-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BdArb8TwQ/GkymPaHwV6a10oFvLMHkyDZq6xXLXF6Tsvl840ufZ72q/1oQ0rVke3 NOIY/Cb8tRtZBakp/JTOlw== 0000950135-96-001566.txt : 19960401 0000950135-96-001566.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950135-96-001566 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 24 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EKCO GROUP INC /DE/ CENTRAL INDEX KEY: 0000018827 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 112167167 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-07484 FILM NUMBER: 96541378 BUSINESS ADDRESS: STREET 1: 98 SPIT BROOK RD CITY: NASHUA STATE: NH ZIP: 03062 BUSINESS PHONE: 6038881212 MAIL ADDRESS: STREET 1: 98 SPIT BROOK RD CITY: NASHUA STATE: NH ZIP: 03062 FORMER COMPANY: FORMER CONFORMED NAME: CENTRONICS CORP DATE OF NAME CHANGE: 19880504 FORMER COMPANY: FORMER CONFORMED NAME: CENTRONICS DATA COMPUTER CORP DATE OF NAME CHANGE: 19870304 10-K405 1 EKCO GROUP, INC. FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 (NO FEE REQUIRED) COMMISSION FILE NO. 1-7484 EKCO GROUP, INC. (Exact name of registrant as specified in its charter) ------------------------ DELAWARE 11-21676167 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 98 SPIT BROOK ROAD NASHUA, NEW HAMPSHIRE 03062 (Address of principal executive offices) (Zip Code)
------------------------ 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. /X/ The aggregate market value of the shares of voting capital stock held by non-affiliates (without admitting that any person whose shares are not included in determining such value is an affiliate) was approximately $108 million based upon the closing price of the shares on the New York Stock Exchange Composite Tape on March 25, 1996. As of March 25, 1996, there were issued and outstanding 18,417,907 shares of Common Stock of the registrant. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1995: Parts I and II. Portions of the registrant's definitive proxy statement with respect to the Annual Meeting of Stockholders to be held on May 21, 1996: Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 Part I ------ Item 1. BUSINESS - ------- -------- General - ------- Ekco Group, Inc. ("Ekco" or the "registrant" and, together with its subsidiaries, the "Company") is a leading U.S. manufacturer and marketer of multiple categories of branded houseware products for everyday home use. The Company believes it is the leading U.S. supplier of metal bakeware, kitchen tools and gadgets and non-toxic pest control products. In addition, the Company believes it is a leading U.S. supplier of plastic storage products (including crates, containers, baskets and office organizers), cleaning products (primarily brushes, brooms and mops) and small animal care and control products. The Company markets its products primarily in the U.S. through substantially all distribution channels that sell houseware products for everyday home use, including mass merchandisers, supermarkets, hardware, drug and specialty stores. The Company was incorporated in Delaware in 1968. The current business of the Company was established in 1987 through the Company's purchase of Ekco Housewares, Inc. and through subsequent acquisitions and internal development. The Company has acquired or developed the following businesses and product lines (net of divestitures): October 1987--acquisition of Ekco Housewares, Inc. ("Housewares"), a manufacturer and marketer of bakeware and kitchen tools and gadgets. January 1989--acquisition of Woodstream Corporation ("Woodstream"), a manufacturer and marketer of non-toxic pest control products. December 1989--acquisition of the non-toxic pest control product line of McGill Metal Products Company. December 1991--acquisition of the small animal care product line of Beacon Industries, Inc. January 1992--acquisition of Frem Corporation ("Frem"), a manufacturer and marketer of molded plastic products. April 1993--acquisition of Kellogg Brush Manufacturing Co. and subsidiaries ("Kellogg"), a manufacturer and marketer of brushes, brooms and mops. January 1995--introduction of an internally developed line of upscale bakeware and kitchen tools, gadgets and other houseware products by B. VIA International Housewares, Inc. ("VIA!"), a newly formed subsidiary of the Company. The Company operates in one industry segment. See Note 14 of Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for industry and geographic area information. The Company's business strategy is to (i) leverage the Company's brand names to further increase brand recognition and reputation among retailers and consumers and expand sales to existing and future customers across multiple product categories, (ii) focus on customer sales and service, (iii) increase market and customer penetration by offering differentiated product lines and 1 3 new and proprietary products and by cross-marketing the full range of the Company's product lines, and (iv) pursue growth through acquisition of additional consumer product lines and businesses. Since the fourth quarter of Fiscal 1993, Ekco has taken a series of actions to position the Company for long-term growth (the "Ekco Integration"). The Ekco Integration included (i) the combination of four of the Company's principal business units into a single operating division, and (ii) the introduction of a new branding strategy to capitalize on the strength of the Ekco(R) brand name. The Ekco Integration combined the management and operations of the Company's bakeware, kitchenware, cleaning products and molded plastic products businesses, which sell through common channels of distribution and accounted for over 75% of the Company's net revenues in Fiscal 1995. The newly created single organization combines and coordinates the sales, marketing, manufacturing, distribution, administrative and financial activities for the four product categories. The Company also consolidated a large portion of the distribution of bakeware and kitchenware products as well as certain cleaning products into its new distribution facility in Bolingbrook, Illinois from four separate warehousing and distribution locations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Notes to the Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference. As part of the Ekco Integration, in January 1996 the Company introduced its new branding strategy in which the Ekco(R) brand name is used to market most of the products in these four categories. The new strategy enables the Company to capitalize on the strength of the Ekco(R) brand name by improving the brand identification of these products by consumers and increasing promotional opportunities for retailers. In addition, management believes that the new branding strategy enhances the effectiveness of the Company's newly consolidated sales and marketing effort by facilitating cross-marketing of the Company's products to retail customers under Ekco(R), one of the strongest brand names in the housewares industry. Recent Developments ------------------- OFFERING OF SENIOR NOTES. On March 25, 1996, the Company completed a private offering to institutional investors of an aggregate of $125 million principal amount of 9 1/4% Senior Notes due 2006 (the "Senior Notes") at a price of 99.291% of face value. The net proceeds of the offering were used by the Company to (i) repurchase all of the outstanding 12.70% Senior Subordinated Notes due 1998 of Housewares, (ii) repurchase the Company's outstanding 7.0% Subordinated Convertible Note due 2002, and (iii) repay amounts outstanding under the Company's existing $75 million revolving credit facility. The offering was effected without registration under the Securities Act of 1933, as amended, or any applicable state securities law. The Company, however, has agreed to file with the Securities and Exchange Commission (the "Commission") and use its best efforts to become effective, a registration statement with respect to a new issue of senior notes (the "Exchange Notes") with terms substantially identical to those of the Senior Notes and, upon becoming effective, to offer the holders of the Senior Notes the opportunity to exchange their Senior Notes for a like principal amount of Exchange Notes and, under certain circumstances, to file a shelf registration statement to cover resales of the Senior Notes by the holders thereof. Concurrently with the closing of the above-described private offering, the Company amended its $75 million revolving credit facility (as so amended, the "Revolving Credit Facility") by consolidating the outstanding debt and borrowing capacity of the Company and its subsidiaries and by revising certain financial covenants. See Note 19 to Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for further information regarding the offering and the Revolving Credit Facility. 2 4 Products - -------- BAKEWARE. The Company manufactures and markets a broad line of metal bakeware for home use, including non-stick coated bakeware marketed under a group of Baker's Secret(R) trademarks and uncoated bakeware marketed under the Ekco(R) trademark. Through Housewares, the Company has over 100 years of experience in the metal bakeware market, and its bakeware products include cookie sheets, muffin tins, brownie pans, loaf pans and similar metal bakeware items. The Company emphasizes value, quality, functionality and, in the case of coated products, ease of cleaning and release. The Company believes it is the leading U.S. supplier of metal bakeware in the U.S. The Company regularly develops new products to capitalize on its high consumer brand recognition and broad retail distribution. New product development efforts are conducted by the Company's internal staff and by third parties on a contract basis. In 1995, the Company introduced specialty muffin pans marketed under the Baker's Secret(R) trademark. In January 1996, the Company expanded its insulated, non-stick coated bakeware product line with the introduction of a variety of baking sheets and baking pans marketed under the Baker's Secret Air Insulated(TM) trademark. The Company also introduced its "Healthy Cooking Made Simple" non-stick coated ovenware, including broiling pans featuring porcelain-coated racks which double as grill tops, and non-stick roasters which hold poultry vertically during cooking for self-basting. The Company also introduced two new merchandising display systems for bakeware: a "cross bar" system which provides full-view product presentation, and its Air Pockets(TM) slanted-shelf peg-board system. KITCHENWARE. The Company sells kitchen tools and gadgets under the Ekco(R) and Ekco Pro(TM) trademarks. The Company markets more than 1,000 products in its kitchen tools and gadgets line, including multiple colors of the same item and various packaging combinations. Kitchen tools include metal, plastic and wooden spoons, spatulas, serving forks, ladles and other cooking accessories. Gadgets include peelers, corkscrews, whisks, can openers, bottle openers and similar items. The Company also markets stainless steel and carbon steel cutlery and stainless steel flatware, mixing bowls and colanders. The Company believes that it is the leading U.S. supplier of kitchen tools and gadgets. The Company believes that it has obtained this position because of its broad product lines, brand name recognition, quality and service. The Company believes that the sale of kitchenware is more dependent on impulse buying by the consumer than any other line of products the Company offers. The Company regularly updates its kitchenware line and introduces new items. For example, in January 1996 the Company introduced a line of upscale kitchen tool, gadget and cutlery products under the Ekco Pro(TM) trademark. The Company also introduced a line of boxed gadgets which include various kitchenware items and sets such as spice racks, gadget organizers and canisters and updated the colors of its Nova(TM) line of kitchen tools. In addition, the Company supplemented its merchandising display program by adding a movable vertical "power tower" which utilizes only one square foot of selling space. 3 5 CLEANING PRODUCTS. The Company manufactures and markets a broad line of cleaning products, including brushes, brooms and mops for home use, indoor and outdoor specialty cleaning and janitorial use. The Company believes that it is a leading manufacturer of cleaning brushes for household, kitchen and personal use. In 1995, the Company introduced a line of indoor and outdoor push brooms and a line of professional-grade janitorial dust and wet mops. Consistent with its strategy of leveraging the Ekco(R) brand name, in January 1996 the Company reintroduced its cleaning products in new packaging utilizing the Ekco(R) trademark for distribution in the mass merchandise and supermarket distribution channels. The Company continues to market brooms and brushes under the Wright-Bernet(TM) trademark to specialty hardware retailers, and mops to janitorial supply and professional cleaning companies. In January 1996, the Company introduced its line of short-handle and long-handle cleaning products with comfortable non-slip grips marketed under the Clean Results(TM) trademark, and further expanded its long-handle product line to include "better" and "best" dust mops and a ceiling fan brush. The Company also expanded its cleaning product line to include lint traps, dust, glass and quick wipes and scrub and scour mitts. PEST CONTROL AND SMALL ANIMAL CARE AND CONTROL PRODUCTS. The Company manufactures and markets non-toxic pest control and small animal care and control products under the Victor(R) and Havahart(R) trademarks, respectively. The Company's products include spring-action rodent traps and glue-based rodent and insect traps marketed under the Victor(R) trademark, pet cages marketed under the Havahart(R) trademark and live animal cage traps marketed under the Havahart(R) trademark, which are used to control garden pests and other nuisance animals such as raccoons. The Company believes it is the leading supplier of non-toxic pest control products, rodent traps and live animal cage traps in the U.S. In 1995, the Company introduced a no-see, no-touch, pre-set and pre-baited mouse trap, and the Roach Magnet(TM), a non-toxic roach trap containing a pheromone attractant. MOLDED PLASTIC PRODUCTS. The Company manufactures and markets injection molded plastic housewares, office and juvenile products. The Company's houseware products include a variety of storage crates and bins, laundry and storage baskets, organizers, wastebaskets and utility caddies. Office products include file crates, desk-top organizers, file caddies and carts. Juvenile products include pocket trays, activity desks and organizing bins and baskets. The Company's molded plastic products emphasize functionality as well as fashion and color and currently consist of more than 60 products in a variety of distinctive colors. The Company develops new products and works with retailers on design concepts. In January 1995, the Company introduced a storage locker with a lift out tray, a flip-top storage crate for files and a smaller carry-all box. Consistent with its strategy of leveraging the Ekco(R) brand name, in January 1996 the Company reintroduced its molded plastic products with new packaging that utilizes the Ekco(R) brand name. In January 1996, the Company expanded its plastic stacking bin product line to include big and jumbo-sized storage bins for garage, pantry, closet and children's use, and added a jumbo-sized cart to its line of plastic rolling carts. The Company introduced an expanded line of laundry products, including a divided laundry basket organizer, a three-handle "hip rider" laundry basket and a wheeled hamper with a built-in handle. The Company also introduced a multi-purpose bin with a folding handle marketed under the Tag Along(TM) trademark. VIA! In January 1995, the Company introduced its VIA!(TM) line of houseware products designed for the upscale and specialty marketplace. Initial products included VIA!'s kitchen tools and gadgets such as "Tutto 4 6 Italiano" pasta, garlic and pizza cooking and storage items, multi-function items, such as a combination spoon rest/tea bag holder/utility dish, and bakeware products, including cookie sheets, loaf pans and muffin tins in heavy-gauge coated and uncoated steel, tin steel pans, and heavy-gauge coated steel roasting pans, racks, bakers and broilers. In January 1996, the VIA!(TM) product line was expanded to include tea kettles marketed under the "House Blend" brand, pantryware marketed under the "Classic Pantry" brand, a line of trivets and tool jugs and additional multi-function gadgets marketed under the "2 Tools in 1" brand. Customers and Distribution - -------------------------- Management believes that the Company has one of the broadest distribution networks of any company in the housewares industry. The Company markets its products primarily in the U.S. through substantially all distribution channels that sell houseware products for everyday home use, including mass merchandisers, supermarkets, hardware stores, drug stores, specialty stores and other retail channels. The Company sells its products to each of the 30 largest mass merchandisers (as ranked by the July 3, 1995 Discount Industry Annual Report published by Discount Store News), including Wal-Mart, Kmart and Target. The Company estimates that it sells its products in over 90% of the approximately 38,000 U.S. supermarkets, including Winn-Dixie, Kroger and Albertson's. The Company sells its products to many of the largest hardware chains, including Ace Hardware, Home Depot, True Value, ServiStar and Lowe's Home Centers. Of its customers, Wal-Mart and Kmart accounted for 13.4% and 9.0%, respectively, of the Company's net revenues in Fiscal 1995. No other customer accounted for more than 5% of the Company's net revenues in Fiscal 1995. The Company's products are distributed through the following retail channels: Bakeware is distributed primarily through mass merchandisers and supermarkets; kitchenware is distributed primarily through supermarkets and mass merchandisers, as well as hardware and drug stores; cleaning products are marketed under the Ekco(R) trademark primarily to mass merchandisers and supermarkets; broom and brush products are marketed under the Wright-Bernet(TM) trademark to hardware retailers and mops are marketed to janitorial supply and professional cleaning companies; pest control and small animal care and control products are marketed to mass merchandisers, supermarkets, hardware, drug and variety stores, agricultural centers and farm stores, home centers and professional pest control companies; molded plastic products are distributed through mass merchandisers, as well as large specialty retailers such as office supply stores and drug stores; and VIA!(TM) products are distributed through department stores and upscale and specialty stores, including Lechter's, Crate & Barrel, Linens 'N Things and Bed, Bath & Beyond. Sales and Marketing - ------------------- The Ekco Integration has enabled the Company to shift the focus of its sales and marketing strategy from individual product categories to the broader needs of each of its customers. Each of the Company's customers now has one Ekco sales person responsible for selling and marketing most of the Company's products. As part of the Ekco Integration, the Company has created a new Ekco(R) logo and new "family" look packaging and marketing materials designed to present consumers with a uniform message of Ekco(R) quality, value, design and functionality. The Company markets its product lines directly through its own sales and marketing organization and through a network of representatives and brokers. Outside the U.S., the Company's products are marketed through its Canadian and U.K. subsidiaries and distributors and agents who 5 7 provide marketing support to supermarkets, mass merchandising stores, specialty stores and department stores. The Company's agreements with its distributors and agents are generally terminable upon 30 days notice and are not deemed to be material by the Company. Manufacturing and Sourcing - -------------------------- The Company manufactures most of its bakeware, cleaning, molded plastic and pest control and small animal care and control products. High volume kitchenware products (representing approximately 25% of kitchenware sales) are generally manufactured and assembled by the Company and the remainder are sourced from third parties. The Company utilizes a variety of standard manufacturing processes, including metal stamping, injection molding, mesh welding, wire forming, and automatic staple setting. The Company regularly evaluates its manufacturing and third party sourcing options to maintain an appropriate balance between quality and cost. Raw Materials and Components - ---------------------------- The Company purchases primary raw materials, including plastic resin, tin-plated steel, wood and corrugated boxes and packaging, from a number of suppliers, including several major steel companies and a number of plastic resin suppliers. All of these materials are subject to price fluctuations which may adversely affect the Company's profitability. The Company purchases primarily on the spot market and does not maintain long-term contracts with suppliers. The Company also purchases components and complete products, primarily for kitchen tools and gadgets, from several domestic and foreign suppliers. The Company believes that raw materials, component items and complete products are available from other suppliers, and that the loss of any one of its suppliers would not have a material adverse effect on the Company. Trademarks and Patents - ---------------------- The Company believes that its Ekco(R) trademark, as well as its Baker's Secret(R), Havahart(R), Victor(R), Wright-Bernet(TM) and VIA!(TM) trademarks are significant to its competitive position. The Company holds a number of patents, none of which is believed to be material to the Company's business. Competition - ----------- The Company believes that the markets for all of its product lines are highly competitive and that competition for retail sales to consumers is based on several factors, including brand name recognition, value, quality, price and availability. Primary competitive factors with respect to selling such products to retailers are brand reputation, number of product categories offered, broad product coverage within each product category, support and service of the retailer and price. The Company competes with established companies, several of which have substantially greater resources than those of the Company. There are no substantial regulatory or other barriers to entry of new competitors in the housewares industry. However, suppliers that are able to maintain, or increase, the amount of retail space allocated to a product may gain a competitive advantage in that product market. The Company believes that the allocation of space by retailers is influenced by many factors, including the brand name recognition by consumers, quality and price of the supplier's products, the level of service provided by the supplier and the supplier's ability to support promotions. 6 8 The Company believes that its ability to compete successfully is based on the wide recognition of its brand names, its multiple category product offerings, its ability to design, develop, acquire, manufacture and market competitively priced products, its broad product coverage within most product categories, its attention to retailer and consumer needs and its access to major channels of distribution. There can be no assurance that the Company will be able to compete successfully against current and future sources of competition or that the competitive pressures faced by the Company will not adversely affect its profitability or financial performance. Seasonality - ----------- Many of the Company's product categories are affected by seasonal consumer purchasing patterns, including holiday cooking and baking, back-toschool shopping and spring cleaning. Historically, the Company's revenues in the last half of the fiscal year have been greater than in the first half. See Note 16 of Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated herein by reference, for information regarding quarterly results of operations. Backlog - ------- Information as to backlog is not material to an understanding of the Company's business because most of the Company's net revenues result from short lead-time customer orders. The Company generally is able to fill orders from inventory, and has generally been able to adjust production levels to meet increases in customers' orders that cannot be filled from inventory. Employees - --------- As of December 31, 1995, the Company employed 1,255 persons in the U.S. of whom 671 were represented under collective bargaining agreements which expire on dates ranging from February 1997 to February 2000. As of such date, the Company also employed 33 persons in Canada, of whom 13 were represented under a collective bargaining agreement which expires in July 1997, and three persons in the U.K. The Company considers its employee relations to be satisfactory. Business Outlook - ---------------- This annual report on Form 10-K, including "Business," "Properties," "Legal Proceedings" and "Management's Discussion and Analysis of Results of Operations and Financial Condition" in Exhibit 13 hereto, contains forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Such factors and uncertainties include, but are not limited to: the impact of the level of the Company's indebtedness; restrictive covenants contained in the Company's various debt documents; general economic conditions and conditions in the retail environment; the Company's dependence on a few large customers; price fluctuations in the raw materials used by the Company; competitive conditions in the Company's markets; the seasonal nature of the Company's business; and the impact of federal, state and local environmental requirements (including the impact of current or future environmental claims against the Company). As a result, the Company's operating results may fluctuate, especially when measured on a quarterly basis. 7 9 Item 2. PROPERTIES - ------- ---------- As of December 31, 1995, the Company owned or leased for use in its business the properties set forth in the table below: 8 10
Approximate Owned or Lease Description of Property Location Square Footage Leased Expires - ----------------------------------------------------------------------------------------------------------------- Executive offices Nashua, New Hampshire 8,000 Leased 11/06/97 Administrative offices for the Franklin Park, Illinois 190,000 Leased 01/31/99 housewares division and warehousing and distribution center for VIA! products Manufacturing, warehousing and Massillon, Ohio 244,000 Owned N/A distribution center for bakeware Warehousing and distribution center Bolingbrook, Illinois 260,000 Leased 06/30/02 for kitchen tools, gadgets, bakeware and other Company products Manufacturing, warehousing, Lititz, Pennsylvania 366,000 Owned N/A distribution and office facility for pest control and small animal care and control products Manufacturing, warehousing, office Easthampton, Massachusetts 326,000 Owned N/A and distribution facility for brushes, brooms and mops Manufacturing, warehousing, Worcester, Massachusetts 170,000 Owned N/A distribution and office facility for molded plastic products Warehousing facility for molded Worcester, Massachusetts 135,000 Leased 01/31/00 plastic products Manufacturing, warehousing and Phoenix, Arizona 104,000 Owned N/A distribution facility for molded plastic products Manufacturing, warehousing, Hamilton, Ohio 100,000 Owned N/A distribution and office facility for brushes, brooms and mops Manufacturing and warehousing Obregon, Sonora, Mexico 27,000 Leased 12/23/96 facility for kitchen tools and gadgets
9 11
Office and warehousing facility Niagara Falls, Ontario 39,000 Owned N/A for products for sale and Canada distribution in Canada Manufacturing and distribution Nashville, Tennessee 42,000 Leased 12/31/96 facility for institutional mop and broom products Office facility for VIA!(TM) Englewood Cliffs, New Jersey 3,000 Leased 07/31/96 products Office facility for products for Caldicot, Gwent, U.K. 2,000 Leased 09/01/98 sale and distribution in the U.K. - ----------------------- (a) In addition to the properties listed in the table, as of December 31, 1995 the Company owned approximately 568,000 square feet of floor space which is being held for sale or lease. Approximately 10% of this space was under lease to a third party as of that date. The remaining space is covered by a purchase and sale agreement. The Company leases other real properties not set forth above which in the aggregate, are not deemed material. (b) Substantially all of the properties owned by the Company are subject to mortgage liens granted in connection with the Revolving Credit Facility. The Company believes that its properties are generally suitable and adequate for its purposes for the foreseeable future.
10 12 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 at its facilities at Massillon (more fully described below) and Hamilton, Ohio; Easthampton, Massachusetts (more fully described in Note 13 of Notes to Consolidated Financial Statements appearing in Exhibit 13 and incorporated herein by reference); Chicago, Illinois and Lititz, Pennsylvania, and at its previously owned facility in Hudson, New Hampshire hazardous substances and oil have been detected and that additional investigations will be, and remedial actions will or may be, required at such facilities. Operations at these and other facilities currently or previously owned or leased by the Company utilize, or in the past have utilized, hazardous substances. There can be no assurance that activities at these or any other facilities or future facilities may not result in additional environmental claims being asserted against the Company or additional investigations or remedial actions being required. Prior to the Company's acquisition of Housewares in 1987, Housewares' Massillon, Ohio steel bakeware manufacturing facility was the subject of administrative proceedings before the United States Environmental Protection Agency by issuance of an administrative complaint alleging violations of the Resource Conservation and Recovery Act resulting from operation of a wastewater lagoon at the facility. American Home Products Corporation ("AHP"), a former owner of Housewares, pursuant to an indemnity agreement (the "Indemnity Agreement") with Housewares relating to acts occurring prior to September 7, 1984, assumed the costs of remediation measures in addition to the defense of the administrative proceedings with federal and state environmental protection agencies, as well as preparation of closure plans and other plans called for as a result of these proceedings. While AHP has acknowledged its full responsibility under the Indemnity Agreement with respect to the wastewater lagoon, it has asserted that Housewares should contribute to the cost of a remediation study and certain remediation measures to the extent that Housewares exacerbated contamination at the facility since September 7, 1984. Housewares has denied that it has exacerbated contamination at the facility since such date. AHP and Housewares have agreed to allocate such costs in proportion to their respective responsibilities based on the results of an engineering study but in no event will Housewares' share with respect to the wastewater lagoon exceed the lesser of 25% of the total cost or $750,000. The Company is unable to determine to what extent, if any, it will be responsible to contribute to such costs but the Company does not believe that any such contribution that it may be required to make will have a material adverse effect on its financial position, results of operations or liquidity. In June 1992, the United States filed an action in the U.S. District Court for the Northern District of Ohio against Housewares seeking penalties and injunctive relief and alleging violations as a result of an alleged failure to provide certain closure and post-closure financial assurances with respect to the Massillon, Ohio site. Pursuant to the Indemnity Agreement and 11 13 a confirmatory letter from AHP to Housewares on December 19, 1988 (the "Indemnity Documents"), AHP conducted and controlled all matters relating to such financial assurances and the defense of the action filed in June 1992. In January 1994, the court entered judgment against Housewares in the amount of $4.6 million in the lawsuit. AHP filed a notice of appeal on behalf of Housewares. In March 1994, AHP informed Housewares that, should it be unsuccessful in its appeal, it would attempt to hold Housewares responsible for a portion of the penalties (approximately $600,000, exclusive of interest) arising from Housewares' alleged delay in furnishing certain information to the Ohio Environmental Protection Agency. In March 1994, Housewares notified AHP that Housewares denies all liability and that AHP is liable for all liabilities, losses, costs or damages arising from the lawsuit pursuant to the Indemnity Documents. In August 1995, the Appeals Court affirmed the Company's liability, reversed the imposition of civil penalties for certain periods of time and remanded the redetermination of such penalties to the District Court. The District Court has not yet completed its redetermination. The Company is unable to predict the result of the redetermination or AHP's attempts to obtain contribution from Housewares, but the Company does not believe that any such liability will have a material adverse effect on its financial position, results of operations or liquidity. Litigation - ---------- In addition to the environmental claims discussed above, from time to time the Company is a party to litigation and other legal proceedings, including product liability claims. In many cases, claims are covered by insurance, subject to standard deductibles. Although the outcome of such proceedings cannot be determined with certainty, the Company believes that the final outcome of such proceedings will not have a material adverse effect on the Company. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- Not applicable. 12 14 EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------
Name Age Office Held - ---- --- ----------- Robert Stein 56 President and Chief Executive Officer, February 1986 to present; Chief Financial Officer, July 1980 to July 1993. Jeffrey A. Weinstein 45 Executive Vice President, April 1985 to present; Secretary, February 1988 to present; General Counsel, October 1978 to present. Donato A. DeNovellis 51 Executive Vice President, October 1994 to present; Chief Financial Officer, July 1993 to present; Vice President, July 1993 to October 1994. Prior to joining the Company, from 1980 to 1992 Mr. DeNovellis served Xerox Corporation and its subsidiary companies in a number of capacities, including the following: Managing Director from May 1992 to October 1992, and Executive Vice President and Chief Administrative Officer from April 1991 to May 1992 of Crum & Forster, Inc. (a property/casualty insurance holding company); and Senior Vice President, Operations Analysis, from January 1990 to April 1991 of Xerox Financial Services (a financial services company). Stuart Cohen 49 Vice President, Strategic Planning and Business Development, June 1995 to present. Prior to joining the Company, from May 1991 to December 1994 Mr. Cohen served as First Vice President of Van Kampen Merritt, Inc. ("VKM") (an investment products and management firm), where he was responsible for strategic planning and business development. From August 1986 to April 1991, Mr. Cohen was an investment banker and Vice President, Mergers and Acquisitions, Capital Markets Divisions of VKM. John R. Haran 53 Vice President and Treasurer, February 1996 to present. From January 1994 to March 1995, Mr. Haran served as Chief Financial Officer of Strategic Realty Advisors, Inc. (a commercial real estate company) and from March 1990 to December 1993, he served as Chief Financial Officer of VMS Realty Partners (a commercial real estate partnership). Brian R. McQuesten 46 Vice President, February 1996 to present; Controller, May 1987 to present.
13 15 The executive officers of the Company are elected annually by the Board of Directors and serve, subject to the provisions of any employment agreement between the executive and the Company, until their respective successors are chosen and qualified or until their earlier resignation or removal. Part II ------- Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - ------- --------------------------------------------------------------------- The information set forth in the section entitled "Common Stock Price Range and Dividends" appearing in Exhibit 13 hereto is incorporated herein by reference. Item 6. SELECTED FINANCIAL DATA - ------- ----------------------- The information set forth in the section entitled "Selected Consolidated Financial Data" appearing in Exhibit 13 hereto is incorporated herein by reference. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- The information set forth in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" appearing in Exhibit 13 hereto is incorporated herein by reference. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------- ------------------------------------------- The information set forth in the consolidated financial statements and notes thereto (including the note which sets forth certain supplementary information) and the Report of Independent Auditors appearing in Exhibit 13 hereto are incorporated herein by reference. Reference is also made to Item 14(a)2 with respect to Financial Statement Schedules filed herewith. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND - ------- --------------------------------------------------------------- FINANCIAL DISCLOSURE -------------------- None. 14 16 Part III -------- Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - -------- -------------------------------------------------- a) Directors - The information set forth in the section entitled "Election of Directors" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference. b) Executive Officers - See "Executive Officers of the Registrant" appearing in Part I above. Item 11. EXECUTIVE COMPENSATION - -------- ---------------------- The information set forth in the sections entitled "Compensation of Directors" and "Compensation of Executive Officers" (except for the information under the captions "Report of the Compensation Committee on Executive Compensation" and "Performance Graph") appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - -------- -------------------------------------------------------------- The information set forth in the section entitled "Security Ownership of Certain Beneficial Owners and Management" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------- ---------------------------------------------- The information set forth in the section entitled "Certain Relationships and Related Transactions" appearing in the Company's definitive proxy statement with respect to the 1996 Annual Meeting of Stockholders is incorporated herein by reference. 15 17 Part IV ------- Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K - -------- ----------------------------------------------------------------
Page Number in Exhibit 13 -------------- (a) 1. Financial Statements: - --- -- --------------------- Report of independent auditors............. 48 Consolidated balance sheets at December 31, 1995 and January 1, 1995................... 30 Consolidated statements of operations for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994........ 31 Consolidated statements of stockholders' equity for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994............................ 32 Consolidated statements of cash flows for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994.. 33 Notes to consolidated financial statements................................. 34
Page Number in Form 10-K -------------- Independent auditors' report............... 18 2. Financial Statement Schedules: -- ------------------------------ III Condensed Financial Information of the Registrant..................... 19 VIII Valuation and Qualifying Accounts..... 23 Schedules other than those listed above have been omitted because they are not required, not applicable or the required information is furnished in the consolidated financial statements or notes thereto. 3. Exhibits: (See Index to Exhibits beginning on page 24.) -- --------- (b) Reports on Form 8-K -- None. - --- -------------------
16 18 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EKCO GROUP, INC. By: /s/ ROBERT STEIN ------------------------------------ Robert Stein, President and Chief Executive Officer (Principal Executive Officer) Date: March 29, 1996 By: /s/ DONATO A. DeNOVELLIS ------------------------------------ Donato A. DeNovellis, Executive Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial Officer) Date: March 29, 1996 By: /s/ BRIAN R. McQUESTEN ------------------------------------ Brian R. McQuesten, Vice President and Controller (Principal Accounting Officer) Date: March 29, 1996 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/ T. MICHAEL LONG Director March 29, 1996 - ------------------------- T. Michael Long /s/ STUART B. ROSS Director March 29, 1996 - ------------------------- Stuart B. Ross /s/ MALCOLM L. SHERMAN Director March 29, 1996 - ------------------------- Malcolm L. Sherman /s/ BILL W. SORENSON Director March 29, 1996 - ------------------------- Bill W. Sorenson /s/ HERBERT M. STEIN Director March 29, 1996 - ------------------------- Herbert M. Stein /s/ ROBERT STEIN Director March 29, 1996 - ------------------------- Robert Stein /s/ JEFFREY A. WEINSTEIN Director March 29, 1996 - ------------------------- Jeffrey A. Weinstein
17 19 INDEPENDENT AUDITORS' REPORT ---------------------------- Board of Directors and Stockholders Ekco Group, Inc. Under date of February 5, 1996, except as to note 19, which is as of March 25, 1996, we reported on the consolidated balance sheets of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the fiscal years in the three-year period ended December 31, 1995, as contained in the 1995 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in this annual report on Form 10-K for the fiscal year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as listed in Item 14(a)2 of this report. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth herein. In 1993, the Company changed its method of accounting for income taxes, post-retirement benefits other than pensions and post-employment benefits. /s/ KPMG Peat Marwick LLP Boston, Massachusetts March 25, 1996 18 20 EKCO GROUP, INC. AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT CONSOLIDATED CONDENSED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) - -----------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- ASSETS Current assets Cash and cash equivalents $ - $ - Prepaid expenses and other current assets 238 276 Investment pledged as collateral - 3,600 -------- -------- Total current assets 238 3,876 Furniture and equipment, net 143 103 Property held for sale or lease - 3,285 Deferred income taxes 1,383 2,265 Other assets 3,551 3,119 Investment in and advances to subsidiaries 191,840 206,176 -------- -------- Total assets $197,155 $218,824 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Note payable $ - $ 3,643 Current portion of long-term obligation - - Accounts payable 379 762 Accrued expenses 2,707 4,293 Income taxes 389 2,616 Deferred income taxes 2,063 1,279 -------- -------- Total current liabilities 5,538 12,593 -------- -------- Long-term obligation, less current portion 829 22,223 -------- -------- Non-interest bearing note payable to Ekco Housewares, Inc. 26,100 26,100 -------- -------- Other long-term liabilities 2,486 2,979 -------- -------- 7% Convertible Subordinated Note 22,000 22,000 -------- -------- Series B ESOP Convertible Preferred Stock, net; outstanding 1,488 shares and 1,568 shares, respectively, redeemable at $3.61 per share 3,458 3,096 -------- -------- Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value - - Common stock, $.01 par value; outstanding 18,414 shares and 18,069 shares, respectively 184 181 Capital in excess of par value 106,916 105,448 Retained earnings 33,614 27,172 Unearned compensation (3,970) (2,968) -------- -------- 136,744 129,833 -------- -------- Total liabilities and stockholders' equity $197,155 $218,824 ======== ========
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) CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) - -------------------------------------------------------------------------------------------------------------------
FISCAL YEARS ENDED ------------------ DECEMBER 31, 1995 JANUARY 1, 1995 JANUARY 2, 1994 ----------------- --------------- --------------- Revenues Investment income $ 71 $ 224 $ 500 Equity in earnings of subsidiaries 14,530 18,132 10,627 ------- ------- ------- 14,601 18,356 11,127 ------- ------- ------- Costs and expenses: General and administrative 1,606 4,070 3,374 Restructuring/reorganization and excess facilities charge - - 3,631 Interest expense 3,187 3,103 2,508 ------- ------- ------- 4,793 7,173 9,513 ------- ------- ------- Income before income taxes and cumulative effect of accounting changes 9,808 11,183 1,614 ------- ------- ------- Income taxes (credit) 1,763 (240) (645) ------- ------- ------- Income before cumulative effect of accounting changes 8,045 11,423 2,259 Cumulative effect of changes in method of accounting for post-retirement and post-employment benefits (net of income taxes of $1,954) - - (3,247) ------- ------- ------- Net income (loss) $ 8,045 $11,423 $ (988) ======= ======= ======= Per share data Earnings before cumulative effect of accounting changes $ .40 $ .57 $ .11 Cumulative effect of accounting changes - - (.19) ------- ------- ------- Net income (loss) $ .40 $ .57 $ (.08) ======= ======= ======= Weighted average number of shares used in computation of per share data Earnings before cumulative effect of accounting changes 20,318 20,115 19,999 Cumulative effect of accounting changes - - 17,148
The accompanying notes are an integral part of the consolidated condensed financial statements. 20 22 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 ------------------ DECEMBER 31, JANUARY 1, JANUARY 2, ------------ ---------- ---------- 1995 1995 1994 ---- ---- ---- Cash flows from operating activities: Net income (loss) $ 8,045 $ 11,423 $ (988) Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: Depreciation 100 51 643 Amortization of unearned compensation 1,363 1,120 1,129 Equity in earnings of subsidiaries (14,530) (18,132) (10,627) Deferred income taxes 1,666 929 201 Cumulative effect of accounting change - - 3,247 Other (5) (134) 1,085 Change in certain assets and liabilities affecting cash provided by (used in) operations: Other assets (41) 5,069 (1,750) Accounts payable and accrued expenses (1,949) 946 879 Income taxes payable (2,227) (2,337) 1,075 -------- -------- -------- Net cash used in operations (7,578) (1,065) (5,106) -------- -------- -------- Cash flows from investing activities: Proceeds from sale of property and equipment 2,772 - 42 Capital expenditures (135) (181) (79) Investment in and advances to subsidiaries 28,866 (13,896) (11,882) -------- -------- -------- Net cash used in investing activities 31,503 (14,077) (11,919) -------- -------- -------- Cash flows from financing activities: Proceeds from issuance of long-term obligations 5,820 22,223 - Proceeds from sale of investment held as collateral 3,600 - 750 Payments of dividends (1,603) - - Purchases of treasury stock (1,180) - - Purchase of common stock for employee stock ownership plan - (950) - Payment of notes and long-term obligation (30,857) (7,615) (993) Other 295 1,484 913 -------- -------- -------- Net cash provided by financing activities (23,925) 15,142 670 -------- -------- -------- Net increase (decrease) in cash and cash equivalents - - (16,355) Cash and cash equivalents at beginning of year - - 16,355 -------- -------- -------- Cash and cash equivalents at end of year $ - $ - $ - ======== ======== ========
The accompanying notes are an integral part of the consolidated condensed financial statements. 21 23 EKCO GROUP, INC. AND SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND OTHER MATTERS: The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes included in this Form 10-K. The consolidated condensed financial statements include the accounts of the Company and its subsidiaries all of which are reported under the equity method of accounting. The accompanying condensed financial statements include the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995 ("Fiscal 1994") and January 2, 1994 ("Fiscal 1993"). Certain amounts from prior periods have been reclassified to conform with the presentation for the current fiscal year. Equity in earnings of the Company's subsidiaries is presented after elimination of management fees payable to the Company, for Fiscal 1995 $4.4 million, for Fiscal 1994 $4.3 million and for Fiscal 1993 $4.2 million and interest payable of $4.9 million for Fiscal 1995. Under the terms of the Ekco Housewares' 12.70% Notes, the amount which may be paid to the Company by Ekco Housewares is limited in accordance with a formula, which is based primarily on the consolidated net revenues and net income of Ekco Housewares, plus reimbursement for expenses and amounts due pursuant to a tax sharing arrangement. At December 31, 1995, the amount payable to the Company by Ekco Housewares was approximately $800,000. During Fiscal 1995, Fiscal 1994 and Fiscal 1993, no dividends were paid to the Company by its subsidiaries. 2. Income taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect, if any, on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 22 24 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 DECEMBER 31, 1995: Allowance for doubtful accounts $ 1,739 $ (442) $ - $ - $ 249 $ 1,048 Reserves related to plant consolidations 3,305 - - 3,305 - - ------- ------ ---- ------ ------ ------- $ 5,044 $ (442) $ - $3,305 $ 249 $ 1,048 ======= ====== ==== ====== ====== ======= YEAR ENDED JANUARY 1, 1995: Allowance for doubtful accounts $ 1,758 $ 247 $ - $ - $ 266 $ 1,739 Provisions related to restructuring/reorganization and excess facilities cost 8,323 - - 5,018 - 3,305 ------- ------- ---- ------ ------ ------- $10,081 $ 247 $ - $5,018 $ 266 $ 5,044 ======= ======= ==== ====== ====== ======= YEAR ENDED JANUARY 2, 1994: Allowance for doubtful accounts $ 1,607 $ 449 $375 (1) $ - $ 673 $ 1,758 Provisions related to restructuring/reorganization and excess facilities cost - 11,000 - - 2,677 8,323 ------- ------- ---- ------ ------ ------- $ 1,607 $11,449 $375 $ - $3,350 $10,081 ======= ======= ==== ====== ====== ======= - ------------------------------------------------------------------------------------------------------------------------------- (1) Included in valuation of assets of Kellogg Brush Manufacturing Co. acquired April 1, 1993.
23 25 INDEX TO EXHIBITS
Exhibit Number Exhibit Description - ------ ------------------- 3.1(i)(a) Restated Certificate of Incorporation dated February 17, 1987, as amended, originally filed as Exhibit 3.1(a) to Form 10-K for the year ended December 31, 1989. 3.1(i)(b) Certificate of Designations of Series A Junior Participating Preferred Stock, originally filed as Exhibits 3.1(b) and 4.2(c) to Form 10-K for the year ended December 28, 1986, included in Exhibit 4.1 (incorporated herein by reference to Exhibit 3.1(b) to Form 10-K for the year ended January 1, 1995). 3.1(i)(c) Certificate of Designations of Series B ESOP Convertible Preferred Stock, originally filed as Exhibit 3.1(d) to Form 10- K for the year ended January 1, 1989 (incorporated herein by reference to Exhibit 3.1(c) to Form 10-K for the year ended January 1, 1995). 3.1(ii) By-Laws as currently in effect (incorporated herein by reference to Exhibit 3.2 to Form 10-K for the year ended December 29, 1991). 4.1 Rights Agreement dated as of March 27, 1987, including Form of Rights Certificate and Form of Certificate of Designations of Series A Junior participating Preferred Stock, originally filed as Exhibit 4.2(c) to Form 10-K for the year ended December 28, 1986; First Amendment dated as of June 9, 1988, originally filed as Exhibit 4.2(a)(2) to Form 10-K for the year ended January 1, 1989; [Second] Amendment dated as of January 10, 1989, originally filed as Exhibit 4.2(a)(3) to Form 10-K for the year ended January 1, 1989; Third Amendment dated as of March 23, 1992, originally filed as Exhibit 8 to Form 8 Amendment No. 2 to Form 8-A dated June 30, 1992; and Fourth Amendment dated as of December 22, 1992, originally filed as Exhibit 9 to Form 8 Amendment No. 3 dated January 8, 1993 to Form 8-A (incorporated herein by reference to Exhibit 4.2 to Form 10-K for the year ended January 3, 1993). 4.2(a) Indenture dated as of March 25, 1996 among the registrant, its U.S. operating subsidiaries and Fleet National Bank of Connecticut. 4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit 4.2(a). - -------------------------------------------------------------------------------- (1) Numbered in accordance with Item 601 of Regulation S-K. (2) An asterisk (*) denotes the Company's management contracts or compensatory plans or arrangements.
24 26
4.2(c) Registration Rights Agreement dated as of March 25, 1996 among the registrant, its U.S. operating subsidiaries, Bear, Stearns & Co. Inc. and Smith Barney Inc. 4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase Plan. 4.4 Form of Purchase Agreement dated as of December 1, 1988 among Ekco Housewares, Inc., Teachers Insurance and Annuity Association of America, The Mutual Life Insurance Company of New York, MONY Life Insurance Company of America, MONY Legacy Life Insurance Company, Kemper Investors Life Insurance Company and Federal Kemper Life Insurance Company, as amended (incorporated herein by reference to Exhibit 4.1 to Form 8-K as of December 21, 1988, Exhibit 4.3(b) to Form 10-K for the year ended December 30, 1990, Exhibit 28.2 to Form 8-K as of January 8, 1992, and Exhibit 4.3(a) to Form 10-Q for the quarterly period ended July 4, 1993. 10.1(a)* 1984 Restricted Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.1(a) to Form 10-K for the year ended December 29, 1991). 10.1(b)* 1985 Restricted Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.3(a) to Form 10-K for the year ended December 29, 1991). 10.1(c)(1)* Form of Restricted Stock Purchase Agreement (incorporated herein by reference to Exhibit 10.1(b) to Form 10-K for the year ended January 1, 1995). 10.1(c)(2)* Schedule to Form of Restricted Stock Purchase Agreement. 10.1(c)(3)* Form of Amendment to Restricted Stock Purchase Agreement. 10.1(d)* Form of Restricted Stock Purchase Agreement, as amended, for the quarterly purchase of restricted stock. 10.2(a)* 1987 Stock Option Plan, as amended, and form of incentive stock option and non-qualified stock option agreements (incorporated herein by reference to Exhibit 10.11(a) to Form 10-K for the year ended December 29, 1991). 10.2(b)(1)* Form of Non-Qualified Stock Option and Repurchase Agreement dated as of September 8, 1987, as amended. 10.2(b)(2)* Form of Non-Qualified Stock Option and Repurchase Agreement dated various dates, as amended. 10.2(c)* Form of Incentive Stock Option Agreement with Ronald N. Fox and Richard J. Corbin dated as of October 28, 1988 and May 9, 1994, respectively (incorporated herein by reference to Exhibit 10.3(c) to Form 10-K for the year ended January 1, 1995).
25 27
10.3(a)* Form of Indemnity Agreement for officers and directors (incorporated herein by reference to Exhibit 10.3(c) to Form 10- K for the year ended January 1, 1995). 10.3(b) Schedule to Form of Indemnity Agreement. 10.4* Ekco Group, Inc. 1988 Directors' Stock Option Plan, originally filed as Exhibit 10.15 to Form 10-K for the year ended December 31, 1989, as amended. 10.5(a)* Ekco Group, Inc. Employees' Stock Ownership Plan effective as of January 1, 1989, originally filed as Exhibit 10.13(a) to Form 10-K for the year ended January 1, 1989, as amended (incorporated herein by reference to Exhibits 10.6(a)(1) and (2) to Form 10-K for the year ended January 1, 1995). 10.5(b) ESOP Loan Agreement dated as of October 1, 1990, originally filed as Exhibit 10.10(c) to Form 10-K for the year ended December 30, 1990. 10.5(c) ESOP Loan Agreement dated as of March 30, 1995. 10.6* Amended and Restated Employment Agreement with Robert Stein dated as of May 25, 1995 (incorporated herein by reference to Exhibit 10.1 to Form 10-Q for the quarterly period ended October 1, 1995). 10.8* Amended and Restated Employment Agreement with Jeffrey A. Weinstein dated as of May 25, 1995 (incorporated herein by reference to Exhibit 10.2 to Form 10-Q for the quarterly period ended October 1, 1995). 10.9* Amended and Restated Employment Agreement with Donato A. DeNovellis dated as of May 25, 1995 (incorporated herein by reference to Exhibit 10.3 to Form 10-Q for the quarterly period ended October 1, 1995). 10.10* Employment Agreement with Stuart W. Cohen dated as of June 12, 1995 (incorporated herein by reference to Exhibit 10.4 to Form 10-Q for the quarterly period ended October 1, 1995). 10.10* Amended and Restated Employment Agreement with Brian R. McQuesten and certain other Company employees dated as of May 25, 1995 (incorporated herein by reference to Exhibit 10.5 to Form 10-Q for the quarterly period ended October 1, 1995). 10.11* Ekco Group, Inc. Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and Subsidiaries, as amended (incorporated herein by reference to Exhibit 10.9 to Form 10-K for the year ended December 29, 1991 and Exhibit 10.12(b) to Form 10-K for the year ended January 1, 1995).
26 28
10.12* 1995 Restatement of Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its Subsidiaries (incorporated herein by reference to Exhibit 10.13 to Form 10-K for the year ended January 1, 1995). 10.13* Ekco Group, Inc. Supplemental Executive Retirement Plan dated as of July 1, 1992 (incorporated herein by reference to Exhibit 10.13 to Form 10-K for the year ended January 2, 1994). 10.14(a)* Form of Split Dollar Agreement (incorporated herein by reference to Exhibit 10.14 to Form 10-K for the year ended January 2, 1994). 10.14(b)* Schedule to Form of Split Dollar Agreement. 10.15* Severance Agreement with Richard J. Corbin dated September 28, 1995. 10.16* Severance Agreement with Ronald N. Fox dated September 21, 1995. 10.17(a)* Severance Agreement with Neil R. Gordon dated December 28, 1995 10.17(b)* Consulting Agreement with N.R. Gordon & Company dated December 28, 1995. 10.18 Standstill Agreement with Stephen Weinroth dated as of March 27, 1987, originally filed as Exhibit 10.15 to Form 10-K for the year ended December 28, 1986 (incorporated herein by reference to Exhibit 10.13 to Form 10-K for the year ended January 3, 1993). 10.19 Standstill Agreement with G. Chris Andersen dated as of March 30, 1987, originally filed as Exhibit 10.17 to Form 10-K for the year ended December 28, 1986 (incorporated herein by reference to Exhibit 10.14 to Form 10-K for the year ended January 3, 1993). 10.20(a) Indemnification Letter from American Home Products Corporation dated February 8, 1985 to The Ekco Group, Inc., originally filed as Exhibit 2.2 to Form 8-K as of October 23, 1987 (incorporated herein by reference to Exhibit 10.15(a) to Form 10-K for the year ended January 3, 1993). 10.20(b) Letter of Restatement and Confirmation of the Indemnification of American Home Products Corporation to The Ekco Group, Inc. from American Home Products Corporation to Centronics Corporation dated October 1, 1987, originally filed as Exhibit 2.3 to Form 8-K as of October 23, 1987 (incorporated herein by reference to Exhibit 10.15(b) to Form 10-K for the year ended January 3, 1993).
27 29
10.20(c) Letter from American Home Products Corporation dated December 19, 1988, originally filed as Exhibit 10.17(d) to Form 10-K for the year ended January 1, 1989 (incorporated herein by reference to Exhibit 10.18(c) to Form 10-K for the year ended January 1, 1995). 10.21 Agreement dated as of March 7, 1989 with Howard R. Curd et al., originally filed as Exhibit 10.16 to Form 10-K for the year ended January 1, 1989 (incorporated herein by reference to Exhibit 10.19 to Form 10-K for the year ended January 1, 1995). 10.22 Securities Purchase Agreement dated as of December 22, 1992 with The 1818 Fund, L.P., originally filed as Exhibit 10.20(a) to Form 10-K for the year ended January 3, 1993; Subordinated Convertible Note dated December 22, 1992, originally filed as Exhibit 10.20(b) to Form 10-K for the year ended January 3, 1993; Registration Rights Agreement with The 1818 Fund, L.P., originally filed as Exhibit 10.20(c) to Form 10-K for the year ended January 3, 1993; and Standstill Agreement dated April 28, 1992 with Brown Brothers Harriman & Co. and The 1818 Fund, L.P., originally filed as Exhibit 10.20(d) to Form 10-K for the year ended January 3, 1993 (incorporated herein by reference to Exhibit 10.22 to Form 10-K for the year ended January 2, 1994). 10.23(a) Credit Agreement dated as of April 11, 1995 among the registrant, Ekco Housewares, Inc., Frem Corporation, Fleet Bank of Massachusetts, N.A., as agent, and the Lenders party thereto (incorporated herein by reference to Exhibit 10.28 to Form 10-Q for the quarterly period ended April 2, 1995). 10.23(b) First Amendment to Revolving Credit Agreement dated as of December 31, 1995 (incorporated herein by reference to Exhibit 10.28(b) to Form 8-K as of December 31, 1995). 10.23(c) Second Amendment to Credit Agreement dated as of March 25, 1996. 11 Statement re computation of per share earnings. (Reference is made to Note 13 of Notes to Consolidated Financial Statements in Exhibit 13 hereto.) 13 1995 Annual Report to Stockholders (Sections entitled "Common Stock Price Range and Dividends," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Results of Operations and Financial Condition," "Consolidated Balance Sheets," "Consolidated Statement of Operations," "Consolidated Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements", and "Report of Independent Auditors"). 21 Subsidiaries of the registrant. 23 Consent of KPMG Peat Marwick LLP.
28 30 27 Financial Data Schedule. - -------------------------------------------------------------------------------- Schedules to Exhibits 10,21, 10.22, 10.23(a) and 10.23(c) will be supplied upon request by the Commission. THE FOREGOING EXHIBITS WILL NOT BE INCLUDED IN COPIES OF THIS ANNUAL REPORT ON FORM 10-K SUPPLIED TO STOCKHOLDERS. A COPY OF THESE EXHIBITS WILL BE FURNISHED TO STOCKHOLDERS UPON WRITTEN REQUEST ADDRESSED TO JOHN T. HARAN, VICE PRESIDENT AND TREASURER, EKCO GROUP, INC., 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062. 29 31 INDEX TO EXHIBITS FILED WITH FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Exhibit No. Description - ----------- ----------- 3.1(i)(a) Restated Certificate of Incorporation dated February 17, 1987, as amended, originally filed as Exhibit 3.1(a) to Form 10-K for the year ended December 31, 1989. 4.2(a) Indenture dated as of March 25, 1996 among the registrant, its U.S. operating subsidiaries and Fleet National Bank of Connecticut. 4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit 4.2(a). 4.2(c) Registration Rights Agreement dated as of March 25, 1996 among the registrant, its U.S. operating subsidiaries, Bear, Stearns & Co. Inc. and Smith Barney Inc. 4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase Plan. 10.1(c)(2) Schedule to Form of Restricted Stock Purchase Agreement. 10.1(c)(3) Form of Amendment to Restricted Stock Purchase Agreement. 10.1(d) Form of Restricted Stock Purchase Agreement, as amended, for the quarterly purchase of restricted stock. 10.2(b)(1)* Form of Non-Qualified Stock Option and Repurchase Agreement dated as of September 8, 1987, as amended. 10.2(b)(2)* Form of Non-Qualified Stock Option and Repurchase Agreement dated various dates, as amended. 10.3(b) Schedule to Form of Indemnity Agreement. 10.4* Ekco Group, Inc. 1988 Directors' Stock Option Plan, originally filed as Exhibit 10.15 to Form 10-K for the year ended December 31, 1989, as amended. 10.5(b) ESOP Loan Agreement dated as of October 1, 1990, originally filed as Exhibit 10.10(c) to Form 10-K for the year ended December 30, 1990. 10.5(c) ESOP Loan Agreement dated as of March 30, 1995. 10.14(b)* Schedule to Form of Split Dollar Agreement. 10.15* Severance Agreement with Richard J. Corbin dated September 28, 1995.
30 32 INDEX TO EXHIBITS FILED WITH FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Exhibit No. Description - ----------- ----------- 10.16* Severance Agreement with Ronald N. Fox dated September 21, 1995. 10.17(a)* Severance Agreement with Neil R. Gordon dated December 28, 1995 10.17(b)* Consulting Agreement with N.R. Gordon & Company dated December 28, 1995. 10.23(c) Second Amendment to Credit Agreement dated as of March 25, 1996. 11 Statement re computation of per share earnings. (Reference is made to Exhibit 13, Note 13 of Notes to Consolidated Financial Statements.) 13 1995 Annual Report to Stockholders (Sections entitled "Common Stock Price Range and Dividends," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Results of Operations and Financial Condition," "Consolidated Balance Sheets," "Consolidated Statement of Operations," "Consolidated Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements" [which includes "Selected Quarterly Financial Data"], and "Report of Independent Auditors"). 21 Subsidiaries of the registrant. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule.
31 EX-3.1.(I)(A) 2 RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1(i)(a) ---------------- Certificate of Amendment of Certificate of Incorporation of CENTRONICS CORPORATION It is hereby certified: 1.The name of the corporation (hereinafter called the "Corporation") is CENTRONICS CORPORATION. 2.Article I of the restated certificate of incorporation of the Corporation is hereby amended by striking out Article FIRST thereof and by substituting in lieu of said Article the following new Article: "FIRST.The name of the corporation is Ekco Group, Inc." 3.The amendment of the restated certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. Signed and attested to on April 26, 1988. CENTRONICS DATA COMPUTER CORP. By: /s/ ROBERT STEIN --------------------------- Robert Stein, President and Chief Executive Officer (Corporate Seal) Attest: By: /s/ JEFFREY A. WEINSTEIN ------------------------------- Jeffrey A. Weinstein, Executive Vice President, Secretary and General Counsel 2 RESTATED CERTIFICATE OF INCORPORATION OF CENTRONICS DATA COMPUTER CORP. CENTRONICS DATA COMPUTER CORP., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is CENTRONICS DATA COMPUTER CORP. The date of filing the Corporation's original Certificate of Incorporation with the Secretary of the State of Delaware was July 3, 1968. 2. The text of the Certificate of Incorporation of the Corporation, as amended or supplemented heretofore and herewith, is hereby restated to read as herein set forth in full: FIRST. The name of the Corporation is Centronics Corporation. SECOND. The address of its registered office in the State of Delaware is 229 South State Street, in the City of Dover, County of Kent. The name of its registered agent at such address is the Prentice-Hall Corporation System, Inc. THIRD. The nature of the business or purpose to be conducted or promoted is: To manufacture, lease, sell, operate and generally deal in and with electronic data processing and computer equipment and devices. To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or Corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any 1 3 business of this Corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise moneys for any of the purposes of the Corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiables or non-negotiable instruments and evidence of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon pledge, conveyance or assignment in trust of the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the Corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the Corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this certificate of incorporation together with any powers incidental thereto, so far as any such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. 2 4 FOURTH. The aggregate number of shares which this Corporation shall have the authority to issue is Sixty Million (60,000,000) shares of Common Stock of the par value of $0.01 per share and Twenty Million (20,000,000) shares of Preferred Stock, of the par value of $0.01 per share. The Preferred Stock may be divided into and issued into series. If the shares of any such class are to be issued in series, then each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Any or all of the series of any such class and variations and the relative rights and preferences as between different series can be fixed and determined by the Board of Directors. The authority of the Board of Directors with respect to each series shall include, without limitation thereto, the determination of any or all of the following and the shares of each series may vary from the shares of any other series in the following respects: The Board of Directors of this Corporation is hereby authorized to issue the Preferred Stock at any time and from time to time, in one (1) or more series and for such consideration as may be fixed from time to time by the then Board of Directors, but not less than the par value thereof. The number of shares to comprise each such series, which number may be increased (except where otherwise provided by the Board of Directors in creating such series) or decreased (but not below the number of shares thereof then outstanding) shall be determined, from time to time, by the Board of Directors. The Board of Directors is hereby expressly authorized, before issuance of any shares of a particular series, to determine any and all rights, preferences and limitations pertaining to such series including but not limited to: (1) Voting rights, if any, including, without limitation, the authority to confer multiple votes per share, voting rights as to specified matters or issues such as mergers, consolidations or sales of assets, or voting rights to be exercised either together with holders of Common Stock as a single class, or independently as a separate class; (2) Rights, if any, permitting the conversion or exchange of any such shares, at the option of the holder, into any other class or series of shares of this Corporation and the price or prices or the rates of exchange and any adjustment thereto at which such shares will be convertible or exchangeable; (3) The rates of dividends, if any, payable on shares of such series, the conditions and the dates upon which such dividends shall be payable and whether such dividends shall be cumulative or non-cumulative; (4) The amount payable on shares of such series in the event of any liquidation, dissolution or winding up of the affairs of this Corporation; 3 5 (5) Redemption, repurchase, retirement and sinking fund rights, preferences and limitations, if any, the amount payable on shares of such series in the event of such redemption, repurchase or retirement, the terms and conditions of any sinking fund, the manner of creating such fund or funds and whether any of the foregoing shall be cumulative or non-cumulative; and (6) Any other preference and relative, participating, optional or other special rights and qualifications, limitations or restrictions of shares of such series not fixed and determined herein, to the extent permitted to do so by law. All shares of Preferred Stock shall be of equal rank and shall be identical, except with respect to the particulars that may be fixed by the Board of Directors as above provided and as to the date from which dividends thereon, if any, shall be cumulative if made cumulative by the Board of Directors. No stockholder shall be entitled, as a matter of right, to purchase or subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, including, but not limited to, treasury stock, or any notes, debentures, bonds or other securities convertible into or carry warrants or options to purchase shares of any class now or hereafter authorized. Any such securities or additional shares of stock may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion may be deemed advisable. At each election for directors every stockholder entitled to vote at such election shall have the right to cast, in person or by proxy, the number of votes represented by the shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote. Each share of Common Stock shall be entitled to one vote. Cumulative voting, for the election of directors or otherwise, is expressly prohibited. On all matters coming before the shareholders, other than the election of directors, each share of issued and outstanding Common Stock shall be entitled to one (1) vote. FIFTH. The name and mailing address of each incorporator is as follows:
Name Mailing Address ---- --------------- B.J. Consono 100 West Tenth Street Wilmington, Delaware F.J. Obara, Jr. 100 West Tenth Street Wilmington, Delaware A.D. Grier 100 West Tenth Street Wilmington, Delaware
4 6 SIXTH. The Corporation is to have perpetual existence. SEVENTH. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: To make, alter or repeal the by-laws of the Corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the by-laws of the Corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, the by-laws may provide that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called upon such notice as is required by the statute or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all or substantially all of the property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other Corporation or corporations, as its board of directors shall deem expedient and for the best interests of the Corporation. EIGHTH. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the 5 7 provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of creditors or class of creditors, and/or if the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. NINTH. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the Corporation may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the Corporation. Elections of directors need not be by written ballot unless the by-laws of the Corporation shall so provide. TENTH. As authorized by section 102(b)(7) of subsection (b) of Section 102, Title 8, of the Delaware Code, as the same may be interpreted or amended from time to time, no director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Code, or (iv) for any transaction from which the director derived an improper personal benefit. This Article TENTH shall not apply to any act or omission occurring prior to the date this Article TENTH becomes effective. ELEVENTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 3. This Restated Certificate of Incorporation shall become effective upon approval of the stockholders and filing with the Secretary of State. 4. This Restated Certificate of Incorporation was duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 and Section 245 of the General Corporation 6 8 Law of the State of Delaware. IN WITNESS WHEREOF, said CENTRONICS DATA COMPUTER CORP. has caused its corporate seal to be hereto affixed and this Restated Certificate of Incorporation to be signed by Robert Stein, its President, and attested by Edmond Coller, its Secretary, this 13th day of February, 1987. CENTRONICS DATA COMPUTER CORP. By: /s/ ROBERT STEIN --------------------------- Robert Stein, President (Corporate Seal) Attest: By: /s/ EDMOND M. COLLER --------------------------- Edmond M. Coller, Secretary 7 EX-4.2.(A) 3 INDENTURE DATED 3/25/96 1 EXHIBIT 4.2(a) EXECUTION COPY ================================================================================ EKCO GROUP, INC., Issuer, and THE GUARANTORS NAMED HEREIN and FLEET NATIONAL BANK OF CONNECTICUT, Trustee ------------------- INDENTURE Dated as of March 25, 1996 ------------------- $125,000,000 9 1/4% Senior Notes due 2006 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................... 1 SECTION 1.1 Definitions............................................ 1 SECTION 1.2 Incorporation by Reference of TIA...................... 27 SECTION 1.3 Rules of Construction.................................. 27 ARTICLE II THE SECURITIES........................................................... 28 SECTION 2.1 Form and Dating........................................ 28 SECTION 2.2 Execution and Authentication........................... 28 SECTION 2.3 Registrar and Paying Agent............................. 30 SECTION 2.4 Paying Agent to Hold Assets in Trust................... 30 SECTION 2.5 Securityholder Lists................................... 31 SECTION 2.6 Transfer and Exchange.................................. 31 SECTION 2.7 Replacement Securities................................. 34 SECTION 2.8 Outstanding Securities................................. 40 SECTION 2.9 Treasury Securities.................................... 40 SECTION 2.10 Temporary Securities................................... 41 SECTION 2.11 Cancellation........................................... 41 SECTION 2.12 Defaulted Interest..................................... 41 ARTICLE III REDEMPTION............................................................... 43 SECTION 3.1 Right of Redemption.................................... 43 SECTION 3.2 Notices to Trustee..................................... 44 SECTION 3.3 Selection of Securities to Be Redeemed................. 44 SECTION 3.4 Notice of Redemption................................... 45 SECTION 3.5 Effect of Notice of Redemption......................... 46 SECTION 3.6 Deposit of Redemption Price............................ 47 SECTION 3.7 Securities Redeemed in Part............................ 47
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Page ---- ARTICLE IV COVENANTS................................................................. 48 SECTION 4.1 Payment of Securities................................... 48 SECTION 4.2 Maintenance of Office or Agency......................... 48 SECTION 4.3 Limitation on Restricted Payments. .................... 49 SECTION 4.4 Corporate Existence..................................... 51 SECTION 4.5 Payment of Taxes and Other Claims....................... 51 SECTION 4.6 Maintenance of Properties and Insurance................. 52 SECTION 4.7 Compliance Certificate; Notice of Default............... 52 SECTION 4.8 Reports and Other Information........................... 53 SECTION 4.9 Limitation on Status as Investment Company................................................. 54 SECTION 4.10 Limitation on Transactions with Affiliates.............. 54 SECTION 4.11 Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock................................................... 55 SECTION 4.12 Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries............. 58 SECTION 4.13 Limitation on Liens..................................... 59 SECTION 4.14 Limitation on Asset Sales............................... 59 SECTION 4.15 Waiver of Stay, Extension or Usury Laws.................................................... 62 SECTION 4.16 Limitation on Sale and Leaseback Transactions............................................ 63 SECTION 4.17 Limitation on Lines of Business......................... 63 SECTION 4.18 Future Guarantors....................................... 63 ARTICLE V SUCCESSOR CORPORATION..................................................... 64 SECTION 5.1 Limitation on Merger, Sale or Consolidation............. 64 SECTION 5.2 Successor Corporation Substituted....................... 64
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Page ---- ARTICLE VI EVENTS OF DEFAULT AND REMEDIES............................................. 65 SECTION 6.1 Events of Default........................................ 65 SECTION 6.2 Acceleration of Maturity Date; Rescission and Annulment.. 68 SECTION 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee............................... 70 SECTION 6.4 Trustee May File Proofs of Claim......................... 70 SECTION 6.5 Trustee May Enforce Claims Without Possession of Securities................................. 71 SECTION 6.6 Priorities............................................... 72 SECTION 6.7 Limitation on Suits...................................... 72 SECTION 6.8 Unconditional Right of Holders to Receive Principal, Premium, Interest and Liquidated Damages................. 73 SECTION 6.9 Rights and Remedies Cumulative........................... 74 SECTION 6.10 Delay or Omission Not Waiver............................. 74 SECTION 6.11 Control by Holders....................................... 74 SECTION 6.12 Waiver of Past Default................................... 75 SECTION 6.13 Undertaking for Costs.................................... 75 SECTION 6.14 Restoration of Rights and Remedies....................... 76 ARTICLE VII TRUSTEE.................................................................... 76 SECTION 7.1 Duties of Trustee........................................ 76 SECTION 7.2 Rights of Trustee........................................ 78 SECTION 7.3 Individual Rights of Trustee............................. 79 SECTION 7.4 Trustee's Disclaimer..................................... 79 SECTION 7.5 Notice of Default........................................ 79 SECTION 7.6 Reports by Trustee to Holders............................ 80 SECTION 7.7 Compensation and Indemnity............................... 80 SECTION 7.8 Replacement of Trustee................................... 81 SECTION 7.9 Successor Trustee by Merger, Etc......................... 83 SECTION 7.10 Eligibility; Disqualification............................ 83 SECTION 7.11 Preferential Collection of Claims Against Company.......................................... 83
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Page ---- ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE; SATISFACTION AND DISCHARGE ............................................................... 83 SECTION 8.1 Option to Effect Legal Defeasance or Covenant Defeasance.................................... 83 SECTION 8.2 Legal Defeasance and Discharge......................... 83 SECTION 8.3 Covenant Defeasance.................................... 84 SECTION 8.4 Conditions to Legal or Covenant Defeasance............. 85 SECTION 8.5 Deposited Cash and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions............................... 87 SECTION 8.6 Repayment to the Company............................... 87 SECTION 8.7 Reinstatement.......................................... 88 SECTION 8.8 Satisfaction and Discharge............................. 88 ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................... 89 SECTION 9.1 Supplemental Indentures Without Consent of Holders..... 89 SECTION 9.2 Amendments, Supplemental Indentures and Waivers with Consent of Holders.................... 90 SECTION 9.3 Compliance with TIA.................................... 92 SECTION 9.4 Revocation and Effect of Consents...................... 92 SECTION 9.5 Notation on or Exchange of Securities.................. 93 SECTION 9.6 Trustee to Sign Amendments, Etc........................ 93 ARTICLE X RIGHT TO REQUIRE REPURCHASE.............................................. 94 SECTION 10.1 Repurchase of Securities at Option of the Holder Upon a Change of Control.................... 94 ARTICLE XI GUARANTEE................................................................ 97 SECTION 11.1 Guarantee.............................................. 97 SECTION 11.2 Execution and Delivery of Guarantee.................... 100
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Page ---- SECTION 11.3 Future Guarantors..................................... 100 SECTION 11.4 Release of a Guarantor................................ 101 SECTION 11.5 Certain Bankruptcy Events............................. 101 SECTION 11.6 Ranking of Guarantee.................................. 102 ARTICLE XII MISCELLANEOUS........................................................... 102 SECTION 12.1 TIA Controls.......................................... 102 SECTION 12.2 Notices............................................... 102 SECTION 12.3 Communications by Holders with Other Holders............................................... 103 SECTION 12.4 Certificate and Opinion as to Conditions Precedent.... 103 SECTION 12.5 Statements Required in Certificate or Opinion............................................... 104 SECTION 12.6 Rules by Trustee, Paying Agent, Registrar............. 104 SECTION 12.7 Non-Business Days..................................... 104 SECTION 12.8 Governing Law......................................... 105 SECTION 12.9 No Adverse Interpretation of Other Agreements............................................ 105 SECTION 12.10 No Recourse Against Others............................ 105 SECTION 12.11 Successors............................................ 106 SECTION 12.12 Duplicate Originals................................... 106 SECTION 12.13 Severability.......................................... 106 SECTION 12.14 Table of Contents, Headings, Etc...................... 106 SECTION 12.15 Qualification of Indenture............................ 106 SECTION 12.16 Registration Rights................................... 107 SIGNATURES.............................................................. 108 EXHIBIT A - FORM OF SECURITY............................................ A-1
v 7 CROSS-REFERENCE TABLE
TIA Indenture Section Section - ------- --------- 310(a)(1)......................................................... 7.10 (a)(2)......................................................... 7.10 (a)(3)......................................................... N.A. (a)(4)......................................................... N.A. (a)(5)......................................................... 7.10 (b)............................................................ 7.8; 7.10 (c) ........................................................... N.A. 311(a)............................................................ 7.11 (b)............................................................ 7.11 (c) ........................................................... N.A. 312(a)............................................................ 2.5 (b)............................................................ 12.3 (c) ........................................................... 12.3 313(a)............................................................ 7.6 (b)(1)......................................................... N.A. (b)(2)......................................................... 7.6 (c) ........................................................... 7.6; 12.2 (d)............................................................ 7.6 314(a)............................................................ 4.7(a); 4.8; 11.2 (b)............................................................ N.A. (c)(1)......................................................... 2.2; 7.2; 12.4 (c)(2)......................................................... 7.2; 12.4 (c)(3)......................................................... N.A. (d)............................................................ N.A. (e) ........................................................... 12.5 (f) ........................................................... N.A.
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TIA Indenture Section Section - ------- --------- 315(a)............................................................ 7.1(b) (b)............................................................ 7.5; 7.6; 12.2 (c) 7.1(a) (d)............................................................ 2.8; 6.11; 7.1(b), (c) (e) 6.13 316(a)(last sentence)............................................. 2.9 (a)(1)(A)...................................................... 6.11 (a)(1)(B)...................................................... 6.12 (a)(2)......................................................... N.A. (b)............................................................ 6.12; 6.7 (c) 6.11 317(a)(1)......................................................... 6.3 (a)(2)......................................................... 6.4 (b)............................................................ 2.4 318(a)............................................................ 12.1
- -------------- N.A. means Not Applicable Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. vii 9 INDENTURE, dated as of March 25, 1996, among Ekco Group, Inc., a Delaware corporation (the "Company"), the Guarantors referred to below and Fleet National Bank of Connecticut, as Trustee. Each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders of the Company's 9 1/4% Senior Notes due 2006 to be issued on the Issue Date (the "Initial Securities") and the 9 1/4% Senior Notes due 2006 (the "Exchange Securities") to be exchanged for the Initial Securities in connection with the Exchange Offer (as defined herein): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1 Definitions. "Acceleration Notice" shall have the meaning specified in Section 6.2. "Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of any Person existing at the time such Person becomes a Subsidiary of the Company or is merged or consolidated into or with the Company or one of its Subsidiaries. "Acquisition" means the purchase or other acquisition of any Person or substantially all the assets of any Person by any other Person, whether by purchase, merger, consolidation or other transfer, and whether or not for consideration. "Affiliate" means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. For purposes of this definition, the term "control" means the power to direct the management and policies of a Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract or otherwise, provided that a beneficial owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to constitute control. 10 "Affiliate Transaction" shall have the meaning specified in Section 4.10. "Agent" means any Registrar, Paying Agent or co- Registrar. "Asset Sale" means, with respect to any Person, the sale, lease, disposition or other transfer by such Person of any of its property or assets (including a Sale and Leaseback Transaction or the sale or other transfer of any Capital Stock of any Subsidiary) other than (i) the sale, lease, disposition or other transfer of obsolete, damaged, materially worn or unusable equipment in the ordinary course of business consistent with past practice, (ii) the sale, lease, disposition or other transfer of inventory acquired and held for resale in the ordinary course of business consistent with past practice, (iii) the issuance by the Company of its Capital Stock, (iv) Investments in compliance with Section 4.3 hereof, (v) the sale, lease, disposition or other transfer of all or substantially all of the assets of the Company governed by the provisions of Article V hereof, (vi) Sale and Leaseback Transactions in compliance with clause (a) of Section 4.16 hereof, (vii) the sale, lease, disposition or other transfer of any property or assets by a Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned Guarantor, (viii) the sale, lease, disposition or other transfer of the property classified as "Property held for sale or lease" in the Company's audited Consolidated Financial Statements for the fiscal year ended December 31, 1995, and without giving effect to any events that may occur subsequent to the date of such Consolidated Financial Statements and (ix) the sale of the Capital Stock of an Unrestricted Subsidiary. "Asset Sale Offer" shall have the meaning specified in Section 4.14. "Asset Sale Offer Period" shall have the meaning specified in Section 4.14. "Asset Sale Offer Price" shall have the meaning specified in Section 4.14. "Asset Sale Payment Date" shall have the meaning specified in Section 4.14. 2 11 "Attributable Indebtedness" means, with respect to any particular lease under which any Person is at the time liable and at any date as of which the amount thereof is to be determined, the present value of the total net amount of rent required to be paid by such Person under the lease during the primary term thereof, without giving effect to any renewals at the option of the lessee, discounted from the respective due dates thereof to such date at the rate of interest per annum implicit in the terms of the lease. As used in the preceding sentence, the net amount of rent under any lease for any such period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease which is terminable by the lessee upon payment of a penalty, such net amount of rent shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "Average Life" means, as of the date of determination, with respect to any security or instrument, the quotient obtained by dividing (i) the sum of the product of (a) the number of years from the date of determination to the date or dates of each successive scheduled principal (or redemption) payment of such security or instrument and (b) the amount of each such respective principal (or redemption) payment by (ii) the sum of all such principal (or redemption) payments. "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal, state or foreign law for the relief of debtors. "Beneficial Owner," for purposes of the definition of Change of Control, has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or not applicable, except that a "person" (as such term is used for purposes of such Rules) shall be deemed to have "beneficial ownership" of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. 3 12 "Board of Directors" means, with respect to any Person, the Board of Directors of such Person or any committee of the Board of Directors of such Person authorized, with respect to any particular matter, to exercise the power of the Board of Directors of such Person. With respect to any Person that is not organized as a corporation, "Board of Directors" shall refer to the entity or entities having similar powers. "Board Resolution" means, with respect to any Person, a duly adopted resolution of the Board of Directors of such Person. "Borrowing Base" means, as of any date, an amount equal to (a) the "Borrowing Base" as defined in the Credit Agreement or, if not so defined in the Credit Agreement, (b) any amount equal to the sum of (i) 85% of all eligible accounts receivable owned by the Company or any of its Subsidiaries as of such date that are not more than 90 days past due, plus (ii) 60% of the book value of all inventory owned by the Company or any of its Subsidiaries as of such date, all as calculated on a consolidated basis and in accordance with GAAP. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York or the city in which the principal office of the Trustee is located are authorized or obligated by law or executive order to close. "Capitalized Lease Obligation" means rental obligations under a lease that are required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligations shall be the capitalized amount of such obligations, as determined in accordance with GAAP. "Capital Stock" means, (i) with respect to any Person formed as a corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation and (ii) with respect to any Person formed other than as a corporation, any and all partnership or other equity interests of such Person. 4 13 "Cash" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Cash Equivalent" means (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) maturing within one year after the date of acquisition, (ii) time deposits, certificates of deposit, bankers' acceptances and commercial paper issued by the parent corporation of any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million, in each case maturing within one year after the date of acquisition, (iii) commercial paper issued by any other issuer which is rated (A) in the case of commercial paper which matures one year or more after the date of acquisition, at least A-1 or the equivalent thereof by Standard & Poor's Corporation ("S&P") or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc. ("Moody's"), or (B) in the case of commercial paper which matures within one year after the date of acquisition, at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i) and (ii) above entered into with any commercial bank meeting the qualifications specified in clause (ii) above and (v) shares of any money market fund, or similar fund, in each case having assets in excess of $500 million, which invests predominantly in investments of the type described in clauses (i), (ii), (iii) or (iv) above. "Change of Control" means (i) any sale, merger or consolidation with or into any Person or any transfer or other conveyance, whether direct or indirect, of all or substantially all of the assets of the Company, on a consolidated basis, in one transaction or in a series of related transactions, if, immediately after giving effect to such transaction, any "person" or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is or becomes the "beneficial owner," directly or indirectly, of more than 50% of the total voting power in the aggregate normally entitled to vote in the election of directors, managers or trustees, as applicable, of the transferee or surviving entity, (ii) any "person" or "group" (as such terms are used for purposes of 5 14 Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is or becomes the "beneficial owner," directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of Capital Stock of the Company then outstanding normally entitled to vote in elections of directors or (iii) during any period of 12 consecutive months after the Issue Date, individuals who at the beginning of any such 12-month period constituted the Board of Directors of the Company (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election, recommendation, or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office. "Change of Control Offer" shall have the meaning specified in Section 10.1. "Change of Control Offer Period" shall have the meaning specified in Section 10.1. "Change of Control Purchase Date" shall have the meaning specified in Section 10.1. "Change of Control Purchase Price" shall have the meaning specified in Section 10.1. "Change of Control Put Date" shall have the meaning specified in Section 10.1. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to the Indenture, and thereafter means such successor. "Consolidated EBITDA" means, with respect to any Person, for any period, the Consolidated Net Income of such Person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of (i) consolidated income tax expense for such period, (ii) consolidated depreciation and amortization expense for such period, (iii) 6 15 non-cash charges of such Person and its Consolidated Subsidiaries during such period less the amount of all cash payments made during such period to the extent such payments relate to non-cash charges that were added back in determining Consolidated EBITDA for such period, (iv) Consolidated Interest Expense for such period and (v) to the extent not excluded from the Consolidated Net Income of such Person for such period, losses (determined on a consolidated basis in accordance with GAAP) (1) which are either extraordinary (as determined in accordance with GAAP) or are unusual or nonrecurring or (2) from Asset Sales or other dispositions of assets not in the ordinary course of business, up to an aggregate of $6.0 million for such period. "Consolidated Interest Coverage Ratio" of any Person on any date of determination (the "Transaction Date") means the ratio, on a pro forma basis, of (a) the aggregate amount of Consolidated EBITDA of such Person attributable to continuing operations and businesses (exclusive of amounts, whether positive or negative, attributable to operations and businesses permanently discontinued or disposed of) for the Reference Period to (b) the aggregate Consolidated Interest Expense of such Person (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of, but only to the extent that the obligations giving rise to such Consolidated Interest Expense would no longer be obligations contributing to such Person's Consolidated Interest Expense subsequent to the Transaction Date) during the Reference Period; provided, that for purposes of such calculation, (i) Acquisitions which occurred during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date (including any Consolidated EBITDA associated with such Acquisition) shall be assumed to have occurred on the first day of the Reference Period, (ii) transactions giving rise to the need to calculate the Consolidated Interest Coverage Ratio shall be assumed to have occurred on the first day of the Reference Period, (iii) the incurrence or repayment of any Indebtedness or issuance of any Disqualified Capital Stock during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date (and the application of the proceeds therefrom to the extent used to refinance or retire other Indebtedness), other than under a revolving credit or similar facility to the extent that the proceeds were used to finance working capital requirements in the ordinary course of business, shall be assumed to have occurred on the first day of such Reference Period and (iv) 7 16 the Consolidated Interest Expense of such Person attributable to interest on any Indebtedness or dividends on any Disqualified Capital Stock bearing a floating interest (or dividend) rate shall be computed on a pro forma basis as if the rate in effect on the Transaction Date had been the applicable rate for the entire period, unless such Person or any of its Subsidiaries is a party to a Hedging and Interest Swap Obligation (which shall remain in effect for the 12-month period immediately following the Transaction Date) that has the effect of fixing the interest rate on the date of computation, in which case such rate (whether higher or lower) shall be used. "Consolidated Interest Expense" of any Person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of such Person and its Consolidated Subsidiaries during such period, including (i) original issue discount and noncash interest payments or accruals on any Indebtedness, (ii) the interest portion of all deferred payment obligations and (iii) all commissions, discounts and other fees and charges owed with respect to bankers' acceptances and letters of credit financing and currency and Hedging and Interest Swap Obligations, in each case to the extent attributable to such period and (b) the amount of dividends accrued or payable (other than in additional shares of such Preferred Stock) by such Person or any of its Consolidated Subsidiaries in respect of Preferred Stock (other than by Subsidiaries of such Person to such Person or such Person's Consolidated Subsidiaries). For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, (y) interest expense attributable to any Indebtedness represented by the guaranty by such Person or a Subsidiary of such Person of an obligation of another Person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed, and (z) dividends in respect of Preferred Stock shall be deemed to be an amount equal to the actual dividends paid divided by one minus the applicable actual combined Federal, state, local and foreign income tax rate of the Company and its Consolidated Subsidiaries (expressed as a decimal). 8 17 "Consolidated Net Income" means, with respect to any Person for any period, the net income (or loss) of such Person and its Consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, (i) adjusted to exclude (only to the extent included in computing such net income (or loss) and without duplication): (a) net gains (but not net losses) from Asset Sales and other dispositions of assets not in the ordinary course of business; (b) net gains (but not net losses) which are either extraordinary (as determined in accordance with GAAP) or are either unusual or nonrecurring, (c) the net income, if positive, of any other Person accounted for by the equity method of accounting, except to the extent of the amount of any dividends or distributions actually paid in cash to such Person or a Consolidated Subsidiary of such Person during such period, but in any case not in excess of such Person's pro rata share of such Person's net income for such period, (d) the net income, if positive, of any Person acquired in a pooling-of-interests transaction for any period prior to the date of such acquisition, (e) the net income, if positive, of any of such Person's Consolidated Subsidiaries in the event and solely to the extent that the declaration or payment of dividends or similar distributions is not at the time permitted by operation of the terms of its charter or bylaws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Consolidated Subsidiary, (f) all gains (but not losses) from currency exchange transactions not in the ordinary course of business consistent with past practice, (g) any non-cash expense determined in accordance with GAAP in connection with a transaction between the Company and the ESOP and (h) Refinancing Expenses; and (ii) adjusted to include the amount of any dividends or distributions actually paid in cash to such Person or a Consolidated Subsidiary of such Person by an Unrestricted Subsidiary in an amount not to exceed such Person's pro rata share of such Unrestricted Subsidiary's net income. "Consolidated Net Worth" of any Person at any date means the aggregate consolidated stockholders' equity of such Person (plus amounts of equity attributable to Preferred Stock) and its Consolidated Subsidiaries, as would be shown on the consolidated balance sheet of such Person prepared in accordance with GAAP, adjusted to exclude (to the extent included in calculating such equity), (a) the amount of any such stockholders' equity attributable to Disqualified Capital Stock or treasury stock of such Person and its 9 18 Consolidated Subsidiaries, (b) all upward revaluations and other write-ups in the book value of any asset of such Person or a Consolidated Subsidiary of such Person subsequent to the Issue Date and (c) all investments in Subsidiaries that are not Consolidated Subsidiaries and in Persons that are not Subsidiaries. "Consolidated Subsidiary" means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such Person in accordance with GAAP. "Covenant Defeasance" shall have the meaning specified in Section 8.3. "Credit Agreement" means the credit agreement dated as of April 11, 1995, as amended on the Issue Date, by and among the Company, the Guarantors, certain financial institutions, and Fleet Bank of Massachusetts, N.A., as agent, providing for an aggregate $75.0 million revolving credit facility, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Credit Agreement" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Agreement and all refundings, refinancings and replacements of any such Credit Agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder, provided that on the date such Indebtedness is incurred it would not be prohibited by paragraph (c) of Section 4.11 hereof or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms hereof. 10 19 "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Default" means any event or condition that is, or after notice or passage of time or both would be, an Event of Default. "Defaulted Interest" shall have the meaning specified in Section 2.12. "Definitive Securities" means Securities that are in the form of Security attached hereto as Exhibit A that do not include the information called for by footnotes 1 and 5 thereof. "Depository" means, with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 2.3 as the Depository with respect to the Securities, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depository" shall mean or include such successor. "Disqualified Capital Stock" means (a) except as set forth in (b), with respect to any Person, Capital Stock of such Person that, by its terms or by the terms of any security into which it is then convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased (including at the option of the holder thereof) by such Person or any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the Securities and (b) with respect to any Subsidiary of such Person (including with respect to any Subsidiary of the Company), any Capital Stock other than any common stock with no preference, privileges, or redemption or repayment provisions. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ESOP" means the Ekco Group, Inc. Employee Stock Ownership Plan or any successor employee stock ownership plan having terms similar to the foregoing, as amended from time to time by a resolution of the Board of Directors of the Company or a duly authorized committee thereof. 11 20 "Event of Default" shall have the meaning specified in Section 6.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. "Exchange Offer" shall mean the offer by the Company and the Guarantors to exchange Exchange Securities for the Initial Securities pursuant to the Registration Rights Agreement. "Exchange Securities" means the 9 1/4% Senior Notes due 2006 to be issued pursuant to this Indenture in connection with the Exchange Offer. "Excess Proceeds" shall have the meaning specified in Section 4.14(b). "Exempted Affiliate Transaction" means (a) transactions solely between the Company and any of its wholly owned Subsidiaries or solely among wholly owned Subsidiaries of the Company, (b) transactions permitted under Section 4.3 hereof, (c) customary employee compensation arrangements approved by a majority of independent (as to such transactions) members of the Board of Directors of the Company and (d) reasonable fees and compensation paid to, and indemnities to, and directors and officers and ERISA-based fiduciary liability insurance provided on behalf of, officers, directors, agents or employees of the Company or any of its Subsidiaries or the ESOP or any trustee thereof, in each case in the ordinary course of business and as determined in good faith by the Board of Directors of the Company. "Foreign Subsidiary" means any Subsidiary of the Company that (a) is not organized under the laws of the United States, any state thereof or the District of Columbia, (b) conducts its principal operations outside the United States and (c) has not, directly or indirectly, secured the payment of, guaranteed, assumed or in any manner become liable with respect to any Indebtedness of the Company or any Guarantor or any other Person organized under the laws of the United States. "Foreign Subsidiary Borrowing Base" means, with respect to any Foreign Subsidiary, as of any date, an amount equal to the sum of (i) 80% of all eligible accounts receiv- 12 21 able owned by such Foreign Subsidiary or any of its Subsidiaries as of such date that are not more than 90 days past due, plus (ii) 50% of the book value of all inventory owned by such Foreign Subsidiary or any of its Subsidiaries as of such date, all as calculated on a consolidated basis and in accordance with GAAP. "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession as in effect on the Issue Date. "Global Security" means a Security that contains the paragraph referred to in footnote 1 and the additional schedule referred to in footnote 5 to the form of Security attached hereto as Exhibit A. "Guarantors" means (i) the Initial Guarantors identified in the following sentence and (ii) any future Guarantors that become Guarantors pursuant to the terms of this Indenture, but excluding any Person whose Guarantee have been released pursuant to the terms of this Indenture and excluding any Unrestricted Subsidiary. The Initial Guarantors consist of: B. Via International Housewares, Inc., a Delaware corporation, Cleaning Specialty Company, a Tennessee corporation, Ekco Distribution of Illinois, Inc., a Delaware corporation, Ekco Housewares, Inc., a Delaware corporation, Ekco Manufacturing of Ohio, Inc., a Delaware corporation, Frem Corporation, a Massachusetts corporation, Kellogg Brush Manufacturing Co., a Massachusetts corporation, Woodstream Corporation, a Pennsylvania corporation, and Wright-Bernet, Inc., an Ohio corporation. "Guarantee" shall have the meaning provided in Section 11.1. "Hedging and Interest Swap Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. 13 22 "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Indebtedness" of any Person means, without duplication: (a) all liabilities and obligations, contingent or otherwise, of any such Person, (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, except (other than accounts payable or other obligations to trade creditors which have remained unpaid for greater than 90 days past their original due date, unless contested in good faith) those incurred in the ordinary course of its business that would constitute ordinarily a trade payable to trade creditors, (iv) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, (v) for the payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement obligation of such Person with respect to any letter of credit; (b) all net obligations of such Person under Hedging and Interest Swap Obligations; (c) all liabilities and obligations of others of the kind described in the preceding clauses (a) or (b) that such Person has guaranteed or that is otherwise its legal liability or which are secured by any assets or property of such Person; and (d) all immediately enforceable obligations to purchase, redeem or acquire any Capital Stock of such Person (other than, in the case of the Company or any of its Subsidiaries, obligations under the Restricted Stock Plans or the Stock Option Plans). "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Independent Committee" shall have the meaning set forth in Section 4.10. "Initial Purchasers" means Bear, Stearns & Co. Inc. and Smith Barney Inc. "Initial Securities" means the 9 1/4% Senior Notes due 2006, as supplemented from time to time in accordance with the terms hereof, issued on the Issue Date. 14 23 "Interest Payment Date" means the stated due date of an installment of interest and Liquidated Damages, if any, on the Securities. "Investment" by any person in any other person means (without duplication): (a) the acquisition (whether by purchase, merger, consolidation or otherwise) by such Person (whether for cash, property, services, securities or otherwise) of Capital Stock, bonds, notes, debentures, partnership or other ownership interests or other securities, including any options or warrants, of such other Person or any agreement to make any such acquisition; (b) the making by such Person of any deposit with, or advance, loan or other extension of credit to, such other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other Person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable or deposits arising in the ordinary course of business); (c) other than guarantees of Indebtedness of the Company or any Guarantor to the extent permitted by Section 4.11 hereof, the entering into by such Person of any guarantee of, or other credit support or contingent obligation with respect to, Indebtedness or other liability of such other Person; (d) the making of any capital contribution by such Person to such other Person; and (e) the designation by the Board of Directors of the Company of any Person to be an Unrestricted Subsidiary. The Company shall be deemed to make an Investment in an amount equal to the fair market value of the net assets of any subsidiary (or, if neither the Company nor any of its Subsidiaries has theretofore made an Investment in such subsidiary, in an amount equal to the Investments being made), at the time that such subsidiary is designated an Unrestricted Subsidiary, and any assets or property transferred to an Unrestricted Subsidiary from the Company or a Subsidiary shall be deemed an Investment valued at its fair market value at the time of such transfer. "Issue Date" means the date of first issuance of the Securities under this Indenture. "Legal Defeasance" shall have the meaning specified in Section 8.2. "Lien" means any mortgage, lien, pledge, charge, security interest, or other encumbrance of any kind, whether 15 24 or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement and any lease deemed to constitute a security interest and any option or other agreement to give any security interest). "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Maturity Date" means, when used with respect to any Security, the date specified on such Security as the fixed date on which the final installment of principal of such Security is due and payable (in the absence of any acceleration thereof pursuant to the provisions of this Indenture regarding acceleration of Indebtedness or any redemption thereof pursuant to Article III of this Indenture, or any Change of Control Offer or Asset Sale Offer). "Net Cash Proceeds" means the aggregate amount of Cash and Cash Equivalents received by the Company in the case of a sale of Qualified Capital Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus, in the case of an issuance of Qualified Capital Stock upon any exercise, exchange or conversion of securities (including options, warrants, rights and convertible or exchangeable debt) of the Company that were issued for cash on or after the Issue Date, the amount of cash originally received by the Company upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt) less, in each case, the sum of all payments, fees, commissions and (in the case of Asset Sales, reasonable and customary) expenses (including, without limitation, the fees and expenses of legal counsel and investment banking fees and expenses) incurred in connection with such Asset Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only, less the amount (estimated reasonably and in good faith by the Company) of income, franchise, sales and other applicable taxes required to be paid by the Company or any of its respective Subsidiaries in connection with such Asset Sale. "Non-Recourse Indebtedness" means Indebtedness or that portion of Indebtedness (i) as to which neither the Company nor any of its Subsidiaries (a) provide credit support (including any undertaking, agreement or instrument which would constitute Indebtedness), (b) is directly or 16 25 indirectly liable or (c) constitutes the lender and (ii) with respect to which no default would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Subsidiary to declare a default on such other Indebtedness or cause the payment therefor to be accelerated or payable prior to its stated maturity. "Notice of Default" shall have the meaning specified in Section 6.1(4). "Obligation" means any principal, premium, interest, penalties, fees, reimbursements, damages, indemnification and other liabilities relating to obligations of the Company or any Guarantor under the Securities, the Guarantees or this Indenture, including any Liquidated Damages pursuant to the Registration Rights Agreement. "Officer" means, with respect to the Company or a Guarantor, the Chief Executive Officer, the President, any Executive or Senior Vice President, the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of the Company or such Guarantor. "Officers' Certificate" means, with respect to the Company or a Guarantor, a certificate signed by two Officers or by an Officer and an Assistant Secretary of the Company or such Guarantor (as applicable) and otherwise complying with the requirements of Sections 12.4 and 12.5. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee complying with the requirements of Sections 12.4 and 12.5. "outstanding," as used with reference to the Securities shall have the meaning specified in Section 2.8. "Paying Agent" shall have the meaning specified in Section 2.3. "Permitted Lien" means any of the following: (a) Liens existing on the Issue Date; (b) Liens imposed by governmental authorities for taxes, assessments or other charges not yet subject to penalty or which are being contested in good faith and by appropriate proceedings, if adequate reserves with 17 26 respect thereto are maintained on the books of the Company in accordance with GAAP; (c) statutory Liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other like Liens arising by operation of law in the ordinary course of business provided that (i) the underlying obligations are not overdue for a period of more than 30 days or (ii) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP; (d) Liens securing the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements, rights-of-way, zoning, similar restrictions and other similar encumbrances or title defects which, singly or in the aggregate, do not in any case materially detract from the value of the property, subject thereto (as such property is used by the Company or any of its Subsidiaries) or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (f) Liens arising by operation of law in connection with judgments, only to the extent, for an amount and for a period not resulting in an Event of Default with respect thereto; (g) pledges or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security legislation; (h) Liens on the property or assets of a Person existing at the time such Person becomes a Subsidiary or is merged with or into the Company or a Subsidiary, provided in each case that such Liens were in existence prior to the date of such acquisition, merger or consolidation, were not incurred in anticipation thereof and do not extend to any other assets; 18 27 (i) Liens on property or assets existing at the time of the acquisition thereof by the Company or any of its Subsidiaries, provided that such Liens were in existence prior to the date of such acquisition and were not incurred in anticipation thereof; (j) Liens securing Refinancing Indebtedness incurred to refinance any Indebtedness that was previously so secured in a manner no more adverse to the Holders of the Securities than the terms of the Liens securing such refinanced Indebtedness; (k) Liens securing Indebtedness permitted to be incurred under clauses (c), (i), (j) and (l) of Section 4.11 hereof; (l) Liens securing Purchase Money Indebtedness or Capitalized Lease Obligations permitted to be incurred under clause (d) or (k) of Section 4.11 hereof; (m) Liens in favor of the Company or any Guarantor; and (n) Liens securing the Securities or the Guarantees. "Person" or "person" means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "principal" of any Indebtedness means the principal of such Indebtedness plus, without duplication, any applicable premium, if any, on such Indebtedness. "Pro Rata Portion" shall have the meaning set forth in Section 11.1(d). "property" means any right or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Purchase Money Indebtedness" means Indebtedness of the Company, the Guarantors or the Foreign Subsidiaries to the extent that (i) such Indebtedness is incurred in connection with the acquisition of specified assets and 19 28 property (the "Subject Assets") for the business of the Company, the Guarantors or the Foreign Subsidiaries, including Indebtedness which existed at the time of the acquisition of such Subject Asset and was assumed in connection therewith, and (ii) the Liens securing such Indebtedness are limited to the Subject Asset. "Qualified Capital Stock" means any Capital Stock of the Company that is not Disqualified Capital Stock. "Qualified Exchange" means any legal defeasance, redemption, retirement, repurchase or other acquisition of Capital Stock or Subordinated Indebtedness of the Company issued on or after the Issue Date with the Net Cash Proceeds received by the Company from the substantially concurrent (i.e., within 60 days) sale (other than to a Subsidiary of the Company or the ESOP) of Qualified Capital Stock or any issuance of Qualified Capital Stock in exchange for any Capital Stock or Subordinated Indebtedness issued on or after the Issue Date. "Record Date" means a Record Date specified in the Securities whether or not such Record Date is a Business Day. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to Article III of this Indenture and Paragraph 5 in the form of Security. "Redemption Price," when used with respect to any Security to be redeemed, means the redemption price for such redemption pursuant to Paragraph 5 in the form of Security, which shall include, without duplication, in each case, accrued and unpaid interest to the Redemption Date. "Reference Period" with regard to any Person means the four full fiscal quarters (or such lesser period during which such Person has been in existence) of such Person ended immediately preceding any date upon which any determination is to be made pursuant to the terms of the Securities or this Indenture. "Refinancing Expenses" means any premiums paid in connection with any repayment, repurchase, redemption or defeasance of the 12.70% Notes or the 7.0% Note. 20 29 "Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock (a) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, discharge or otherwise retire for value, in whole or in part, or (b) constituting an amendment, modification or supplement to, or a deferral or renewal of (each of (a) and (b) above is a "Refinancing"), any Indebtedness or Disqualified Capital Stock in a principal amount or, in the case of Disqualified Capital Stock, liquidation preference, not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of (i) the principal amount or, in the case of Disqualified Capital Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock so refinanced and (ii) if such Indebtedness being refinanced was issued with an original issue discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such Refinancing; provided, that (A) such Refinancing Indebtedness of any Subsidiary of the Company shall only be used to refinance outstanding Indebtedness or Disqualified Capital Stock of such Subsidiary, (B) Refinancing Indebtedness shall (x) not have an Average Life shorter than the Indebtedness or Disqualified Capital Stock to be so refinanced at the time of such Refinancing and (y) in all respects, be no less subordinated or junior, if applicable, to the rights of Holders of the Securities than was the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such Refinancing Indebtedness shall have no installment of principal (or redemption payment) scheduled to come due earlier than the scheduled maturity of any installment of principal of the Indebtedness or Disqualified Capital Stock to be so refinanced which was scheduled to come due prior to the Stated Maturity. "Registrar" shall have the meaning specified in Section 2.3. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date hereof, by and among the Company, the Guarantors and the Initial Purchasers, as such agreement may be amended, modified or supplemented from time to time. "Related Business" means the business conducted (or proposed to be conducted) by the Company and its Subsidiaries as of the Issue Date and any and all businesses that 21 30 in the good faith judgment of the Board of Directors of the Company are materially related businesses. "Restricted Investment" means, in one or a series of related transactions, any Investment, other than (i) Investments in Cash Equivalents, (ii) Investments in the Company or a Wholly-Owned Guarantor, (iii) Investments in any Person engaged in a Related Business if, as a consequence of such Investment, (a) such Person becomes a Wholly-Owned Guarantor or (b) such Person is merged, consolidated or amalgamated with or into, or conveys substantially all of its assets to the Company or a Wholly-Owned Guarantor; (iv) loans or advances made in the ordinary course of business to officers, directors, employees or agents of the Company or any of its Subsidiaries not exceeding $2.0 million outstanding in the aggregate at any one time; (v) Investments existing on the Issue Date or (vi) Investments made as a result of the receipt of non-cash consideration from an Asset Sale made pursuant to Section 4.14 hereof. "Restricted Payment" means, with respect to any Person, (a) the declaration or payment of any dividend or other distribution in respect of any Capital Stock of such Person or any Subsidiary of such Person, (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Capital Stock of such Person or any Subsidiary of such Person, (c) other than with the proceeds from the substantially concurrent (i.e., within 60 days) sale of, or in exchange for, Refinancing Indebtedness, any purchase, redemption or other acquisition or retirement for value of, any payment in respect of any amendment of the terms of or any defeasance of, any Subordinated Indebtedness of such Person or any Affiliate or Subsidiary of such Person, directly or indirectly, by such Person or any Subsidiary of such Person prior to the scheduled maturity, any scheduled repayment of principal, or any scheduled sinking fund payment, as the case may be, of such Subordinated Indebtedness and (d) any Restricted Investment by such Person; provided, however, that the term "Restricted Payment" does not include (i) any dividend, distribution or other payment on or with respect to, or on account of the purchase, redemption or other acquisition or retirement for value of, Capital Stock of an issuer to the extent payable solely in shares of Qualified Capital Stock of such issuer or (ii) any dividend, distribution or other payment to the Company or to any of its Wholly-Owned Guarantors by the Company or any of its Subsidiaries. 22 31 "Restricted Stock Plans" shall mean collectively, (i) the 1984 Ekco Group, Inc. Restricted Stock Plan, (ii) the 1985 Ekco Group, Inc. Restricted Stock Plan, (iii) the Company's 1984 Employee Stock Purchase Plan, (iv) the Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its Subsidiaries and (v) comparable plans providing for the issuance of Capital Stock of the Company to officers, directors and employees of the Company and its Subsidiaries having terms similar to the foregoing, each as amended from time to time by a resolution of the Board of Directors of the Company or a duly authorized committee thereof. "Sale and Leaseback Transaction" means any arrangement relating to any property owned on the date of the Indenture or acquired thereafter whereby the Company, a Guarantor or one of their Subsidiaries transfers such property to a Person and leases such property back from such Person. "SEC" means the Securities and Exchange Commission. "Securities" means, collectively, the Initial Securities and, when and if issued as provided in the Registration Rights Agreement, the Exchange Securities. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor entity thereto. "Securityholder" or "Holder" means the Person in whose name a Security is registered on the Registrar's books. "Senior Indebtedness" of the Company or any Guarantor means any Indebtedness of the Company or such Guarantor, whether outstanding on the Issue Date or thereafter created, incurred, assumed or guaranteed by the Company or such Guarantor, other than Indebtedness as to which the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness is subordinated or junior to the Securities. Notwith- 23 32 standing the foregoing, however, in no event shall Senior Indebtedness include (a) Indebtedness to any Subsidiary of the Company or any officer, director or employee of the Company or any Subsidiary of the Company or (b) Indebtedness incurred in violation of the terms of this Indenture. "7.0% Note" shall mean the 7.0% Subordinated Convertible Note due November 30, 2002 of the Company. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article I, Rule 1-02-w of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. "Special Record Date" for payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12. "Stated Maturity," when used with respect to any Security, means April 1, 2006. "Stock Option Plans" shall mean collectively, (i) the Company's 1987 Stock Option Plan, (ii) the Ekco Group, Inc. 1988 Director's Stock Option Plan, and (iii) comparable plans providing for the issuance of options to purchase Capital Stock of the Company to officers, directors and/or employees of the Company and its Subsidiaries having terms similar to the foregoing, each as amended from time to time by a resolution of the Board of Directors of the Company or a duly authorized committee thereof. "Subordinated Indebtedness" means Indebtedness of the Company or a Guarantor that is (i) subordinated in right of payment to the Securities or such Guarantor's Guarantee, as applicable, in any respect or (ii) any Indebtedness which is expressly subordinate to Senior Indebtedness and has a stated maturity on or after the Stated Maturity. "Subsidiary" with respect to any Person, means (i) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person, or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries of such Person, or such Person 24 33 and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof has at least majority ownership interest. Notwithstanding the foregoing, an Unrestricted Subsidiary shall not constitute a Subsidiary of the Company or of any of the Company's Subsidiaries. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the execution of this Indenture. "Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 2.6 hereof. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer within the corporate trust division (or any successor group) of the Trustee or any other officer of the Trustee customarily performing functions similar to those performed by the Persons who at that time shall be such officers, and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such trust matter is referred because of his knowledge of and familiarity with the particular subject. "12.70% Notes" shall mean the 12.70% Senior Subordinated Notes due December 15, 1998 of Ekco Housewares, Inc. "Unrestricted Subsidiary" means any subsidiary of the Company that does not own any Capital Stock of, or own or hold any Lien on any property of, the Company or any other Subsidiary of the Company and that, at the time of determination, shall then be an Unrestricted Subsidiary (as designated by the Board of Directors of the Company); provided, that (i) such subsidiary shall not engage, to any substantial extent, in any line or lines of business activity other than a Related Business, (ii) neither immediately prior thereto nor after giving pro forma effect to such designation would there exist a Default or Event of Default and (iii) immediately after giving pro forma effect thereto, the Company could incur at least $1.00 of Indebtedness pursuant to the Consolidated Interest Coverage Ratio in 25 34 paragraph (a) of Section 4.11 hereof. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Subsidiary, provided, that (i) no Default or Event of Default is existing or will occur as a consequence thereof and (ii) immediately after giving effect to such designation, on a pro forma basis, the Company could incur at least $1.00 of Indebtedness pursuant to the Consolidated Interest Coverage Ratio in paragraph (a) of Section 4.11 hereof. Each such designation shall be evidenced by filing with the Trustee a certified copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "U.S. Government Obligations" means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "Voting Stock" means Capital Stock of the Company having generally the right to vote in the election of a majority of the directors of the Company or having generally the right to vote with respect to the organizational matters of the Company. "Wholly Owned" or "wholly owned" with respect to a Subsidiary of any Person means (i) a Subsidiary of such Person of which all of the outstanding Capital Stock or other ownership interests (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned Subsidiaries of such Person, and (ii) Woodstream Corporation, a Pennsylvania corporation, shall be deemed to be a Wholly-Owned Subsidiary of the Company for so long as Woodstream Corporation meets the ownership test in clause (i), except for the shares of preferred stock of Woodstream Corporation not owned by the Company on the Issue Date. "Wholly-Owned Guarantor" means (i) a Subsidiary of the Company (other than a Foreign Subsidiary) of which all of the outstanding Capital Stock or other ownership interests (other than directors' qualifying shares) shall at the time be owned by the Company or by one or more Wholly- Owned Guarantors of the Company or by the Company and one or more Wholly-Owned Guarantors of the Company and (ii) Woodstream 26 35 Corporation, a Pennsylvania corporation, for so long as Woodstream Corporation meets the ownership test in clause (i), except for the shares of preferred stock of Woodstream Corporation not owned by the Company on the Issue Date. SECTION 2 Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture security" means any of the Securities. "indenture securityholder" means a Holder or a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company, each Guarantor and any other obligor on the Securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them thereby. SECTION 3 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; 27 36 (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (7) references to Sections or Articles means reference to such Section or Article in this Indenture, unless stated otherwise. ARTICLE II THE SECURITIES SECTION 1 Form and Dating. The Securities and the Trustee's certificate of authentication, in respect thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit is part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall approve the form of the Securities and any notation, legend or endorsement on them. Any such notations, legends or endorsements not contained in the form of Security attached as Exhibit A hereto shall be delivered in writing to the Trustee. Each Security shall be dated the date of its authentication. The terms and provisions contained in the forms of Securities shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. SECTION 2 Execution and Authentication. Two Officers shall sign, or one Officer shall sign and one Officer shall attest to, the Security for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. If an Officer whose signature is on a Security was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Secu- 28 37 rity, the Security shall be valid nevertheless and the Company shall nevertheless be bound by the terms of the Securities and this Indenture. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security but such signature shall be conclusive evidence that the Security has been authenticated pursuant to the terms of this Indenture. The Trustee shall authenticate Initial Securities for original issue in the aggregate principal amount of up to $125,000,000 and shall authenticate Exchange Securities for original issue in the aggregate principal amount of up to $125,000,000, in each case upon a written order of the Company in the form of an Officers' Certificate; provided that such Exchange Securities shall be issuable only upon the valid surrender for cancellation of Initial Securities of a like aggregate principal amount in accordance with the Registration Rights Agreement. The Officers' Certificate shall specify the amount of Securities to be authenticated and the date on which the Securities are to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed $125,000,000, except as provided in Section 2.7. Upon the written order of the Company in the form of an Officers' Certificate, the Trustee shall authenticate Securities in substitution of Securities originally issued to reflect any name change of the Company. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. Unless otherwise provided in the appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company, any Affiliate of the Company, or any of their respective Subsidiaries. Securities shall be issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. 29 38 SECTION 3 Registrar and Paying Agent. The Company and the Guarantors shall maintain an office or agency in the Borough of Manhattan, The City of New York, where Securities may be presented or surrendered for payment ("Paying Agent"), where Securities may be surrendered for registration of transfer or exchange ("Registrar") and where notices and demands to or upon the Company and the Guarantors in respect of the Securities and this Indenture may be served. The Company may act as Registrar or Paying Agent, except that, for the purposes of Articles III, VIII, X and Section 4.14 and as otherwise specified in this Indenture, neither the Company nor any Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term "Paying Agent" includes any additional Paying Agent. The Company hereby initially appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees so to act. The Company shall enter into an appropriate written agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent, and shall furnish a copy of each such agreement to the Trustee. The Company shall promptly notify the Trustee in writing of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints The Depository Trust Company ("DTC") to act as Depository with respect to the Global Securities. The Company initially appoints the Trustee to act as Securities Custodian with respect to the Global Securities. SECTION 4 Paying Agent to Hold Assets in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, premium, if any, or interest or Liquidated Damages, if any, on, the Securities (whether such assets 30 39 have been distributed to it by the Company or any other obligor on the Securities), and shall notify the Trustee in writing of any Default in making any such payment. If either of the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate such assets and hold them as a separate trust fund for the benefit of the Holders or the Trustee. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default or any Event of Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent (if other than the Company) shall have no further liability for such assets. SECTION 5 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before the third Business Day preceding each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee reasonably may require of the names and addresses of Holders and shall otherwise comply with TIA Section 312(a). SECTION 6 Transfer and Exchange. (a) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Registrar or a co-Registrar with a request: (x) to register the transfer of such Definitive Securities; or (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that 31 40 the Definitive Securities surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (ii) in the case of Transfer Restricted Securities that are Definitive Securities, shall be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in substantially the form set forth on the reverse of the Security); or (B) if such Transfer Restricted Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, or to an "institutional accredited investor" within the meaning of Rule 501 (A)(1), (2), (3) or (7) under the Securities Act that is acquiring the security for its own account, or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the Securities of $250,000, not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act, a certification to that effect (in substantially the form set forth on the reverse of the Security); or (C) if such Transfer Restricted Security is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that ef- 32 41 fect (in substantially the form set forth on the reverse of the Security) and an Opinion of Counsel reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act. (b) Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) if such Definitive Security is a Transfer Restricted Security, a certification, substantially in the form set forth on the reverse of the Security, that such Definitive Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act; and (ii) whether or not such Definitive Security is a Transfer Restricted Security, written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an endorsement on the Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the Global Security, then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities represented by the Global Security to be increased accordingly. If no Global Securities are then outstanding, the Company shall issue and the Trustee shall authenticate a new Global Security in the appropriate principal amount. (c) Transfer and Exchange of Global Securities. The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. 33 42 (d) Transfer of a Beneficial Interest in a Global Security for a Definitive Security. (i) Any Person having a beneficial interest in a Global Security may upon request exchange such beneficial interest for a Definitive Security. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depository from the Depository or its nominee on behalf of any Person having a beneficial interest in a Global Security and upon receipt by the Trustee of a written order or such other form of instructions as is customary for the Depository or the Person designated by the Depository as having such a beneficial interest in a Transfer Restricted Security only, the following additional information and documents (all of which may be submitted by facsimile): (A) if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification from such Person to that effect (in substantially the form set forth on the reverse of the Security); or (B) if such beneficial interest is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act, or to an "institutional accredited investor" within the meaning of Rule 501 (A)(1), (2), (3) or (7) under the Securities Act that is acquiring the security for its own account, or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the Securities of $250,000, not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act, a certification to that effect from the transferor (in substantially the form set forth on the reverse of the Security); or (C) if such beneficial interest is being transferred in reliance on another ex- 34 43 emption from the registration requirements of the Securities Act, a certification to that effect from the transferee or transferor (in substantially the form set forth on the reverse of the Security) or an Opinion of Counsel from the transferee or transferor reasonably acceptable to the Company and to the Registrar to the effect that such transfer is in compliance with the Securities Act, then the Trustee or the Securities Custodian, at the direction of the Trustee, will cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of the Global Security to be reduced and, following such reduction, the Company will execute and, upon receipt of an authentication order in the form of an Officers' Certificate, the Trustee will authenticate and deliver to the transferee a Definitive Security. (ii) Definitive Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 2.6(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Securities to the persons in whose names such Securities are so registered. (e) Restrictions on Transfer and Exchange of Global Securities. Notwithstanding any other provisions of this Indenture (other than the provisions set forth in subsection (f) of this Section 2.6), a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (f) Authentication of Definitive Securities in Absence of Depository. If at any time: (i) the Depository for the Securities notifies the Company that the Depository is unwilling or unable to continue as Depository for the Global 35 44 Securities and a successor Depository for the Global Securities is not appointed by the Company within 90 days after delivery of such notice; or (ii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture, then the Company will execute, and the Trustee, upon receipt of an Officers' Certificate requesting the authentication and delivery of Definitive Securities, will authenticate and deliver Definitive Securities, in an aggregate principal amount equal to the principal amount of the Global Securities, in exchange for such Global Securities. (g) Legends. (i) Except as permitted by the following paragraph (ii), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHICH IS AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE") RESELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITU- 36 45 TIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A WRITTEN CERTIFICATION CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION TERMINATION DATE. (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Act or an effective registration statement under the Act: 37 46 (A) in the case of any Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security; and (B) any such Transfer Restricted Security represented by a Global Security shall not be subject to the provisions set forth in (i) above (such sales or transfers being subject only to the provisions of Section 2.6(c) hereof); provided, however, that with respect to any request for an exchange of a Transfer Restricted Security that is represented by a Global Security for a Definitive Security that does not bear a legend, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Registrar that such request is being made pursuant to Rule 144 (such certification to be substantially in the form set forth on the reverse of the Security). (h) Cancellation and/or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, repurchased or cancelled, such Global Security shall be returned to or retained and cancelled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the principal amount of Securities represented by such Global Security shall be reduced and an endorsement shall be made on such Global Security, by the Trustee or the Securities Custodian, at the direction of the Trustee, to reflect such reduction. (i) Obligations with respect to Transfers and Exchanges of Definitive Securities. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Registrar's or co-Registrar's request. 38 47 (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments, or similar governmental charge payable upon exchanges not involving any transfer pursuant to Section 2.2 (fourth paragraph), 2.10, 3.7, 4.14(e), 9.5, or 10.1 (final paragraph)). (iii) The Registrar or co-Registrar shall not be required to register the transfer of or exchange of (a) any Definitive Security selected for redemption in whole or in part pursuant to Article III, except the unredeemed portion of any Definitive Security being redeemed in part, (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase pursuant to Article X or Section 4.14 hereof or redeem Securities pursuant to Article III hereof and ending at the close of business on the day of such mailing or (c) any Security which has been surrendered for repurchase at the option of the Holder pursuant to Article X or Section 4.14 hereof, except the portion, if any, of such Security not to be so repurchased. (iv) Prior to due presentment for registration or transfer of any Security, the Trustee, any Agent and the Company may deem and treat the Person in whose name the Security is registered as the absolute owner of such Security, and none of the Trustee, Agent or the Company shall be affected by notice to the contrary. SECTION 7 Replacement Securities. If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims and submits an affidavit or other evidence, satisfactory to the Trustee, to the effect that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee or any 39 48 Agent from any loss which any of them may suffer if a Security is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 8 Outstanding Securities. Securities outstanding at any time are all the Securities that have been authenticated by the Trustee (including any Security represented by a Global Security) except those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Security effected by the Trustee hereunder and those described in this Section 2.8 as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security, except as provided in Section 2.9. If a Security is replaced pursuant to Section 2.7 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. A mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.7. If on a Redemption Date or the Maturity Date the Paying Agent (other than an Company or an Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient to pay all of the principal of, premium, if any, interest and Liquidated Damages, if any, due on the Securities payable on that date and payment of the Securities called for redemption is not otherwise prohibited pursuant to this Indenture, then on and after that date such Securities shall cease to be outstanding and interest on them shall cease to accrue. SECTION 9 Treasury Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, amendment, supplement, waiver or consent, Securities owned by the Company or Affiliates of the Company shall be disregarded, except that, for the purposes of determining 40 49 whether the Trustee shall be protected in relying on any such direction, amendment, supplement, waiver or consent, only Securities that a Trust Officer of the Trustee knows are so owned shall be disregarded. SECTION 10 Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare, the Guarantors shall endorse and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company reasonably and in good faith considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare, the Guarantors shall endorse and the Trustee shall authenticate definitive Securities in exchange for temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as permanent Securities authenticated and delivered hereunder. SECTION 11 Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent (other than the Company or an Affiliate of the Company), and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Securities surrendered for transfer, exchange, payment or cancellation. Except as set forth in Section 2.7, the Company may not issue new Securities to replace Securities that have been paid or delivered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 2.11, except as expressly permitted in the form of Securities and as permitted by this Indenture. SECTION 12 Defaulted Interest. Interest and Liquidated Damages, if any, on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more predecessor Securities) is registered at the close of busi- 41 50 ness on the Record Date for such interest or Liquidated Damages. Any interest or Liquidated Damages, if any, on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date plus, to the extent lawful, any interest payable on the defaulted interest or Liquidated Damages (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant Record Date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the persons in whose names the Securities (or their respective predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of Cash equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such Cash when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as provided in this clause (1). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the 42 51 Securities (or their respective predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, if any, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest and Liquidated Damages, if any, accrued and unpaid, and to accrue, which were carried by such other Security. ARTICLE III REDEMPTION SECTION 1 Right of Redemption. Redemption of Securities, as permitted by any provision of this Indenture, shall be made in accordance with such provision and this Article III. The Company will not have the right to redeem any Securities prior to April 1, 2001. On or after April 1, 2001, the Company will have the right to redeem all or any part of the Securities at the Redemption Prices specified in the form of Security attached as Exhibit A set forth in Paragraph 5 thereof, in each case (subject to the right of the Holders of record on a Record Date to receive interest and Liquidated Damages, if any, due on an Interest Payment Date that is on or prior to such Redemption Date), including accrued and unpaid interest and Liquidated Damages, if any, thereon to the Redemption Date. SECTION 2 Notices to Trustee. If the Company elects to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date and the principal 43 52 amount of Securities to be redeemed and whether it wants the Trustee to give notice of redemption to the Holders. If the Company elects to reduce the principal amount of Securities to be redeemed pursuant to Paragraph 5 of the Securities by crediting against any such redemption Securities it has not previously delivered to the Trustee for cancellation, it shall so notify the Trustee of the amount of the reduction and deliver such Securities with such notice. The Company shall give each notice to the Trustee provided for in this Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3 Selection of Securities to Be Redeemed. If less than all of the Securities are to be redeemed pursuant to Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed by lot or by such other method as the Trustee shall determine to be fair and appropriate and in such manner as complies with any applicable Depository, legal or stock exchange requirements. The Trustee shall make the selection from the Securities outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed. Securities in denominations of $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. SECTION 4 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first class mail, postage prepaid, to the Trustee and each Holder whose Securities are to be redeemed to 44 53 such Holder's last address as then shown on the registry books of the Registrar. At the Company's written request made at least five days prior to the date on which notice is to be given (or such shorter period as the Trustee shall reasonably permit), the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Securities to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price, including the amount of accrued and unpaid interest and Liquidated Damages, if any, to be paid upon such redemption; (3) the name, address and telephone number of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent at the address specified in such notice to collect the Redemption Price; (5) that, unless (a) the Company defaults in its obligation to deposit Cash or U.S. Government Obligations which through the scheduled payment of principal, interest and Liquidated Damages, if any, in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, Cash in an amount to fund the Redemption Price with the Paying Agent in accordance with Section 3.6 hereof or (b) such redemption payment is otherwise prohibited, interest and Liquidated Damages, if any, on Securities called for redemption ceases to accrue on and after the Redemption Date and the only remaining right of the Holders of such Securities shall be to receive payment of the Redemption Price, including accrued and unpaid interest to the Redemption Date, upon surrender to the Paying Agent of the Securities called for redemption and to be redeemed; (6) if any Security is being redeemed in part, the portion of the principal amount equal to $1,000 or any integral multiple thereof, of such Security to be redeemed and that, after the Redemption Date, and upon surrender of such Security, a new Security or Securities in aggregate principal amount equal 45 54 to the unredeemed portion thereof will be issued; (7) if less than all the Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal amount of such Securities to be redeemed and the aggregate principal amount of Securities to be outstanding after such partial redemption; (8) the CUSIP number of the Securities to be redeemed; and (9) that the notice is being sent pursuant to this Section 3.4 and pursuant to the optional redemption provisions of Paragraph 5 of the Securities. SECTION 5 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.4, Securities called for redemption shall become due and payable on the Redemption Date and at the Redemption Price, including accrued and unpaid interest and Liquidated Damages, if any, to the Redemption Date. Upon surrender to the Trustee or Paying Agent, such Securities called for redemption shall be paid at the Redemption Price, including interest and Liquidated Damages, if any, accrued and unpaid to the Redemption Date; provided that if the Redemption Date is after a regular Record Date and on or prior to the Interest Payment Date to which such Record Date relates, the accrued interest or Liquidated Damages shall be payable to the Holder of the redeemed Securities registered on the relevant Record Date; and provided, further, that if a Redemption Date is not a Business Day, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. SECTION 6 Deposit of Redemption Price. Prior to 10:00 A.M. on the Redemption Date, the Company shall deposit with the Paying Agent (other than the Company or an Affiliate of the Company) Cash or U.S. Government Obligations sufficient to pay the Redemption Price of, including accrued and unpaid interest and Liquidated Damages, if any, on, all Securities to be redeemed on such Redemption Date (other than Securities or portions thereof called for redemption on that date that have been delivered 46 55 by the Company to the Trustee for cancellation). The Paying Agent shall promptly return to the Company any Cash or U.S. Government Obligations so deposited which is not required for that purpose upon the written request of the Company. If the Company complies with the preceding paragraph and the other provisions of this Article III and payment of the Securities called for redemption is not prohibited under this Indenture, interest and Liquidated Damages, if any, on the Securities to be redeemed will cease to accrue on the applicable Redemption Date, whether or not such Securities are presented for payment. Notwithstanding anything herein to the contrary, if any Security surrendered for redemption in the manner provided in the Securities shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest and Liquidated Damages, if any, shall continue to accrue and be paid from the Redemption Date until such payment is made on the unpaid principal, and, to the extent lawful, on any interest or Liquidated Damages, if any, not paid on such unpaid principal, in each case at the rate and in the manner provided in Section 4.1 hereof and the Security. SECTION 7 Securities Redeemed in Part. Upon surrender of a Security that is to be redeemed in part, the Company shall execute, the Guarantors shall endorse and the Trustee shall authenticate and deliver to the Holder, without service charge to the Holder, a new Security or Securities equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE IV COVENANTS SECTION 1 Payment of Securities. The Company shall pay the principal of, premium, if any, interest and Liquidated Damages, if any, on the Securities on the dates and in the manner provided herein and in the Securities. An installment of principal of, premium, if any, interest or Liquidated Damages, if any, on the Securities shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company, 47 56 a Subsidiary of the Company or an Affiliate of the Company) holds for the benefit of the Holders, on or before 10:00 A.M., New York City time on that date, Cash deposited and designated for and sufficient to pay such installment. The Company shall pay interest on overdue principal and premium, if any, and on overdue installments of interest and Liquidated Damages, if any, at the rates specified in the Securities compounded semi-annually, to the extent lawful. SECTION 2 Maintenance of Office or Agency. The Company and the Guarantors shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company and the Guarantors in respect of the Securities and this Indenture may be served. The Company and the Guarantors shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company and the Guarantors shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.2. The Company and the Guarantors may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company and the Guarantors of their obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company and the Guarantors shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company and the Guarantors hereby initially designate the Corporate Trust Office of the Trustee located at 14 Wall Street, New York, New York 10005. SECTION 3 Limitation on Restricted Payments. 48 57 The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, make any Restricted Payment, if, after giving effect thereto on a pro forma basis, (a) a Default or an Event of Default shall have occurred and be continuing, (b) the Company is not permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio in Section 4.11(a) or (c) the aggregate amount of all Restricted Payments made by the Company and its Subsidiaries, including after giving effect to such proposed Restricted Payment, from and after the Issue Date, would exceed the sum of (i) $4.0 million, plus (ii) 50% of the aggregate Consolidated Net Income of the Company for the period (taken as one accounting period), commencing on the first day of the first full fiscal quarter commencing after the Issue Date, to and including the last day of the fiscal quarter ended immediately prior to the date of each such calculation (or, in the event Consolidated Net Income for such period is a deficit, then minus 100% of such deficit), plus (iii) 100% of the aggregate Net Cash Proceeds received by the Company from the issue or sale after the Issue Date of its Qualified Capital Stock or its debt securities that have been converted into Qualified Capital Stock (other than (i) to a Subsidiary of the Company and (y) to the extent applied in connection with a Qualified Exchange, but including the Net Cash Proceeds received by the Company upon the exercise, exchange or conversion of securities into Qualified Capital Stock), plus (iv) an amount equal to the portion (proportionate to the Company's or a Subsidiary's equity interest in such Unrestricted Subsidiary) of the fair market value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Subsidiary; provided, however, that such amount shall not exceed, in the case of any Unrestricted Subsidiary, the amount of any Restricted Payments previously made by the Company or any Subsidiary to such Unrestricted Subsidiary which were permitted to be made pursuant to this Section, plus (v) the Net Cash Proceeds received by the Company or any Guarantor from its investment in, and the sale, disposition or other liquidation of, any Restricted Investment. The foregoing clauses (b) and (c) of the immediately preceding paragraph, however, will not prohibit (v) a Qualified Exchange, (w) the payment of any dividend on Qualified Capital Stock within 60 days after the date of its declaration if such dividend could have been made on the date of such declaration in compliance with the foregoing 49 58 provisions, (x) any redemption or repurchase or payment on account of Capital Stock of the Company required to be made under (i) the Restricted Stock Plans or (ii) the Stock Option Plans, in an amount equal to the sum of the exercise prices paid to the Company by the holder of such Capital Stock upon the exercise of such stock options, (y) (i) any redemption or repurchase by the Company of its Capital Stock, (ii) any contribution or dividend paid by the Company to the ESOP or (iii) any loan made by the Company to the ESOP, in each case only to the extent made in connection with the distribution of retirement, termination or diversification withdrawal benefits to ESOP participants or beneficiaries pursuant to the terms of the ESOP and the provisions of ERISA and the Code and (z) any contribution or dividend paid by the ESOP, in each case only to the extent used by the ESOP (i) to pay administrative expenses of the ESOP in an amount not to exceed $200,000 per year or (ii) to repay Indebtedness of the ESOP owed to the Company or its Subsidiaries. The full amount of any Restricted Payment made pursuant to the foregoing clauses (w), (x), (y) and (z) of the immediately preceding sentence, however, will be deducted in the calculation of the aggregate amount of Restricted Payments available to be made which is referred to in clause (c) of the immediately preceding paragraph. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.3 were computed, which calculations may be based upon the Company's latest available internal financial statements; provided, however, that a failure to so deliver such Officers' Certificate shall not constitute a Default if the Company provides the Officers' Certificate within 30 days of the date of making such Restricted Payment and conclusively demonstrates therein that the Restricted Payment was permitted to be made on the date made. The Trustee may rely on such Officers' Certificate without further inquiry. SECTION 4 Corporate Existence. Subject to Article V, the Company and the Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect their respective corporate existence and the corporate existence of each of their Subsidiaries in accordance with the respective orga- 50 59 nizational documents of each of them (as the same may be amended from time to time) and the rights (charter and statutory) and corporate franchises of the Company, the Guarantors and each of their respective Subsidiaries; provided, however, that neither the Company nor any Guarantor shall be required to preserve, with respect to themselves, any right or franchise, and with respect to any of their respective Subsidiaries, any such existence, right or franchise, if (a) the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of such entity and (b) the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 5 Payment of Taxes and Other Claims. Except with respect to immaterial items, the Company and the Guarantors shall, and shall cause each of their Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company, any Guarantor or any of their Subsidiaries or any of their respective properties and assets and (ii) all lawful claims, whether for labor, materials, supplies, services or anything else, which have become due and payable and which by law have or may become a Lien upon the property and assets of the Company, any Guarantor or any of their Subsidiaries; provided, however, that neither the Company nor any Guarantor shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which disputed amounts adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP. SECTION 6 Maintenance of Properties and Insurance. The Company and the Guarantors shall cause all material properties used or useful to the conduct of their business and the business of each of their Subsidiaries to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in their reasonable judgment 51 60 may be necessary, so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section 4.6 shall prevent the Company or any Guarantor from discontinuing any operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is (a), in the judgment of the Board of Directors of the Company or Guarantor, as applicable, desirable in the conduct of the business of such entity and (b) not disadvantageous in any material respect to the Holders. The Company and the Guarantors shall provide, or cause to be provided, for themselves and each of their Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the reasonable, good faith opinion of the Company is adequate and appropriate for the conduct of the business of the Company, the Guarantors and such Subsidiaries. SECTION 7 Compliance Certificate; Notice of Default. (a) The Company shall deliver to the Trustee within 120 days after the end of its fiscal year (commencing with the Company's 1996 fiscal year) an Officers' Certificate complying with Section 314(a)(4) of the TIA and stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, whether or not the signer knows of any failure by the Company, any Guarantor or any Subsidiary of the Company to comply with any conditions or covenants in this Indenture and, if such signer does know of such a failure to comply, the certificate shall describe such failure with particularity. The Officers' Certificate shall also notify the Trustee should the relevant fiscal year end on any date other than the current fiscal year end date. (b) The Company shall, so long as any of the Securities are outstanding, deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. The Trustee shall not be deemed 52 61 to have knowledge of any Default, any Event of Default or any such fact unless one of its Trust Officers receives written notice thereof from the Company or any of the Holders. SECTION 8 Reports and Other Information. (a) Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the Trustee and to each Holder and to prospective purchasers of Securities identified to the Company by the Holders of Transfer Restricted Securities within 10 days after it is or would have been required to file them with the SEC, annual and quarterly financial statements substantially equivalent to financial statements that would have been included in reports filed with the SEC, if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the Company's certified independent public accountants as such would be required in such reports to the SEC, and, in each case, together with management's discussion and analysis of financial condition and results of operations which would be so required. Whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such a filing). (b) During any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall furnish to the Holders of Transfer Restricted Securities and prospective purchasers of Transfer Restricted Securities, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time as either the Company has concluded an offer to exchange the Exchange Securities for the Initial Securities or a registration statement relating to resales of the Securities has become effective under the Securities Act. The Company shall also furnish such information during the pendency of any suspension of effectiveness of such resale registration statement. SECTION 9 Limitation on Status as Investment Company. Neither the Company nor any of its Subsidiaries shall be required to register as an "investment company" (as that term is defined in the Investment Company Act of 1940, 53 62 as amended), or otherwise become subject to regulation as an investment company under the Investment Company Act. SECTION 10 Limitation on Transactions with Affiliates. The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, enter into any contract, agreement, arrangement or transaction with any Affiliate (an "Affiliate Transaction") or any series of related Affiliate Transactions (other than Exempted Affiliate Transactions), unless such Affiliate Transaction is made in good faith, the terms of such Affiliate Transaction are fair and reasonable to the Company, such Guarantor or such Subsidiary, as the case may be, and are on terms at least as favorable as the terms which could be obtained by the Company, such Guarantor or such Subsidiary, as the case may be, in a comparable transaction made on an arm's-length basis with Persons who are not Affiliates. Without limiting the foregoing, any Affiliate Transaction or series of related Affiliate Transactions (other than Exempted Affiliate Transactions) (i) involving consideration to either party in excess of $3.0 million, must be evidenced by a resolution of a committee of non-employee directors of the Company who are disinterested with respect to such transaction (an "Independent Committee"), set forth in an Officers' Certificate addressed and delivered to the Trustee, certifying that (a) the terms of such Affiliate Transaction are fair and reasonable to the Company, such Guarantor or such Subsidiary, as the case may be, and no less favorable to the Company, such Guarantor or such Subsidiary, as the case may be, than could have been obtained in an arm's-length transaction with a non-Affiliate and (b) such Affiliate Transaction has been approved by a majority of the members of an Independent Committee, and (ii) involving consideration to either party in excess of $10.0 million must be evidenced by a resolution of an Independent Committee in accordance with the foregoing clause (i) and, prior to the consummation thereof, a written favorable opinion as to the fairness of such transaction to the Company, such Guarantor or such Subsidiary, as the case may be, from a financial point of view from an independent investment banking firm of national reputation having assets in excess of $1.0 billion. SECTION 11 Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock. 54 63 The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become directly or indirectly liable with respect to (including as a result of an Acquisition), or otherwise become responsible for, contingently or otherwise (individually and collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital Stock from and after the Issue Date (including Acquired Indebtedness). Notwithstanding the foregoing: (a) if (i) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect on a pro forma basis to, such incurrence of Indebtedness or Disqualified Capital Stock and the application of the proceeds therefrom and (ii) on the date of such incurrence (the "Incurrence Date"), the Consolidated Interest Coverage Ratio of the Company for the Reference Period immediately preceding the Incurrence Date, after giving effect on a pro forma basis to such incurrence of such Indebtedness or Disqualified Capital Stock and, to the extent set forth in the definition of Consolidated Interest Coverage Ratio, the use of proceeds therefrom, would be at least 2.5 to 1.0, the Company and the Guarantors may Incur such Indebtedness or Disqualified Capital Stock; (b) the Company and the Guarantors may incur Indebtedness evidenced by the Securities and the Guarantees pursuant to the Indenture up to the amounts specified therein as of the Issue Date; (c) The Company and the Guarantors may incur Indebtedness pursuant to the Credit Agreement up to an aggregate amount outstanding (including any Indebtedness issued to refinance, refund or replace such Indebtedness in whole or in part) at any time not to exceed the greater of (A) $75.0 million, minus the amount of any such Indebtedness retired with the Net Cash Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale; provided that this reduction shall not apply to a reduction of any Indebtedness under a revolving credit or similar facility to the extent that such Net Cash Proceeds are used to finance working capital requirements in the ordinary course of business or (B) the Borrowing Base; (d) The Company and the Guarantors may incur Indebtedness (in addition to Indebtedness permitted by 55 64 any other clause of this paragraph) in an aggregate amount outstanding at any time (including any Indebtedness issued to refinance, replace or refund such Indebtedness in whole or in part) of up to $25.0 million, less the aggregate amount of any Indebtedness incurred by the Foreign Subsidiaries pursuant to clause (k) of this Section 4.11 and outstanding at such time; (e) The Company and the Guarantors, as applicable, may incur Refinancing Indebtedness with respect to any Indebtedness or Disqualified Capital Stock, as applicable, described in clauses (a), (b) and (g) of this Section 4.11; (f) The Company may incur Indebtedness to any Wholly-Owned Guarantor, and any Guarantor may incur Indebtedness to any other Wholly-Owned Guarantor or to the Company; provided, that such obligations shall be unsecured and subordinated in all respects to the Company's or such Guarantor's obligations pursuant to the Securities or the Guarantees, respectively; and, provided, further, that if any Wholly-Owned Guarantor ceases to be a Wholly-Owned Guarantor of the Company or if the Company or any Wholly-Owned Guarantor transfers such Indebtedness to any Person (other than to the Company or another Wholly-Owned Guarantor), such events, in each case, shall constitute the incurrence of such Indebtedness by the Company or such Wholly- Owned Guarantor, as the case may be, at the time of such event; (g) The Company and the Guarantors may incur Indebtedness existing on the Issue Date; (h) The Company and its Guarantors may incur Indebtedness solely in respect of bankers acceptances, letters of credit, surety bonds and performance bonds (in each case to the extent that such incurrence does not result in the incurrence of any obligation for the payment of borrowed money of others) issued in the ordinary course of business consistent with past practice; provided, however, that the aggregate principal amount outstanding of such Indebtedness (including any Indebtedness issued to refinance, refund or replace such Indebtedness) shall at no time exceed $5.0 million outstanding at any time; (i) The Company and the Guarantors may incur Indebtedness represented by Hedging and Interest Swap Obligations entered into in the ordinary course of 56 65 business related to Indebtedness of the Company and the Guarantors otherwise permitted to be incurred pursuant to this Indenture not exceeding the underlying obligations; (j) The Foreign Subsidiaries may incur Non- Recourse Indebtedness in an aggregate amount outstanding at any time (including any Non-Recourse Indebtedness issued to refinance, replace or refund such Non-Recourse Indebtedness in whole or in part) of up to $20.0 million, less the aggregate amount of any indebtedness incurred by the Foreign Subsidiaries pursuant to clause (k) of this Section 4.11 and outstanding at such time; (k) The Foreign Subsidiaries may incur Indebtedness in an aggregate amount outstanding at any time (including any Indebtedness issued to refinance, replace or refund such Indebtedness in whole or in part) of up to $5.0 million; and (l) Any Foreign Subsidiary may incur Indebtedness up to an aggregate amount outstanding (including any Indebtedness issued to refinance, replace or refund such Indebtedness in whole or in part) at any time not to exceed the Foreign Subsidiary Borrowing Base of such Foreign Subsidiary. Indebtedness of any Person which is outstanding at the time such Person becomes a Subsidiary of the Company or is merged with or into or consolidated with the Company or a Subsidiary of the Company shall be deemed to have been incurred at the time such Person becomes such a Subsidiary of the Company or is merged with or into or consolidated with the Company or a Subsidiary of the Company, as applicable. SECTION 12 Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, assume or suffer to exist any consensual restriction on the ability of any Subsidiary of the Company to pay dividends or make other distributions to or on behalf of, or otherwise to transfer assets or property to, or make or pay loans or advances to or on behalf of, the Company or any Subsidiary of the Company, except (a) restrictions imposed by the Securities or this Indenture, (b) restrictions imposed by applicable law, (c) existing restrictions under specified Indebtedness outstanding on the Issue Date 57 66 or under any Acquired Indebtedness not incurred in violation of this Indenture or any agreement relating to any property, asset, or business acquired by the Company or any of its Subsidiaries, which restrictions, in each case, existed at the time of acquisition, were not put in place in connection with or in anticipation of such acquisition and are not applicable to any Person, other than to the Person acquired, or to any property, asset or business, other than the property, assets and business so acquired, (d) any such restriction or requirement imposed by Indebtedness incurred under paragraph (c) of Section 4.11 hereof, provided such restriction or requirement is no more restrictive than that imposed by the Credit Agreement in effect as of the Issue Date, (e) restrictions with respect solely to a Subsidiary of the Company imposed pursuant to a binding agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, provided such restrictions apply solely to the Capital Stock or assets of such Subsidiary which are being sold, (f) in connection with and pursuant to permitted Refinancings, replacements of restrictions imposed pursuant to clause (c) of this paragraph that are not more restrictive than those being replaced and do not apply to any other Person or assets than those that would have been covered by the restrictions in the Indebtedness so refinanced, (g) customary provisions restricting subletting or assignment of any lease entered into in the ordinary course of business, consistent with industry practice and (h) any Lien permitted by Section 4.13 hereof. SECTION 13 Limitation on Liens. The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on any of their respective assets or property, whether now owned or hereinafter acquired, or on any income or profits therefrom or assign or convey any right to receive income therefrom securing (i) any Indebtedness of the Company unless the Securities are equally and ratably secured or (ii) any Indebtedness of a Guarantor unless the Guarantees are equally and ratably secured; provided, however, that if such Indebtedness is by its terms expressly subordinate to the Securities or the Guarantees, the Lien securing such Indebtedness shall be subordinate and junior to the Lien securing the Securities or the Guarantees, with the same relative priority as such Subordinated Indebtedness shall have with respect to the Securities or the Guarantees, as the case may be. 58 67 SECTION 14 Limitation on Asset Sales. (a) The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, consummate an Asset Sale to any Person other than the Company or a Wholly-Owned Guarantor unless (i) the Company (or the Subsidiary, as the case may be) receives consideration at the time of such Asset Sale which is at least equal to the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise subject to disposition and (ii) at least 80% of the consideration therefor received by the Company or such Subsidiary is in the form of Cash or Cash Equivalents; provided that the amount of (x) any liabilities (as shown on the Company's or such Subsidiary's most recent balance sheet or in the notes thereto) of the Company or any Subsidiary (other than liabilities that are by their terms subordinated to the Securities) that are assumed by the transferee of any such assets, and (y) any notes or other obligations received by the Company or any such Subsidiary from such transferee that are immediately converted by the Company or such Subsidiary into Cash or Cash Equivalents (to the extent of the Cash or Cash Equivalents received) will be deemed to be Cash for purposes of this provision. (b) Within 270 days after the date of any Asset Sale, the Company may apply the Net Cash Proceeds from such Asset Sale to either (i) permanently reduce outstanding Indebtedness, other than Subordinated Indebtedness, of the Company or the Subsidiary whose assets were sold in such Asset Sale, provided that any such reduction of Indebtedness of such Subsidiary shall not exceed the amount of Net Cash Proceeds received from the sale of assets of such Subsidiary or (ii) acquire property or assets to be used in any Related Business; provided that when any proceeds not in the form of Cash or Cash Equivalents become Net Cash Proceeds, the requirements contained in this paragraph shall apply thereto. Pending the final application of any such Net Cash Proceeds, the Company may temporarily invest such Net Cash Proceeds in Cash Equivalents or reduce outstanding Indebtedness under the Credit Agreement. Any Net Cash Proceeds from an Asset Sale that are not applied or invested as provided in the second sentence of this paragraph will be deemed to constitute "Excess Proceeds." (c) When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company shall, within 30 59 68 days of the occurrence of such event, make an offer to all Holders of Securities (an "Asset Sale Offer") to purchase the maximum principal amount of Securities that may be purchased out of the Excess Proceeds, at an offer price in cash (the "Asset Sale Offer Price") in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date fixed for the closing of such Asset Sale Offer (which shall be 20 Business Days (or such later date as may be required by applicable law, rule or regulation) following the commencement of such Asset Sale Offer (the "Asset Sale Offer Period")), in accordance with the procedures set forth herein. (d) Within such 30-day period referred to in (c) above, the Company shall mail a notice to each Holder stating: (1) that the Asset Sale Offer is being made pursuant to this Section 4.14 and that the Company will purchase the maximum principal amount of Securities that may be purchased out of the Excess Proceeds; (2) the Asset Sale Offer Price and the purchase date, which shall be no sooner than 30 nor later than 60 days from the date such notice is mailed (the "Asset Sale Payment Date"); (3) that any Security, or portion thereof, not tendered or accepted for payment will continue to accrue interest and Liquidated Damages, if any; (4) that, unless the Company defaults in depositing Cash with the Paying Agent in accordance with (e) below or such payment is otherwise prohibited, any Security, or portion thereof, accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest and Liquidated Damages, if any, after the Asset Sale Payment Date; (5) that Holders electing to have any Securities purchased pursuant to such Asset Sale Offer will be required to surrender the Securities, and complete the section entitled "Option of Holder to Elect Purchase" on the reverse of the Securities or transfer beneficial ownership of such Securities by book-entry transfer, to the Company, the Depository (if appointed by the Company), or the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Asset Sale Payment Date; (6) that Holders will be entitled to withdraw their elections, in whole or in part, if the Company, the Depository or the Paying Agent, as the case may be, receives, not later than the close of business on the third Business Day preceding the Asset Sale Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder is withdrawing, and a statement that such Holder is withdrawing his election to have such principal amount of Securities purchased; (7) that Holders whose Securities are being purchased only in part will be issued new Securities equal in 60 69 principal amount to the unpurchased portion of the Securities surrendered (or transferred by book-entry transfer), provided that the principal amount of such unpurchased portion must be equal to $1,000 or an integral multiple thereof; and (8) a brief description of the circumstances and relevant facts regarding such Asset Sale. Any such Asset Sale Offer shall comply with all applicable provisions of Federal and state laws, including those regulating tender offers, if applicable, and any provisions of this Indenture which conflict with such laws (A) shall be deemed to be superseded by the provisions of such laws and (B) shall not be deemed to have been breached by virtue thereof. (e) On or before an Asset Sale Payment Date, the Company shall, to the extent lawful, (1) accept for purchase all Securities or portions thereof in minimum denominations of $1,000 or integral multiples thereof properly tendered pursuant to the Asset Sale Offer (subject to (f) below), (2) deposit with the Paying Agent an amount equal to the Asset Sale Offer Price in respect of all Securities or portions thereof so tendered (subject to (f) below) and (3) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers' Certificate stating the aggregate principal amount of Securities or portions thereof being purchased by the Company. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly mail to each Holder of Securities so accepted payment in an amount equal to the Asset Sale Offer Price for such Securities or portions thereof, and the Trustee shall promptly authenticate and mail or deliver (or cause to be transferred by book entry) to such Holders a new Security equal in principal amount to any unpurchased portion of the Security surrendered; provided, that each such new Security shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Asset Sale Payment Date. (f) To the extent that the aggregate amount of Securities tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use the excess of such Excess Proceeds for general corporate purposes. If the aggregate principal amount of Securities tendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Securities or portions thereof in minimum denominations of $1,000 to be purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero. 61 70 (g) Notwithstanding the foregoing, $2.0 million of Net Cash Proceeds received from Asset Sales in any fiscal year shall not constitute Excess Proceeds and thus shall not be subject to the restrictions contained in this Section 4.14. (h) The Company and the Guarantors will not, and will not permit any of their Subsidiaries to, directly or indirectly, make any Asset Sale of any of the Capital Stock of any Subsidiary of the Company except pursuant to an Asset Sale of all of the Capital Stock of such Subsidiary. SECTION 15 Waiver of Stay, Extension or Usury Laws. Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Company or any Guarantor from paying all or any portion of the principal of, premium, if any, interest or Liquidated Damages, if any, on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) each of the Company and the Guarantors hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 16 Limitation on Sale and Leaseback Transactions. The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, enter into any Sale and Leaseback Transaction unless either (a) at the time such transaction is entered into, the Company or such Guarantor, as the case may be, would be able to incur Indebtedness in an amount equal to the Attributable Indebtedness, and Liens, if any, with respect to such Sale and Leaseback Transaction pursuant to Sections 4.11 and 4.13 hereof or (b) the Company or such Guarantor receives proceeds from such Sale and Leaseback Transaction at least equal to the fair market value thereof (as determined in good faith by the Company's Board of Directors, whose determination in good faith, evidenced by a resolution of such Board, shall be conclusive) and such proceeds are applied in 62 71 the same manner and to the same extent as the Net Cash Proceeds and Excess Proceeds from an Asset Sale pursuant to Section 4.14 hereof. SECTION 17 Limitation on Lines of Business. Neither the Company nor any of its Subsidiaries shall directly or indirectly engage to any substantial extent in any line or lines of business activity other than that which, in the reasonable good faith judgment of the Board of Directors of the Company, is a Related Business. SECTION 18 Future Guarantors. All present and future Subsidiaries of the Company (other than any Foreign Subsidiary) jointly and severally shall guarantee irrevocably and unconditionally all principal, premium, interest and Liquidated Damages on the Securities on a senior basis, all in accordance with Article XI hereof. 63 72 ARTICLE V SUCCESSOR CORPORATION SECTION 1 Limitation on Merger, Sale or Consolidation. (a) The Company shall not, directly or indirectly, consolidate with or merge with or into another Person or sell, lease, convey or transfer all or substantially all of its assets (computed on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person or group of affiliated Persons, unless (i) either (a) the Company is the continuing entity or (b) the resulting, surviving or transferee entity is a corporation organized under the laws of the United States, any state thereof or the District of Columbia and expressly assumes by supplemental indenture all of the obligations of the Company in connection with the Securities and this Indenture; (ii) no Default or Event of Default shall exist or shall occur immediately before or after giving effect on a pro forma basis to such transaction; (iii) immediately after giving effect to such transaction on a pro forma basis, the Consolidated Net Worth of the consolidated resulting, surviving or transferee entity is at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction; and (iv) immediately after giving effect to such transaction on a pro forma basis, the consolidated resulting, surviving or transferee entity would immediately thereafter be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio set forth in Section 4.11(a) hereof. (b) For purposes of clause (a), the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. SECTION 2 Successor Corporation Substituted. Upon any consolidation or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.1 hereof, the successor corporation formed by such consolidation or into which the Company 64 73 is merged or to which such transfer is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named herein as the Company, and when a successor corporation duly assumes all of the obligations of the Company pursuant hereto and pursuant to the Securities, the Company shall be released from such obligations (except with respect to any obligations that arise from, or are related to, such transaction). ARTICLE VI EVENTS OF DEFAULT AND REMEDIES SECTION 1 Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be caused voluntarily or involuntarily or effected, without limitation, by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) failure to pay any installment of interest or Liquidated Damages, if any, upon the Securities as and when the same becomes due and payable, and the continuance of such default for a period of 30 days; (2) failure to pay all or any part of the principal of, or premium, if any, on the Securities when and as the same becomes due and payable at maturity, upon redemption, by acceleration or otherwise, including, without limitation, payment of the Change of Control Purchase Price in accordance with Article X or the Asset Sale Offer Price in accordance with Section 4.14; (3) failure by the Company to comply with the provisions of Article V; (4) failure by the Company to comply with the provisions of Sections 4.3, 4.11, 4.14 (other than a failure to repurchase Securities when required) and 10.1 (other than a failure to repurchase Securities when required), and the continuance of such failure for a period of 10 days after there has been given, by registered or certified mail, to the Company by the Trust- 65 74 ee, or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the outstanding Securities, a written notice specifying such default or breach, requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (5) failure by the Company or any Guarantor to observe or perform any covenant or agreement contained in the Securities or this Indenture (other than a default in the performance of any covenant or agreement which is specifically dealt with elsewhere in this Section 6.1), and continuance of such failure for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the outstanding Securities, a written notice specifying such default or breach, requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (6) a default under Indebtedness of the Company or any of its Subsidiaries with an aggregate principal amount in excess of $5.0 million (a) resulting from the failure to pay principal of, premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness or (b) as a result of which the maturity of such Indebtedness has been accelerated prior to its stated maturity; (7) the failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million if (A) any creditor has commenced an enforcement proceeding with respect to such final judgements or (B) such final judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 45 days after their entry; (8) a decree, judgment or order by a court of competent jurisdiction shall have been entered adjudicating the Company or any of its Significant Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company or any of its Significant Subsidiaries under any bankruptcy or similar law, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of 66 75 competent jurisdiction over the appointment of a Custodian of the Company or any of its Significant Subsidiaries, or of the property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment or order shall have remained in force undischarged and unstayed for a period of 60 days; or (9) the Company or any of its Significant Subsidiaries shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a Custodian of it or any of its assets or property, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall, within the meaning of any Bankruptcy Law, become insolvent, fail generally to pay its debts as they become due, or take any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing. Notwithstanding the 10-day period and notice requirement contained in Section 6.1(4) above, (i) with respect to a default under Article X the 10-day period referred to in Section 6.1(4) shall be deemed to have begun as of the date the Change of Control notice is required to be sent in the event that the Company has not complied with the provisions of Section 10.1, and the Trustee or Holders of at least 25% in principal amount of the outstanding Securities thereafter give the Notice of Default referred to in Section 6.1(4) to the Company and, if applicable, the Trustee; provided, however, that if the breach or default is a result of a default in the payment when due of the Change of Control Purchase Price, such default shall be deemed, for purposes of this Section 6.1, to arise no later than on such due date; and (ii) with respect to a default under Section 4.14, the 10-day period referred to in Section 6.1(4) shall be deemed to have begun as of the date the notice of an Asset Sale Offer is required to be sent in the event that the Company has not complied with the provisions of Section 4.14 requiring the giving of such notice, and the Trustee or Holders of at least 25% in principal amount of the outstanding Securities thereafter give the Notice of Default referred to in Section 6.1(4) to the Company and, if applicable, the Trustee; provided, however, that if the breach or 67 76 default is a result of a default in the payment when due of the Asset Sale Offer Price, such default shall be deemed, for purposes of this Section 6.1, to arise no later than on such due date. If a Default occurs and is continuing, the Trustee must, within 90 days after the occurrence of such default, give to the Holders notice of such default. SECTION 2 Acceleration of Maturity Date; Rescission and Annulment. If an Event of Default occurs and is continuing (other than an Event of Default specified in Section 6.1(8) or (9) relating to the Company or any of its Significant Subsidiaries), then, and in every such case, unless the principal of all of the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of then outstanding Securities, by notice in writing to the Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may declare all principal (and premium, if any) and accrued interest and Liquidated Damages, if any, of the Securities (or the Change of Control Payment if the Event of Default includes failure to pay the Change of Control Payment), determined as set forth below, to be due and payable immediately. In the event a declaration of acceleration (or a Default which, after the giving of notice, the lapse of time or both) resulting from an Event of Default described in Section 6.1(6) or (7) above has occurred and is continuing, such declaration of acceleration or such Default, as the case may be, shall be automatically annulled if such default is cured or waived or the holders of the Indebtedness which is the subject of such default have rescinded their declaration of acceleration in respect of such Indebtedness within 30 days thereof (in the case of an Event of Default under Section 6.1(6) above) or 45 days thereof (in the case of an Event of Default under Section 6.1(7) above) and the Trustee has received written notice of such cure, waiver or rescission and no other Event of Default described in Section 6.1(6) or (7) as applicable, has occurred that has not been cured or waived, or as to which the declaration has not been rescinded, within such specified number of days of the declaration of such acceleration in respect of such Indebtedness. If an Event of Default specified in Section 6.1(8) or (9) relating to the Company or any Significant Subsidiary occurs, all principal (and premium, if any) and accrued interest thereon will be immediately due and payable on all outstanding Securities without any declaration or other act on the part of Trustee or the Holders. 68 77 At any time after such a declaration of acceleration being made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article VI, the Holders of a majority in aggregate principal amount of then outstanding Securities, by written notice to the Company and the Trustee, may rescind, on behalf of all Holders, any such declaration of acceleration if: (1) the Company has paid or deposited with the Trustee Cash sufficient to pay (A) all overdue interest and Liquidated Damages, if any, on all Securities, (B) the principal of, and premium, if any, payable with respect to any Securities which would become due other than by reason of such declaration of acceleration, and interest thereon at the rate borne by the Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest and Liquidated Damages, if any, at the rates set forth in the Securities, (D) all sums paid or advanced by the Trustee hereunder and the compensation, expenses, disbursements and advances of the Trustee and its agents and counsel and any other amounts due the Trustee under Section 7.7, and (2) all Events of Default, other than the non-payment of the principal of, premium, if any, and interest and Liquidated Damages, if any, on Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.12, including, if applicable, any Event of Default relating to the covenants contained in Section 10.1. Notwithstanding the previous sentence of this Section 6.2, no waiver shall be effective against any Holder for any Event of Default or event which with notice or lapse of time or both would be an Event of Default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Security affected thereby, unless all such affected Holders agree, in writing, to waive such Event of Default or other 69 78 event. No such waiver shall cure or waive any subsequent default or impair any right consequent thereon. SECTION 3 Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if an Event of Default in payment of principal, premium, interest or Liquidated Damages specified in clause (1) or (2) of Section 6.1 occurs and is continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, premium, if any, interest and Liquidated Damages, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal, premium, if any, interest or Liquidated Damages, if any, at the rates set forth in the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including compensation to, and expenses, disbursements and advances of the Trustee and its agents and counsel and all other amounts due to the Trustee under Section 7.7. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust in favor of the Holders, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 4 Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such 70 79 other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, interest or Liquidated Damages, if any) shall be entitled and empowered, by intervention in such proceeding or otherwise to take any and all actions under the TIA, including: (1) to file and prove a claim for the whole amount of principal, premium, if any, interest or Liquidated Damages, if any, owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee and its agent and counsel and all other amounts due the Trustee under Section 7.7) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any Custodian is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 5 Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be 71 80 brought in its own name as trustee of an express trust in favor of the Holders, and any recovery of judgment shall, after provision for the payment of compensation to, and expenses, disbursements and advances of the Trustee and its agents and counsel and all other amounts due the Trustee under Section 7.7, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 6 Priorities. Any money collected by the Trustee pursuant to this Article VI shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, interest or Liquidated Damages, if any, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the Trustee in payment of all amounts due pursuant to Section 7.7; SECOND: To the Holders in payment of the amounts then due and unpaid for principal of, premium, if any, and interest and Liquidated Damages, if any, on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, interest or Liquidated Damages, if any, respectively; and THIRD: To the Company, the Guarantors or such other Person as may be lawfully entitled thereto, the remainder, if any. The Trustee may, but shall not be obligated to, fix a record date and payment date for any payment to the Holders under this Section 6.6. SECTION 7 Limitation on Suits. No Holder or Holders of any Security or Securities shall have any right to order or direct the Trustee to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless 72 81 (A) such Holder or Holders have previously given written notice to the Trustee of a continuing Event of Default; (B) the Holders of not less than 25% in aggregate principal amount of then outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (C) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred or reasonably probable to be incurred in compliance with such request; (D) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (E) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture or the Securities to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture or the Securities, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 8 Unconditional Right of Holders to Receive Principal, Premium, Interest and Liquidated Damages. Notwithstanding any other provision of this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, and premium, if any, interest and Liquidated Damages, if any, on such Security on the dates such payments are required to be made, as set forth in such Security (in the case of redemption, the Redemption Price on the applicable Redemption Date, in the case of the Change of Control Purchase Price, on the applicable Change of Control Payment Date, and in the case of the Asset Sale Offer Price, on the Asset Sale Payment Date) and to institute suit for the en- 73 82 forcement of any such payment after such respective dates, and such rights shall not be impaired without the consent of such Holder. SECTION 9 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 10 Delay or Omission Not Waiver. No delay or omission by the Trustee or by any Holder of any Security to exercise any right or remedy arising upon any Event of Default shall impair the exercise of any such right or remedy or constitute a waiver of any such Event of Default. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 11 Control by Holders. The Holder or Holders of a majority in aggregate principal amount of then outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee, provided, that: (1) such direction shall not be in conflict with any applicable law (including the TIA) or with this Indenture, (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or may subject the Trustee to personal liability, and 74 83 (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. The record date for purposes of determining the identity of the Holders of the Securities entitled to vote or consent to any action pursuant to this Section 6.11 shall be determined as provided for in TIA Section 3.16(c). SECTION 12 Waiver of Past Default. Subject to Section 6.8, prior to the declaration of acceleration of the maturity of the Securities, the Holder or Holders of not less than a majority in aggregate principal amount of the outstanding Securities may, on behalf of all Holders, waive any past default hereunder and its consequences, except a default: (A) in the payment of the principal of, premium, if any, or interest or Liquidated Damages, if any, on any Security as specified in clauses (1) and (2) of Section 6.1 which has not yet been cured; or (B) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair the exercise of any right arising therefrom. SECTION 13 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted to be taken by it as Trustee, any court may in its discretion require the filing by any party to such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party to such suit, having due regard to the merits and good faith of the claims or defenses made by such party; but the provisions of this Section 6.13 shall not apply to any suit instituted by 75 84 the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the aggregate principal amount of the outstanding Securities, or to any suit instituted by any Holder for enforcement of the payment of principal of, premium, if any, interest or Liquidated Damages, if any, on any Security on or after the respective Maturity Date set forth in such Security (including, in the case of redemption, on or after the Redemption Date). SECTION 14 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE VII TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. SECTION 1 Duties of Trustee. (a) If a Default or an Event of Default actually known to the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of a Default or an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no others, and no covenants or obligations shall be 76 85 implied in or read into this Indenture which are adverse to the Trustee, and (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.1, (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts, and (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.11. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or at the request, order or direction of the Holders or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1. (f) The Trustee shall not be liable for interest on any assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust 77 86 by the Trustee need not be segregated from other assets except to the extent required by law. SECTION 2 Rights of Trustee. Subject to Section 7.1: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Sections 12.4 and 12.5. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or advice of counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (other than any agent who is an employee of the Trustee) appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture, nor for any action permitted to be taken or omitted hereunder by any Agent. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. (g) Unless otherwise specifically provided for in this Indenture, any demand, request, direction or notice from the Company or any Guarantor shall be sufficient 78 87 if signed by an Officer of the Company or such Guarantor, as applicable. (h) The Trustee shall have no duty to inquire as to the performance of the Company's or any Guarantor's covenants in Article IV hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 5.1, 6.1(1), 6.1(2) or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. (i) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate. SECTION 3 Individual Rights of Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company, any Guarantor, any of their Subsidiaries, or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Notwithstanding the foregoing, the Trustee must comply with Sections 7.10 and 7.11 at all times. SECTION 4 Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities and it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities, other than the Trustee's certificate of authentication (if executed by the Trustee), or the use or application of any funds received by a Paying Agent other than the Trustee. SECTION 5 Notice of Default. If a Default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail at the Company's expense to each Securityholder notice of the uncured Default or Event of Default within 90 days after such Default or Event of Default occurs. Except 79 88 in the case of a Default or an Event of Default in payment of, principal of or premium, if any, interest or Liquidated Damages, if any, on any Security (including the payment of the Change of Control Purchase Price on the Change of Control Payment Date, the payment of the Redemption Price on the Redemption Date and the payment of the Asset Sale Offer Price on the Asset Sale Payment Date), the Trustee may withhold the notice if and so long as a Trust Officer in good faith determines that withholding the notice is in the interest of the Securityholders. SECTION 6 Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall, if required by law, mail to each Securityholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee shall also comply with TIA Sections 313(b) and 313(c). The Company shall promptly notify the Trustee in writing if the Securities become listed on any stock exchange or automatic quotation system. A copy of each report at the time of its mailing to Securityholders shall be mailed to the Trustee and filed with the SEC and each stock exchange, if any, on which the Securities are listed. SECTION 7 Compensation and Indemnity. The Company and the Guarantors jointly and severally agree to pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law concerning the compensation of a trustee of an express trust. The Company and the Guarantors shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it in accordance with this Indenture. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents, accountants, experts and counsel. The Company and the Guarantors jointly and severally agree to indemnify the Trustee (in its capacity as Trustee) and each of its officers, directors, attorneys-in-fact and agents for, and hold it harmless against, any claim, demand, expense (including but not limited to reasonable compensation, disbursements and expenses of the Trustee's agents and counsel), loss or liability incurred by 80 89 it without negligence or bad faith on the part of the Trustee, arising out of or in connection with the administration of this trust and its rights or duties hereunder, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company and the Guarantors shall defend the claim and the Trustee shall provide reasonable cooperation at the Company's and the Guarantors' expense in the defense. The Trustee may have separate counsel and the Company and the Guarantors shall pay the reasonable fees and expenses of such counsel; provided, that the Company and the Guarantors will not be required to pay such fees and expenses if they assume the Trustee's defense and there is no conflict of interest between the Company and the Guarantors and the Trustee in connection with such defense. The Company and the Guarantors need not pay for any settlement made without their written consent. The Company and the Guarantors need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company's and the Guarantors' payment obligations in this Section 7.7, the Trustee shall have a claim prior to the Securities on all assets held or collected by the Trustee in its capacity as Trustee, except assets held in trust to pay principal of, premium, if any, interest or Liquidated Damages, if any, on the Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(5) or (6) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The Company's and the Guarantors' obligations under this Section 7.7 and any lien arising hereunder shall survive the resignation or removal of the Trustee, the discharge of the Company's and the Guarantors' obligations pursuant to Article VIII of this Indenture and any rejection or termination of this Indenture under any Bankruptcy Law. SECTION 8 Replacement of Trustee. The Trustee may resign by so notifying the Company in writing, to become effective upon the appointment of a successor trustee. The Holder or Holders of a majority in aggregate principal amount of the outstanding Securities may 81 90 remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor trustee with the Company's consent. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b) the Trustee is adjudged bankrupt or insolvent; (c) a receiver, Custodian or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holder or Holders of a majority in aggregate principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that and provided that all sums owing to the retiring Trustee provided for in Section 7.7 have been paid, the retiring Trustee shall transfer all property held by it as trustee to the successor Trustee, subject to the lien provided in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holder or Holders of at least 10% in aggregate principal amount of the outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company and the Guarantors' 82 91 obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. SECTION 9 Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee. SECTION 10 Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). SECTION 11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE; SATISFACTION AND DISCHARGE SECTION 1 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at its option and at any time, elect to have Section 8.2 or Section 8.3 applied to all outstanding Securities upon compliance with the conditions set forth below in this Article VIII. SECTION 2 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.1 of the option applicable to this Section 8.2, the Company and the Guarantors shall be deemed to have been discharged from their respective obligations with respect to all outstanding 83 92 Securities on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Securities, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.5 and the other Sections of this Indenture referred to in (a) and (b) below, and the Company and the Guarantors shall be deemed to have satisfied all of their other respective obligations under such Securities and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Securities to receive solely from the trust fund described in Section 8.4, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, interest and Liquidated Damages, if any, on such Securities when such payments are due, (b) the Company's obligations with respect to such Securities under Sections 2.4, 2.6, 2.7, 2.10 and 4.2, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the obligations of the Company and the Guarantors in connection therewith and (d) this Article VIII. Upon Legal Defeasance as provided herein, the Guarantee of each Guarantor shall be fully released and discharged and the Trustee shall promptly execute and deliver to the Company any documents reasonably requested by the Company to evidence or effect the foregoing. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 with respect to the Securities. SECTION 3 Covenant Defeasance. Upon the Company's exercise under Section 8.1 of the option applicable to this Section 8.3, the Company and the Guarantors shall be released from their respective obligations under the covenants contained in Sections 4.3, 4.5, 4.6, 4.7, 4.8(a), 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.17 and Article V with respect to the outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder. For this purpose, such Covenant Defeasance means that, with 84 93 respect to the outstanding Securities, neither the Company nor any Guarantor need comply with and shall have any liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document (and Sections 6.1(3), (4) and (5) shall not apply to any such covenant), but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.1 of the option applicable to this Section 8.3, Sections 6.1(6) and 6.1(7) shall not constitute Events of Default. SECTION 4 Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.2 or Section 8.3 to the outstanding Securities: (a) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 who shall agree to comply with the provisions of this Article VIII applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (i) Cash in an amount, or (ii) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, Cash in an amount, or (iii) a combination thereof, in such amounts, as in each case will be sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of, premium, if any, interest and Liquidated Damages, if any, on the outstanding Securities on the stated maturity or on the applicable Redemption Date, as the case may be, of such principal or installment of principal, premium, interest or Liquidated Damages; provided that the Trustee shall have been irrevocably instructed to apply such Cash and the proceeds of such U.S. Government Obligations to said payments with respect to the Securities and the Holders of Securities must have a 85 94 valid, perfected, first priority security interest in such trust. (b) In the case of an election under Section 8.2, the Company shall have delivered to the Trustee an Opinion of Counsel confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service, a ruling or (ii) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the outstanding Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such Legal Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) In the case of an election under Section 8.3, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the outstanding Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance and will be subject to Federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) No Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as Section 6.1(8) or 6.1(9) is concerned, at any time in the period ending on the 91st day after the date of such deposit (it being understood that this condition is a condition subsequent which shall not be deemed satisfied until the expiration of such period, but in the case of Covenant Defeasance, the covenants which are defeased under Section 8.3 will cease to be in effect unless an Event of Default under Section 6.1(8) or 6.1(9) occurs during such period); (e) Such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company, the Guarantors or any of their Subsidiaries is a party or by which any of them is bound; (f) The Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit made by the Company pursuant to its election under Section 86 95 8.2 or 8.3 was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; and (g) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in, in the case of the Officers' Certificate, (a) through (f) and, in the case of the Opinion of Counsel, clauses (a) (with respect to the validity and perfection of the security interest), (b) (if applicable), (c) and (e) of this Section 8.4 have been complied with. SECTION 5 Deposited Cash and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.6, all Cash and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 in respect of the outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. SECTION 6 Repayment to the Company. (a) Anything in this Article VIII to the contrary notwithstanding, the Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company from time to time, upon the request of the Company, any Cash or U.S. Government Obligations held by it as provided in Section 8.4 hereof which in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. (b) Any Cash and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee or any Paying Agent, or then held by the Company, in trust 87 96 for the payment of the principal of, premium, if any, interest or Liquidated Damages, if any, on any Security and remaining unclaimed for two years after such principal, premium, interest or Liquidated Damages have become due and payable shall be paid to the Company on its request; and the Holder of such Security shall thereafter look only to the Company and the Guarantors for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 7 Reinstatement. If the Trustee or Paying Agent is unable to apply any Cash or U.S. Government Obligations in accordance with Section 8.2 or 8.3, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Company and the Guarantors under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 until such time as the Trustee or Paying Agent is permitted to apply such money in accordance with Section 8.2 and 8.3, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, interest or Liquidated Damages, if any, on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the Cash or U.S. Government Obligations held by the Trustee or Paying Agent. SECTION 8 Satisfaction and Discharge. In addition to the Company's rights under Section 8.1, the Company may terminate all of its obligations and the obligations of the Guarantors under this Indenture when: (1) all Securities theretofore authenticated and delivered (other than Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7) have been delivered to the Trustee for cancellation; 88 97 (2) the Company or the Guarantors have paid or caused to be paid all other sums payable hereunder and under the Securities by the Company and the Guarantors; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with. ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 1 Supplemental Indentures Without Consent of Holders. Without the consent of any Holder, the Company (when authorized by Board Resolutions), any Guarantor (when authorized by Board Resolutions) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to cure any ambiguity, defect or inconsistency, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action pursuant to this clause (1) shall not adversely affect the interests of any Holder in any respect; (2) to provide for uncertificated Securities in addition to or in place of certificated Securities; (3) to add to the covenants of the Company or the Guarantors for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company or the Guarantors or to make any other change that does not adversely affect the legal rights of any Holder under the Indenture, provided, that the Company or the Guarantors have delivered to the Trustee an Opinion of Counsel stating that such change does not adversely affect the rights of any Holder; (4) to provide collateral for the Securities or additional Guarantors of the Securities; 89 98 (5) to evidence the succession of another Person to the Company, and the assumption by any such successor of the obligations of the Company herein and in the Securities in accordance with Article V; (6) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (7) to provide for the issuance and authorization of the Exchange Securities; (8) to release any Guarantor that ceases to be a Subsidiary of the Company pursuant to Section 11.4 from its Guarantee; (9) in any other case where a supplemental indenture is required or permitted to be entered into pursuant to the provisions of Article XI without the consent of any Holder; or (10) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities. SECTION 2 Amendments, Supplemental Indentures and Waivers with Consent of Holders. Subject to Section 6.8, with the consent of the Holders of not less than a majority in aggregate principal amount of then outstanding Securities (including consents obtained in connection with a tender offer or exchange offer for Securities), by written act of said Holders delivered to the Company and the Trustee, the Company (when authorized by a Board Resolution), the Guarantors (when authorized by a Board Resolution) and the Trustee may amend or supplement this Indenture or the Securities or enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or the Securities or of modifying in any manner the rights of the Holders under this Indenture or the Securities. Subject to Section 6.8, the Holder or Holders of not less than a majority in aggregate principal amount of then outstanding Securities may waive compliance by the Company or any Guarantor with any provision of this Indenture or the Securities. Notwithstanding any of the above, however, no such amendment, supplemental indenture or waiver shall, without the consent of the Holder of each outstanding Security affected thereby: 90 99 (1) reduce the percentage of principal amount of the outstanding Securities whose Holders must consent to an amendment, supplement or waiver of any provision of this Indenture or the Securities; (2) reduce the rate or extend the time for payment of interest on any Security; (3) reduce the principal amount of any Security, or reduce the Change of Control Purchase Price, the Asset Sale Offer Price or the Redemption Price; (4) change the Stated Maturity or the Change of Control Purchase Date or the Asset Sale Offer Period of any Security; (5) alter the redemption provisions of Article III or the provisions of Section 4.14 or Article XI in a manner adverse to any Holder; (6) make any changes in the provisions concerning waivers of Defaults or Events of Default by Holders of the Securities or the rights of Holders to recover the principal of, premium, if any, interest or Liquidated Damages, if any, on, or redemption payment with respect to, any Security, including without limitation any changes in Section 6.8, 6.12 or this third sentence of this Section 9.2; (7) reduce the principal of, premium, if any, interest or Liquidated Damages, if any, on any Security payable as provided for in this Indenture and the Securities (or change the place of payment where, or the coin, currency or manner in which, any Security or any principal, premium, interest or Liquidated Damages is payable); or (8) make any change to this Indenture that would adversely affect the contractual ranking of the Securities. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the 91 100 amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture or waiver. After an amendment, supplement or waiver under this Section 9.2 or Section 9.4 becomes effective, it shall bind each Holder. The Company and the Guarantors shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any outstanding Securities for or as an inducement to any consent, waiver or amendment of any terms or provisions of the outstanding Securities unless such consideration is offered to be paid or agreed to be paid to all Holders of the Securities which so consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 3 Compliance with TIA. Every amendment, waiver or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 4 Revocation and Effect of Consents. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of his Security by written notice to the Company or the Person designated by the Company as the Person to whom consents should be sent if such revocation is received by the Company or such Person before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Securities have consented (and have not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be the date so fixed by the Company 92 101 notwithstanding the provisions of the TIA. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date, and only those Persons (or their duly designated proxies), shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (1) through (8) of Section 9.2, in which case, the amendment, supplement or waiver shall bind only each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security; provided, that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of, premium, if any, interest and Liquidated Damages, if any, on a Security, on or after the respective dates set for such amounts to become due and payable expressed in such Security, or to bring suit for the enforcement of any such payment on or after such respective dates. SECTION 5 Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee or require the Holder to put an appropriate notation on the Security. The Trustee may place an appropriate notation on the Security briefly describing the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company, in exchange for the Security, shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Any failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment, supplement or waiver. SECTION 6 Trustee to Sign Amendments, Etc. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article IX; provided, that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of 93 102 Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article IX is authorized or permitted by this Indenture. ARTICLE X RIGHT TO REQUIRE REPURCHASE SECTION 1 Repurchase of Securities at Option of the Holder Upon a Change of Control. (a) In the event that a Change of Control occurs, each Holder shall have the right, at such Holder's option, pursuant to an irrevocable and unconditional offer by the Company (the "Change of Control Offer") subject to the terms and conditions of this Indenture, to require the Company to repurchase all or any part of such Holder's Securities (provided, that the principal amount of such Securities at maturity must be $1,000 or an integral multiple thereof) on a date selected by the Company that is no later than 45 Business Days after the occurrence of such Change of Control (the "Change of Control Purchase Date"), at a cash price (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof, plus (subject to the right of Holders of record on a Record Date to receive interest and Liquidated Damages, if any, due on an Interest Payment Date that is on or prior to such repurchase date and subject to clause (b)(4) below) accrued and unpaid interest and Liquidated Damages, if any, to and including the Change of Control Purchase Date. (b) In the event of a Change of Control, the Company shall be required to commence an offer to purchase Securities (a "Change of Control Offer") as follows: (1) the Change of Control Offer shall commence within 15 Business Days following the occurrence of the Change of Control; (2) the Change of Control Offer shall remain open for 20 Business Days, except to the extent that a longer period is required by applicable law, rule or regulation (the "Change of Control Offer Period"); (3) upon the expiration of a Change of Control Offer, the Company shall purchase all of the properly tendered Securities at the Change of Control Purchase Price; 94 103 (4) if the Change of Control Purchase Date is on or after a Record Date and on or before the related interest payment date, any accrued interest and Liquidated Damages, if any, will be paid to the Person in whose name a Security is registered at the close of business on such Record Date, and no additional interest will be payable to Securityholders who tender Securities pursuant to the Change of Control Offer; (5) the Company shall provide the Trustee and the Paying Agent with notice of the Change of Control Offer at least three Business Days before the commencement of any Change of Control Offer; and (6) on or before the commencement of any Change of Control Offer, the Company or the Registrar (upon the request and at the expense of the Company) shall send, by first-class mail, a notice to each of the Securityholders, which (to the extent consistent with this Indenture) shall govern the terms of the Change of Control Offer and shall state: (i) that the Change of Control Offer is being made pursuant to such notice and this Section 10.1 and that all Securities, or portions thereof, tendered will be accepted for payment; (ii) the Change of Control Purchase Price (including the amount of accrued and unpaid interest, subject to clause (b)(4) above), the Change of Control Purchase Date and the Change of Control Put Date (as defined below); (iii) that any Security, or portion thereof, not tendered or accepted for payment will continue to accrue interest and Liquidated Damages, if any; (iv) that, unless the Company defaults in depositing Cash with the Paying Agent in accordance with the last paragraph of this Article X or such payment is prevented, any Security, or portion thereof, accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest and Liquidated Damages, if any, after the Change of Control Purchase Date; (v) that Holders electing to have a Security, or portion thereof, purchased pursuant to a Change of Control Offer will be required to 95 104 surrender the Security, with the section entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, to the Paying Agent (which may not for purposes of this Section 10.1, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) at the address specified in the notice prior to the close of business on the earlier of (a) the third Business Day prior to the Change of Control Purchase Date and (b) the third Business Day following the expiration of the Change of Control Offer (such earlier date being the "Change of Control Put Date"); (vi) that Holders will be entitled to withdraw their election, in whole or in part, if the Paying Agent (which may not for purposes of this Section 10.1, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) receives, up to the close of business on the Change of Control Put Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder is withdrawing and a statement that such Holder is withdrawing his election to have such principal amount of Securities purchased; and (vii) a brief description of the events resulting in such Change of Control. Any such Change of Control Offer shall comply with all applicable provisions of Federal and state laws, including those regulating tender offers, if applicable, and any provisions of this Indenture which conflict with such laws (A) shall be deemed to be superseded by the provisions of such laws and (B) shall not be deemed to have been breached by virtue thereof. On or before the Change of Control Purchase Date, the Company shall (i) accept for payment Securities or portions thereof properly tendered pursuant to the Change of Control Offer and (ii) deposit with the Paying Agent Cash sufficient to pay the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any, subject to clause (b)(4) above) for all Securities or portions thereof so tendered. Promptly following the Change of Control Purchase Date the Company shall deliver to the Registrar Securities so accepted, together with an Officers' Certificate listing the Securities or por- 96 105 tions thereof being purchased by the Company. The Paying Agent shall on the Change of Control Purchase Date or promptly thereafter mail to Holders of Securities so accepted payment in an amount equal to the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any, subject to clause (b)(4) above), for such Securities (subject to clause (b)(4) above), and the Trustee or its authenticating agent shall promptly authenticate and the Registrar shall mail or deliver (or cause to be transferred by book entry) to such Holders a new Security equal in principal amount to any unpurchased portion of the Security surrendered; provided, however, that each such new Security will be in a principal amount of $1,000 or an integral multiple thereof. Any Securities not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. ARTICLE XI GUARANTEE SECTION 1 Guarantee. (a) In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, to the fullest extent permitted by applicable law, each of the Guarantors hereby irrevocably and unconditionally guarantees (the "Guarantee"), jointly and severally, on a senior basis, to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Company under this Indenture or the Securities, that: (w) the principal of, premium, if any, interest and Liquidated Damages, if any, on the Securities will be paid in full when due, whether on the Maturity Date or on the applicable Interest Payment Date, by acceleration, call for redemption, upon a Change of Control, an Asset Sale Offer or otherwise; (x) all other obligations of the Company to the Holders or the Trustee under this Indenture or the Securities will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Securities; and (y) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, 97 106 whether at maturity, by acceleration, call for redemption, upon a Change of Control, upon an Asset Sale Offer or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, each Guarantor shall be jointly and severally obligated, to pay the same before failure so to pay becomes an Event of Default. If the Company or a Guarantor defaults in the payment of the principal of, premium, if any, interest or Liquidated Damages, if any, on, the Securities when and as the same shall become due, whether upon maturity, acceleration, call for redemption, upon a Change of Control Offer, Asset Sale Offer or otherwise, without the necessity of action by the Trustee or any Holder, each Guarantor shall be required, jointly and severally, to promptly make such payment in full. (b) Each Guarantor hereby agrees, to the fullest extent permitted by applicable law, that its obligations with regard to this Guarantee shall be unconditional, irrespective of the validity, regularity or enforceability of the Securities or this Indenture, the absence of any action to enforce the same, any delay in obtaining or realizing upon or failure to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances that might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or right to require the prior disposition of the assets of the Company to meet its obligations, protest, notice and all demands whatsoever and covenants that this Guarantee will not be discharged (except to the extent released pursuant to Section 11.4) except by complete performance of the obligations contained in the Securities and this Indenture. (c) If any Holder or the Trustee is required by any court or otherwise to return to either the Company or any Guarantor, or any Custodian or similar official acting in relation to either the Company or such Guarantor, any amount paid by either the Company or such Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect (except to the extent released pursuant to Section 11.4). Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between such Guarantor, on the 98 107 one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 6.2 for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration as to the Company of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of those obligations as provided in Section 6.2, those obligations (whether or not due and payable) will forthwith become due and payable by each of the Guarantors for the purpose of this Guarantee. (d) Each Guarantor, and by its acceptance of a Security issued hereunder, each Holder, hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor set forth in Section 11.1(a) not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under its Guarantee set forth in Section 11.1(a) shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to the following paragraph of this Section 11.1(d), result in the obligations of such Guarantor under such Guarantee not constituting such a fraudulent transfer or conveyance. Each Guarantor that makes any payment or distribution under Section 11.1(a) shall be entitled to a contribution from each other Guarantor equal to its Pro Rata Portion of such payment or distribution. For purposes of the foregoing, the "Pro Rata Portion" of any Guarantor means the percentage of the net assets of all Guarantors held by such Guarantor, determined in accordance with GAAP. (e) It is the intention of each Guarantor and the Company that the obligations of each Guarantor hereunder shall be in, but not in excess of, the maximum amount permitted by applicable law. Accordingly, if the obligations in respect of the Guarantee would be annulled, avoided or subordinated to the creditors of any Guarantor by a court of competent jurisdiction in a proceeding actually pending before such court as a result of a determination both that such Guarantee was made by such Guarantor without 99 108 fair consideration and, immediately after giving effect thereto, such Guarantor was insolvent or unable to pay its debts as they mature or left with an unreasonably small capital, then the obligations of such Guarantor under such Guarantee shall be reduced by such court if and to the extent such reduction would result in the avoidance of such annulment, avoidance or subordination; provided, however, that any reduction pursuant to this paragraph shall be made in the smallest amount as is strictly necessary to reach such result. For purposes of this paragraph, "fair consideration," "insolvency," "unable to pay its debts as they mature," "unreasonably small capital" and the effective times of reductions, if any, required by this paragraph shall be determined in accordance with applicable law. SECTION 2 Execution and Delivery of Guarantee. Each Guarantor shall, by virtue of such Guarantor's execution and delivery of this Indenture or such Guarantor's execution and delivery of a supplemental indenture pursuant to Section 11.3 hereof, be deemed to have signed on each Security issued hereunder the notation of guarantee set forth on the form of the Securities attached hereto as Exhibit A to the same extent as if the signature of such Guarantor appeared on such Security. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in Section 11.1 on behalf of each Guarantor. The notation of a Guarantee set forth on any Security shall be null and void and of no further effect with respect to the Guarantee of any Guarantor which, pursuant to Section 11.4, is released from such Guarantee. SECTION 3 Future Guarantors. The Company and the Guarantors covenant and agree that they shall cause each Person that is or becomes a Subsidiary of the Company or any Guarantor (other than any Foreign Subsidiary) to execute and deliver to the Trustee a supplemental indenture in order to become a Guarantor hereunder. SECTION 4 Release of a Guarantor. In the event of a sale or other disposition, by way of merger, consolidation, foreclosure or otherwise, of all or substantially all of the assets of any Guarantor or of all of the Capital Stock of such Guarantor, then such 100 109 Guarantor (in the event of a sale or other disposition of all of the Capital Stock of such Guarantor) or the corporation acquiring the property (but not such Guarantor) (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) shall, without further action on the part of the Trustee, the Company, a Guarantor or any other Person, be unconditionally released and relieved of any obligations under the applicable Guarantee; provided that the Net Cash Proceeds from such sale or other disposition shall be applied in accordance with Section 4.14 hereof and the Trustee shall have received the Officers' Certificate referred to therein; and provided further, that the guarantee of such Guarantor with respect to the Credit Agreement and any renewals, extensions, replacements, refinancings, amendments and modifications thereof, if any, has been or is simultaneously released. In the event that the Board of Directors of the Company designates any of the Guarantors an Unrestricted Subsidiary, such Guarantor shall, subject to the limitations set forth in the definition of "Unrestricted Subsidiary" herein, and without further action on the part of the Trustee, the Company, such Guarantor or any other Person, be unconditionally released and relieved of any obligations under the Guarantee of such Guarantor. The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a request by the Company or the Guarantor accompanied by an Officers' Certificate certifying as to the compliance with this Section 11.4. Any Guarantor not so released shall remain liable for the full amount of principal of, premium, if any, interest and Liquidated Damages, if any, on the Securities as provided in this Article XI. SECTION 5 Certain Bankruptcy Events. Each Guarantor hereby covenants and agrees, to the fullest extent that it may do so under applicable law, that in the event of the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, such Guarantor shall not file (or join in any filing of), or otherwise seek to participate in the filing of, any motion or request seeking to stay or to prohibit (even temporarily) execution on the Guarantee and hereby waives and agrees not to take the benefit of any such stay of execution, whether the Bankruptcy Law or otherwise. SECTION 6 Ranking of Guarantee. The obligations of each Guarantor under its Guarantee pursuant to this Article XI shall rank pari passu with the Senior Indebtedness of such Guarantor on the same basis 101 110 as the Securities rank pari passu with Senior Indebtedness of the Company. ARTICLE XII MISCELLANEOUS SECTION 1 TIA Controls. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of the TIA, the imposed duties, upon qualification of this Indenture under the TIA, shall control. SECTION 2 Notices. Any notices or other communications to the Company or any Guarantor or the Trustee required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or any Guarantor: Ekco Group, Inc. 98 Spit Brook Road Nashua, New Hampshire 03062 Attention: Chief Financial Officer Telecopy: (603) 888-1427 (with a copy to the General Counsel) if to the Trustee: Fleet National Bank of Connecticut 777 Main Street Hartford, Connecticut 06115 Attention: Michael Hopkins Telecopy: (860) 986-7920 Any party by notice to each other party may designate additional or different addresses as shall be furnished in writing by such party. Any notice or communication to any party shall be deemed to have been given or made as of the date so delivered, if personally delivered; when answered back, if telexed; when receipt is acknowledged, if telecopied; and five Business Days after mailing if sent by registered or certified mail, postage prepaid (except that a 102 111 notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Securityholder shall be mailed to him or her by first class mail or other equivalent means at his or her address as it appears on the registration books of the Registrar and shall be sufficiently given to him or her if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 3 Communications by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). SECTION 4 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or any Guarantor to the Trustee to take any action under this Indenture, such Person shall furnish to the Trustee: (1) an Officers' Certificate (in form and substance reasonably satisfactory to the Trustee) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been met; and (2) an Opinion of Counsel (in form and substance reasonably satisfactory to the Trustee) stating that, in the opinion of such counsel, all such conditions precedent have been met; provided, however, that in the case of any such request or application as to which the furnishing of particular documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished under this Section. 103 112 SECTION 5 Statements Required in Certificate or Opinion. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate or Opinion of Counsel are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been met; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been met; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. SECTION 6 Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 7 Non-Business Days. If a payment date is not a Business Day, any payment required to be paid to Holders may be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period. SECTION 8 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURIS- 104 113 DICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION. SECTION 9 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Guarantor or any of their respective Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 10 No Recourse Against Others. No direct or indirect partner, incorporator, stockholder, director, officer or employee, as such, past, present or future, of the Company or any Guarantor, or any successor entity, shall have any personal liability in respect of the obligations of the Company or the Guarantors under the Securities or this Indenture by reason of his, her or its status as such partner, incorporator, stockholder, director, officer or employee. Each Securityholder by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities. SECTION 11 Successors. All agreements of the Company and the Guarantors in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. 105 114 SECTION 12 Duplicate Originals. All parties may sign any number of copies or counterparts of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. SECTION 13 Severability. In case any one or more of the provisions in this Indenture or in the Securities shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SECTION 14 Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and headings of the Articles and the Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 15 Qualification of Indenture. The Company shall qualify this Indenture under the TIA in accordance with the terms and conditions of the Registration Rights Agreement and shall pay all costs and expenses (including attorneys' fees for the Company and the Trustee) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of the Indenture and the Securities and printing this Indenture and the Securities. The Trustee shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA. SECTION 16 Registration Rights. Holders of the Securities shall be entitled to the registration rights with respect to such Securities pursuant to, and subject to the terms of, the Registration Rights Agreement. 106 115 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above. EKCO GROUP, INC., [Seal] By: /S/ JOHN T. HARAN --------------------------- Name: John T. Haran Title: Vice President & Treasurer Attest: /S/ JEFFREY A. WEINSTEIN ------------------------- Secretary FLEET NATIONAL BANK OF CONNECTICUT, as Trustee By: /S/ MICHAEL M. HOPKINS --------------------------- Name: Michael M. Hopkins Title: Vice President 116 GUARANTORS: B. VIA INTERNATIONAL CLEANING SPECIALTY COMPANY HOUSEWARES, INC. By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN ------------------------- ------------------------- Name: John T. Haran Name: John T. Haran Title: Vice President Title: Vice President & Treasurer & Treasurer EKCO DISTRIBUTION EKCO HOUSEWARES, INC. OF ILLINOIS, INC. By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN ------------------------- ------------------------- Name: John T. Haran Name: John T. Haran Title: Vice President Title: Vice President & Treasurer & Treasurer EKCO MANUFACTURING OF FREM CORPORATION OF OHIO, INC. By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN ------------------------- ------------------------- Name: John T. Haran Name: John T. Haran Title: Vice President Title: Vice President & Treasurer & Treasurer KELLOGG BRUSH MANUFACTURING WOODSTREAM CORPORATION CO. By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN ------------------------- ------------------------- Name: John T. Haran Name: John T. Haran Title: Vice President Title: Vice President & Treasurer & Treasurer WRIGHT-BERNET, INC. By: /S/ JOHN T. HARAN ------------------------- Name: John T. Haran Title: Vice President & Treasurer
117 Exhibit A [FORM OF SECURITY] EKCO GROUP, INC. 9 1/4% SENIOR NOTE DUE 2006 CUSIP No. _______ No. $ _________ Ekco Group, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successors under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, the principal sum of _____ Dollars, on April 1, 2006. Interest Payment Dates: April 1 and October 1, commencing October 1, 1996. Record Dates: March 15 and September 15. Reference is made to the further provisions of this Security on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Security to be duly executed under its corporate seal. Dated: ___________ ___, 199_. EKCO GROUP, INC., [Seal] By: ______________________________ Name: Title: Attest: ____________________ Name: Title: Secretary 118 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Securities described in the within-mentioned Indenture. FLEET NATIONAL BANK OF CONNECTICUT, as Trustee By: ___________________________________ Authorized Signatory Dated: ___________ ___, ____. A-2 119 EKCO GROUP, INC. 9 1/4% Senior Note due 2006 Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.(1) THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHICH IS AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE") RESELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT - ------------------------ (1) This paragraph should only be added if the Security is issued in global form. A-3 120 OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A WRITTEN CERTIFICATION CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION TERMINATION DATE.(2) - ------------------------ (2) This paragraph should be included only for the Initial Securities. A-4 121 (Back of Security) 1. Interest. Ekco Group, Inc., a Delaware corporation (hereinafter called the "Company," which term includes any successors of the Company under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Security at the rate of 9 1/4% per annum [and Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below].(3) To the extent it is lawful, the Company promises to pay interest on overdue installments of interest [and Liquidated Damages, if any] (without regard to applicable grace periods) at the rate of 9 1/4% per annum [, plus the rate of Liquidated Damages accruing on the Securities pursuant to the Registration Rights Agreement,] compounded semi-annually. The Company will pay interest semi-annually on April 1 and October 1 of each year (each, an "Interest Payment Date"), commencing October 1, 1996. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid on the Securities, from March 25, 1996. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Notwithstanding any other provision of the Indenture or this Security: (i) accrued and unpaid interest [and Liquidated Damages], if any, on the Initial Securities being exchanged in the Exchange Offer shall be due and payable on the next Interest Payment Date for the Exchange Securities following the Exchange Offer, (ii) interest on the Exchange Securities to be issued in the Exchange Offer shall accrue from the date the Exchange Offer is consummated and (iii) the Exchange Securities shall have no provisions for Liquidated Damages. 2. Method of Payment. The Company shall pay interest [and Liquidated Damages, if any] on the Securities (except defaulted interest [and Liquidated Damages, if any,]) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date. Holders must surrender Securities to a Paying Agent to collect principal payments. Except as provided below, the Company shall pay principal, premium, if any, interest [and - ------------------------ (3) References to Liquidated Damages shall appear only in the Initial Securities. A-5 122 Liquidated Damages], if any, in such coin or currency of the United States of America as at the time of payment shall be legal tender for payment of public and private debts ("U.S. Legal Tender"). The Securities will be payable as to principal, premium, if any, interest, [and Liquidated Damages, if any,] and the Securities may be presented for registration of transfer or exchange, at the office or agency of the Company maintained for such purpose within or without the Borough of Manhattan, the City and State of New York or, at the option of the Company, such payments may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium, if any, interest [and Liquidated Damages], if any, on all Global Securities and all other Securities the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Until otherwise designated by the Company, the Company's office or agency will be the corporate trust office of the Trustee. 3. Paying Agent and Registrar. Initially, Fleet National Bank of Connecticut (the "Trustee"), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co- Registrar without notice to the Holders. The Company or any of its Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar or co-Registrar. 4. Indenture. The Company issued the Securities under an Indenture, dated as of March 25, 1996 (the "Indenture"), among the Company, the Guarantors named therein and the Trustee. Capitalized terms herein have the meanings set forth in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the TIA, as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of them. The Securities are general unsecured obligations of the Company limited in aggregate principal amount to $125,000,000. The Securities are guaranteed on a senior basis by all of the Company's present and future Subsidiaries (other than Foreign Subsidiaries). A-6 123 5. Redemption. The Securities may be redeemed in whole or from time to time in part at any time on and after April 1, 2001, at the option of the Company, at the Redemption Price (expressed as a percentage of principal amount) set forth below with respect to the indicated Redemption Date, in each case, plus any accrued but unpaid interest [and Liquidated Damages], if any, to the Redemption Date. The Securities may not be so redeemed prior to April 1, 2001.
If redeemed during the 12-month period beginning Redemption Price ------------------- ---------------- 2001 ..................... 104.6250% 2002 ..................... 103.0834% 2003 ..................... 101.5417% 2004 and thereafter ...... 100.0000%
Any such redemption will comply with Article III of the Indenture. 6. Notice of Redemption. Notice of redemption will be sent by first class mail, at least 30 days and not more than 60 days prior to the Redemption Date to the Holder of each Security to be redeemed at such Holder's last address as then shown upon the registry books of the Registrar. Securities may be redeemed in part in integral multiples of $1,000 only. Except as set forth in the Indenture, from and after any Redemption Date, if monies for the redemption of the Securities called for redemption shall have been deposited with the Paying Agent on such Redemption Date and payment of the Securities called for redemption is not prohibited under the Indenture, the Securities called for redemption will cease to bear interest or Liquidated Damages and the only right of the Holders of such Securities will be to receive payment of the Redemption Price, plus any accrued and unpaid interest [and Liquidated Damages], if any, to the Redemption Date. 7. Denominations; Transfer; Exchange. The Securities are in registered form, without coupons, in denominations of $1,000 and integral multiples thereof. A Holder may register the transfer of, or exchange Securities in accordance with, the Indenture. No service A-7 124 charge will be made for any registration of transfer or exchange of the Securities, but the Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption. 8. Persons Deemed Owners. The registered Holder of a Security may be treated as the owner of it for all purposes. 9. Unclaimed Money. If money for the payment of principal, premium, if any, interest [and Liquidated Damages], if any, remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money back to the Company at its written request. After that, all liability of the Trustee and such Paying Agent(s) with respect to such money shall cease. 10. Discharge Prior to Redemption or Maturity. Except as set forth in the Indenture, if the Company irrevocably deposits with the Trustee, in trust, for the benefit of the Holders, Cash, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient in the opinion of a nationally recognized firm of independent public accountants selected by the Trustee, to pay the principal of, premium, if any, interest [and Liquidated Damages], if any, on the Securities to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company and the Guarantors will be discharged from certain provisions of the Indenture and the Securities (including the restrictive covenants described below, but excluding their obligation to pay the principal of, premium, if any, interest [and Liquidated Damages], if any, on the Securities). Upon satisfaction of certain additional conditions set forth in the Indenture, the Company may elect to have its and the Guarantors' obligations discharged with respect to outstanding Securities. 11. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default or compliance A-8 125 with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Without notice to or consent of any Holder, the parties thereto may under certain circumstances amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, or make any other change that does not adversely affect the rights of any Holder of a Security. 12. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company, the Guarantors and their respective Subsidiaries to, among other things, incur additional Indebtedness and Disqualified Capital Stock, pay dividends or make certain other Restricted Payments, enter into certain transactions with Affiliates, incur Liens, engage in Sale and Leaseback Transactions, sell assets, merge or consolidate with any other Person or transfer (by lease, assignment or otherwise) substantially all of the properties and assets of the Company. The limitations are subject to a number of important qualifications and exceptions. The Company must periodically report to the Trustee on compliance with such limitations. 13. Ranking. Payment of principal of, premium, if any, interest [and Liquidated Damages], if any, on the Securities will rank pari passu in right of payment with all existing and future Senior Indebtedness of the Company and senior in right of payment to all existing and future Subordinated Indebtedness of the Company. 14. Repurchase at Option of Holder. (a) If there is a Change of Control, the Company shall be required to offer to purchase on the Change of Control Payment Date all outstanding Securities at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest [and Liquidated Damages], if any, to the Change of Control Payment Date. Holders of Securities will receive a Change of Control Offer from the Company prior to any related Change of Control Payment Date and may elect to have such Securities purchased by completing the form entitled "Option of Holder to Elect Purchase" appearing below. (b) The Indenture imposes certain limitations on the ability of the Company, the Guarantors or any of their A-9 126 respective Subsidiaries to sell assets. In the event the proceeds from a permitted Asset Sale exceed certain amounts, as specified in the Indenture, the Company will be required either to reinvest the proceeds of such Asset Sale in its business or to make an offer to purchase a certain amount of each Holder's Securities at 100% of the principal amount thereof, plus accrued and unpaid interest [and Liquidated Damages], if any, to the Asset Sale Payment Date. 15. Notation of Guarantee. As set forth more fully in the Indenture, the Persons, constituting Guarantors from time to time, in accordance with the provisions of the Indenture, fully and unconditionally, and jointly and severally, guarantee, in accordance with Section 11.1 of the Indenture, to the Holder and to the Trustee and its successors and assigns, that (i) the principal of, premium, if any, interest [and Liquidated Damages], if any, on the Security will be paid, whether at the Maturity Date or the appropriate Interest Payment Dates, as applicable, by acceleration, call for redemption or otherwise, and all other obligations of the Company to the Holders or the Trustee under the Indenture of this Security will be promptly paid in full or performed, all in accordance with the terms of the Indenture and this Security, and (ii) in the case of any extension of payment or renewal of this Security or any of such other obligations, they will be paid in full when due or performed in accordance with the terms of such extension or renewal, whether at the Maturity Date, as so extended, by acceleration or otherwise. Such Guarantees shall cease to apply, and shall be null and void, with respect to any Guarantor who, pursuant to Article XI of the Indenture, is released from its Guarantees, or whose Guarantees otherwise cease to be applicable pursuant to the terms of the Indenture. 16. Successors. When a successor assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor will be released from those obligations. 17. Defaults and Remedies. If an Event of Default occurs and is continuing (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization), then in every such case, unless the principal of all of the securities shall have already become due and payable, either the Trustee or the Holders of 25% in aggregate principal amount of A-10 127 Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Securities notice of any continuing Default or Event of Default (except a Default in payment of principal, premium, if any, [or] interest [or Liquidated Damages], if any), if it determines in good faith that withholding notice is in their interest. 18. Trustee or Agent Dealings with Company. Subject to certain limitations, the Trustee and each Agent under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates as if it were not the Trustee or such Agent. 19. No Recourse Against Others. No direct or indirect partner, incorporator, stockholder, director, officer or employee, as such, past, present or future, of the Company or any Guarantor, or any successor entity, shall have any personal liability in respect of the obligations of the Company or the Guarantors under the Securities or the Indenture by reason of his, her or its status as such partner, incorporator, stockholder, director, officer or employee. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities. 20. Authentication. This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Security. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), A-11 128 JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon. [23. Additional Rights of Holders of Transfer Restricted Securities. In addition to the rights provided to Holders of Securities under the Indenture, Holders of Transfer Restricted Securities shall have all the rights set forth in the Registration Rights Agreement.](4) - ------------------------ (4) This paragraph should only be added to the Initial Securities. A-12 129 [FORM OF] ASSIGNMENT I or we assign this Security to - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code of assignee) Please insert Social Security or other identifying number of assignee - ------------------------- and irrevocably appoint agent to transfer this ------------------------- Security on the books of the Company. The agent may substitute another to act for him . Dated: Signed: ---------- ------------------------------ (Sign exactly as name appears on the other side of this Security) A-13 130 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.14 or Article X of the Indenture, check the appropriate box: / / Section 4.14 / /Article X --- --- If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.14 or Article X of the Indenture, as the case may be, state the amount you want to be purchased (in an amount which must be $1,000 or an integral multiple thereof): $ -------- Date: Signature: ---------------- --------------------------------------------- (Sign exactly as name appears on the other side of this Security) A-14 131 SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(5) The following exchanges of a part of this Global Security for Definitive Securities have been made:
Amount of Amount of Principal Amount Signature of decrease in increase in of this Global authorized officer Principal Amount Principal Amount Security following of Trustee or Date of of this Global of this Global such decrease (or Securities Exchange Security Security increase) Custodian - ---------------------------------------------------------------------------------------------------------------------------
- ------------------------ (5) This schedule should only be added if the Security is issued in global form. A-15 132 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES(6) Re: 9 1/4% SENIOR NOTES DUE 2006 OF EKCO GROUP, INC. This Certificate relates to $____________ principal amount of Securities held in (check applicable space) _____ book-entry or ______ definitive form by __________________ (the "Transferor"). The Transferor (check applicable box): / / has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depository a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above); or / / has requested the Trustee by written order to exchange or register the transfer of a Security or Securities. In connection with such request and in respect of each such Security, the Transferor does hereby certify that Transferor is familiar with the Indenture relating to the above-captioned Securities and as provided in Section 2.6 of such Indenture, the transfer of this Security does not require registration under the Securities Act (as defined below) because: / / Such Security is being acquired for the Transferor's own account, without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of the Indenture). / / Such Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section 2.6(a)(ii)(B), Section 2.6(b)(i) or Section 2.6(d)(i)(B) of the Indenture). / / Such Security is being transferred in accordance with Rule 144 under the Securities Act, or pursuant to an effective registration statement under the Securities Act - ------------------------ (6) The following should be included only for Initial Securities. A-16 133 (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the Indenture). / / Such Security is being transferred in reliance on and in compliance with an exemption from the registration requirements of the Securities Act, other than as provided in the immediately preceding paragraph. An Opinion of Counsel to the effect that such transfer does not require registration under the Securities Act accompanies this Certificate (in satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture). ------------------------------------------- [INSERT NAME OF TRANSFEROR] By: ---------------------------------------- Date: ------------------------ A-17 EX-4.2.(C) 4 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.2 (c) EXECUTION COPY ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of March 25, 1996 by and among EKCO GROUP, INC. THE GUARANTORS (as defined herein), and BEAR, STEARNS & CO. INC. and SMITH BARNEY INC. ================================================================================ 2 This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of March 25, 1996, by and among Ekco Group, Inc., a Delaware corporation (the "COMPANY"), the Guarantors (as defined herein) and Bear, Stearns & Co. Inc. ("Bear Stearns") and Smith Barney Inc. ("Smith Barney" and, together with Bear Stearns, the "PURCHASERS"), who have agreed to purchase the Company's 9 1/4% Senior Notes due 2006 (the "INITIAL SECURITIES") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated March 20, 1996 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors and the Purchasers. In order to induce the Purchasers to purchase the Initial Securities, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Purchasers set forth in Section 2 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: ACT: The Securities Act of 1933, as amended. BUSINESS DAY: Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust office of the Trustee, on which banks are authorized to close. BROKER-DEALER: Any broker or dealer registered under the Exchange Act. BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Exchange Securities that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Initial Securities that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Initial Securities acquired directly from the Company or any of its affiliates). 2 3 CLOSING DATE: The date hereof. COMMISSION: The Securities and Exchange Commission. CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (b) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof and (c) the delivery by the Company and the Guarantors to the Trustee under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities tendered by Holders thereof pursuant to the Exchange Offer. DAMAGES PAYMENT DATE: With respect to the Initial Securities, each Interest Payment Date. EFFECTIVENESS TARGET DATE: As defined in Section 5. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended. EXCHANGE OFFER: The registration by the Company and the Guarantors under the Act of the Exchange Securities pursuant to the Exchange Offer Registration Statement pursuant to which the Company and the Guarantors shall offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating to the Exchange Offer, including the related Prospectus. 3 4 EXCHANGE SECURITIES: The Company's 9 1/4% Senior Notes due 2006 to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the request of any Holder of Initial Securities covered by a Shelf Registration Statement, in exchange for such Initial Securities. EXEMPT RESALES: The transactions in which the Purchasers propose to sell the Initial Securities to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act, and to certain "accredited investors," as such term is defined in Rule 501(a)(1), (2), (3), (5) and (7) of Regulation D under the Act. GUARANTORS: means (i) the Initial Guarantors identified in the following sentence and (ii) any future Guarantors that become Guarantors pursuant to the terms of the Indenture, but excluding any Person whose Guarantee has been released pursuant to the terms of the Indenture and excluding any Unrestricted Subsidiary (as such terms are defined in the Indenture). The Initial Guarantors consist of: B. Via International Housewares, Inc., a Delaware corporation, Cleaning Specialty Company, a Tennessee corporation, Ekco Distribution of Illinois, Inc., a Delaware corporation, Ekco Housewares, Inc., a Delaware corporation, Ekco Manufacturing of Ohio, Inc., a Delaware corporation, Frem Corporation, a Massachusetts corporation, Kellogg Brush Manufacturing Company, a Massachusetts corporation, Woodstream Corporation, a Pennsylvania corporation, and Wright-Bernet Incorporated, an Ohio corporation. HOLDERS: As defined in Section 2(b) hereof. INDEMNIFIED HOLDER: As defined in Section 8(a) hereof. INDENTURE: The Indenture, dated as of the Closing Date, among the Company, the Guarantors and Fleet National Bank of Connecticut, N.A., as trustee (the "TRUSTEE"), pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. INITIAL SECURITIES: The Company's 9 1/4% Senior Notes due 2006 issued pursuant to the Indenture on the Closing Date. 4 5 INTEREST PAYMENT DATE: As defined in the Indenture and the Securities. NASD: National Association of Securities Dealers, Inc. PERSON: An individual, partnership, corporation, limited liability company, joint venture, trust, unincorporated organization, or a government or agency or political subdivision thereof. PROSPECTUS: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. RECORD HOLDER: With respect to any Damages Payment Date, each Person who is a Holder of Securities on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. REGISTRATION DEFAULT: As defined in Section 5 hereof. REGISTRATION STATEMENT: Any registration statement of the Company and the Guarantors relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) which is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer Transfer Restricted Securities. SECURITIES: The Initial Securities and the Exchange Securities. SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof. 5 6 TIA: The Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. TRANSFER RESTRICTED SECURITIES: Each of the Initial Securities, until the earliest to occur, with respect to a particular Security, of (a) the date on which such Initial Security is exchanged for an Exchange Security in the Exchange Offer, (b) the date on which such Initial Security has been effectively registered under the Act and has been disposed of in accordance with a Shelf Registration Statement or (c) the date on which such Security is distributed to the public pursuant to Rule 144 under the Act or is salable pursuant to Rule 144(k) under the Act. UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) TRANSFER RESTRICTED SECURITIES. The Securities entitled to the benefit of this Agreement are the Transfer Restricted Securities. (b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law or Commission policy (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and the Guarantors shall (i) cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 30 days after the Closing Date, the Exchange Offer Registration Statement, (ii) use their best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest practicable time, but in no event later than 120 days after the Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such 6 7 Exchange Offer Registration Statement to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Securities to be made under the state securities or "Blue Sky" laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, except as otherwise provided in Section 6(c)(xi) below, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence the Exchange Offer. The Exchange Offer shall be on an appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Initial Securities that are Transfer Restricted Securities and to permit resales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as contemplated by Section 3(c) below. If, after such Exchange Offer Registration Statement initially is declared effective by the Commission, the Exchange Offer or the issuance of Exchange Securities thereunder or the sale of Transfer Restricted Securities pursuant thereto as contemplated by Section 3(c) below is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court, such Exchange Offer Registration Statement shall be deemed not to have become effective for purposes of this Agreement during the period that such stop order, injunction or other similar order or requirement remain in effect. (b) The Company and the Guarantors shall use their best efforts to cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their best efforts to cause the Exchange Offer to be Consummated on or prior to 45 days after the date on which the Exchange Offer Registration Statement is declared effective, but in no event later than 150 days after the Closing Date. 7 8 (c) The Company and the Guarantors shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Restricted Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities, may exchange such Initial Securities (other than Transfer Restricted Securities acquired directly from the Company and the Guarantors) pursuant to the Exchange Offer; provided, however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and the rules and regulations of the Commission promulgated thereunder and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Company and the Guarantors shall use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that such Registration Statement conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the date on which the Exchange Offer is Consummated. The Company and the Guarantors shall promptly provide sufficient copies of the latest version of such Prospectus to such Restricted Broker-Dealers promptly 8 9 upon request, and in no event later than two days after such request, at any time during such 180-day period in order to facilitate such resales. SECTION 4. SHELF REGISTRATION (a) SHELF REGISTRATION. If (i) the Company and the Guarantors are not required to file an Exchange Offer Registration Statement or Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a)(i) below have been complied with), (ii) any Holder of Transfer Restricted Securities shall notify the Company in writing within 10 Business Days following the Consummation of the Exchange Offer that (A) such Holder is prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder (other than due solely to the status of such Holder as an affiliate of the Company) or (C) such Holder is a Broker-Dealer and holds Initial Securities acquired directly from the Company or one of its affiliates, or (iii) the Exchange Offer is not Consummated or the Company and the Guarantors determine in good faith, based on the advice of counsel, that the Commission is unlikely to permit Consummation of the Exchange Offer within the time period set forth in Section 3(a) (so long as, in either case, the procedures set forth in Section 6(a) below are being or have been complied with) then the Company and the Guarantors shall (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Act, (which, if the Commission so allows, may be an amendment to the Exchange Offer Registration Statement (in either event, the "SHELF REGISTRATION STATEMENT")), on or prior to 30 days after the obligation to file such Shelf Registration Statement arises, which Shelf Registration Statement shall provide for resales of (I) all Transfer Restricted Securities in the case of clause (a)(i) or (a)(iii) above and (II) all Transfer Restricted Securities the Holders of which are prohibited from participating in the Exchange Offer or reselling Exchange Securities under clauses (A), (B) or (C) of clause (a)(ii) above, the Holders of which shall have provided the 9 10 information required pursuant to Section 4(b) hereof, and (y) use their best efforts to cause such Shelf Registration Statement to be declared effective on or prior to 120 days after the date on which the Company becomes obligated to file such Shelf Registration Statement. The Company and the Guarantors shall use their best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by and subject to the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least three years (as extended pursuant to Section 6(c)(i)) after the Closing Date, or such shorter period ending when (i) all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold in the manner set forth and as contemplated by such Shelf Registration Statement or (ii) a subsequent Shelf Registration Statement covering all Transfer Restricted Securities has been declared effective by the Commission. (b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 Business Days after receipt of a request therefor, such information specified in item 507 or 508 of Regulation S-K under the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such reasonably requested information to the Company. 10 11 SECTION 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any such Registration Statement is not declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii) the Exchange Offer has not been Consummated on or prior to the date specified for such Consummation in this Agreement or (iv) the Shelf Registration Statement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded promptly by a post-effective amendment to such Registration Statement that cures such failure (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the Company will pay to each Holder of Transfer Restricted Securities, for the first 90-day period immediately following the occurrence of such Registration Default, liquidated Damages ("Liquidated Damages") in an amount equal to one-half of one percent (0.5%) per annum of the principal amount of the Securities constituting Transfer Restricted Securities held by such Holder for so long as the Registration Default continues. The amount of liquidated damages payable to each Holder of Transfer Restricted Securities shall increase by an additional one-half of one percent (0.5%) per annum of the principal amount of Securities constituting Transfer Restricted Securities held by such Holder for each subsequent 90-day period up to a maximum amount of Liquidated Damages equal to two percent (2.0%) per annum of the principal amount of Securities constituting Transfer Restricted Securities held by such Holder, and ceasing to accrue on the date such Registration Default has been cured by, as applicable, the filing, declaration of effectiveness or withdrawal of suspension of effectiveness of the applicable Registration Statement. The obligation of the Company to pay Liquidated Damages pursuant to this Section 5 shall be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors as set forth in Section 11.1 of the Indenture. The Company shall notify the Trustee within two Business Days after (i) each and every Registration De- 11 12 fault and (ii) the date the Registration Default has been so cured. Until the Trustee and the Paying Agent have received an Officers' Certificate from the Company to the effect that all Liquidated Damages then due have been paid in full, the Company (in respect of any Interest Payment Date) shall pay Liquidated Damages then due by depositing with the Trustee, in trust, for the benefit of the affected Holders of Transfer Restricted Securities, on or before the applicable semi-annual Interest Payment Date, immediately available funds in sums sufficient to pay the Liquidated Damages then due and provide to the Trustee and the Paying Agent a list of Holders entitled to Liquidated Damages together with the amount of cash such Holder is due. The Liquidated Damages amount due shall be payable as additional interest (from funds received pursuant to such deposit) on each Interest Payment Date to the record holder of Transfer Restricted Securities entitled to receive the interest payment to be made on such date as set forth in the Indenture. All obligations of the Company and the Guarantors set forth in the preceding paragraphs that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Security shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange Offer, the Company and the Guarantors shall comply with all applicable provisions of Section 6(c) below, shall use their best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If, following the date hereof there has been published a change in Commission policy with respect to exchange offers such as the Exchange Offer, such that in the reasonable opinion of counsel to the Company and the Guarantors there is a question as to whether the Exchange Offer is permitted by applicable federal law or Commission policy, the Company and the Guarantors hereby agree to seek 12 13 a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for the Initial Securities. The Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company and the Guarantors hereby agree to take all such other actions as are requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement and to its entitlement to Liquidated Damages pursuant to Section 5 of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company and the Guarantors, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company or any Guarantor, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer, and (C) it is acquiring the Exchange Securities in its ordinary course of business. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder intending to use the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as 13 14 interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company or an affiliate thereof. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall provide a supplemental letter to the Commission (A) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that neither the Company nor the Guarantors have entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Exchange Offer and that, to the best of each of the Company's and the Guarantors' information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Securities in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities received in the Exchange Offer and (C) including any other undertaking or representation required by the Commission as set forth in any no-action letter pursuant to clause (i) above. (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf Registration Statement, the Company and the Guarantors shall comply with all the provisions of Section 6(c) below and shall use their best efforts to effect such registration to permit the sale of the Trans- 14 15 fer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof. (c) GENERAL PROVISIONS. In connection with any Registration Statement and any related Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Exchange Offer Registration Statement and the related Prospectus, to the extent that the same are required to be available to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the Company and the Guarantors shall: (i) use their best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Guarantors shall file promptly an appropriate amendment to such Registration Statement, (1) in the case of clause (A), correcting any such misstatement or omission, and (2) in the case of either clause (A) or (B), use their best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter. Notwithstanding the foregoing, if (A) the Board of Directors of the Company determines in good faith that it is in the best interests of the Company not to disclose the existence of or facts surrounding any proposed or pending material corporate 15 16 transaction involving the Company or any of the Guarantors and (B) the Company notifies the Holders within two Business Days after the Board of Directors makes such determination, the Company and the Guarantors may allow the Shelf Registration Statement to fail to be effective and usable as a result of such nondisclosure for up to 60 days during the three year period of effectiveness required by Section 4 hereof, but in no event for any period in excess of 30 consecutive days; provided, however, that the three year period referred to in Section 4 hereof during which the Shelf Registration Statement is required to be effective and usable shall be extended by the number of days during which such registration statement was not effective or usable pursuant to the foregoing provisions; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been, as applicable, exchanged or sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424 and 430A, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or 16 17 amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (E) of the Company's or any Guarantors' determination that, based on the advice of counsel, a post-effective amendment to a Registration Statement would be appropriate. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or "Blue Sky" laws, the Company and the Guarantors shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to the Purchasers, each selling Holder named in any Registration Statement or Prospectus and each of the underwriter(s) in connection with such sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such 17 18 sale, if any, for a period of at least five Business Days, and none of the Company nor the Guarantors will file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which the selling Holders of the Transfer Restricted Securities covered by such Registration Statement or the underwriter(s) in connection with such sale, if any, shall reasonably object within five Business Days after the written receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply with the applicable requirements of the Act; (v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s) in connection with such sale, if any, make the Company's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably request; (vi) subject to the execution of confidentiality agreements that are reasonably satisfactory to the Company as to the disclosure of any non-public information obtained pursuant to this Section 6(c)(vi), make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of such underwriter(s), all financial and other records, pertinent corporate documents and properties of the Company and the Guarantors and cause the Company's and the Guarantors' officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent 18 19 to the filing thereof and prior to its effectiveness; (vii) if requested by any selling Holders or the underwriter(s) in connection with such sale, if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company or the Guarantors are notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) furnish to each selling Holder named in any Registration Statement or Prospectus and each of the underwriter(s) in connection with such sale, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (ix) deliver to each selling Holder named in any Registration Statement or Prospectus and each of the underwriter(s) in connection with such sale, if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted 19 20 Securities covered by the Prospectus or any amendment or supplement thereto; (x) enter into such agreements (including an underwriting agreement) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company and the Guarantors shall: (A) furnish to each underwriter, if any, upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, signed on behalf of the Company by (x) the President or any Executive Vice President and (y) a principal financial or accounting officer of the Company, confirming, as of the date thereof, the matters set forth in paragraph (d) of Section 6 of the Purchase Agreement and such other similar matters as the underwriter(s) may reasonably request; (2) an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Company and the Guarantor, covering matters similar to those set forth in paragraphs (a) and (b) of Section 6 of the Purchase Agreement and such other matters as the underwriter(s) may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, 20 21 representatives of the independent public accountants for the Company and the Guarantor and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Company and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated as of the date of effectiveness of the Shelf Registration Statement from the Company's independent public accountants, in the customary form and covering matters of the type customarily covered in comfort 21 22 letters to underwriters in connection with primary underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 6(e) of the Purchase Agreement, without exception; (B) furnish to each selling Holder named in any Shelf Registration Statement or Prospectus, upon the effectiveness of such Shelf Registration Statement, one copy of each of the certificates, opinions and comfort letters delivered to the underwriters pursuant to clauses (A)(1),(2) and (3) above; (C) set forth in full or incorporate by reference in the underwriting agreement in connection with any sale or resale pursuant to such Shelf Registration Statement the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (D) deliver such other documents and certificates as may be reasonably requested by the underwriter(s) to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreements entered into by the Company and any Guarantor pursuant to this clause (x). The above shall be done at each closing under such underwriting or similar agreement, as and to the extent required thereunder, and if at any time the representations and warranties of the Company contemplated in (A)(1) above cease to be true and correct, the Company shall so advise the underwriter(s) promptly and if requested by such Persons, shall confirm such advice in writing; (xi) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the state securities or "Blue Sky" laws of such jurisdictions as the selling 22 23 Holders or underwriter(s), if any, may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided that, in connection therewith or as a condition thereof, neither the Company nor any Guarantor shall be required to (i) qualify or register as a foreign corporation in any such jurisdiction, (ii) execute a general or limited consent to service of process in any such jurisdiction, (iii) make any undertaking with respect to the conduct of its business, (iv) subject itself to taxation as a foreign corporation in any such jurisdiction or (v) enter into any agreement with any state securities or "Blue Sky" commission or agency, including, without limitation, any agreement to escrow shares of its capital stock; (xii) issue, upon the request of any Holder of Initial Securities covered by any Shelf Registration Statement contemplated by this Agreement, Exchange Securities, having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company for cancellation; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the Holders or the underwriter(s), if any may request at least two Business Days prior to such sale of Transfer Restricted Securities; 23 24 (xiv) use their best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xi) above; (xv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD; (xviii) otherwise use their best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to Holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 24 25 158 under the Act (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xix) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xx) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(i) or any notice from the Company and the Guarantors of the existence of any fact of the kind described in Section 6(c)(iii) (B), (C), (D) or (E) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in writing (the "ADVICE") by the Company and the Guarantors that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company and the Guarantors, each Holder will deliver to the Company and the Guarantors (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of 25 26 either such notice. In the event the Company and the Guarantors shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(B), (C), (D) and (E) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the Advice. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's and the Guarantors' performance of or compliance with this Agreement will be borne by the Company and the Guarantors, as applicable, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made with the NASD and counsel fees in connection therewith); (ii) all fees and expenses of compliance with federal securities and state securities or "Blue Sky" laws; (iii) all printing expenses of printing (including printing certificates for the Exchange Securities and printing of Prospectuses); (iv) all fees and disbursements of counsel for the Company, the Guarantors, and, in accordance with Section 7(b) below, the Holders of Transfer Restricted Securities; and (v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). Notwithstanding anything in this Section 7 to the contrary, the Company shall not be required to pay, in the case of an Underwritten Offering, underwriting discounts and selling commissions, which discounts and commissions shall be borne pro rata by the Holders of Transfer Restricted Securities. The Company and each of the Guarantors will, in any event, bear their respective internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company and the Guarantors. 26 27 (b) In connection with any Registration Statement required by this Agreement, the Company and the Guarantors will reimburse the Purchasers and the Holders of Transfer Restricted Securities the distribution of which is being registered pursuant to the Shelf Registration Statement for the reasonable fees and disbursements, not to exceed $25,000, of not more than one counsel chosen by the Holders of a majority of the principal amount of such Transfer Restricted Securities. SECTION 8. INDEMNIFICATION (a) Each of the Company and the Guarantors, jointly and severally agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder and each Person, if any, who controls such Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each of their respective directors, officers, employees and agents (any Person referred to above being sometimes hereinafter referred to as an "INDEMNIFIED HOLDER"), against any and all losses, liabilities, claim, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company and the Guarantors will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein (i) in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Indemnified Holder expressly for use therein or (ii) 27 28 in a preliminary prospectus if (x) a copy of the Prospectus (as then amended or supplemented) was previously furnished to the Holder but was not sent or given by or on behalf of such Holder to the Person asserting any such loss, claim, damage, liability or expense, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Initial Securities and (y) the Prospectus (as then amended or supplemented) would have completely corrected such untrue or alleged untrue statement or omission or alleged omission. This indemnity agreement will be in addition to any liability which the Company may otherwise have, including, under this Agreement. (b) Each of the Holders severally, and not jointly, agrees to indemnify and hold harmless each of the Company and the Guarantors and each Person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and each of their respective directors, officers, employees and agents, against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use therein; provided, however, that in no event shall any Holder be liable or responsible for any amount in excess of the amount by which the total 28 29 amount of the proceeds received by such Holder with respect to its sale of Initial Securities exceeds (i) the amount paid by such Holder for such Initial Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. This indemnity will be in addition to any liability which such Holder may otherwise have, including, under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expens- 29 30 es of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above, shall only be liable for the legal expenses of one counsel for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section 8 is for any reason held to be unavailable from the Company, any Guarantor or any Holder or is insufficient to hold harmless a party indemnified thereunder, the Company, the Guarantors and each Holder shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company, any contribution received by the Company from persons, other than any Indemnified Holders, who may also be liable for contribution, including persons who control the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company, any Guarantor and any Holder may be subject, in such proportion as is appropriate to reflect the relative benefits received by (i) the Company and the Guarantors, on the one hand, from the offering of the Initial Securities and (ii) any such Holder (and its related Indemnified Holder), on the other hand, from its sale of Initial Securities or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in this Section 8, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Guarantors, on the one hand, and such Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the 30 31 Company and the Guarantors, on the one hand, and any Holder, on the other hand, shall be deemed to be in the same proportion as (x) the total proceeds from the offering of Initial Securities (net of discounts but before deducting expenses) received by the Company and the Guarantors and (y) the total proceeds received by such Holder upon its sale of Initial Securities which otherwise would give rise to the indemnification obligation, respectively. The relative fault of the Company and the Guarantors, on the one hand, and of any Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors or such Holder or its related Indemnified Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8, (1) no Holder or its related Indemnified Holders shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total proceeds received by such Holder with respect to the sale of its Initial Securities exceeds the sum of (A) the amount paid by such Holder for such Initial Securities plus (B) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleges omission and (2) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Holder, and each person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company or such Guarantor, subject in each case to clauses (1) and (2) of this Section 8(d). Any party entitled to contribution will, promptly after receipt of notice of 31 32 commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8, notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its written consent; provided, however, that such written consent was not unreasonably withheld. SECTION 9. RULE 144A The Company and the Guarantors hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company is not subject to Section 13 or 15(d) of the Securities Exchange Act, to make available, upon request of any Holder of Transfer Restricted Securities, to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. UNDERWRITTEN REGISTRATIONS Anything herein to the contrary notwithstanding, no Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in customary underwriting arrangements entered into in connection therewith and (b) completes and executes all reasonable questionnaires, powers of attorney, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS Subject to the Company's consent, for any Underwritten Offering, the investment banker or investment bankers and manager or managers for any Underwritten Offering that will administer such offering will be 32 33 selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however, that (i) the Company's consent shall not be unreasonably withheld and (ii) the Company shall be deemed to have consented to Bear, Stearns & Co. Inc. and Smith Barney Inc. acting as such investment bankers or managers with respect to such Underwritten Offering. Such investment bankers and managers are referred to herein as the "underwriters." SECTION 12. MISCELLANEOUS (a) REMEDIES. Each Holder, in addition to being entitled to exercise all rights provided herein, in the Indenture, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) NO INCONSISTENT AGREEMENTS. None of the Company nor any of the Guarantors will on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or any of the Guarantors' securities under any agreement in effect on the date hereof. (c) ADJUSTMENTS AFFECTING THE SENIOR NOTES. Neither the Company nor any of the Guarantors will take any action, or voluntarily permit any change to occur, with respect to the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has 33 34 obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer or registered pursuant to the Shelf Registration Statement and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer or registered pursuant to the Shelf Registration Statement may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered, as applicable. (e) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Company or the Guarantors: Ekco Group, Inc. 98 Spit Brook Road Nashua, New Hampshire 03062 Telecopier No.: (603) 888-1427 Attention: Chief Financial Officer with a copy to: Ekco Group, Inc. 98 Spit Brook Road Nashua, New Hampshire 03062 Telecopier No.: (603) 888-1427 Attention: General Counsel All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; 34 35 when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities directly from such Holder. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. THE COMPANY AND EACH OF THE GUARANTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD IN ANY SUCH NEW YORK STATE OR FEDERAL COURT. NOTHING HEREIN SHALL BE CONSTRUED TO PREVENT OR IMPAIR THE RIGHT OF ANY INITIAL PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER JURISDICTION. 35 36 (j) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) ENTIRE AGREEMENT. This Agreement together with the other Operative Documents (as defined in the Purchase Agreement) is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. 36 37 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. EKCO GROUP, INC. By: /s/ John T. Haran ---------------------------- Name: John T. Haran Title: Vice-President and Treasurer GUARANTORS: B. VIA INTERNATIONAL CLEANING SPECIALTY COMPANY HOUSEWARES, INC. By: /s/ John T. Haran By: /s/ John T. Haran ------------------------------ ---------------------------- Name: John T. Haran Name: John T. Haran Title: Vice-President Title: Vice-President and Treasurer and Treasurer EKCO DISTRIBUTION EKCO HOUSEWARES, INC. OF ILLINOIS, INC. By: /s/ John T. Haran By: /s/ John T. Haran ------------------------------ ---------------------------- Name: John T. Haran Name: John T. Haran Title: Vice-President Title: Vice-President and Treasurer and Treasurer EKCO MANUFACTURING OF FREM CORPORATION OF OHIO, INC. By: /s/ John T. Haran By: /s/ John T. Haran ------------------------------ ---------------------------- Name: John T. Haran Name: John T. Haran Title: Vice-President Title: Vice-President and Treasurer and Treasurer 37 38 KELLOGG BRUSH MANUFACTURING WOODSTREAM CORPORATION CO. By: /s/ John T. Haran By: /s/ John T. Haran ------------------------------ ---------------------------- Name: John T. Haran Name: John T. Haran Title: Vice-President Title: Vice-President and Treasurer and Treasurer WRIGHT-BERNET INC. By: /s/ John T. Haran ------------------------------ Name: John T. Haran Title: Vice-President and Treasurer BEAR, STEARNS & CO. INC. SMITH BARNEY INC. By: /s/ J. Andrew Bugas By: /s/ John B. Phillips, Jr. ------------------------------ ---------------------------- Name: J. Andrew Bugas Name: John B. Phillips, Jr. Title: Senior Managing Director Title: Director EX-4.3 5 DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN 1 EXHIBIT 4.3 ----------- THE PLAN The text of the Plan consists of the following questions and answers: PURPOSE - ------- 1. What is the purpose of the Plan? The purpose of the Plan is to provide stockholders with a convenient and simple method of investing in additional shares of Common Stock without fees of any kind. The shares acquired under the Plan will be purchased by the Agent (as hereinafter defined) either from the Corporation, in the market or from private sources. To the extent shares are sold by the Corporation, the Plan will provide additional funds to the Corporation. The Corporation intends to add the proceeds of such sales to the general funds of the Corporation for general corporate purposes. ADVANTAGES - ---------- 2. What are the advantages of the Plan? A participant in the Plan may have cash dividends on all or less than all shares of Common Stock automatically reinvested, or may invest in additional shares of Common Stock by making optional cash purchases ("optional payments") of a minimum of $10 per payment and up to $10,000 per calendar quarter. Participants in the Plan pay no brokerage fee or service charge in connection with purchases under the Plan. Funds are fully invested through the purchase of fractions of shares, as well as full shares, and proportionate cash dividends on fractions of shares will be used to purchase additional shares. Participants may avoid the necessity of safekeeping their certificates for shares credited to their accounts by leaving the shares with the Agent. A statement of account will be provided to you after each quarterly investment and each optional cash investment. ADMINISTRATION - -------------- 3. Who will administer the Plan? American Stock Transfer & Trust Company (the "Agent"), will administer the Plan, keep records, send statements of account activity to participants and perform other duties related to the Plan. Certificates for shares purchased under the Plan will be held in safekeeping by the Agent in the Agent's name or in the Agent's nominee's name unless a participant requests delivery of certificates for some or all of his or her shares. Participants may contact the Agent by writing to American Stock Transfer & Trust Company, 40 Wall Street, 46th Floor, New York, New York 10005, Attention: Dividend Reinvestment, or by telephoning the Agent at 1-800-278-4353. PARTICIPATION - ------------- 4. Who is eligible to participate? You are an eligible holder of Common Stock ("Eligible Stockholder") and may therefore participate in the Plan if you qualify as either one of the following: (a) you are a stockholder whose shares of Common Stock are registered on the stock transfer books of the Corporation in your name (a "Registered Owner") or (b) you are a stockholder who has beneficial ownership of shares of Common Stock (a "Beneficial Owner") that are registered in a name other than your own, such as in the name of a broker, a bank nominee or trustee. While a Registered Owner may participate in the Plan directly, a 1 2 Beneficial Owner must either become a Registered Owner, by having such shares transferred into his or her own name, or must make arrangements with his or her broker, bank nominee or trustee to participate in the Plan on his or her behalf. Your right to participate in the Plan is not transferable apart from a transfer of your underlying Common Stock to another person. You or, if appropriate, your broker, bank nominee or trustee must supply the Agent with your valid social security number or taxpayer identification number in order to be eligible to participate. 5. How does an Eligible Stockholder participate and when is participation effective? A holder of record may join the Plan at any time by signing the Authorization Card which accompanies this Prospectus and returning it to the Agent. An additional Authorization Card may be obtained at any time by written request to the Agent. A shareholder electing to join the Plan may participate with respect to any number of shares owned of record. Reinvestment of dividends commences with the first dividend paid after such stockholder joins the Plan, provided that an Authorization Card is received from such stockholder by the Agent before the record date for such dividend. Participation will begin with the next relevant Investment Date (see answer to Question 8 below) following receipt by the Agent of the Authorization Card for optional payments. 6. When and in what amounts may optional payments be made? A participant may at any time make optional payments of a minimum of $10 per payment and up to a maximum of $10,000 per calendar quarter. Since no interest is paid, participants may wish to send optional payments so as to reach the Agent shortly before an Investment Date for optional payments (see answer to Question 8 below). A participant may make an optional payment upon joining the Plan by enclosing a check or money order (payable in United States dollars to "American Stock Transfer & Trust Company, Agent") with the Authorization Card. Thereafter, optional payments may be made by such a participant through the use of a cash payment form which will be attached to each statement of account. PURCHASES AND PRICE OF SHARES - ----------------------------- 7. How will the price of shares purchased under the Plan be determined? The Agent will purchase the shares from the Corporation to the extent the Corporation makes shares available. The Agent will purchase any other shares required for the Plan in the market or from private sources. The price of shares purchased from the Corporation will be the average of the high and low sales prices of the Common Stock on the relevant Investment Date as reported on the New York Stock Exchange consolidated tape. The price of shares purchased in the market or from private sources will be the average cost of all shares so purchased with respect to the relevant Investment Date (see answers to Questions 8 and 9 below). 8. When is the Investment Date? In any calendar month in which a cash dividend is payable, the Investment Date will be the dividend payment date if a business day; if not a business day, the Investment Date will be the next succeeding business day. In all other calendar months, the Investment Date will be the tenth day of that month if a business day; if not a business day, the Investment Date will be the next succeeding business day. The first Investment Date will be May 10, 1995. No shares will be purchased with optional payments in the thirty (30) day period preceding any dividend payment date until the Common Stock is traded ex-dividend. 2 3 9. How many shares will be purchased for participants? The number of shares to be purchased for a participant will depend on the amount of the participant's dividend or optional payment or both and the price of the shares. Each participant's account will be credited with the number of shares, including fractions to three decimal places, equal to the total of a participant's funds available for investment, divided by the purchase price described in the answer to Question 7 above. 10. When will the shares be purchased? Shares acquired from the Corporation will be purchased for the accounts of the participants as of the close of business on the relevant Investment Date. Shares acquired in the market or from private sources will be purchased promptly by the Agent and in no event later than thirty days after a relevant Investment Date. Except where necessary under any applicable federal securities law, these purchases may be made on any securities exchange where such shares are traded, in the over-the-counter market or by negotiated transactions, and are subject to such terms and conditions, including price and delivery, to which the Agent may agree. Dividends and voting rights will commence upon settlement, which will normally be three business days after the purchase, whether from the Corporation or any other source. For the purpose of making purchases, the Agent will commingle each participant's funds with those of all other participants. REPORTS TO PARTICIPANTS - ----------------------- 11. What kind of reports will be sent to participants in the Plan? After each purchase, each participant will receive a statement of cumulative investments for the year, including share price for tax purposes. In addition, each participant will receive, from time to time, copies of all communications sent to every other stockholder. CERTIFICATES FOR SHARES - ----------------------- 12. Will certificates be issued for shares purchased? Certificates for shares purchased under the Plan will be held in safekeeping by the Agent in its name or the Agent's nominee's name. The number of shares (including fractional interests) held for each participant will be shown on each statement of account. No fractional share certificates will be issued. Certificates for any number of whole shares credited to any account will be delivered to a participant upon written request to the Agent. Any remaining full or fractional shares will continue to be credited to the account. WITHDRAWALS - ----------- 13. How does a participant withdraw from the Plan and how are shares distributed upon withdrawal? A participant may withdraw from the Plan at any time by written notice to the Agent. Upon withdrawal from the Plan, certificates for whole shares held for a participant will be sent to the participant with a cash payment for any fraction of a share being held. Fractions of shares will be valued at the closing market price of the Common Stock as reported on the New York Stock Exchange consolidated tape on the date the withdrawal is effective, less any applicable stock transfer tax. 14. When does a withdrawal from the Plan become effective? Withdrawal is normally effective when notice is received by the Agent. However, if the notice of withdrawal is received after a dividend record date and before the related dividend payment date, the withdrawal will be effective after that dividend payment date. The dividend paid on that date and any optional payment will be invested under the Plan. The 3 4 withdrawal will be processed after the participant's account has been credited with the shares purchased. When a participant withdraws from the Plan, or upon termination of the Plan by the Corporation, certificates for whole shares credited to the participant's account under the Plan will be issued to the participant and a cash payment will be made for any fraction of a share based on the valuation as described in the answer to Question 13 above. 15. May a participant request return of an optional payment? Any optional payment not already invested will be refunded upon the participant's written request received by the Agent at least 48 hours prior to the relevant Investment Date. RESALE RESTRICTIONS - ------------------- 16. Are employees restricted in any way from reselling Common Stock acquired under the Plan? Some employees are so restricted. Employees who are "affiliates" of the Corporation, as that term is defined in Rule 405 promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), may not publicly re-offer shares acquired under the Plan except pursuant to Rule 144 of the Securities Act or pursuant to an effective registration statement. Rule 405 defines an "affiliate" as a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or under common control with the Corporation. Directors and certain officers of the Corporation may be "affiliates" of the Corporation under this definition. The Corporation has no present intention of filing a registration statement which would permit the Corporation's "affiliates" to re-offer Common Stock acquired under the Plan other than pursuant to Rule 144 of the Securities Act. Provided that employees who are not affiliates of the Corporation comply with all relevant federal and state securities laws and regulations, they are free to sell, at any time, the Common Stock acquired under the Plan. Directors and certain executive officers of the Corporation participating in the Plan are subject to the reporting obligations of Section 16(a) and the short-swing profit recovery provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), with respect to purchases of Common Stock made under the Plan with optional cash payments. While such directors and officers are not subject to the short-swing profit recovery provisions of Section 16(b) of the Exchange Act with respect to purchases of Common Stock made under the Plan with reinvested dividends, such purchases must be disclosed on annual reports filed pursuant to Section 16(a) of the Exchange Act. LIMITATIONS ON PARTICIPATION - ---------------------------- 17. Are there limitations on participation in the Plan other than those described above? The Corporation reserves the right to limit participation in the Plan for any reason, even if a stockholder is otherwise eligible to participate. Some stockholders may be residents of jurisdictions in which the Corporation determines that it may not legally or economically offer its shares under the Plan, and accordingly residents of such jurisdictions may be precluded from participating in the Plan. The Corporation has no present plans to limit participation in the Plan by any stockholder of record for reasons other than those set forth above, but it reserves such right in the event that it determines in its sole discretion that such limitation may be in the best interests of the Corporation. TAX CONSEQUENCES - ---------------- 18. What are the federal income tax consequences of participation in the Plan? The amount of cash dividends paid by the Corporation must be included in income even though reinvested under the Plan. The cost basis for federal income tax purposes of any shares acquired through the Plan will be the price at which the shares are purchased by the Agent for the account of the participant. That is, (a) for shares purchased from the Corporation, the average of the high and low sales prices for the shares on the relevant Investment Date as reported on the 4 5 New York Stock Exchange consolidated tape, or (b) for shares purchased in the market or from private sources, the average cost of all shares so purchased with respect to the relevant Investment Date. In connection with market purchases, brokerage commissions paid by the Corporation on a participant's behalf are to be treated as distributions subject to income tax in the same manner as dividends, and such amounts will be included in the cost basis of shares purchased. The information return sent to participants and the IRS at year-end will show such amounts paid on behalf of participants. A participant will realize gain or loss when shares are sold or exchanged after withdrawal from, or termination of, the Plan and, in the case of a fractional share, when the participant receives a cash payment for a fraction of a share credited to his or her account. The amount of such gain or loss will be the difference between the amount that the participant receives for the shares or fraction of a share and the tax basis therein. Gain will be long term if the participant's holding period for the shares exceeds one year. The holding period for shares acquired pursuant to the Plan will begin on the day following the Investment Date. The Corporation believes the foregoing is an accurate summary of the tax consequences of participation in the Plan as of the date of this Prospectus, but participants should consult with their own advisers for advice applicable to their particular situations. SALE OF PLAN SHARES - ------------------- 19. When and how may a participant sell shares held in this Plan? Any participant, including a participant who is withdrawing from the Plan, may sell some or all of his or her shares in the Plan in the market through the participant's broker. If a participant elects to sell through a broker, he or she must first request the Agent to send the participant a certificate or certificates representing the requested number of shares in the Plan credited to the participant's account. As soon as practicable after receipt of such request, the Agent will issue a certificate or certificates representing such number of shares to the participant in his or her name as it appears in the participant's Plan account, unless other instructions are provided in writing. A participant who wishes to sell some or all of his or her shares in the Plan should be aware of the risk that the price of the Common Stock may decrease between the time that the participant determines to sell shares in the Plan and the time that the sale is completed. This risk is borne solely by the participant. MISCELLANEOUS - ------------- 20. What happens if a participant sells or transfers all the shares held of record in the participant's name? A participant may continue to reinvest cash dividends on shares held under the Plan even though all shares held of record in the participant's name have been sold or transferred. 21. What happens if the Corporation declares a stock split, stock dividend or makes a rights offering? Any stock dividends or split shares distributed by the Corporation on shares credited to a participant's Plan account will be added to the account. Stock dividends or split shares distributed on shares registered in a participant's name will be mailed directly to the participant in the same manner as to shareholders who are not participating in the Plan. In the event of a rights offering, the participant will receive rights based upon the total number of whole shares owned (that is, the total number of shares registered in the participant's name and the total number of whole shares held in the account). 22. How will shares be voted at shareholders' meetings? 5 6 Shares held in a dividend reinvestment account may be voted in person or by the same proxy sent for the shares registered in the participant's own name. If no shares are registered in a participant's name, a proxy will be sent for any whole shares held under the Plan. Shares held pursuant to the Plan for which no proxy is received will not be voted. 23. Are there limitations on the liabilities of the Corporation and the Agent under the Plan? Neither the Corporation nor the Agent will be liable in administering the Plan for any act done in good faith nor for any good faith omission to act, including, without limitation, any claim of liability arising from failure to terminate a participant's account upon such a participant's death or with respect to the prices, or times at which, or sources from which, shares are purchased for participants. 24. May the Plan be changed or terminated? The Corporation may suspend, modify or terminate the Plan at any time. Notice of such suspension, modification or termination will be sent to all participants. No such event will affect any shares then credited to a participant's account. 25. Who bears the risk of market price fluctuations in the Common Stock? A participant's investment in shares acquired under the Plan is no different from an investment in any equity security purchased and held directly. The participant bears the risk of loss and realizes the benefits of any gain from market price changes with respect to all such shares held by him or her in the Plan or otherwise. However, because purchase prices for shares purchased under the Plan are established on an Investment Date, a participant loses any advantage otherwise available from being able to select the timing of share purchases. A participant should also note that the timing of distributions and processing of distributions and requests for issuance of certificates for Plan shares may affect the availability of the shares to the participant for resale. 6 EX-10.1.(C)(2) 6 RESTRICTED STOCK PURCHASE AGREEMENT SCHEDULE 1 EXHIBIT 10.1(c)(2) ----------------- EKCO GROUP, INC. SCHEDULE TO FORM OF RESTRICTED STOCK PURCHASE AGREEMENT Each of the following employees of the Company has a Restricted Stock Purchase Agreement with the Company which covers the following blocks of restricted shares pursuant to the Company's 1984 Restricted Stock Plan and/or 1985 Restricted Stock Plan which is identical in form to the foregoing Form of Restricted Stock Purchase Agreement except as to the date of the Agreement and the number of shares in each such Performance Block:
Date of Name and Job Title(s) Agreement No. of Shares in Performance Block for Each Year Noted - --------------------- --------- ---------------------------------------------------------------------- 1995 1996 1997 1998 1999 Robert Stein 01/01/95 1984 Plan: 13,300 -0- -0- -0- -0- President & Chief 1985 Plan: 5,916 19,216 19,216 19,216 19,216 Executive Officer Jeffrey A. Weinstein 01/01/95 1984 Plan: 3,723 -0- -0- -0- -0- Executive Vice Presi- 1985 Plan: 1,657 5,380 5,380 5,380 5,380 dent, Secretary & General Counsel Donato A. DeNovellis 01/01/95 1984 Plan: 3,016 1,840 -0- -0- -0- Executive Vice Presi- 1985 Plan: -0- 6,176 8,016 8,016 8,016 dent, Finance & Admi- nistration, & Chief Financial Officer Brian R. McQuesten 01/01/95 1984 Plan: 1,675 -0- -0- -0- -0- Vice President & 1985 Plan: 741 2,416 2,416 2,416 2,416 Controller Stuart W. Cohen 06/12/95 1985 Plan: 1,998 3,592 3,592 3,592 3,592 Vice President, Strategic Planning & Business Development Dennis P. Wittekind 08/28/95 1985 Plan: 4,167 8,333 8,333 8,333 8,333 President, Ekco House- wares, Inc. John T. Haran 02/06/96 1984 Plan: -0- 3,333 3,333 3,333 3,333 Vice President and Treasurer
EX-10.1.(C)(3) 7 FORM OF AMENDMENT 1 EXHIBIT 10.1(c)(3) FORM OF AMENDMENT TO RESTRICTED STOCK PURCHASE AGREEMENT AMENDMENT AGREEMENT dated as of August 22, 1995 by and between Ekco Group, Inc., a Delaware corporation (the "Company") and [NAME OF EMPLOYEE], an employee of the Company, residing at [ADDRESS OF EMPLOYEE] (the "Employee"). W I T N E S S E T H WHEREAS, the Company granted the Employee the right to purchase restricted stock under the Company's 1984 and 1985 Restricted Stock Purchase Plans and the terms of those certain Restricted Stock Purchase Agreements by and between the Company and the Employee (the "Restricted Stock Agreements") dated [Dates of Agreements]; and WHEREAS, the Employee and the Company desire to amend each of the Restricted Stock Agreements to add a certain provision to insure compliance with new Rule 16b(3) promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and to make a reference change. NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Each of the Restricted Stock Agreements is hereby amended as follows: a. In paragraph 3(d) (except in the January 1, 1995 Restricted Stock Agreement that paragraph is numbered as Paragraph 3(e)), the following is hereby added after "the Securities Exchange Act of 1934, as amended": "(the "1934 Act")". b. A new Section 10 is hereby added to read as follows: "10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION ------------------------------------------------------- 16 OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------------------------- If the Purchaser is subject to Section 16 of the Securities Exchange Act of 1934, Section 16 requires that at least six (6) months must elapse from the date of purchase of the Shares to the date of disposition." c. All sections which follow the new Section 10 shall be renumbered accordingly. 2. This Amendment Agreement constitutes the entire Agreement between the parties with respect to the subject matter hereof. 3. Except as expressly provided for herein, each of the Restricted Stock Agreements is hereby ratified and confirmed and shall continue in full force and effect. 4. This Amendment Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document. IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to 1 2 be executed as of the date first above written. EKCO GROUP, INC. By: ----------------------- Title: -------------------- -------------------------- EMPLOYEE 2 EX-10.1.(D) 8 AMENDED FORM OF RES. STOCK PER AGREEMENT 1 EXHIBIT 10.1(d) --------------- FORM OF RESTRICTED STOCK PURCHASE AGREEMENT [FOR THE QUARTERLY PURCHASE OF RESTRICTED STOCK IN LIEU OF SALARY INCREASES PURSUANT TO ELECTION BY PURCHASER] AGREEMENT made as of the [DATE] by and between Ekco Group, Inc., a Delaware corporation with a principal place of business at 98 Spit Brook Road, Nashua, New Hampshire 03062 (hereinafter the "Corporation") and [NAME AND ADDRESS OF PURCHASER], (hereinafter the "Purchaser"). W I T N E S S E T H : WHEREAS, the Corporation has adopted and amended the 1985 Restricted Stock Plan (hereinafter the "1985 Plan") to promote the interests of the Corporation by providing an incentive for employees, officers and directors of the Corporation; WHEREAS, pursuant to the provisions of the 1985 Plan, the Corporation is offering to sell to the Purchaser shares of the Corporation's Common Stock, par value $.01 per share, in accordance with the provisions of the 1985 Plan, all on the terms and conditions hereinafter set forth; and WHEREAS, Purchaser wishes to accept said offer. NOW THEREFORE, in consideration of the premises and mutual interests to be served hereby and the mutual covenants and promises contained herein, the Corporation and Purchaser hereby agree as follows: 1. TERMS OF PURCHASE. The Purchaser hereby accepts the offer of the Corporation to sell to the Purchaser, in accordance with the terms of the 1985 Plan and this Agreement, [NO. OF SHARES] (_____) shares of the Corporation's Common Stock, par value $.01 per share (hereinafter collectively the "Plan Shares") at a purchase price of $[PURCHASE PRICE], receipt of which is hereby acknowledged by the Corporation. 2. PROVISIONS OF AGREEMENT CONTROLLING. The Purchaser specifically understands and agrees that the Plan Shares issued under the 1985 Plan are being sold to the Purchaser pursuant to the 1985 Plan, copies of which Plan Purchaser acknowledges he or she has read, understands and by which he or she agrees to be bound. The provisions of the 1985 Plan is incorporated herein by reference. In the event of a conflict between the terms and conditions of the 1985 Plan and this Agreement, the provisions of this Agreement will control. 3. RESTRICTIONS ON DISPOSITION. In accordance with Paragraph 5(b) of the 1985 Plan, the Purchaser may not, and hereby specifically agrees that he or she shall not pledge, encumber, hypothecate, assign, sell, transfer, give or otherwise dispose of the Plan Shares, provided, however, that all of the aforesaid restrictions shall lapse and shall no longer apply to: (a) Any Plan Shares owned by the Purchaser upon the Purchaser's death. (b) Any Plan Shares owned by the Purchaser upon the Purchaser's "Disability" (as that term is specifically defined in Paragraph 9 hereof). (c) As to twenty percent (20%) of the Plan Shares on each of the first, second, third, fourth and fifth anniversary of the Closing Date for such Plan Shares, provided that the Purchaser is at each such date an employee or 2 director of the Corporation. (d) Any Plan Shares owned by the Purchaser upon the occurrence of a Change of Control unless such Change of Control shall have been approved by a resolution adopted by the Board of Directors of the Corporation with at least two-thirds (2/3) of the then serving Corporation directors who were Corporation directors as of November 6, 1991 voting in favor. As used herein, a "Change of Control" shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended [the "1934 Act"]), other than the Corporation or any employee stock plan of the Corporation, is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing fifteen percent (15%) or more of the outstanding Common Stock of the Corporation; or (ii) ten (10) days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by any "person" of fifteen percent (15%) or more of the Common Stock of the Corporation, provided, however, that at the conclusion of such ten (10) day period such person has not discontinued or rescinded his intention to make such a tender or exchange offer, or (iii) if during any consecutive twelve (12) month period beginning on or after November 6, 1991 individuals who at the beginning of such period were directors of the Corporation cease, for any reason, to constitute at least a majority of the Board of Directors of the Corporation; or (iv) if a merger of, or consolidation involving, the Corporation in which the Corporation's stock is converted into securities of another corporation or into cash shall be consummated, or a plan of complete liquidation of the Corporation (whether or not in connection with a sale of all or substantially all of the Corporation's assets) shall be adopted and consummated, or substantially all of the Corporation's operating assets are sold (whether or not a plan of liquidation shall be adopted or a liquidation occurs), excluding in each case a transaction solely for the purpose of reincorporating the Corporation in a different jurisdiction or recapitalizing the Corporation's stock. (e) The occurrence of the events described in the aforementioned Subsections (a), (b), (c) and (d) shall each be deemed a ("Lapsing Event"). (f) Plan Shares as to which the restrictions on disposition have not lapsed are hereinafter referred to as "Restricted Shares." (g) Any disposition or encumbrance of any Restricted Shares contrary to the provisions hereof shall be null and void, and the Corporation shall have no obligation to recognize or give effect to such disposition or encumbrance on its books and records or otherwise. 4. ADDITIONAL SHARES. As used in this Agreement, the term "Restricted Shares" shall be deemed to include any securities issued in respect of the Restricted Shares as a result of a stock split, stock dividend, combination of shares or an exchange for other securities by reclassification, redesignation, merger, consolidation, recapitalization or otherwise. 5. ESCROW OF SHARE CERTIFICATES. Certificates representing Plan Shares shall be delivered to Devine, Millimet & Branch, P.A., of Manchester, New Hampshire, as Escrow Agent. The Escrow Agent will deliver any Plan Shares as to which restrictions have lapsed pursuant to Section 3 above to the Purchaser as soon as practicable after receipt of written notice signed by either the President, Secretary or Treasurer of the Corporation that a Lapsing Event has occurred. Such notice shall identify the Lapsing Event, and shall instruct the Escrow Agent to deliver such Plan Shares as to which restrictions have 2 3 lapsed. The Escrow Agent will deliver all Plan Shares then held in escrow to the Purchaser as to which restrictions have lapsed pursuant to Section 3(e) upon receipt of written notice signed by Purchaser that a Lapsing Event pursuant to Section 3(e) has occurred. 6. TAX LIABILITY OF THE PURCHASER AND PAYMENT OF TAXES. The Purchaser agrees that, to the extent that the lapsing of restrictions on disposition of any of the Restricted Shares or the declaration of dividends on any such shares before the lapse of such restrictions on disposition results in the Purchaser's being deemed to be in receipt of earned income under the provisions of the Internal Revenue Code of 1986, as amended, the Corporation shall be entitled to immediate payment from the Purchaser of the amount of any tax required to be withheld by the Corporation with respect to such earned income as follows: (i) in cash to the extent of the greater of two thousand, five hundred dollars ($2,500.00) or ten percent (10%) of such withholding tax, and (ii) by the Purchaser's issuing a promissory note (the "Promissory Note") to the Corporation in principal amount equal to the full amount of the balance of such withholding tax, which Promissory Note shall be due and payable with interest at the annual rate of the prime rate of Fleet Bank of Massachusetts, N.A. in effect at the date of the note plus one percent (1%), ninety (90) days after the date on which the taxable event has occurred. The Promissory Note shall also provide for mandatory prepayments equal to (a) twenty-five percent (25%) of any net cash compensation, payable to the Purchaser by the Corporation after the date of the Promissory Note, and (b) one hundred percent (100%) of the proceeds from the sale by Purchaser of any of the Plan Shares then owned. The Promissory Note shall be secured by a pledge of all the Plan Shares which caused the tax liability to occur. Said Promissory Note and pledge shall each be in form and substance reasonably satisfactory to the Corporation. In the event Purchaser does not comply with the foregoing within three (3) days after the due date for payment and presentation of documentation indicating the tax required to be withheld by the Corporation, the Corporation, in addition to its other remedies, will be entitled to the entire amount due hereunder from any salary or any other payments due to the Purchaser from the Corporation. 7. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE 1934 ACT. If the Purchaser is subject to Section 16 of the 1934 Act, Section 16 requires that at least six (6) months must elapse from the date of purchase of the Shares to the date of disposition. 8. SECURITIES LAW COMPLIANCE. The Purchaser represents that any sales of Plan Shares at a time when the Purchaser may be deemed an "affiliate" of the Corporation for purposes of the Securities Act of 1933, as amended (the "Act"), shall be made in accordance with the requirements of Rule 144 under the Act (or any successor rule) applicable to sales by an "affiliate" of shares registered under the Act or in a transaction otherwise exempt from the registration requirements of the Act and as to which the Corporation shall have received an opinion of counsel satisfactory to it confirming such exemption. 9. CORPORATION'S DUTY ON OCCURRENCE OF LAPSING EVENT. Upon the occurrence of a Lapsing Event described in Section 3(c) or 3(d), the Corporation shall give notice of such event to the Escrow Agent immediately, 3 4 but in no event, later than fifteen days after such event. Upon the occurrence of a Lapsing Event described in Section 3(a) or 3(b) and upon receipt of written request of a duly appointed executor or administrator of the estate of the Purchaser, in the case of death of the Purchaser or the duly authorized representative of the Purchaser or the Purchaser, in the case of Disability of the Purchaser, and of documentation reasonably satisfactory to the Corporation which substantiates the fact of death or Disability, the Corporation shall notify the Escrow Agent as soon as practicable, but in no event, later than fifteen (15) days after receipt of such request. The term "Disability" shall mean permanent and total disability as defined in the Corporations's Wage Continuation Plan in effect at the time such Disability is being determined. 10. Sale of Restricted Shares to Corporation Upon Termination of ------------------------------------------------------------ Service. - ------- (a) In the event that the Purchaser's employment with, or position as a director of, the Corporation terminates for any reason (hereinafter "Termination") other than death, Disability or Change of Control as defined in Section 3(e) above, then, the Corporation shall send written notice to the Escrow Agent of such Termination no later than thirty (30) days after the effective date thereof. Such notice shall contain instructions to the Escrow Agent of either (i) the Corporation's intention to repurchase the Restricted Shares from Purchaser, or (ii) the Corporation's determination not to purchase all or any portion of the Restricted Shares. (b) If the Corporation elects to purchase the Restricted Shares from the Purchaser, the Escrow Agent shall deliver such Restricted Shares immediately to the Secretary of the Corporation and the Corporation shall contemporaneously with the receipt thereof make payment to the Purchaser at the price specified in Section 1 above. (c) If the Corporation elects not to purchase all or any portion of the Restricted Shares, the Escrow Agent shall forthwith deliver one or more certificates representing the Restricted Shares the Corporation has determined not to purchase to the Purchaser and the Purchaser shall be restored to all rights as a stockholder with respect to those shares as of the effective date of Termination. The Corporation may impose such restrictions as it deems appropriate on the transfer of the Restricted Shares which it does not purchase hereunder, subject to the limitations set forth in Paragraph 7 of the 1985 Plan. (d) If the Corporation does not within sixty (60) days after the effective date of Termination give written instructions to the Escrow Agent, then the Corporation will be deemed to have instructed the Escrow Agent to purchase the Restricted Shares from the Purchaser and the terms of Subsection (b) above shall apply. 11. EQUITABLE RELIEF, CONSENT TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. The Purchaser specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement or the 1985 Plan, including the attempted transfer of the Restricted Shares by the Purchaser, monetary damages may not be adequate to compensate the Corporation, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Corporation shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Corporation from pursuing any 4 5 other remedies available to it for any such breach or threatened breach. The Purchaser specifically consents to the jurisdiction of the courts of the State of New Hampshire and to the appointment of the Secretary of the Corporation as his or her agent for the service of process in any action, whether at law or in equity, brought by the Corporation to protect any of its rights hereunder or under the 1985 Plan. 12. NO IMPLIED AGREEMENT. Nothing herein contained shall be deemed to give the Purchaser the right to be retained in the employ of the Corporation. 13. NOTICES. All notices required by this Agreement shall be in writing signed by the party giving such notice and shall be delivered by registered or certified mail, postage prepaid, to the addresses set forth below: To the Corporation: Ekco Group, Inc. 98 Spit Brook Road, Suite 102 Nashua, New Hampshire 03062 Attention: Corporate Secretary To the Purchaser: Purchaser's last address in the records of the Corporation 14. BINDING EFFECT. This Agreement shall be binding upon the parties hereto and upon their respective successors and assigns and upon Purchaser's heirs, executors and administrators. 15. GOVERNING LAW. This Agreement shall be interpreted and construed in accordance with the laws of the State of New Hampshire. 16. SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby. 17. ENTIRE AGREEMENT. This Agreement and the 1985 Plan constitute the entire agreement among the parties with respect to the subject matter hereof, and may not be modified, amended, renewed, or terminated, nor may any term, condition or breach of any term or condition be waived, except by a writing signed by the person or persons sought to be bound by such modification, amendment, renewal, termination or waiver. Any waiver of any term, condition or breach hereof shall not be a waiver of any other term or condition or of the same term or condition for the future, or of any subsequent breach. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. EKCO GROUP, INC. By: --------------------------- Title: ------------------------ 5 6 PURCHASER: -------------------------------- 6 7 EKCO GROUP, INC. SCHEDULE TO FORM OF RESTRICTED STOCK PURCHASE AGREEMENT, AS AMENDED FOR THE QUARTERLY PURCHASE OF RESTRICTED STOCK Each of the following employees of the Company has the following Restricted Stock Purchase Agreements with the Company pursuant to the Company's 1985 Restricted Stock Plan which are identical in form to the foregoing Form of Restricted Stock Purchase Agreement, as amended, except as to the number of shares:
Name and Job Title(s) Date No. of Shares - --------------------- ---- ------------- Robert Stein 04/02/95 490 President & Chief 07/02/95 491 Executive Officer 10/01/95 490 12/31/95 491 Jeffrey A. Weinstein 04/02/95 264 Executive Vice Presi- 07/02/95 265 dent, Secretary & 10/01/95 265 General Counsel 12/31/95 265 Donato A. DeNovellis 04/02/95 245 Executive Vice Presi- 07/02/95 245 dent, Finance & Admi- 10/01/95 245 nistration, & Chief 12/31/95 246 Financial Officer Brian R. McQuesten 04/02/95 309 Vice President & 07/02/95 309 Controller 10/01/95 309 12/31/95 309
7 EX-10.2.(B)(1) 9 NON-QUALIFIED STOCK OPTION 1 EXHIBIT 10.2(b)(1) ------------------ FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED ----------------------------------------------------------------------- CENTRONICS CORPORATION ---------------------- AGREEMENT made as of the 8th day of September 1987 between Centronics Corporation (the "Company"), a Delaware corporation having a principal place of business in Nashua, New Hampshire, and [NAME OF EMPLOYEE], of [ADDRESS OF EMPLOYEE], an employee of the Company (the "Employee"); WHEREAS, the Company desires to grant to the Employee an Option to purchase shares of its common stock of a par value of $.01 a share (the "Shares") under and for the purposes of the Company's 1987 Stock Option Plan of the Company, (the "Plan") pursuant to Article XII thereof; WHEREAS, the Company and the Employee understand and agree that any terms used herein have the same meanings as in the Plan; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. GRANT OF OPTION --------------- The Company hereby irrevocably grants to the Employee the right and option to purchase at one time or from time to time all or any part of an aggregate of [NUMBER OF SHARES GRANTED] ( ) Shares, subject to adjustment as provided in the Plan (the "Option"), on the terms and conditions and subject to all the limitations set forth herein and in the Plan, which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the Plan. 2. PURCHASE PRICE -------------- The purchase price of the Shares covered by this Option shall be Three and Eleven Sixteenths Dollars ($3.6875) per Share, subject to adjustment as provided in the Plan (the "Purchase Price"). 3. EXERCISE OF OPTION ------------------ (a) The Option granted hereby shall be exercisable as of the date first above written (the "Grant Date"). (b) Notwithstanding the provisions of the foregoing Subsection (a) and except as otherwise provided herein or in the Plan, if the Employee ceases to be an employee of the Company or of an Affiliate for any reason, then if such termination occurs: (i) during the period on or after the Grant Date and before the date which is twelve months thereafter (the "First Anniversary Date") and the Employee has theretofore exercised the Option for any Shares, then the Company may purchase any or all of those Shares from the Employee at the price paid by the Employee upon exercise; (ii) if such termination occurs on or after the First Anniversary Date and before the date which is twelve months thereafter (the "Second Anniversary Date") and the Employee has theretofore exercised the Option 1 2 for more than [ONE THIRD OF THE NUMBER OF SHARES GRANTED] ( ) Shares, the Company may purchase any excess over [ONE THIRD OF THE NUMBER OF SHARES GRANTED] ( ) Shares purchased by the Employee at the price paid by the Employee upon exercise; or (iii) if such termination occurs on or after the Second Anniversary Date and before the date which is twelve months thereafter and the Employee has theretofore exercised the Option for more than [TWO THIRDS OF THE NUMBER OF SHARES GRANTED] ( ) Shares, the Company may purchase any excess over [TWO THIRDS OF THE NUMBER OF SHARES GRANTED] ( ) Shares purchased by the Employee at the price paid by the Employee upon exercise. Notwithstanding the foregoing, in the event the Employee's employment shall terminate as a result of death or Disability, the Purchase Option (as hereinbelow defined) shall cease and terminate. The right of the Company to purchase Shares pursuant to this Subsection 3(b) is hereinafter referred to as the "Purchase Option" and such Shares are hereinafter referred to as the "Purchase Stock." (c) Notwithstanding the foregoing Subsection (b), but not subject to the other provisions hereof, the Purchase Option shall cease and terminate in the event of, and immediately upon, a Change of Control that occurs at any time before the Employee has ceased to be an employee of the Company or of an Affiliate. As used herein, a "Change of Control" shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "1934 Act")), other than the Company or any employee stock plan of the Company, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the outstanding Common Stock of the Company; or (ii) ten (10) days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by any "person" of fifteen percent (15%) or more of the outstanding Common Stock of the Company, provided, however, that at the conclusion of such ten (10) day period such person has not discontinued or rescinded his intention to make such a tender or exchange offer, or (iii) if during any consecutive twelve (12) month period beginning on or after the date on or after November 6, 1991 individuals who at the beginning of such period were directors of the Company cease, for any reason, to constitute at least a majority of the Board of Directors of the Company; or (iv) if a merger of, or consolidation involving, the Company in which the Company's stock is converted into securities of another corporation or into cash shall be consummated, or a plan of complete liquidation of the Company (whether or not in connection with a sale of all or substantially all of the Company's assets) shall be adopted and consummated, or substantially all of the Company's operating assets are sold (whether or not a plan of liquidation shall be adopted or a liquidation occurs), excluding in each case a transaction solely for the purpose of reincorporating the Company in a different jurisdiction or recapitalizing the Company's stock. 4. TERM OF OPTION -------------- The Option shall terminate eleven (11) years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan. If the Employee ceases to be an employee of the Company or of an 2 3 Affiliate (for any reason other than death or Disability or termination by the Employee's employment [sic] for cause), the Option may be exercised within six (6) months and one (1) day after the date the Employee ceases to be an employee, or within eleven (11) years from the granting of the Option, whichever is earlier, but may not be exercised thereafter. In the event of the Disability of the Employee (as determined by the Company pursuant to the provisions of the Employment Agreement, and as to the fact and date of which the Employee is notified in writing), the Option shall be exercisable within one (1) year after the date of such Disability or, if earlier, the term originally prescribed by this Agreement. In the event of the death of the Employee while an employee of the Company or of an Affiliate, the Option may be exercised by the Employee's legal representatives and/or any person or persons who acquired the Employee's rights to the Option by will or by the laws of descent and distribution. The Company shall give a notice to the Employee's legal representative, if known, or his next of kin or other persons likely to know his legal representative, within three (3) months of the date of death. In such event, the Option must be exercised, if at all, prior to the happening of the later to occur of one (1) year after the date of death of the Employee or nine (9) months from the date of notice by the Company, but in no event later than the expiration of the originally prescribed term of the Option. 5. NON-ASSIGNABILITY ----------------- The Option shall not be transferable by the Employee otherwise than by will or by the laws of descent and distribution and shall be exercisable, during the Employee's lifetime, only by the Employee or by the Employee's duly appointed legal representative. The Option shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 5, or the levy of any attachment or similar process upon the Option or such rights, shall be null and void. 6. EXERCISE OF OPTION AND ISSUE OF SHARES -------------------------------------- The Option may be exercised, in whole or in part, at one time or from time to time (to the extent that it is exercisable in accordance with its terms) by giving written notice to the Company. Such written notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised, shall contain any warranty required by Section 7 below, and shall otherwise comply with the terms and conditions of this Agreement and the Plan. The Company shall pay all original issue taxes with respect to the issue of the Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection herewith. Except as specifically set forth herein, the holder acknowledges that any income or other taxes due from him with respect to the Option or the shares issuable pursuant to the Option shall be the responsibility of the holder. The holder of the Option shall have rights as a shareholder only with respect to any Shares covered by the Option after due exercise of the Option and tender of the full exercise price for the shares being purchased pursuant to such exercise. Pursuant to the Plan, the Company shall make delivery of the Shares against payment of the Option price therefor. 3 4 7. PURCHASE FOR INVESTMENT ----------------------- Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "Act"), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled: (a) The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for his or her own account, for investment and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their option Shares issued pursuant to such exercise: "The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, in the absence of an effective registration statement for the shares under the Securities Act of 1933 or an opinion of counsel satisfactory to the Company that an exemption from registration is then available." (b) The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any reasonable action or obtaining of any consent, which the Company deems reasonably necessary under any applicable law (including without limitation state securities or "blue sky" laws). 8. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE ----------------------------------------------------------- OPTION - ------ (a) Any Shares which are subject to the Purchase Option shall not be transferred by the Employee except as permitted herein. Until the termination of this Agreement, the Shares which are subject to the Purchase Option may not be transferred by the Employee unless and until the transferee agrees, in a form satisfactory to the Company, to be bound by this Agreement and to sell any transferred Shares to the Company as herein provided. (b) In the event the Company shall be entitled to elect to exercise the Purchase Option, the Company shall be deemed to have made such election unless it shall give to the Employee notice of its non-election to exercise the Purchase Option, in whole or in part, within ninety (90) days of the date of the event entitling the Company to exercise the Purchase Option. (c) In the event the Company shall be entitled to and shall have determined to elect to exercise the Purchase Option, it shall give to the Employee a written notice specifying a date for the Closing, which date shall be not more than ten (10) business days after the giving of such notice. The Closing shall take place at the Company's principal offices in New Hampshire, or such other location as the Company may reasonably designate in such notice. If the Company shall be deemed to have elected to exercise the Purchase Option by virtue of the provisions of Subsection (b) above, the Closing will take 4 5 place on the tenth business day after the Company will be deemed to have so elected under said Subsection (b). (d) At the Closing, the Employee shall deliver the Purchase Stock being purchased by the Company against the simultaneous delivery to the Employee of the purchase price (by certified or bank cashier's check or in such other form as mutually agreed to) for the number of shares of the Purchase Stock then being purchased. In the event that the Employee fails so to deliver the shares of Purchase Stock to be purchased, the Company may elect (a) to establish a segregated account in the amount of the Purchase Price, such account to be turned over to the Employee upon delivery of such shares of Purchase Stock, and (b) immediately to take such action as is appropriate to transfer record title of such of the Purchase Stock from the Employee to the Company and to treat the Employee and such shares of the Purchase Stock in all respects as if delivery of such shares of the Purchase Stock had been made as required by this Agreement. The Employee hereby irrevocably grants the Company a power of attorney for the purpose of effectuating the preceding sentence. (e) If the Company shall pay a stock dividend or declare a stock split on or with respect to any of the Company's Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, whether before or after the exercise of the Option, the number of shares of stock or other securities of the Company issued with respect to the Purchase Stock then subject to the Purchase Option shall be added to the Purchase Stock then subject to the Purchase Option without any change in the aggregate purchase price. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Purchase Stock then subject to the Purchase Option shall be added to the Purchase Stock covered by the Purchase Option without any change in the aggregate purchase price. Without limiting the generality of the foregoing, the Employee shall be entitled to retain any and all cash dividends paid by the Company on the Shares. (f) If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to any capital reorganization, whether before or after the exercise of the Option, there shall be substituted for the Purchase Stock then covered by the Purchase Option such amount and kind of securities as are issued in such subdivision, combination, reclassification, or capital reorganization in respect of the Purchase Stock subject to the Purchase Option immediately prior thereto, without any change in the aggregate purchase price. (g) If the Company shall be completely liquidated, then the Purchase Option shall cease and terminate as of the date of such liquidation and the Employee shall hold the Shares free of the Purchase Option. (h) The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been sold, assigned or otherwise transferred, from and after any sale, assignment or transfer of any Shares made in violation of this Agreement. (i) All certificates representing any Shares to be issued to the 5 6 Employee pursuant to the exercise of the Option which are subject to the Purchase Option shall have endorsed thereon a legend substantially as follows: "The shares represented by this certificate are subject to a Stock Option and Repurchase Agreement dated as of September 8, 1987 between the Corporation and [NAME OF EMPLOYEE], a copy of which Agreement is available for inspection at the principal offices of the Company or will be made available upon request." (j) This Agreement shall not restrict the transfer by the Employee of shares, if any, which are not acquired pursuant to the exercise of the Option or which are not, or cease to be, subject to the Purchase Option in accordance with the terms hereof. 9. REGISTRATION RIGHTS ------------------- The Employee acknowledges that simultaneously with the execution of the Option Agreement, comparable option agreements have been executed by the Company with [NO. OF HOLDERS] other employees ("Other Holders"), each containing a section identical to this Section 9. Subject to the terms hereinafter set forth, at any time after the Grant Date, the holder shall have the right, by written notice to the Company, to require the Company to file and use its best efforts to cause to become effective a registration statement under the Securities Act of 1933, as amended (the "Act") on Form S-2 or Form S-3 or other like form, if available, covering such number of Shares acquired or to be acquired prior to the effective date of such registration statement, subject to the limitations that (i) the Company shall be required to file no more than an aggregate of two (2) registration statements pursuant to such notices and/or pursuant to notices received from Other Holders, and (ii) if, in the opinion of counsel to the Company, the holder can then sell, subject to such limitations as to the number of Shares which may be sold as may be imposed by Rule 144 under the Act or any successor rule, Shares requested to be included in any such registration statement, without such registration, the Company need not so register such Shares. In no event will the Company be required to register Shares which are subject to the Purchase Option. The Company agrees to promptly notify a holder in the event that it receives a notice from any of the Other Holders requiring it to file a registration statement and to permit the holder to require the Company to include Shares owned by the holder in such registration statement, subject to the limitations set forth above. (a) In connection with any registration statement pursuant to this Section 9 [sic]: (i) the holder will furnish to the Company in writing such appropriate information as the Company, or the Securities and Exchange Commission (the "Commission") or any other regulatory authority may request; (ii) the holder agrees to execute, deliver and/or file with or supply to the Company, the Commission, any underwriters and/or any state or other regulatory authority such information, documents, representations, undertakings and/or agreements necessary to carry out the provisions of the registration agreements contained in this Agreement and/or to effect the registration or qualification of the Shares under the Act and/or any of the laws and regulations of any state or governmental instrumentality; (iii) the Company will furnish to the holder of Shares included in the registration statement such number of copies of such prospectus (including each preliminary, amended or supplemental prospectus) as the 6 7 holder may reasonably request; (iv) in the event an offering of securities by the Company is pending, the Company shall have the right to require that the holder delay any offering of Shares for a period of ninety (90) days after the effective date of such pending offering (upon the Company's having first delivered to the holder the written opinion of its principal underwriter, or if there be none, then from an officer of the Company based upon a good faith resolution of the Board of Directors to the effect that the offering of such Shares will have an adverse effect on the marketing of such pending offering). (b) The Company will pay all its out-of-pocket expenses and disbursements in connection with any registration statement filed under this Section 9 [sic], including, without limitation, printing expenses, fees of the Company's counsel and auditors, registration fees, Blue Sky fees and similar costs. (c) The Company will be obligated to keep any Demand Registration Statement filed by it under this Section 9 [sic] effective under the Act for a period of ninety (90) days after the actual effective date of such registration statement and to prepare and file such supplements and amendments necessary to maintain an effective registration statement for such period. As a condition to the Company's obligation under this Section (c), the holder will execute and deliver to the Company such written undertakings as the Company and its counsel may reasonably require in order to assure full compliance with relevant provisions of the Act. (d) The Company will use its best efforts to register or qualify the Shares covered by a registration statement filed pursuant hereto under such securities or Blue Sky laws in such jurisdictions within the United States as the holder may reasonably request, provided, however, that the Company reserves the right, in its sole discretion, not to register or qualify such stock in any jurisdiction where such stock does not meet with the requirements of such jurisdiction or where the Company is required to qualify as a foreign corporation to do business in such jurisdiction and is not so qualified therein or is required to file any general consent to service of process. (e) In the event that a holder has not sold all of his Shares on or prior to the expiration of the period specified in Subsection (d) above, the holder hereby agrees that the Company may deregister by post-effective amendment any of his Shares covered by the registration statement or notification but not sold on or prior to such date. The Company agrees that it will notify the holder of the filing and effective date of such post-effective amendment. (f) The holder agrees that upon notification by the Company that the prospectus in respect to any public offering covered by the provisions hereof is in need of revision, the holder will immediately upon receipt of such notification (i) cease to offer or sell any securities of the Company which must be accompanied by such prospectus; (ii) return to the Company all such prospectuses in the hands of the holder; and (iii) not offer or sell any securities of the Company until the holder has been provided with a current prospectus and the Company has given the holder notification permitting the holder to resume offers and sales. 10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO ----------------------------------------------- SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934 - ------------------------------------------------- 7 8 If the Participant to whom the Option has been granted pursuant to this Agreement is subject to Section 16 of the Securities Exchange Act of 1934, as amended, Section 16 requires that at least six (6) months must elapse from the date of grant of the Option to the date of disposition of the Shares. 11. NOTICES ------- Any notices required or permitted by the terms of this Agreement or the Plan shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Company: Centronics Corporation Ten Tara Boulevard Nashua, New Hampshire 03062 Attention: General Counsel To the Employee: [NAME AND ADDRESS OF EMPLOYEE] or to such other address as either party furnishes to the other by like notice. Any such notice shall be deemed to have been given when mailed in accordance with the foregoing provisions. 12. GOVERNING LAW ------------- This Agreement shall be construed and enforced in accordance with the law of the State of New Hampshire. 13. BENEFIT OF AGREEMENT -------------------- This Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, legal representatives and successors of the parties hereto. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and delivered by its duly authorized officer and its corporate seal to be hereunto affixed and the Employee has hereunto set his or her hand and seal as of the day and year first above written in duplicate originals. CENTRONICS CORPORATION [SEAL] By --------------------------- --------------------------- EMPLOYEE 8 9 EKCO GROUP, INC. SCHEDULE TO FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT DATED SEPTEMBER 8, 1987, AS AMENDED Each of the following employees and former employees of the Company has a Non-Qualified Stock Option and Repurchase Agreement, as amended, with the Company dated September 8, 1987 which covers the following number of shares of the Company's Common Stock pursuant to the Company's 1987 Stock Option Plan which is identical in form to the foregoing Form of Non-Qualified Stock Option and Repurchase Agreement, as amended, except as to the number of shares:
No. of Shares Name and Position Granted - ----------------- ------- Robert Stein 200,000 President & Chief Executive Officer Jeffrey A. Weinstein 120,000 Executive Vice Presid- dent, Secretary & General Counsel Brian R. McQuesten 30,000 Vice President & Controller Linda R. Millman 30,000 Associate General Counsel & Asst. Secretary Neil R. Gordon 30,000 Former Executive Officer
EX-10.2.(B)(2) 10 AMENDED NON-QULAIFIED STOCK OPTION 1 EXHIBIT 10.2(b)(2) ----------------- FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED ----------------------------------------------------------------------- EKCO GROUP, INC. ---------------- AGREEMENT made as of the [DATE] (the "Grant Date"), between Ekco Group, Inc. (the "Company"), a Delaware corporation having a principal place of business in Nashua, New Hampshire, and [NAME AND ADDRESS OF EMPLOYEE], an employee of the Company (the "Employee"); WHEREAS, the Company desires to grant to the Employee an Option to purchase shares of its common stock of a par value of $.01 a share (the "Shares") under and for the purposes of the Company's 1987 Stock Option Plan, as amended (the "Plan") pursuant to Article XII thereof as a non-qualified stock option; WHEREAS, the Company and the Employee understand and agree that any terms used herein have the same meanings as in the Plan; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. GRANT OF OPTION --------------- The Company hereby grants to the Employee the right and option to purchase at one time or from time to time all or any part of an aggregate of [NUMBER OF SHARES GRANTED] (______) Shares, subject to adjustment as provided in the Plan, on the terms and conditions and subject to all the limitations set forth herein and in the Plan, which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the Plan. 2. PURCHASE PRICE -------------- The purchase price of the Shares covered by this Option shall be [PURCHASE PRICE] ($____) per Share, subject to adjustment as provided in the Plan (the "Purchase Price"). 3. EXERCISE OF OPTION ------------------ (a) The Option granted hereby shall be exercisable immediately, within the term set forth in Section 4 below, subject to the provisions of this Agreement. (b) Notwithstanding the provisions of the foregoing Subsection (a) and except as otherwise provided herein or in the Plan, if the Employee ceases to be an employee of the Company or of an Affiliate for any reason, then if such termination occurs: (i) during the period on or after the Grant Date and before the date which is twelve months thereafter (the "First Anniversary Date") and the Employee has theretofore exercised this Option for any Shares, then the Company may purchase any or all of those Shares from the Employee at the price paid by the Employee upon exercise; (ii) during the period on or after the First Anniversary Date and before the date which is twelve months thereafter (the "Second Anniversary Date") and the Employee has theretofore exercised this Option for more than [ONE THIRD OF THE NUMBER OF SHARES GRANTED] (___) 2 Shares, then the Company may purchase from the Employee up to that number of Shares equal to the amount by which the number of Shares purchased by the Employee pursuant to this Option exceeds [ONE THIRD OF THE NUMBER OF SHARES GRANTED] (____) Shares at the price paid by the Employee upon exercise; or (iii) during the period on or after the Second Anniversary Date and before the date which is twelve months thereafter (the "Third Anniversary Date") and the Employee has theretofore exercised this Option for more than [TWO THIRDS OF THE NUMBER OF SHARES GRANTED] (____) Shares, then the Company may purchase from the Employee up to that number of Shares equal to the amount by which the number of Shares purchased by the Employee pursuant to this Option exceeds [TWO THIRDS OF THE NUMBER OF SHARES GRANTED] (____) Shares at the price paid by the Employee upon exercise. Notwithstanding the foregoing, in the event the Employee's employment shall terminate as a result of death or Disability, the Purchase Option (as hereinbelow defined) shall cease and terminate. The right of the Company to purchase Shares pursuant to this Subsection 3(b) is hereinafter referred to as the "Purchase Option" and such Shares are hereinafter referred to as the "Purchase Stock." (c) Notwithstanding the foregoing Subsection (b), but subject to the other provisions hereof, the Purchase Option shall cease and terminate in the event of, and immediately upon, a Change of Control that occurs at any time before the Employee has ceased to be an employee of the Company or of an Affiliate UNLESS SUCH CHANGE OF CONTROL SHALL HAVE BEEN APPROVED BY A RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY WITH AT LEAST TWO-THIRDS (2/3) OF THE THEN SERVING COMPANY DIRECTORS WHO ARE COMPANY DIRECTORS AS OF THE DATE HEREOF VOTING IN FAVOR. As used herein, a "Change of Control" shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended [THE "1934 ACT"]), other than the Company or any employee stock plan of the Company, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of outstanding Shares of the Company; or (ii) ten (10) days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by any "person" of fifteen percent (15%) or more of the Shares of the Company, provided, however, that at the conclusion of such ten (10) day period such person has not discontinued or rescinded his intention to make such a tender or exchange offer, or (iii) if during any consecutive twelve (12) month period beginning on or after the date on which this Agreement is executed individuals who at the beginning of such period were directors of the Company cease, for any reason, to constitute at least a majority of the Board of Directors of the Company; or (iv) if a merger of, or consolidation involving, the Company in which the Company's stock is converted into securities of another corporation or into cash shall be consummated, or a plan of complete liquidation of the Company (whether or not in connection with a sale of all or substantially all of the Company's assets) shall be adopted and consummated, or substantially all of the Company's operating assets are sold (whether or not a plan of liquidation shall be adopted or a liquidation occurs), excluding in each case a transaction solely for the purpose of reincorporating the Company in a different jurisdiction or recapitalizing the Company's stock. 2 3 4. TERM OF OPTION -------------- (a) This Option shall terminate ten (10) years and one (1) month from the Grant Date of this Option, but shall be subject to earlier termination as provided herein or in the Plan. (b) If the Employee ceases to be an employee of the Company or of an Affiliate (for any reason other than death or Disability or termination by the Employee's employer for cause), then this Option may be exercised (subject to the provisions herein and in the Plan regarding exercise of the Option) but only within six (6) months and one (1) day after the date on which the Employee ceases to be an employee, or within ten (10) years from the granting of this Option, whichever is earlier, and may not be exercised thereafter. Immediately upon the Employee's ceasing to be an employee as aforesaid, this Option shall cease to be exercisable by the Employee as to those Shares, if any, which if purchased immediately following such termination would be subject to the Company's Purchase Option. The provisions of this Subsection (b), and not the provisions of Subsection (c) and (d) below, shall apply to the Employee if the Employee subsequently becomes Disabled or dies after the Employee's termination of employment; however, in the case of the Employee's death which occurs within the six (6) months and one (1) day following the termination of employment, the Employee's Survivors may exercise this Option within six (6) months after the date of the Employee's death, but in no event beyond the originally prescribed term hereof. (c) In the event of the Disability of the Employee (as determined by the 1987 Stock Option Plan Committee of the Company, and as to the fact and date of which the Employee is notified by that Committee in writing), this Option shall be exercisable within (1) year after the date of such Disability or, if earlier, the term originally prescribed by this Agreement. (d) In the event of the death of the Employee while an employee of the Company or of an Affiliate, this Option may be exercised only by the Employee's legal representatives and/or any person or persons who acquired the Employee's rights to this Option by will or by the laws of descent and distribution. The Company shall use reasonable efforts to notify the Employee's legal representative, if known, or his or her next of kin or other persons likely to know his or her legal representative, promptly after the date of death of the existence of this Option. Any failure by the Company to give such notice will not extend the period of time during which this Option may be exercised or otherwise entitle the holder to any greater rights than stated in this Agreement or in the Plan. This Option must be exercised, if at all, within one (1) year after the date of death of the Employee, or, if earlier, within the originally prescribed term of this Option. (e) In the event the Employee's employment is terminated by the Employee's employer for "cause" (as defined in the Plan), the Employee's right to exercise any unexercised portion of this Option shall cease forthwith, and this Option shall thereupon terminate. 5. NON-ASSIGNABILITY ----------------- This Option shall not be transferable by the Employee otherwise than by will or by the laws of descent and distribution and shall be 3 4 exercisable, during the Employee's lifetime, only by the Employee (or by the Employee's duly appointed legal representative). This Option shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Option or of any rights granted hereunder contrary to the provisions of this Section 5, or the levy of any attachment or similar process upon this Option or such rights, shall be null and void. 6. EXERCISE OF OPTION AND ISSUE OF SHARES -------------------------------------- This Option may be exercised, in whole or in part, at one time or from time to time (to the extent that it is exercisable in accordance with its terms) by giving written notice to the Company. Such written notice shall be signed by the person exercising this Option, shall state the number of Shares with respect to which this Option is being exercised, shall contain any warranty required by Section 7 below, and shall otherwise comply with the terms and conditions of this Agreement and the Plan. Such notice must be received by the Company within the relevant exercise period specified in Section 4 of this Agreement. Such notice shall either: (i) be accompanied by payment of the full purchase price of such Shares, in which event the Company, subject to the provisions of Section 7, shall deliver a certificate or certificates representing such Shares as soon as practicable after the notice shall be received, or (ii) fix a date (not less than five nor more than ten business days after such notice shall be received by the Company, which date must be within the relevant exercise period specified in Section 4 of this Agreement) for the payment of the full purchase price of such Shares against delivery subject to the provisions of Section 7, of a certificate or certificates representing such Shares. Payment of such purchase price shall, in either case, be made by check payable to the order of the Company, or in such other manner as the Committee shall permit. The certificate or certificates for the Shares as to which this Option shall have been so exercised shall be registered in the name of the person or persons so exercising this Option and shall be delivered as provided above to the person or persons exercising this Option. All Shares that shall be purchased upon the exercise of this Option as provided herein shall be fully paid and non-assessable. The Employee agrees to pay to the Company upon exercise of this Option that amount which is equal to the amount the Company is required to withhold as a result of such exercise. The Company shall pay all original issue taxes with respect to the issue of the Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection herewith. Except as specifically set forth herein, the holder acknowledges that any income or other taxes due from him or her with respect to this Option or the shares issuable pursuant to this Option shall be the responsibility of the holder. The holder of this Option shall have rights as a shareholder only with respect to any Shares covered by this Option after due exercise of this Option and tender of the full exercise price for the Shares being purchased pursuant to such exercise. Pursuant to the Plan, the Company shall make deliver of the Shares against payment of the Option price therefor. 7. PURCHASE FOR INVESTMENT ----------------------- Unless the offering and sale of the Shares to be issued upon the particular exercise of this Option shall have been effectively registered 4 5 under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "Act"), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled: (i) The person(s) who exercise this Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for his or her own account, for investment and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall in substantially the following form be endorsed upon the certificate(s) evidencing the option Shares issued pursuant to such exercise: "The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, in the absence of an effective registration statement for the shares under the Securities Act of 1933 or an opinion of counsel satisfactory to the Company that an exemption from registration is then available." (ii) The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any reasonable action or obtaining of any consent, which the Company deems reasonably necessary under any applicable law (including without limitation state securities or "blue sky" laws). 8. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE OPTION ------------------------------------------------------------------ (a) Any Shares which are subject to the Purchase Option shall not be transferred by the Employee except as permitted herein. Until the termination of this Agreement, the Shares which are subject to the Purchase Option may not be transferred by the Employee unless and until the transferee agrees, in a form satisfactory to the Company, to be bound by this Agreement and to sell any transferred Shares to the Company as herein provided. (b) In the event the Company shall be entitled to elect to exercise the Purchase Option, the Company shall be deemed to have made such election with respect to all Shares which are Purchase Stock, unless it shall have given to the Employee written notice of its non-election to exercise the Purchase Option, in whole or in part, within ninety (90) days of the date of the event entitling the Company to exercise the Purchase Option. If the Company shall have given the Employee written notice of its election to exercise the Purchase Option in part, any remaining Shares subject to the Purchase Option hereunder shall thenceforth no longer be subject to the Purchase Option, except as such notice may otherwise provide. (c) In the event the Company shall be entitled to and shall have determined to elect to exercise the Purchase Option, it shall give to the Employee a written notice specifying a date for the Closing, which date shall be not more than ten (10) business days after the giving of such notice. The Closing shall take place at the Company's principal offices in New Hampshire, or such other location as the Company may reasonably designate in such notice. If the Company shall be deemed to have elected to exercise the Purchase Option 5 6 by virtue of the provisions of Subsection (b) above, the Closing will take place on the tenth business day after the ninety (90) day period described in Subsection (b) above. (d) At the Closing, the Employee shall deliver the Purchase Stock being purchased by the Company against the simultaneous delivery to the Employee of the purchase price (by certified or bank cashier's check or in such other form as mutually agreed to) for the number of shares of the Purchase Stock then being purchased. In the event that the Employee fails so to deliver the shares of Purchase Stock to be purchased, the Company may elect (a) to establish a segregated account in the amount of the Purchase Price, such account to be turned over to the Employee upon delivery of such shares of Purchase Stock, and (b) immediately to take such action as is appropriate to transfer record title of such of the Purchase Stock from the Employee to the Company and to treat the Employee and such shares of the Purchase Stock in all respects as if delivery of such shares of the Purchase Stock had been made as required by this Agreement. The Employee hereby irrevocably grants the Company a power of attorney for the purpose of effectuating the preceding sentence. (e) If the Company shall pay a stock dividend or declare a stock split on or with respect to any of the Company's common stock, $.01 par value (the "Common Stock"), or otherwise distribute securities of the Company to the holders of its Common Stock, whether before or after the exercise of this Option, the number of shares of stock or other securities of the Company issued with respect to the Purchase Stock then subject to the Purchase Option shall be added to the Purchase Stock then subject to the Purchase Option without any change in the aggregate purchase price. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Purchase Stock then subject to the Purchase Option shall be added to the Purchase Stock covered by the Purchase Option without any change in the aggregate purchase price. Without limiting the generality of the foregoing, the Employee shall be entitled to retain any and all cash dividends paid by the Company on the Shares. (f) If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to any capital reorganization, whether before or after the exercise of this Option, there shall be substituted for the Purchase Stock then covered by the Purchase Option such amount and kind of securities as are issued in such subdivision, combination, reclassification, or capital reorganization in respect of the Purchase Stock subject to the Purchase Option immediately prior thereto, without any change in the aggregate purchase price. (g) If the Company shall be completely liquidated, then the Purchase Option shall cease and terminate as of the date of such liquidation and the Employee shall hold the Shares free of the Purchase Option. (h) The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been sold, assigned or otherwise transferred, from and after any sale, assignment or transfer of any Shares made in violation of this Agreement. 6 7 (i) All certificates representing any Shares to be issued to the Employee pursuant to the exercise of this Option which are subject to the Purchase Option shall have endorsed thereon a legend substantially as follows: "The shares represented by this certificate are subject to a Stock Option and Repurchase Agreement dated as of February 6, 1996 between the Corporation and [NAME OF EMPLOYEE], a copy of which Agreement is available for inspection at the principal offices of the Company or will be made available without charge upon request." (j) This Agreement shall not restrict the transfer by the Employee of shares, if any, which are not acquired pursuant to the exercise of this Option or which are not, or cease to be, subject to the Purchase Option in accordance with the terms hereof, except as otherwise provided in Section 7 hereof. 9. REGISTRATION RIGHTS ------------------- (a) In the event that the Company has an effective registration statement covering the sale and resale of securities issued pursuant to the Plan, then the Employee agrees to sign a waiver in substantially the following form: "For so long as a registration statement under the Securities Act of 1933, as amended, is in effect covering the sale and resale of securities issued pursuant to the 1987 Stock Option Plan of Ekco Group, Inc. (the "Company"), the undersigned Employee waives his/her rights to require the Company to file a registration statement pursuant to Section 9 of the Non-Qualified Stock Option and Repurchase Agreement dated as of [DATE], between the undersigned Employee and the Company." (b) The Employee acknowledges that option agreements have been executed by the Company with [NO. OF EMPLOYEES] (____) other employees of the Company and its Affiliates and [NO. OF OUTSIDE DIRECTORS] (____) Outside Directors of the Company and may be executed with other employees and Directors (collectively "Other Holders"), each containing or to contain a section substantially identical to this Section 9. Subject to the terms hereinafter set forth, at any time after the Grant Date, the holder shall have the right, by written notice to the Company, to require the Company to file and use its best efforts to cause to become effective a registration statement under the Securities Act of 1933, as amended (the "Act") on Form S-8, Form S-2 or Form S-3 or other like form, if available, covering such number of Shares acquired or to be acquired prior to the effective date of such registration statement, subject to the limitations that (i) the Company shall be required to file no more than an aggregate of two (2) registration statements pursuant to such notices and/or pursuant to notices received from Other Holders, and (ii) if, in the opinion of counsel to the Company, the holder can then sell, subject to such limitations as to the number of Shares which may be sold as may be imposed by Rule 144 under the Act or any successor rule, Shares requested to be included in any such registration statement, without such registration, the Company need not so register such Shares. In no event will the Company be required to register Shares which are subject to the Purchase Option. The Company agrees to promptly notify a holder in the event that it receives a notice from any of the Other Holders requiring it to file a registration statement and to permit the holder to require the Company to include Shares owned by the holder in such registration statement, subject to the limitations set forth above. (c) In connection with any registration statement pursuant to this 7 8 Section 9: (i) the holder will furnish to the Company in writing such appropriate information as the Company, or the Securities and Exchange Commission (the "Commission") or any other regulatory authority may request; (ii) the holder agrees to execute, deliver and/or file with or supply to the Company, the Commission, any underwriters and/or any state or other regulatory authority such information, documents, representations, undertakings and/or agreements necessary to carry out the provisions of the registration agreements contained in this Agreement and/or to effect the registration or qualification of the Shares under the Act and/or any of the laws and regulations of any state or governmental instrumentality; (iii) the Company will furnish to the holder of Shares included in the registration statement such number of copies of such prospectus (including each preliminary, amended or supplemental prospectus) as the holder may reasonably request; and (iv) in the event an offering of securities by the Company is pending, the Company shall have the right to require that the holder delay any offering of Shares for a period of ninety (90) days after the effective date of such pending offering (upon the Company's having first delivered to the holder the written opinion of its principal underwriter, or if there be none, then from an officer of the Company based upon a good faith resolution of the Board of Directors to the effect that the offering of such Shares will have an adverse effect on the marketing of such pending offering). (d) The Company will pay all its out-of-pocket expenses and disbursements in connection with any registration statement filed under this Section 9, including, without limitation, printing expenses, fees of the Company's counsel and auditors, registration fees, Blue Sky fees and similar costs to the extent permitted by state and regulatory authorities. (e) The Company will be obligated to keep any registration statement filed by it under this Section 9 effective under the Act for a period of ninety (90) days after the actual effective date of such registration statement and to prepare and file such supplements and amendments necessary to maintain an effective registration statement for such period. As a condition to the Company's obligation under this Subsection (e), the holder will execute and deliver to the Company such written undertakings as the Company and its counsel may reasonably require in order to assure full compliance with relevant provisions of the Act. (f) The Company will use its best efforts to register or qualify the Shares covered by a registration statement filed pursuant hereto under such securities or Blue Sky laws in such jurisdictions within the United States as the holder may reasonably request, provided, however, that the Company reserves the right, in its sole discretion, not to register or qualify such stock in any jurisdiction where such stock does not meet with the requirements of such jurisdiction or where the Company is required to qualify as a foreign corporation to do business in such jurisdiction and is not so qualified therein or is required to file any general consent to service of process. (g) In the event that a holder has not sold all of his or her Shares on or prior to the expiration of the period specified in Subsection (e) above, 8 9 the holder hereby agrees that the Company may deregister by post-effective amendment any of his or her Shares covered by the registration statement or notification but not sold on or prior to such date. The Company agrees that it will notify the holder of the filing and effective date of such post-effective amendment. (h) The holder agrees that upon notification by the Company that the prospectus in respect to any public offering covered by the provisions hereof is in need of revision, the holder will immediately upon receipt of such notification (i) cease to offer or sell any securities of the Company which must be accompanied by such prospectus; (ii) return to the Company all such prospectuses in the hands of the holder; and (iii) not offer or sell any securities of the Company until the holder has been provided with a current prospectus and the Company has given the holder notification permitting the holder to resume offers and sales. 10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE ----------------------------------------------------------------- SECURITIES EXCHANGE ACT OF 1934 - ------------------------------- IF THE PARTICIPANT TO WHOM THE OPTION HAS BEEN GRANTED PURSUANT TO THIS AGREEMENT IS SUBJECT TO SECTION 16 OF THE 1934 ACT, SECTION 16 REQUIRES THAT AT LEAST SIX (6) MONTHS MUST ELAPSE FROM THE DATE OF GRANT OF THE OPTION TO THE DATE OF DISPOSITION OF THE SHARES. 11. NOTICES ------- Any notices required or permitted by the terms of this Agreement or the Plan shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Company: Ekco Group, Inc. 98 Spit Brook Road Nashua, New Hampshire 03062 Attention: Associate General Counsel To the Employee: To Employee's last address in the records of the Company or to such other address as either party furnishes to the other by like notice. Any such notice shall be deemed to have been given when mailed in accordance with the foregoing provisions. 12. GOVERNING LAW ------------- This Agreement shall be construed and enforced in accordance with the law of the State of New Hampshire, except to the extent the law of the State of Delaware may be applicable. 13. BENEFIT OF AGREEMENT -------------------- This Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, legal representatives and successors of the parties hereto, subject to the provisions of Section 5 above. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and delivered by its duly authorized officer and its corporate seal 9 10 to be hereunto affixed and the Employee has hereunto set his or her hand and seal all as of the day and year first above written in duplicate originals. EKCO GROUP, INC. [SEAL] By ------------------------------ Title ---------------------------- --------------------------------- EMPLOYEE 10 11 EKCO GROUP, INC. SCHEDULE TO FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED Each of the following employees and former employees of the Company has the following Non-Qualified Stock Option and Repurchase Agreements with the Company which cover the following shares of the Company's Common Stock pursuant to the Company's 1987 Stock Option Plan which agreements are identical in form to the foregoing Form of Non-Qualified Stock Option and Repurchase Agreement, as amended:
No. of Shares Exercise Name and Position Grant Date Granted Price - ----------------- ---------- ------- -------- Robert Stein 06/22/88 134,000 $ 2.1250 President & Chief 01/18/90 69,000 $ 2.5625 Executive Officer 01/13/92 77,000 $10.0625 01/19/93 120,000 $11.3125 01/24/94 75,000 $ 7.4375 01/03/95 66,359 $ 6.5000 02/06/98 66,359 $ 5.9375 Jeffrey A. Weinstein 06/22/88 80,000 $ 2.1250 Executive Vice Presid- 01/18/90 22,000 $ 2.5625 dent, Secretary & 01/03/95 16,491 $ 6.5000 General Counsel 02/06/96 16,491 $ 5.9375 Donato A. DeNovellis 07/14/93 30,000 $10.0625 Executive Vice Presi- 01/24/94 20,000 $ 7.4375 dent, Finance & Admi- 01/03/95 24,538 $ 6.5000 nistration, & Chief 02/06/96 24,538 $ 5.9375 Financial Officer Brian R. McQuesten 06/22/88 50,000 $ 2.1250 Vice President & 01/18/90 8,500 $ 2.5625 Controller 01/13/92 9,500 $10.0625 01/19/93 10,000 $11.3125 01/24/94 8,500 $ 7.4375 01/03/95 6,992 $ 6.5000 02/06/96 8,401 $ 5.9375 Stuart B. Cohen 06/13/95 7,161 $ 6.0625 Vice President, Strate- 02/06/96 12,847 $ 5.9375 gic Planning & Busines Development John T. Haran 02/06/96 9,295 $ 5.9375 Vice President & Treasurer Linda R. Millman 02/06/96 3,000 $ 5.9375 Associate General Counsel & Asst. Secretary
11 12
Neil R. Gordon 06/22/88 40,000 $ 2.1250 Former Executive 01/18/90 8,500 $ 2.5625 Officer 01/13/92 9,500 $10.0625 01/19/93 9,000 $11.3125 01/24/94 8,500 $ 7.4375 01/03/95 5,937 $ 6.5000 Richard J. Corbin 01/03/95 29,288 $ 6.5000 Former Executive Officer Ronald N. Fox 01/13/92 27,500 $10.0625 Former Executive 01/19/93 60,000 $11.3125 Officer 01/24/94 16,000 $ 7.4375
12 EX-10.3.(B) 11 INDEMNITY AGREEMENT SCHEDULE 1 EXHIBIT 10.3(b) --------------- EKCO GROUP, INC. INDEMNITY AGREEMENT SCHEDULE -------- Each of the following persons has an Indemnity Agreement with Ekco Group, Inc. which is identical in form to the foregoing Form of Indemnity Agreement except that agreements executed between February 17, 1987 and April 29, 1988 bear the former company name of Centronics Corporation and agreements executed before February 17, 1987 bear the former company name of Centronics Data Computer Corp.:
Present Position Date of Name With the Company Agreement - ---- ---------------- --------- Stuart W. Cohen Vice President, Strategic 06-12-95 Planning & Business Develop- ment Edmond M. Coller Former Director 02-12-87 Richard J. Corbin Former Officer 10-26-94 Donato A. DeNovellis Executive Vice President, 10-26-94 Finance & Administration, and Chief Financial Officer Andrew D. Dunn Director 08-03-87 Ronald N. Fox Former Officer 06-30-87 Neil R. Gordon Former Officer 07-30-86 John T. Haran Vice President & Treasurer 02-06-96 Thomas G. Kamp Former Director & Officer 07-30-86 Michael D. Kaufman Former Director 01-04-87 Robert W. Kilcullen, Jr. Former Director & Officer 07-30-86 Milton C. Lauenstein Former Director 08-18-87 T. Michael Long Director 05-18-93 Brian R. McQuesten Vice President & Controller 07-30-86 Linda R. Millman Associate General Counsel 01-01-92 & Assistant Secretary Kenneth J. Novack Former Director 08-10-87 Stuart B. Ross Director 02-14-89 Harold J. Seigle Former Director 08-03-87 Malcolm L. Sherman Director 05-25-95 Bill W. Sorenson Director 03-15-88 Herbert M. Stein Director 08-03-87 Robert Stein President & Chief 07-30-86 Executive Officer Jeffrey A. Weinstein Executive Vice President, 07-30-86 Secretary & General Counsel
EX-10.4 12 1988 DIRECTOR'S STOCK OPTION PLAN/AMENDED 1 EXHIBIT 10.4 ------------ EKCO GROUP, INC. 1988 DIRECTORS' STOCK OPTION PLAN, AS AMENDED I. DEFINITIONS AND PURPOSES ------------------------ A. Definitions Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this 1988 Directors' Stock Option Plan, have the following meanings: (1) "COMPANY" means Ekco Group, Inc. (2) "PLAN" means this 1988 Directors' Stock Option Plan. (3) "BOARD OF DIRECTORS" means the Board of Directors of the Company. (4) "AFFILIATE" means a corporation which owns at least fifty percent (50%) of the outstanding capital stock of the Company, directly or indirectly, or a corporation in which the Company or an Affiliate, directly or indirectly, owns at least fifty (50%) of the outstanding capital stock of such corporation. (5) "OUTSIDE DIRECTOR" means any Director of the Company who is not an employee of the Company or of an Affiliate at the time of the grant of the Option, who has not been an employee of the Company or of an Affiliate at any time within one (1) year prior to such time of grant and who has been elected to serve as a Director by the Company's stockholders. (6) "OPTION" means a right or option granted under the Plan. (7) "OPTION AGREEMENT" means an agreement between the Company and a Participant executed and delivered pursuant to the Plan. (8) "PARTICIPANT" means an Outside Director to whom an Option is granted under the Plan, or, where the context requires, his or her legal representative. (9) "PARTICIPANT'S SURVIVORS" means a deceased Participant's legal representatives and/or any person or persons who acquired the Participant's rights to an Option by will or by the laws of descent and distribution. (10) "SHARES" means the following shares of the capital stock of the Company as to which Options have been or may be granted under the Plan: Common Stock, $0.01 par value, or any shares (08-22-95) 2 of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Article VII of the Plan. The shares issued upon exercise of Options granted under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both. B. Purposes of the Plan: --------------------- The Plan is intended to encourage ownership of shares by Outside Directors in order to attract such Outside Directors, to induce such Outside Directors to remain as Directors of the Company and to provide additional incentive for such Outside Directors to promote the success of the Company. The Plan is intended to comply in all respects with Rule 16b-3 or its successors, promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), with respect to Participants who are subject to Section 16 of the 1934 Act, and any provision in this Plan with respect to such persons contrary to Rule 16b-3 shall be deemed null and void to the extent permissible by law. II. SHARES SUBJECT TO THE PLAN -------------------------- The aggregate number of Shares as to which Options may be granted from time to time shall be 600,000 Shares as of the date of adoption of this Plan (and the equivalent of stock-split, stock dividend, combination, recapitalization or similar transaction effected after such date). If an Option ceases to be "outstanding", in whole or in part, the Shares which were subject to such Option shall be available for the granting of other Options under the Plan. Any Option shall be treated as "outstanding" until such Option is exercised in full or terminates or expires under the provisions of the Plan or by agreement of the parties to the pertinent Option Agreement. The aggregate number of Shares as to which Options may be granted shall be subject to change only by means of an amendment of the Plan duly adopted by the Company and approved by the stockholders of the Company within twelve (12) months before or after the date of the adoption of any such amendment, subject to the provisions of Article VII. III. ELIGIBILITY FOR PARTICIPATION ----------------------------- Each Participant must be an Outside Director of the Company at the time an Option is granted. Upon the later of the approval of this Plan by the Board of Directors of the Company or the date on which he or she becomes an Outside Director (the "Grant Date"), each Outside Director shall be automatically granted an Option with an exercise price equal to the fair market value of a Share determined as set forth in subparagraph A(2) of Article IV below and for that number of Shares as is determined by dividing (i) $100,000 by (ii) the fair market value of a Share determined as set forth in subparagraph A(2) of Article IV, rounded to the nearest whole Share, but in no event to be greater than 50,000 Shares. No Outside Director shall be entitled to be granted more than one Option pursuant to this Plan. IV. TERMS AND CONDITIONS OF OPTIONS ------------------------------- 2 3 Each Option shall be set forth in an Option Agreement substantially in the form hereto annexed and marked Exhibit A, duly executed on behalf of the Company and by the Participant to whom such Option is granted. No Option shall be exercisable unless an Option Agreement shall have been duly executed on behalf of the Company and by the Participant. Each such Option Agreement shall be subject to at least the following terms and conditions: A. Exercise Price: -------------- (1) The exercise price (per share) of the Shares covered by each Option shall be the "fair market value" as hereinafter defined (per share) of the Shares, determined as of the Grant Date. (2) For purpose of the forgoing subparagraph (1), fair market value shall be determined as follows. If such Shares are then listed on any national securities exchange, the fair market value shall be the mean between the high and low sales prices, if any, on the largest such exchange on which such prices were reported for the Grant Date, or, if none, on the most recent trade date thirty (30) days or less prior to the Grant Date for which such prices are reported. If the Shares are not then listed on any such exchange, the fair market value of such shares shall be the mean between the closing "Bid" and the closing "Ask" prices, if any, as reported in the National Association of Securities Dealers Automated Quotation System ("NASDAQ") for the Grant Date, or if none, on the most recent trade date thirty (30) days or less prior to the Grant Date for which such quotations are reported. If the Shares are not then either listed on any such exchange or quoted in NASDAQ, the fair market Value shall be the mean between the average of the "Bid" and the average of the "Ask" prices, if any, as reported in the National Daily Quotation Service for the Grant Date, or if none, for the most recent trade date thirty (30) days or less prior to the Grant Date for which such quotations are reported. If the fair market value cannot be determined under the preceding three sentences, it shall be determined in good faith by the Board of Directors. B. Number of Shares: ---------------- Each Option shall be for that number of Shares as is determined by dividing (i) $100,000 by (ii) the fair market value determined as set forth in subparagraph A(2) of Article IV above, rounded to the nearest whole Share, but in no event to be greater than 50,000 Shares. C. Term of Option: -------------- Each Option shall terminate ten (10) years from the Grant Date thereof, and shall be subject to earlier termination as herein provided. D. Date of Exercise: ---------------- Each Option shall become exercisable immediately upon grant, within its prescribed term subject to the provisions of Paragraphs G, H and I below. 3 4 E. Repurchase Rights: ----------------- (1) Notwithstanding the provisions of the forgoing Paragraph D and except as otherwise provided herein or in the Option Agreement, if a Participant ceases to be a Director of the Company for any reason, then the provisions set forth below in this Paragraph E shall apply to the Shares purchased by the Participant pursuant to his or her Option. If such termination occurs: (i) during the period on or after the Grant Date for such Option and before the date which is twelve months thereafter (the "First Anniversary Date") and the Participant has theretofore exercised the Option for any Shares, then the Company shall purchase those Shares from the Participant at the price by him or her upon exercise; (ii) during the period on or after the First Anniversary Date and before the Date which is twelve months thereafter (the "Second Anniversary Date") and the Participant has theretofore exercised the Option for more than one-third (1/3) of the number of Shares which may be purchased pursuant to such Option, the Company shall purchase any excess over such amount of Shares so determined from the Participant at the price paid by him or her upon exercise; and (iii) during the period on or after the Second Anniversary Date and before the date which is twelve months thereafter (the "Third Anniversary Date") and the Participant has heretofore exercised the Option for more than two-thirds (2/3) of the number of Shares which may be purchased pursuant to such Option, the Company shall purchase any excess over such amount of Shares so determined from the Participant at the price paid by him or her upon exercise. (2) Notwithstanding the foregoing, in the event the Participant ceases to be a Director of the Company as a result of death, the Purchase Obligation (as hereinbelow defined) shall cease and terminate. (3) Notwithstanding the foregoing provisions of this Paragraph E, but subject to the other provisions of this Plan, the Purchase Obligation shall cease and terminate in the event of, and immediately upon, a Change of Control that occurs at any time before the Participant has ceased to be a director of the Company. As used herein, a "Change of Control" shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becomes the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company's then outstanding securities; or (ii) if the stockholders of the company approve any merger of, or consolidation involving, the Company in which the Company's stock is converted into securities of another corporation or into cash and such merger or consolidation shall be consummated, or the 4 5 stockholders of the Company approve any plan of complete liquidation of the Company (whether or not in connection with a sale of all or substantially all of the Company's assets) and such liquidation is consummated, excluding in each case a transaction solely for the purpose of reincorporating the Company in a different jurisdiction or recapitalizing the Company's stock or a merger of the Company in which the holders of the voting stock of the Company immediately prior to the merger have the same proportionate ownership of voting stock of surviving corporation immediately after the merger. (4) The obligation of the Company to purchase Shares pursuant to this Paragraph E is hereinafter referred to as the "Purchase Obligation" and such Shares are hereinafter referred to as the "Purchase Stock." F. Medium of Payment: ----------------- The Option price shall be payable upon the exercise of the Option by check payable to the Company or by cash. G. Termination of Directorship: --------------------------- A Participant who ceases to be a Director of the Company (for any reason other than death) may exercise any Option granted to such Participant, but only within six (6) months and one (1) day after the date on which the Participant ceased to be a Director, provided, however, (i) in no event may the Option be exercised any later than the prescribed term of the Option, and (ii) immediately upon such Participant ceasing to be a Director such Participant's Option shall cease to be exercisable for any number of Shares which if purchased immediately following such termination would be subject to the Company's Purchase Obligation. The provisions of this Paragraph G, and not the provisions of Paragraph H of this Article IV, shall apply to a Participant who subsequently dies after the termination of his or her Directorship; however, in the case of a Participant's death, the Participant's Survivors may exercise the Option within six (6) months after the date of the Participant's death, but in no event beyond the prescribed term of the Option. H. Death: ----- In the event of the death of a Participant to whom an Option has been granted while the Participant is a Director of the Company, such Option, to the extent not exercised by the Participant's Survivor's, if at all, within one (1) year after the date of death of such Participant or, if earlier, within the prescribed term of the Option, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant were alive and had continued to be a Director of the Company. 5 6 I. Exercise of Option and Issue of Shares: -------------------------------------- An Option may be exercised by giving written notice to the Company. Such written notice shall be signed by the person exercising the Option, shall state the number of shares with respect to which the Option is being exercised and shall contain any warranty required by Article VI. Reasonably promptly following receipt by the Company of such written notice, the Company shall give notice to the person exercising the Option of a date for delivery of the Option Shares to such person, against payment of the Option price. In determining what constitutes "reasonably promptly", it is expressly understood that the delivery of the Option Shares may be delayed by the Company in order to comply with any law or regulation which requires the Company to take any action with respect to the Option Shares prior to the issuance thereof, whether pursuant to the provisions of Article VI or otherwise. The option Shares shall, upon delivery, be evidenced by an appropriate certificate or certificates for paid-up non-assessable Shares. J. Rights as a Stockholder: ----------------------- No Participant to whom an Option has been granted nor any of Participant's Survivors shall have rights as a stockholder with respect to any Shares covered by such Option except after due exercise of the Option and tender of the full exercise price for the Shares being purchased pursuant to such exercise. K. Assignability and Transferability of Option: ------------------------------------------- By its terms, an Option granted to a Participant shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution in accordance with the foregoing Paragraphs G and H of this Article IV and shall be exercisable, during the Participant's lifetime, only by such Participant (or his or her legal representative). No Option shall be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise and no Option shall be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Option or of any rights granted thereunder contrary to the provisions of this Paragraph K, or the levy of any attachment or similar process upon an Option or such rights, shall be null and void. V. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE OBLIGATION ---------------------------------------------------------------------- (1) Any Shares which are subject to a Purchase Obligation shall not be transferred by the Participant except as permitted herein. Until the termination of the Option Agreement, the Shares which are subject to a Purchase Obligation may not be transferred by the Participant unless and until the transferee agrees, in a form satisfactory to the Company, to be bound by the Option Agreement and to sell any transferred Shares to the Company as provided herein and in the Option 6 7 Agreement. (2) If a Participant ceases to be a Director and such Participant holds any Purchase Stock, then within sixty (60) days following the date a Participant ceases to be a Director, the Company shall give to each Participant a written notice specifying a date for the Closing for the purchase by the Company of the Purchase Stock, which date shall not be more than ten (10) business days after the giving of such notice. The Closing shall take place at the Company's principal offices in New Hampshire, or such other location as the Company may reasonably designate in such notice. If the Company shall fail to give the notice provided for above within the specified period of time, then the Closing shall be on the ninetieth (90th) day following the date the Participant ceased to be a director or if not a business day, the next business day. (3) At the Closing, the Participant shall deliver the Purchase Stock being purchased by the Company against the simultaneous delivery to the Participant of the purchase price (by certified or bank cashier's check or in such other form as mutually agreed to) for the number of shares of the Purchase Stock then being purchased. In the event that the Participant fails so to deliver the shares of Purchase Stock to be purchased, the Company may elect (a) to establish a segregated account in the amount of the purchase price, such account to be turned over to the Participant upon delivery of such shares of Purchase Stock, and (b) immediately to take such action as is appropriate to transfer record title of such of the Purchase Stock from the Participant to the Company and to treat the Participant and such shares of the Purchase Stock in all respects as if delivery of such shares of the Purchase Stock had been made as required by this Plan and the Option Agreement. The Participant shall be entering into the Option Agreement irrevocably grant the Company a power of attorney for the purpose of effectuating the terms of the preceding sentence. (4) If the Company shall pay a stock dividend or declare a stock split on or with respect to any of the Company's Shares, or otherwise distribute securities of the Company to the holders of its Shares, whether before or after the exercise of an Option, the number of shares of stock or other securities of the Company issued with respect to the Purchase Stock then subject to the Purchase Obligation shall be added to the Purchase Stock then subject to the Purchase Obligation without any change in the aggregate purchase price. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Purchase Stock then subject to the Purchase Obligation shall be added to the Purchase Stock covered by the Purchase Obligation without any change in the aggregate purchase price. Without limiting the generality of the foregoing, a Participant shall be entitled to retain any and all cash dividends paid by the Company on the Shares. 7 8 (5) If the Company's Shares shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the Company's Shares, or if the Company shall be a party to any capital reorganization, whether before or after the exercise of an Option, there shall be substituted for the Purchase Stock then covered by the Purchase Obligation such amount and kind of securities as are issued in such subdivision, combination, reclassification, or capital reorganization in respect of the Purchase Stock subject to the Purchase Obligation immediately prior thereto, without any change in the aggregate purchase price. (6) If the Company shall be completely liquidated, then the Purchase Obligation shall cease and terminate as of the date of such liquidation and the Participant shall hold the shares free of the Purchase Obligation. (7) The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Plan or an Option Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been sold, assigned or otherwise transferred, from and after any sale, assignment or transfer of any Shares made in violation of this Plan or an Option Agreement. (8) All certificates representing any Shares to be issued to a Participant pursuant to the exercise of an Option which are subject to a Purchase Obligation shall have endorsed thereon a legend substantially as follows: "The shares represented by this certificate are subject to a Director's Stock Option and Repurchase Agreement dated between the Corporation and , a copy of which Agreement is available for inspection at the principal offices of the Company or will be made available without charge upon request." (9) This Article V shall not restrict the transfer by a Participant of shares, if any, which are not acquired pursuant to the exercise of an Option or which are not, or cease to be, subject to the Purchase Obligation in accordance with the terms hereof and the terms of the Option Agreement. VI. PURCHASE FOR INVESTMENT ----------------------- Unless the offering and sale of the Shares to be issued upon the particular exercise of an Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "Act"), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled: (1) The person(s) who exercise such Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for his or her own account, for 8 9 investment and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed in substantially the following form upon the certificate(s) evidencing their Option Shares issued pursuant to such exercise: "The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, in the absence of an effective registration statement for the shares under the Securities Act of 1933 or an opinion of counsel satisfactory to the Company that an exemption from registration is then available." (2) The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any reasonable action or obtaining of any consent, which the Company deems reasonably necessary under any applicable law including (including without limitation state securities or "blue sky" laws). VII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION ------------------------------------------ To prevent dilution or enlargement of rights, in the event that the outstanding Shares of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, change in par value, stock split-up, combination of shares or dividend payable in capital stock, or the like, appropriate adjustment shall be made in the number and kind of shares for the purchase of which Options may be granted under the Plan and, in addition, appropriate adjustment to prevent dilution or enlargement of the rights granted to or available for Participants, shall be made in the number and kind of shares and in the option price per share subject to outstanding Options. In addition, the Board of Directors may make other adjustments in outstanding Options if such adjustment is appropriate to prevent dilution or enlargement of rights. VIII. DISSOLUTION OR LIQUIDATION OF THE COMPANY ----------------------------------------- Upon the dissolution or liquidation of the Company other than in connection with a transaction to which the preceding Article VII is applicable, all Options granted hereunder shall terminate and become null and void; provided, however, that if the rights of a Participant or a Participant's Survivors hereunder have not otherwise terminated and expired, the Participant (or his or her legal representatives) or the Participant's Survivors shall have the right immediately prior to such dissolution or liquidation to exercise any Option granted hereunder to the extent that the right to purchase shares thereunder has accrued as of the date immediately prior to such dissolution or liquidation. 9 10 IX. TERMINATION OF THE PLAN ----------------------- The Plan shall terminate ten (10) years from the earlier of the date of its adoption by the Board of Directors or the date of its approval by the stockholders of the Company. The Plan may be terminated at an earlier date by vote of the stockholders of the Company; provided, however, that any such earlier termination shall not affect any Options granted or Option Agreements executed prior to the effective date of such termination. X. AMENDMENT OF THE PLAN --------------------- The Plan may be amended by the stockholders of the Company. The Plan may also be amended by the Board of Directors, including, without limitation, to the extent necessary to ensure the qualification of the Plan under Rule 16b-3, and to the extent necessary to qualify the shares issuable upon exercise of any outstanding Options granted, or Options to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Board of Directors which is of a scope that requires shareholder approval in order to ensure the compliance of the Plan with Rule 16b-3, or requires approval for listing of the shares, shall be subject to obtaining such shareholder approval. No amendment shall affect any Options theretofore granted or any Option Agreements theretofore executed by the Company and a Participant, unless such amendment shall expressly so provide and unless any Participant to whom an Option has been granted who would be adversely affected by such amendment consents in writing thereto. Notwithstanding the foregoing concerning amendment of the Plan, the provisions of Article III and Paragraphs A, B, C and D of Article IV above shall not be amended more than once every six (6) months, other than to comport with changes in the United States Internal Revenue Code of 1986, as amended, the Employee Retirement Income Security Act, or the rules thereunder. XI. RELATIONSHIP WITH THE COMPANY ----------------------------- Nothing herein contained shall be deemed to prevent the Company from terminating the Directorship of a Participant, nor to prevent a Participant from terminating the Participant's Directorship with the Company. XII. EFFECTIVE DATE -------------- This Plan shall become effective upon adoption by the Board of Directors; provided, however, that the effectiveness of the Plan and the effectiveness of grants of any Options pursuant to the Plan shall be subject to approval to the holders of at least a majority of the issued and outstanding shares of capital stock of the Company entitling such holders to a right to vote and be present or represented or by written consent of the holders to a right to vote and be present or represented at a meeting of the stockholders duly convened or by the written consent of the holders of at least a majority of the issued and outstanding shares of capital stock entitling holders to a right to vote, within twelve (12) months either before or after the adoption by the Board of Directors for such a resolution. Until such time as this Plan is effective, no Option may be granted pursuant hereto, unless a resolution 10 11 to the effect of the immediately preceding sentence shall have been adopted by the Board of Directors. If any Options are so granted, then such Option may not be exercised until all conditions to the effectiveness for this Plan shall have been satisfied. 11 12 EXHIBIT A --------- DIRECTORS' STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED EKCO GROUP, INC. ---------------- AGREEMENT made as of the [DATE] (the "Grant Date") between Ekco Group, Inc. (the "Company"), a Delaware corporation having a principal place of business in Nashua, New Hampshire, and [NAME AND ADDRESS OF OUTSIDE DIRECTOR], an Outside Director of the Company (the "Director"). The term the "Director" as used in this Agreement shall include, where the context so requires, the legal representatives of the Director, and/or any person or persons who acquired the Director's rights hereunder by will or by the laws of descent and distribution. WHEREAS, the Company desires to grant to the Director an Option to purchase shares of its common stock of a par value of $.01 a share (the "Shares") under and for the purposes of the 1988 Directors' Stock Option Plan of the Company (the "Plan"); and WHEREAS, the Company and the Director understand and agree that any terms used herein have the same meanings as in the Plan. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows: 1. GRANT OF OPTION --------------- The Company hereby irrevocably grants to the Director the right and option to purchase at one time or from time to time all or any part of an aggregate of [NO. OF SHARES]( ) Shares, subject to adjustment as provided in the Plan, on the terms and conditions and subject to all the limitations set forth herein and in the Plan, which is incorporated herein by reference. The Director acknowledges receipt of a copy of the Plan. 2. PURCHASE PRICE -------------- The purchase price of the Shares covered by this Option shall be [PURCHASE PRICE]($ ) per share, subject to adjustment as provided in the Plan. 3. EXERCISE OF OPTION ------------------ 3.1 The Option granted hereby shall be exercisable immediately, within the term set forth in Section 4 below, subject to the provisions of this Agreement. 3.2 Notwithstanding the provisions of the foregoing Subsection 3.1 and except as otherwise provided herein or in the Plan, if the Director ceases to be a director of the Company for any reason, then if such termination occurs: (i) during the period on or after the Grant Date and before the date which is twelve months thereafter (the "First Anniversary Date") and the Director has theretofore exercised the Option for any Shares, 12 13 then the Director shall sell to the Company and the Company shall purchase from the Director those Shares from the Director at the price paid by the Director upon exercise; (ii) during the period on or after the First Anniversary Date and before the date which is twelve months thereafter (the "Second Anniversary Date") and the Director has theretofore exercised the Option for more than [ONE-THIRD THE NO. OF SHARES]( ) Shares, then the Director shall sell to the Company and the Company shall purchase from the Director that number of Shares equal to the amount by which the number of Shares purchased by the Director pursuant to this Option exceeds [ONE-THIRD THE NO. OF SHARES]( ) Shares at the price paid by the Director upon exercise; and (iii) during the period on or after the Second Anniversary Date and before the date which is twelve months thereafter (the "Third Anniversary Date") and the Director has theretofore exercised the Option for more than [TWO-THIRDS THE NO. OF SHARES]( ) Shares, then the Director shall sell to the Company and the Company shall purchase from the Director that number of Shares equal to the amount by which the number of Shares purchased by the Director pursuant to this Option exceeds [TWO-THIRDS THE NO. OF SHARES]( ) Shares at the price paid by the Director upon exercise. 3.3 Notwithstanding the foregoing, in the event the Director ceases to be a director of the Company as a result of death, the Purchase Obligation (as hereinbelow defined) shall cease and terminate. 3.4 Notwithstanding the foregoing provisions of this Section 3, but subject to the other provisions of this Agreement and the Plan, the Purchase Obligation shall cease and terminate in the event of, and immediately upon, a Change of Control that occurs at any time before the Director has ceased to be a director of the Company. As used herein, a "Change of Control" shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended [the "1934 Act"]) becomes the beneficial owner (within the meaning of Rule 13d-3 under the 1934 Act) of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding securities; or (ii) if the stockholders of the Company approve any merger of, or consolidation involving, the Company in which the Company's stock is converted into securities of another corporation or into cash and such merger or consolidation shall be consummated, or the stockholders of the Company approve any plan of complete liquidation of the Company (whether or not in connection with a sale of all or substantially all of the Company's assets) and such liquidation is consummated, excluding in each case a transaction solely for the purpose of reincorporating the Company in a different jurisdiction or recapitalizing the Company's stock or a merger of the Company in which the holders of the voting stock of the Company immediately prior to the merger have the same proportionate ownership of voting stock of the surviving corporation immediately after the merger. 3.5 The obligation of the Company to purchase Shares pursuant to this Section 3 is hereinafter referred to as the "Purchase Obligation" and such Shares are hereinafter referred to as the "Purchase Stock." 3.6 The Director acknowledges that if he or she exercises this Option and any of the Shares so purchased are subject to the Purchase Obligation, then such Shares will be restricted shares and that the difference 13 14 between the fair market value of such Shares on the date the Purchase Obligation lapses as to such Shares and the aggregate purchase price for such Shares will be classified as compensation income, unless the Director files an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with the Internal Revenue Service within thirty (30) days of the acquisition of such Shares. If such election is filed, the difference between the fair market value of such Shares and the aggregate purchase price of such Shares will be treated as compensation income as of the date of purchase. This acknowledgment should not be understood as a substitute for the Director consulting with his or her own tax advisors and the Director is urged to do so prior to any exercise of this Option. 3.7 Notwithstanding the foregoing, this Option may not be exercised until and unless all conditions to the effectiveness of the Plan, as set forth in Article XI thereof, have been satisfied, including, without limitation, approval by the Company's shareholders. 4. TERM OF OPTION -------------- 4.1 This Option shall terminate ten (10) years from the Grant Date of this Option, but shall be subject to earlier termination as provided herein or in the Plan. 4.2 If the Director ceases to be a director of the Company (for any reason other than death or termination for cause), then the Director may exercise this Option, but only within six (6) months and one (1) day after the date on which the Director ceased to be a Director, provided, however, (i) in no event may this Option be exercised any later than ten (10) years after the Grant Date of this Option, and (ii) immediately upon the Director's ceasing to be a director, this Option shall cease to be exercisable for any number of Shares which if purchased immediately following such termination would be subject to the Company's Purchase Obligation. The provisions of this paragraph, and not the provisions of Subsection 4.3, shall apply to the Director if the Director subsequently dies after the termination of the directorship; however, in such case of the Director's death, the Director's Survivors may exercise this Option within six (6) months after the date of the Director's death, but in no event beyond ten (10) years after the Grant Date of this Option. If the Director's directorship is terminated for "cause," the Director shall forthwith upon such termination cease to have any right to exercise this Option. For purposes of this Subsection 4.2, "cause" shall be deemed to include (but shall not be limited to) dishonesty with respect to the Company or any Affiliate, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, or conduct substantially prejudicial to the business or reputation of the Company or any Affiliate. 4.3 In the event of the death of the Director while the Director is a director of the Company, this Option, to the extent not exercised as of the date of death, may be exercised by the Director's Survivors. Such Option must be exercised by the Director's Survivors, if at all, within one (1) year after the date of death of the Director or, if earlier, within the ten (10) years after the Grant Date of this Option, notwithstanding that the decedent might have been able to exercise this Option as to some or all of the Shares on a later date if the Director were alive and had continued to be a director of the Company. 5. NON-ASSIGNABILITY ----------------- 14 15 This Option shall not be transferable by the Director otherwise than by will or by the laws of descent and distribution and shall be exercisable, during the Director's lifetime, only by the Director (or his or her legal representative). This Option shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Option or of any rights granted hereunder contrary to the provisions of this Section 5, or the levy of any attachment or similar process upon this Option or such rights, shall be null and void. 6. EXERCISE OF OPTION AND ISSUE OF SHARES -------------------------------------- This Option may be exercised, in whole or in part, at one time or from time to time, (to the extent that it is exercisable in accordance with its terms) by giving written notice to the Company. Such written notice shall be signed by the person exercising this Option, shall state the number of Shares with respect to which this Option is being exercised, shall contain any warranty required by Section 8 below and shall otherwise comply with the terms and conditions of this Agreement and the Plan. Such notice must be received by the Company within the relevant exercise period specified in Section 4 of this Agreement. Such notice shall either: (i) be accompanied by payment of the full purchase price of such Shares, in which event the Company, subject to the provisions of Section 8, shall deliver a certificate or certificates representing such Shares as soon as practicable after the notice shall be received, or (ii) fix a date (not less than five nor more than ten business days after such notice shall be received by the Company, which date must be within the relevant exercise period specified in Section 4 of this Agreement) for the payment of the full purchase price of such Shares against delivery subject to the provisions of Section 8, of a certificate or certificates representing such Shares. Payment of such purchase price shall, in either case, be made by check payable to the order of the Company. The certificate or certificates for the Shares as to which this Option shall have been so exercised shall be registered in the name of the person or persons so exercising this Option and shall be delivered as provided above to the person or persons exercising this Option. All Shares that shall be purchased upon the exercise of this Option as provided herein shall be fully paid and non-assessable. The Company shall pay all original issue taxes with respect to the issue of the Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection herewith. Except as specifically set forth herein, the holder acknowledges that any income or other taxes due from him or her with respect to this Option or the shares issuable pursuant to this Option shall be the responsibility of the holder. The holder of this Option shall have rights as a shareholder only with respect to any Shares covered by this Option after due exercise of this Option and tender of the full exercise price for the shares being purchased pursuant to such exercise. Pursuant to the Plan, the Company shall make delivery of the Shares against payment of the Option price therefor. 7. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE ----------------------------------------------------------- OBLIGATION - ---------- 7.1 Any Shares which are subject to the Purchase Obligation shall not be transferred by the Director except as permitted herein. Until the termination of this Agreement, the Shares which are subject to the Purchase Obligation may not be transferred by the Director unless and until 15 16 the transferee agrees, in a form satisfactory to the Company, to be bound by this Agreement and to sell any transferred Shares to the Company as herein provided. 7.2 Within sixty (60) days following the date Director ceases to be a director and if the Director holds any Purchase Stock, then, the Company shall give to the Director a written notice specifying a date for the Closing for the sale by the Director and the purchase by the Company of the Purchase Stock, which date shall be not more than ten (10) business days after the giving of such notice. The Closing shall take place at the Company's principal offices in New Hampshire, or such other location as the Company may reasonably designate in such notice. If the Company shall fail to give the notice provided for above, within the specified period of time, then the Closing shall be on the ninetieth (90th) day following the date Director ceased to be a director or if not a business day, the next business day. 7.3 At the Closing, the Director shall deliver the Purchase Stock being purchased by the Company against the simultaneous delivery to the Director of the purchase price (by certified or bank cashier's check or in such other form as mutually agreed to) for the number of shares of the Purchase Stock then being purchased. In the event that the Director fails so to deliver the shares of Purchase Stock to be purchased, the Company may elect (a) to establish a segregated account in the amount of the Purchase Price, such account to be turned over to the Director upon delivery of such shares of Purchase Stock, and (b) immediately to take such action as is appropriate to transfer record title of such of the Purchase Stock from the Director to the Company and to treat the Director and such shares of the Purchase Stock in all respects as if delivery of such shares of the Purchase Stock had been made as required by this Agreement. The Director hereby irrevocably grants to the Company a power of attorney for the purpose of effectuating the terms of the preceding sentence. 7.4 If the Company shall pay a stock dividend or declare a stock split on or with respect to any of the Company's Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, whether before or after the exercise of this Option, the number of shares of stock or other securities of the Company issued with respect to the Purchase Stock then subject to the Purchase Obligation shall be added to the Purchase Stock then subject to the Purchase Obligation without any change in the aggregate purchase price. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Purchase Stock then subject to the Purchase Obligation shall be added to the Purchase Stock covered by the Purchase Obligation without any change in the aggregate purchase price. Without limiting the generality of the foregoing, the Director shall be entitled to retain any and all cash dividends paid by the Company on the Shares. 7.5 If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to any capital reorganization, whether before or after the exercise of this Option, there shall be substituted for the Purchase Stock then covered by the Purchase Obligation such amount and kind of securities as are issued in such subdivision, combination, reclassification, or capital reorganization in respect of the Purchase Stock subject to the Purchase Obligation immediately prior thereto, without any change in the aggregate purchase price. 16 17 7.6 If the Company shall be completely liquidated, then the Purchase Obligation shall cease and terminate as of the date of such liquidation and the Director shall hold the Shares free of the Purchase Obligation. 7.7 The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been sold, assigned or otherwise transferred, from and after any sale, assignment or transfer of any Shares made in violation of this Agreement. 7.8 All certificates representing any Shares to be issued to the Director pursuant to the exercise of the Option which are subject to the Purchase Obligation shall have endorsed thereon a legend substantially as follows: "The shares represented by this certificate are subject to a Director's Stock Option and Repurchase Agreement dated as of [DATE] between the Corporation and [NAME OF DIRECTOR], a copy of which Agreement is available for inspection at the principal offices of the Company or will be made available without charge upon request." 7.9 This Article 7 shall not restrict the transfer by the Director of shares, if any, which are not acquired pursuant to the exercise of this Option or which are not, or cease to be, subject to the Purchase Obligation in accordance with the terms hereof. 8. PURCHASE FOR INVESTMENT ----------------------- Unless the offering and sale of the Shares to be issued upon the particular exercise of this Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "Act"), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled: (a) The person(s) who exercise this Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for his or her own account, for investment and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall in substantially the following form be endorsed upon the certificate(s) evidencing the option Shares issued pursuant to such exercise: "The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, in the absence of an effective registration statement for the shares under the Securities Act of 1933 or an opinion of counsel satisfactory to the Company that an exemption from registration is then available." (b) The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance 17 18 with the Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or "blue sky" laws). 9. REGISTRATION RIGHTS ------------------- (a) In the event that the Company has an effective registration statement covering the sale and resale of securities issued pursuant to the Plan, then the Director agrees to sign a waiver in substantially the following form: "For so long as a registration statement under the Securities Act of 1933, as amended, is in effect covering the sale and resale of securities issued pursuant to the 1988 Directors' Stock Option Plan of Ekco Group. Inc. (the "Company"), the undersigned waives his/her rights to require the Company to file a registration statement pursuant to Section 9 of the Directors' Stock Option and Repurchase Agreement dated [DATE OF AGREEMENT], between the undersigned and the Company." (b) The Director acknowledges that option agreements have been executed by the Company with [NO. OF EMPLOYEE-OPTIONEES] employees, [NO. OF EMPLOYEE-DIRECTORS] employee-directors, [NO. OF DIRECTORS] Directors and may be executed with other employees and Directors (collectively, "Other Holders"), each containing or to contain a section substantially identical to this Section 9. Subject to the terms hereinafter set forth, at any time after the Grant Date, the holder shall have the right, by written notice to the Company, to require the Company to file and use its best efforts to cause to become effective a registration statement under the Securities Act of 1933, as amended (the "Act") on Form S-8, Form S-2 and Form S-3 or other like form, if available, covering such number of Shares acquired or to be acquired prior to the effective date of such registration statement, subject to the limitations that (i) the Company shall be required to file no more than an aggregate of two (2) registration statements pursuant to such notices and/or pursuant to notices received from Other Holders, and (ii) if, in the opinion of counsel to the Company, the holder can then sell, subject to such limitations as to the number of Shares which may be sold as may be imposed by Rule 144 under the Act or any successor rule, Shares requested to be included in any such registration statement, without such registration, the Company need not so register such Shares. In no event will the Company be required to register Shares which are subject to the Purchase Option. The Company agrees to promptly notify a holder in the event that it receives a notice from any of the Other Holders requiring it to file a registration statement and to permit the holder to require the Company to include Shares owned by the holder in such registration statement, subject to the limitations set forth above. (c) In connection with any registration statement pursuant to this Section 9: (i) the holder will furnish to the Company in writing such appropriate information as the Company, or the Securities and Exchange Commission (the "Commission") or any other regulatory authority may request; (ii) the holder agrees to execute, deliver and/or file with or supply to the Company, the Commission, any underwriters and/or 18 19 any state or other regulatory authority such information, documents, representations, undertakings and/or agreements necessary to carry out the provisions of the registration agreements contained in this Agreement and/or to effect the registration or qualification of the Shares under the Act and/or any of the laws and regulations of any state or governmental instrumentality; (iii) the Company will furnish to the holder of Shares included in the registration statement such number of copies of such prospectus (including each preliminary, amended or supplemental prospectus) as the holder may reasonably request; and (iv) in the event an offering of securities by the Company is pending, the Company shall have the right to require that the holder delay any offering of Shares for a period of ninety (90) days after the effective date of such pending offering (upon the Company's having first delivered to the holder the written opinion of its principal underwriter, or if there be none, then from an officer of the Company based upon a good faith resolution of the Board of Directors to the effect that the offering of such Shares will have an adverse effect on the marketing of such pending offering). (d) The Company will pay all of its out-of-pocket expenses and disbursements in connection with any registration statements filed under this Section 9, including, without limitation, printing expenses, fees of the Company's counsel and auditors, registration fees, blue sky fees and similar costs to the extent permitted by state and regulatory authorities. (e) The Company will be obligated to keep any Registration Statement filed by it under this Section 9 effective under the Act for a period of ninety (90) days after the actual effective date of such registration statement and to prepare and file such supplements and amendments necessary to maintain an effective registration statement for such period. As a condition to the Company's obligation under this Subsection (e), the holder will execute and deliver to the Company such written undertakings as the Company and its counsel may reasonably require in order to assure full compliance with relevant provisions of the Act. (f) The Company will use its best efforts to register or qualify the Shares covered by a registration statement filed pursuant hereto under such securities or Blue Sky laws in such jurisdictions within the United States as the holder may reasonably request, provided, however, that the Company reserves the right, in its sole discretion, not to register or qualify such stock in any jurisdiction where such stock does not meet with the requirements of such jurisdiction or where the Company is required to qualify as a foreign corporation to do business in such jurisdiction and is not so qualified therein or is required to file any general consent to service of process. (g) In the event that a holder has not sold all of his or her Shares on or prior to the expiration of the period specified in Subsection (d) above, the holder hereby agrees that the Company may deregister by post-effective amendment any of his or her Shares covered by the registration statement or notification but not sold on or prior to such date. The Company agrees that it will notify the holder of the filing and effective date of such post-effective amendment. 19 20 (h) The holder agrees that upon notification by the Company that the prospectus in respect to any public offering covered by the provisions hereof is in need of revision, the holder will immediately upon receipt of such notification (i) cease to offer or sell any securities of the Company which must be accompanied by such prospectus; (ii) return to the Company all such prospectuses in the hands of the holder; and (iii) not offer or sell any securities of the Company until the holder has been provided with a current prospectus and the Company has given the holder notification permitting the holder to resume offers and sales. 10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE ----------------------------------------------------------------- 1934 ACT -------- If the Director to whom the Option has been granted pursuant to this Agreement is subject to Section 16 of the 1934 Act, Section 16 requires that at least six (6) months must elapse from the date of grant of the Option to the date of disposition of the Shares. 11. NOTICES ------- Any notices required or permitted by the terms of this Agreement or the Plan shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Company: Ekco Group, Inc. 98 Spit Brook Road Nashua, NH 03062 Attn: General Counsel To the Director: [ADDRESS OF DIRECTOR] or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given when mailed in accordance with the foregoing provisions. 12. GOVERNING LAW ------------- This Agreement shall be construed and enforced in accordance with the law of the State of New Hampshire, except to the extent the law of the State of Delaware may be applicable. 13. BENEFIT OF AGREEMENT -------------------- This Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators and successors of the parties hereto, except as otherwise provided herein. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its corporate seal to be hereto affixed by Robert Stein, its duly authorized officer, and the Director has hereunto set his hand and seal, all as of the day and year first above written in duplicate originals. 20 21 EKCO GROUP, INC. By: ------------------------- President and Chief Executive Officer ---------------------------- DIRECTOR Form dated: 08/22/95 21 22 Schedule of Exercises
Number of Shares Purchased Pursuant Consideration Date of Notation to this Option Received Purchase Made By - ------------------ ------------- -------- --------
22 23 EKCO GROUP, INC. SCHEDULE TO 1988 DIRECTORS' STOCK OPTION PLAN Each of the following Outside Directors of the Company has a Directors' Stock Option and Repurchase Agreement, as amended, with the Company which is identical in form to the foregoing Form of Directors' Stock Option and Repurchase Agreement, as amended, except as to the date, the number of shares and the exercise price:
No. of Date of Shares Exercise Name Agreement Granted Price - ---- --------- ------- -------- T. Michael Long 05/18/93 9,040 $11.0625 Stuart B. Ross 05/19/89 31,373 $ 3.1875 Malcolm L. Sherman 05/25/95 16,162 $ 6.1875 Bill W. Sorenson 10/13/88 45,714 $ 2.1875 Herbert M. Stein 10/13/88 45,714 $ 2.1875
23 EX-10.5.(B) 13 LOAN AGREEMENT DATED 10/1/90 1 EXHIBIT 10.5(b) --------------- LOAN AGREEMENT -------------- THIS AGREEMENT made as of the 1st day of October, 1990 by and between Ekco Group, Inc. (the "Company") and Neil R. Gordon ("Trustee") as Trustee of the Ekco Group, Inc. Employee Stock Ownership Plan (the "Plan"). WHEREAS, the Board of Directors of the Company (the "Board") has authorized the Trustee to acquire up to one million (1,000,000) shares of the Company's common stock ("Shares") for the Plan, and has further authorized the Company to lend funds to the Trustee to make purchases of Shares on the open market or from the Company, as he deems appropriate, WHEREAS, the Company and the Trustee wish to set forth their respective rights and duties with respect to this extension of credit; NOW THEREFORE, in consideration of the premises and for other valuable consideration, the receipt and sufficiency of which are mutually acknowledged by the parties hereto, the Company and the Trustee hereby agree as follows: 1. AUTHORIZED LOAN AMOUNT. The Company agrees to loan an amount not to exceed three million, five hundred thousand ($3,500,000) dollars (the "Obligations") to the Trustee. The Trustee agrees to execute a promissory note in the form attached hereto with respect to all funds advanced in 1990 and to execute a similar note with respect to funds advanced in each future calendar year in the event all of the one million (1,000,000) Shares are not purchased in 1990. 2. PAYMENT: ADVANCES FOR EACH CALENDAR YEAR TO BE SEPARATE LOANS. The amounts advanced in each calendar year will be aggregated, so that all amounts loaned to the Trustee in calendar year 1990 will be considered one loan, and amounts advanced in any following calendar year(s) will be treated as one or more separate loan(s). The Trustee agrees to repay the Obligations incurred in each calendar year as follows: interest, at the rate of ten (10%) per cent per annum, will be paid on the Obligations incurred in that calendar year from the date of the advance(s) to the last day of said calendar year. Commencing on or about March 31 of the following calendar year, and on the last day of each of the following calendar quarter, the Trustee will repay said Obligations in eighty (80) substantially equal quarterly installments of principal and interest, so that the full amount of said Obligations will be repaid within twenty (20) years following the end of the calendar year in which they were advanced. The Trustee will have the right to prepay the Obligation, in full or in part, at any time and from time to time, without penalty. 3. PLEDGE. As security for the Obligations, the Trustee does hereby pledge and grant to the Company a security interest in the Shares which it purchases (the "Financed Shares") with the Obligations. All Financed Shares purchased in a calendar year will be pledged as security only for the Obligations incurred to purchase them, and said Financed Shares will not serve as security for any other loan to the Trustee. Financed Shares serving as security for the loans will be separately accounted for by the Trustee in one or more escrow "pools", so that, for example, all Financed Shares acquired in 1990 will be in a 1990 escrow pool to serve as security for the 1990 Obligations, all Financed Shares acquired in 1991 will be in a 1991 escrow pool to serve as security for the 1991 Obligations, etc. The Company agrees to a release of the Financed Shares from the escrow pools, as provided in 1 2 Section 10. The Trustee agrees to transfer to the Company, upon its request, separate stock powers or other instruments of assignment, endorsed in blank, to be held by the Company in accordance with the terms hereof. 4. TITLE TO THE FINANCED SHARES. The Trustee represents and warrants: (i) that upon the purchase of the Financed Shares or upon the issuance of the Financed Shares by the Company he will be the legal and beneficial owner of the Financed Shares free and clear of all liens, encumbrances, security interests and other charges except as created hereby; and (ii) that he has all necessary right, power and authority to enter into this Agreement and to grant the security interest and make the assignment provided herein; and that he will defend the Company's right, title, special property and security interest in and to the Financed Shares against the claims or demands of any person, firm, corporation or other legal entity or any governmental agency or authority. 5. RIGHTS AND DUTIES WITH RESPECT TO FINANCED SHARES. Beyond the exercise of reasonable care to assure the safe custody of securities constituting Financed Shares while in the Company's possession, the Company shall not be under any duty to collect or protect the Financed Shares or income thereon or to preserve rights pertaining thereto and shall be relieved of all responsibility for the Financed Shares upon surrendering them to the Trustee. 6. REGISTRATION, INCOME AND VOTING RIGHTS. The right is expressly granted to the Company, at any time after an Event of Default (as hereinafter defined) has occurred hereunder, at its option, to transfer any securities constituting the number of Financed Shares which is necessary to meet the payment schedule of this Agreement in accordance with Section 7 hereof (the "Default Shares") into its own name or the name of any nominee acting on the Company's behalf. Until there is an Event of Default, as herein defined, the Trustee shall be entitled to receive and retain any dividends or interest paid in cash with respect to securities constituting Financed Shares and shall retain all voting rights incident to ownership. After the occurrence of an Event of Default, (a) the Company shall have the sole right to receive any dividends, interest or distribution with respect to securities constituting Default Shares which stand in its name or the name of the Company's nominee, and (b) the Company shall be expressly empowered to exercise all powers of voting and consent with respect to any securities constituting Default Shares which have been transferred into its name or the name of the Company's nominee and the Company is authorized to provide a copy of this Agreement to the transfer agent for the common stock of any issuer of securities constituting Financed Shares as conclusive evidence of the registration, voting and other rights herein granted. 7. EVENTS OF DEFAULT; REMEDIES. If there is an event of default (each an "Event of Default") whereby there is a default in the payment of any of the Obligations under the terms of this Agreement, then thereupon or at any time thereafter (unless all existing Events of Defaults have been cured to this Company's satisfaction), the Company may declare this Agreement to be in default and shall thereafter have as its sole remedy with respect to any default, the right to dispose of an amount of Financed Shares in the Plan escrow account that is necessary to provide to the Company sufficient funds to bring the Trustee current with his Obligations hereunder and under the Promissory Note. The Trustee will not be considered to have committed any default, notwithstanding any other provision of this agreement, if his non-payment is due to the failure of the Company to have contributed sufficient amounts to the Plan to enable him to meet his obligations hereunder or under 2 3 the terms of any other ESOP financing arrangement. 8. FURTHER ASSURANCES. The Trustee will at any time and from time to time upon the written request of the Company, join in the execution and filing of appropriate Uniform Commercial Code financing statements and will also do, make, execute and deliver all such additional and further acts, things, deeds, instruments, documents and assurances (including without limitation, Federal Reserve Form U-1) as the Company may reasonably request in order to perfect and protect more completely the Company's rights hereunder and its security interest in the Financed Shares and to carry out the terms of this Agreement. The Company, in its own name or in the name of the Trustee, may likewise take such steps in case the Trustee shall fail to do so. All costs and expenses incurred by the Company or the Trustee in connection with anything contemplated hereunder, including without limitation, legal fees and other costs and expenses relating to any judicial proceedings, shall be borne by the Trustee, and to the extent they are paid or incurred by the Company, shall be reimbursed, with interest, by the Trustee upon demand. 9. WAIVER OF DEMANDS, NOTICES, DILIGENCE, ETC. The Trustee hereby assents to all the terms and conditions of the Obligations and waives (a) demand for the payment of the principal of any Obligation or of any claim for interest or any part of any thereof; (b) notice of the occurrence of an Event of Default under any Obligation; (c) protest of the nonpayment of the principal of any Obligation or of any claim for interest or any part of any thereof; (d) notice of presentment, demand or protest; (e) notice of any indulgences or extensions granted to the Trustee or to any other person or entity which shall have succeeded to or assumed the obligation of the Trustee; (f) any requirement of diligence or promptness on the part of the Company in the enforcement of any of its rights under the provisions of any Obligation or of this Pledge Agreement; (g) any enforcement of any Obligation; (h) any right which the Trustee might have to require the Company to proceed against any guarantor of the Obligations or to realize on any collateral security thereof; and (i) any and all notices of every kind and description which may be required to be given by any statute or rule of law in any jurisdiction except as provided herein. 10. RELEASE OF SHARES FROM ESCROW POOLS. The Trustee agrees to hold the Financed Shares purchased in each calendar year in a separate escrow pool (as described in Section 3). Shares in each escrow pool will be released for allocation to participant accounts as follows: A-- Escrow pool established in 1990 i) For the year ending December 31, 1990, twelve thousand, five hundred (12,500) shares; and ii) For each following year, a number of Shares from the 1990 escrow pool equal to five (5%) percent of the number of Shares originally purchased for the 1990 escrow pool. B-- Escrow pools established in 1991 (and later years, if any) For each year, a number of Shares equal to five (5%) percent of the number of Shares originally purchased in the escrow pool. C-- Commencing on December 31, 1991, at least fifty thousand (50,000) shares shall be released each year from all pools under this agreement. To the extent that the amounts under A and B for any such year total less than fifty thousand 3 4 (50,000) additional shares shall be released from the oldest pool under this agreement. In all events, the number of shares released from each escrow pool must be at least equal to the number of Shares in the escrow pool immediately prior to the release multiplied by a fraction, the numerator of which is the amount of principal and interest paid on the loan for the year and the denominator of which is the sum of the numerator plus the principal and interest to be paid for all future years, in accordance with Internal Revenue Code Regulation Sec. 54.4975-7(b)(8)(i), and as provided in Section 2(c) of Article 6 of the Plan. The release of Shares from the pools will not be prevented or suspended if the reason for the Trustee's non-payment of obligations owed to the Company is due to the failure of the Company to have contributed sufficient amounts to the Plan to enable the Trustee to meet his obligations hereunder or under the terms of any other ESOP financing arrangement. 11. ALTERNATIVE. If the Trustee is unable to repay his obligations under this Agreement, the Trustee may pursue any of the following alternatives which he deems prudent at the time and which shall discharge his obligations under this Agreement in full: A) He may return the remaining Financed Shares in the escrow account to the Company, properly endorsed to the Company which will discharge the Obligations in full; B) He may continue to make payments to or for the benefit of the Company by tendering to the Company the number of shares necessary to keep the Obligations current; C) He may obtain a loan from another lender to pay off remaining obligations to the Company and the Company agrees to release the Financed Shares from the restrictions of this Agreement for that purpose; or D) If non-payment is due to the Company having failed to contribute sufficient amounts for him to meet his ESOP financing arrangements, he may continue to release Shares from the escrow pools without taking further action; or E) He may utilize any combination of the above alternatives. 12. MISCELLANEOUS. (a) No course of dealing between the Trustee and the Company, and no failure to exercise nor any delay in exercising on the part of the Company, any right, power or privilege hereunder or under any other instrument or agreement, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further privilege. (b) This Agreement is subject to amendment or modification only by a writing signed by the Trustee and the Company. The Financed Shares shall secure all Obligations. (c) In case any provision of this Agreement shall be determined to be invalid or unenforceable under applicable law, applied in such manner as will permit enforcement; otherwise this Agreement shall be construed as though such provision had never been made a part hereof. 4 5 (d) This Agreement is intended to take effect as a sealed instrument governed by the laws of the State of Delaware and shall inure to the benefit of the Company and its successors and assigns of the Trustee. If a non-individual serves as trustee of the Plan, then this Agreement shall be effective notwithstanding the fact that such trustee ceases to exist by reason of its liquidation, merger, consolidation or otherwise. 13. TERMINATION. This Agreement shall terminate upon the payment and satisfaction in full of all Obligations. 14. ERISA COMPLIANCE. The loan of funds to the Trustee that he may purchase Shares is meant to comply fully with the terms of ERISA and its requirements for "leveraged ESOP's." Any provision herein which does not comply with ERISA is null and void and of no effect. IN WITNESS WHEREOF, the Trustee and the Company have caused this Agreement to be duly executed as of the day and year first above written. EKCO GROUP, INC. By /S/ ROBERT STEIN -------------------------- President /S/ NEIL R. GORDON ---------------------------- Neil R. Gordon, as Trustee and not individually 5 6 Exhibit A --------- PROMISSORY NOTE --------------- $_______________________ December 31, 19____ Nashua, New Hampshire The Trustee of the Ekco Group, Inc. Employees' Stock Ownership Plan ("Trustee") hereby acknowledges that it has received a series of cash advances from Ekco Group, Inc. ("Employer") during the calendar year ending on the above referenced date, and that the advances total the principal amount of $________ (the "Loan Amount"). The Trustee agrees to repay the Loan Amount, with 10% interest, in 80 equal quarterly installments of $ ________ each, with the first installment due on March 31, 19__ and the last installment due on December 31, 20__. For the calendar year in which the Loan Amount was advanced, interest at the 10% rate will be calculated for each advance through the end of the calendar year, but no principal payments will be required. This payment of interest will be due at the same time as the first quarterly installment. A grace period of 30 days is permitted for any payment owed by the Trustee hereunder. This Note is issued under the Loan Agreement between the Employer and the Trustee dated as of October 1, 1990 and it is subject to and entitled to the benefit of all of the terms and conditions thereof. It may be prepaid in whole or in part without premium as therein provided, and upon the occurrence of any default specified therein, the principal may become forthwith due and payable in the manner, upon conditions and with the effect provided thereby; provided, however, that in no event shall the Employer have any additional remedies other than the right to dispose of an amount of Financed Shares (as such term is defined in the Loan Agreement) that is necessary to provide to the Company sufficient funds to bring the Trustee current with his obligations under the Loan Agreement and hereunder. The Trustee hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, assent to any extension or postponement of the time of payment or any other indulgence to any substitution, exchange or release of collateral and the addition or release of any other party or person primarily or secondarily liable. -------------------------------- Neil R. Gordon, as Trustee and not individually EX-10.5.(C) 14 LOAN AGREEMENT DATED 3/30/95 1 EXHIBIT 10.5(c) --------------- LOAN AGREEMENT -------------- $3,604,646.37 THIS AGREEMENT is made as of the 30th day of March, 1995 (the "Closing Date") by and between Ekco Group, Inc. (the "Company") and Neil R. Gordon ("Trustee"), as Trustee and not individually, of the Ekco Group, Inc. Employees' Stock Ownership Plan (the "ESOP"). A. The ESOP is the borrower pursuant to a term loan agreement dated May 22, 1989 in the initial principal amount of Six Million Four Hundred Twenty Six Thousand and 00/l00 ($6,426,000.00) Dollars in which Shawmut Bank, N.A. ("Shawmut") is the lender, and Ekco Group, Inc. ("the "Company") is the guarantor. B. The Shawmut loan provides that it may be prepaid at any time without penalty and the Trustee of the ESOP wishes to refinance the loan on terms which are no less favorable to the ESOP. C. The Company has agreed to lend the Trustee three million, six hundred and four thousand, six hundred and forty six dollars and thirty seven cents ($3,604,646.37) so that the ESOP may pay in full its remaining obligations to Shawmut Bank, N.A. under said loan agreement dated May 22, 1989. D. The Shawmut loan is collateralized with cash and other liquid investments of the Company and the Company, as guarantor of the Shawmut loan, retains a collateral interest in certain Company securities which are in an ESOP "suspense account" and which have not been allocated to Participant accounts. E. The Company agrees that it will require as collateral for the ESOP loan only a continued interest in those suspense account securities which collateralized its guaranty of the Shawmut loan and only to the extent permitted by ERISA. Effective as of the "Closing Date", Ekco and the Trustee of the ESOP agree to the following terms. 1. LOAN. The Company agrees to lend three million, six hundred and four thousand, six hundred and forty six dollars and thirty seven cents ($3,604,646.37) (the "Obligation") to the Trustee. The Trustee agrees to pay the Obligation by executing a promissory note attached hereto as Exhibit A. 2. PAYMENT. The Trustee agrees to repay the Obligation in sixty (60) substantially equal quarterly installments of one hundred thousand, five hundred and eighty three dollars and eighty five cents ($100,583.85) on the 1 2 last day of each calendar quarter, with the first payment due on June 30, 1995 and with a last payment of one hundred thousand, five hundred and eighty four dollars and thirty seven cents ($100,584.37) due on March 31, 2010. Interest will accrue on the unpaid balance at the rate of seven and one half percent (7+1/2%) per annum. The Trustee shall have the right to prepay the Obligation in whole or in part without premium at any time. 3. PLEDGE. As security for the Obligation, the Trustee does hereby reaffirm its pledge to the Company of a security interest in the remaining unallocated portion of 1,800,000 shares of Series B ESOP Convertible Preferred Stock (the "Financed Shares") which were acquired on February 28, 1989 pursuant to a Company loan and which were the subject of continued collateralization under the Shawmut loan. The Trustee agrees to continue to hold the shares in a suspense account, as provided in section 10. 4. TITLE TO THE FINANCED SHARES. The Trustee represents and warrants: (i) he is the legal and beneficial owner of the Financed Shares free and clear of all liens, encumbrances, security interests and other charges except as created hereby; and (ii) that he has all necessary right, power and authority to enter into this Agreement and to grant the security interest and make the assignment provided herein; and that he will defend the Company's right, title, special property and security interest in and to the Financed Shares against the claims or demands of any person, firm, corporation or other legal entity or any governmental agency or authority. 5. RIGHTS AND DUTIES WITH RESPECT TO FINANCED SHARES. Beyond the exercise of reasonable care to assure the safe custody of securities constituting Financed Shares while in the Company's possession, the Company shall not be under any duty to collect or protect the Financed Shares or income thereon or to preserve rights pertaining thereto. 6. REGISTRATION, INCOME AND VOTING RIGHTS. The right is expressly granted to the Company, at any time after an Event of Default (as hereinafter defined) has occurred hereunder, at its option, to transfer any securities constituting the number of Financed Shares which is necessary to meet the payment schedule of this Agreement in accordance with Section 7 hereof (the "Default Shares") into its own name or the name of any nominee acting on the Company's behalf. Until there is an Event of Default hereunder, as herein defined, the Trustee shall be entitled to receive and retain any dividends or interest paid in cash with respect to securities constituting Financed Shares and shall retain all voting rights incident to ownership. After the occurrence of an Event of Default, (a) the Company shall have the sole right to receive any dividends, interest or distribution with respect to securities constituting Default Shares which stand in its name or the name of the Company's nominee, and (b) the Company shall be expressly empowered to exercise all powers of voting and consent with respect to any securities 2 3 constituting Default Shares which have been transferred into its name or the name of the Company's nominee and the Company is authorized to provide a copy of this Agreement to the transfer agent for the common stock of any issuer of securities constituting Financed Shares as conclusive evidence of the registration, voting and other rights herein granted. In order to permit the Trustee to exercise powers of voting and consent and to receive cash dividends prior to an Event of Default, the Company shall, from time to time, upon written request of the Trustee, execute and deliver to the Trustee appropriate proxies and dividend or payment orders. 7. EVENTS OF DEFAULT; REMEDIES. If there is an event of default (each an "Event of Default") whereby there is a default in the payment of any of the Obligation under the terms of this Agreement, then thereupon or at any time thereafter (unless all existing Events of Defaults have been cured to the Company's satisfaction), the Company may declare this Agreement to be in default and shall thereafter have as its sole remedy with respect to any default, the right to dispose of an amount of Financed Shares in the Plan escrow account that is necessary to provide to the Company sufficient funds to bring the Trustee current with his Obligation hereunder and under the Promissory Note. IN NO EVENT WILL AN EVENT OF DEFAULT BE DEEMED TO HAVE OCCURRED IF THE COMPANY HAS NOT CONTRIBUTED SUFFICIENT FUNDS TO THE ESOP TO ENABLE IT TO MEET THE DEBT SERVICE OF THE PROMISSORY NOTE ATTACHED AS SCHEDULE A. 8. FURTHER ASSURANCES. The Trustee will at any time and from time to time upon the written request of the Company, join in the execution and filing of appropriate Uniform Commercial Code financing statements and will also do, make, execute and deliver all such additional and further acts, things, deeds, instruments, documents and assurances (including without limitation, Federal Reserve Form U-1) as the Company may reasonably request in order to perfect and protect more completely the Company's rights hereunder and its security interest in the Financed Shares and to carry out the terms of this Agreement. The Company, in its own name or in the name of the Trustee, may likewise take such steps in case the Trustee shall fail to do so. All costs and expenses incurred by the Company or the Trustee in connection with anything contemplated hereunder, including without limitation, legal fees and other costs and expenses relating to any judicial proceedings, shall be borne by the Trustee, and to the extent they are paid or incurred by the Company, shall be reimbursed, with interest, by the Trustee upon demand. 9. NO WAIVER OF DEMANDS, NOTICES, DILIGENCE, ETC. The Trustee hereby assents to all the terms and conditions of the Obligation but does not waive any of the formal protections afforded a debtor under the laws of the State of Delaware or otherwise available to an ESOP trustee under federal law. 10. RELEASE. The Trustee agrees to hold the Financed Shares in a Plan suspense account for the benefit of the Company. Shares will be released from the account ratably as the Trustee makes each monthly payment of principal and 3 4 interest hereunder for allocation to participant accounts, as provided in the Plan and in accordance with Internal Revenue Code Regulation Sec. 54.4975- 7(b)(8)(i). 11. ALTERNATIVE. If the Trustee is unable to repay his obligations under this Agreement, the Trustee may pursue any of the following alternatives which he deems prudent at the time and which shall discharge his obligations under this Agreement in full: A) He may return the remaining Financed Shares in the escrow account to the Company, properly endorsed to the Company which will discharge the Obligation in full; B) He may continue to make payments to or for the benefit of the Company by tendering to the Company the number of shares necessary to keep the Obligation current; C) He may obtain a loan from another lender to pay off remaining obligations to the Company and the Company agrees to release the Financed Shares from the restrictions of this Agreement for that purpose; or D) He may utilize any combination of the above alternatives. 12. Miscellaneous. (a) No course of dealing between the Trustee and the Company, and no failure to exercise nor any delay in exercising on the part of the Company, any right, power or privilege hereunder or under any other instrument or agreement, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further privilege. (b) This Agreement is subject to amendment or modification only by a writing signed by the Trustee and the Company. The Financed Shares shall secure all of the Obligation. (c) In case any provision of this Agreement shall be determined to be invalid or unenforceable under applicable law, such provision shall, insofar as possible, be construed or applied in such manner as will permit enforcement; otherwise this Agreement shall be construed as though such provision had never been made a part hereof. (d) It is the intent of this agreement that it in all events comply with ERISA. Any provision which is ambiguous or in conflict shall be interpreted by the Trustee in his sole discretion so that it does not contravene that statute, including specifically rules related to "leveraged ESOPs." 4 5 (d) This Agreement is intended to take effect as a sealed instrument governed by the laws of the State of Delaware and shall inure to the benefit of the Company and its successors and assigns and shall be binding upon the Trustee and successors and assigns of the Trustee. If a non-individual serves as trustee of the Plan, then this Agreement shall be effective notwithstanding the fact that such trustee ceases to exist by reason of its liquidation, merger, consolidation or otherwise. 13. TERMINATION. This Agreement shall terminate upon the payment and satisfaction in full of all of the Obligation. IN WITNESS WHEREOF, the Trustee and the Company have caused this Agreement to be duly executed and delivered under seal as of the day and year first above written. EKCO GROUP, INC. EKCO GROUP, INC.EMPLOYEES' STOCK OWNERSHIP PLAN By: /S/DONATO A. DENOVELLIS By: /S/NEIL R. GORDON ----------------------- ------------------------ Title: Executive Vice President, Neil R. Gordon, as Finance & Administration Trustee and not and Chief Financial Officer individually
5 6 PROMISSORY NOTE EXHIBIT A $3,604,646.37 FOR VALUE RECEIVED, Neil R. Gordon, as Trustee of the Ekco Group, Inc. Employees' Stock Ownership Plan ("Trustee") and not individually, hereby promises to pay to the order of Ekco Group, Inc. ("Company") the principal amount of three million, six hundred and four thousand, six hundred and forty six dollars and thirty seven cents ($3,604,646.37). Interest will accrue on the unpaid balance at the rate of seven and one half percent (7+1/2%) per annum. Payments will be made in sixty (60) substantially equal quarterly installments of one hundred thousand, five hundred and eighty three dollars and eighty five cents ($100,583.85) on the last day of each calendar quarter, with the first payment due on June 30, 1995 and with a last payment of one hundred thousand, five hundred and eighty four dollars and thirty seven cents ($100,584.37) due on March 31, 2010. This Note is issued under the Loan Agreement between the Company and the Trustee of even date and it is subject to and entitled to the benefit of all of the terms and conditions thereof. It may be prepaid in whole or in part without premium, and upon the occurrence of any default specified therein, the principal may become forthwith due and payable in the manner, upon conditions and with the effect provided in said loan agreement; provided, however, that in no event shall the Company have any additional remedies other than the right to dispose of an amount of Financed Shares (as such term is defined in the Loan Agreement) that is necessary to provide to the Company sufficient funds to bring the Trustee current with his obligations under the Loan Agreement and hereunder. EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN -------------------------- Neil R. Gordon, as Trustee and not individually EX-10.14.(B) 15 SCHEDULE TO SPLIT DOLLAR AGREEMENT 1 EXHIBIT 10.14(b) --------------- EKCO GROUP, INC. SCHEDULE TO FORM OF SPLIT DOLLAR AGREEMENTS Each of the following employees of the Company has a Split Dollar Agreement with the Company which is identical in form to the foregoing Form of Split Dollar Agreement, except as to the date and the face amount of the policy of life insurance:
Date of Face Amount Name and Position Agreement of Policy - ----------------- --------- ----------- Robert Stein 10/01/92 $1,895,038 President & Chief Executive Officer Jeffrey A. Weinstein 10/01/92 $ 527,352 Executive Vice Presid- dent, Secretary & General Counsel Donato A. DeNovellis 10/01/93 $ 471,381 Executive Vice Presid- ent, Finance & Adminis- tration, & Chief Financial Officer Brian R. McQuesten 10/01/92 $ 279,742 Vice President & Controller
EX-10.15 16 SEVERANCE AGREEMENT WITH R.J. CORBIN 1 EXHIBIT 10.15 ------------- [EKCO GROUP, INC. LETTERHEAD] September 28, 1995 Mr. Richard Corbin 6 Acorn Drive Andover, Massachusetts 01810 Dear Dick: This letter will serve to confirm the agreement which you and Ekco Group, Inc. including all of of its subsidiaries and affiliates (together they are hereinafter referred to as "EKCO"), reached with respect to the severance arrangement occasioned by your voluntary resignation as an employee and officer of EKCO and the termination of the employment agreement between you and EKCO dated as of May 20, 1994 (together with all amendments are hereinafter referred to as the "Employment Agreement"). The following constitutes the agreement: 1. You hereby voluntarily resign from your positions as Executive Vice President Marketing and Sales of EKCO as well as any and all other positions you now hold either as an officer or director of EKCO and any of its subsidiaries and affiliates. Your resignation will be effective as of August 31, 1995. 2. The severance arrangements recited herein shall be in lieu of and take the place of any and all rights which you may have pursuant to the Employment Agreement, EKCO severance, vacation accrual and other types of employment policies, and any rights you may have pursuant to any federal, state or local laws, statutes, or ordinances and the regulations promulgated thereunder, relating in any way to your employment with EKCO, the termination of such employment or severance or compensation benefits incident to either. 3. EKCO shall pay you from and after September 1, 1995, on a bi-weekly basis, a gross amount equal to $9730.77, through February 2, 1996. On March 1, 1996 EKCO shall pay you in a lump sum $181,096.15 less $3,744.60 paid by EKCO on your behalf to the Royal Maccabees Life Insurance Company for your disability policy for a total of $177,351.55. These payments are based upon a one year severance of salary at $253,000 plus a bonus of $40,000. Furthermore, EKCO shall pay you the amount accrued and not theretofore paid to you for vacation time properly accrued but not used by you prior to August 31, 1995 in the amount of 133.29 hours for a gross amount of $16,212.06. EKCO will also pay you $1,087.69, the amount attributable to your election to exchange your 1995 salary increase for the period July 1, 1995 through August 31, 1995 for shares of restricted stock. All such amounts shall be paid to you with all required deductions and withholdings made, except as may otherwise be provided herein. Furthermore, through the earlier of August 31, 1996 or when you secure employment either as an employee or as an independent contractor (hereinafter the "Reemploymnet Date), EKCO shall provide you with continuation of the medical, dental and life insurance benefits currently in effect (but not disability insurance of any kind). Currently you are required to contribute under your individual policy $7.00 on a bi-weekly basis. It is your responsibility to continue to make those payments to EKCO. Should any changes be effected on this coverage such that the benefits are limited Page 1 2 or the contribution cost to you increases you agree to accept such changes provided that they are being applied to you on a non-discriminatory basis. 4. From August 31, 1995 forward, you will not be eligible to participate in the Ekco Group, Inc. Employee Stock Purchase Program, the EKCO Corporation 401(K) Plan and the Ekco Group, Inc. disability insurance policy and benefits. 5. The restrictions on exercising the options detailed below to acquire Ekco Group, Inc. common stock shall lapse as of August 31, 1996. Please contact Linda Millman, Esq. if you desire to exercise any of the options detailed below prior to that date. OPTIONS: 29,288 shares at an option price of $6.50 per share (January 3, 1995 issue date) 30,000 shares at an option price of $7.00 per share (May 5, 1994 issue date) 6. You have purchased 48,255 shares of EKCO common stock pursuant to EKCO'S restricted stock purchase plans. Of this amount EKCO agrees not to repurchase from you 9,602 shares of EKCO common stock. The remainder, totalling 38,653 shares of EKCO common stock will be repurchased by EKCO from you for the original purchase price of $.10 per share or a total of $3,865.30 on the following schedule: A. 29,051 shares on or about September 11, 1995 at a price of $2,905.10, and B. 9,602 shares on the Reemployment Date at a price of $960.20. However, if you do not secure employment as an employee or independent contractor on or before August 31, 1996 EKCO shall not repurchase such shares from you. Pursuant to Federal tax regulations EKCO is required to withhold no less than 28%, for Federal tax purposes, of the value as of September 1, 1995 of the restricted stock which is not being repurchased. That amount is $17,206.78. You agree to make such tax withholding payment to EKCO no later than October 10, 1995. In lieu of receiving the purchase price defined immediately above and the payment of vacation accrual defined in paragraph 3 above, such amounts may be used as an offset against the monies which will be owed by you to EKCO for Federal tax withholding due to the lapsing of restrictions on the restricted stock. Please confirm to EKCO, prior to October 10, 1995, in writing, the manner in which you will satisfy this obligation. 7. You will return to EKCO on or before the Reemployment Date, in substantially the same condition as it is in today, normal wear and tear excepted, the Cadillac Seville automobile owned by EKCO which you are currently utilizing. In lieu of returning the automobile you may purchase it at any time prior to August 31, 1996 by tendering to EKCO 80% of the then wholesale ("Blue Book") value of the automobile. Please give us 10 business days notice of your intention to purchase the automobile. 8. You shall return to EKCO on or before August 31, 1996, in the condition that they are in now, reasonable wear and tear excepted, the Panasonic facsimile machine and AST Power Executive personal lap top computer which are owned by EKCO and are currently in your possession. You represent that on or before August 31, 1995 you returned to EKCO all business records and documents and all copies thereof relating to any of Page 2 3 EKCO's activities which were in your possession and which were not otherwise public documents. 9. You represent that you have returned to EKCO on or before August 31, 1995, any and all credit cards, travel cards, travel letters, telephone credit cards, and the like then currently in your possession which belong to EKCO. You are further directed and agree not to use any of the above-mentioned cards or credit devices from that day forward. Effective August 31, 1995 any charges to the telephone numbers (508) 989-3457 (mobile phone) and (508) 470-4744 (fax phone) shall be on your account and not for the account of EKCO. Please make arrangements with the appropriate telephone companies to receive their billings directly. Any charges you make to any of the above, on or after August 31, 1995, will be your personal obligation and may be deducted by EKCO from the amounts owed to you hereunder. 10. EKCO shall make available to you the services of a secretary to assist you in obtaining employment. On a reasonable and non-interfering basis secretarial services will include telephone answering, typing and assistance in preparing and mailing related business correspondence in your efforts to secure employment. 11. Reference is made to "Section 8, Confidentiality and Non Competition", in the Employment Agreement. You hereby reaffirm and agree to the obligations you assumed pursuant thereto for the period running to and through August 31, 1996. 12. You, on the one hand, and EKCO, on the other hand, acknowledge to one another the obligation to continue the relationship between the two in a fair and responsible manner. As a result, you and EKCO agree not to intentionally disparage or damage the other. EKCO acknowledges your voluntary resignation and agrees, to the extent inquiries are made with respect to your termination, to confirm such fact. 13. You hereby represent that, except for the continuing obligations of EKCO specifically described in this letter, there are no claims which may or will be made against EKCO, their employees, officers, directors and stockholders and any and all of their subsidiaries and affiliates arising out of any events which occurred prior to today's date. 14. You irrevocably and unconditionally release, remise, and forever discharge EKCO, their affiliates and their officers, directors, employees, agents, owners and attorneys on account of any claim which you may have on the date of this agreement, including, without limitation, any claim arising from or related to your employment relationship with EKCO or the termination thereof including, without limitation, claims for discrimination under the Massachusetts Fair Employment Practices Statute, M.G.L. c. 151B (as amended) (including, but not limited to, claims for discrimination based upon age), the Age Discrimination in Employment Act (as amended), 29 U.S.C. section 621 et seq., the Employee Retirement Income Security Act (as amended), the Americans with Disabilities Act, wrongful discharge, breach of express or implied contract, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, misrepresentation, deceit, fraud, negligence, or any other statutory or common law claim under any state or federal law. 15. The parties agree that you shall have until October 21, 1995 to accept the terms of this agreement by signing below, and you are advised to consult an attorney before signing. In addition, should you accept the terms of this agreement, you may rescind your assent to this agreement if, within seven (7) days from the date you sign this agreement, you Page 3 4 deliver in writing to Jeffrey A. Weinstein at Ekco Group, Inc., 98 Spit Brook Road, Nashua, NH, a written notice of recision. To be effective, such recision must be: (1) postmarked within the seven-day period; (2) properly addressed to Ekco Group, Inc. 98 Spit Brook Road, Suite 102, Nashua, New Hampshire 03062, Attention Jeffrey A. Weinstein; and (3) sent by certified mail, return receipt requested. You and EKCO, will execute a mutual, general release in the form attached hereto as Exhibit A. 16. This agreement constitutes the entire agreement between you and EKCO with respect to your separation. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. 17. This Agreement is made pursuant to the laws of the State of New Hampshire, and questions as to its validity and effect shall be governed thereby. Any provision of this Agreement which is prohibited or unenforceable in accordance with such laws shall be ineffective as to the extent of such prohibition and unenforceability without invalidating the remaining provisions hereof. If the above accurately represents our agreement, please indicate your acknowledgement thereof by signing your name below where indicated. ACCEPTED AND AGREED: EKCO GROUP, INC. ON BEHALF OF ITSELF AND ITS SUBSIDIARIES AND AFFILIATES /S/RICHARD CORBIN By: /S/DONATO A. DENOVELLIS - ------------------------- ------------------------ Richard Corbin Title: EVP/CFO --------------------
Page 4 EX-10.16 17 SEVERANCE AGREEMENT WITH R.N. FOX 1 EXHIBIT 10.16 ------------- [EKCO GROUP, INC. LETTERHEAD] September 21, 1995 Mr. Ronald Fox 100 Commons Drive Apartment #7 Shrewsbury, Ma. 01545 HAND DELIVERY BY JEFFREY A. WEINSTEIN Dear Ron: This letter will serve to confirm the agreement which you and Ekco Group, Inc. including all of of its subsidiaries and affiliates, including Frem Corporation ("Frem"), (together they are all hereinafter referred to as "EKCO"), reached with respect to the severance arrangement occasioned by your voluntary resignation as an employee and officer of Frem Corporation and EKCO and the termination of the employment agreement between you on the one hand and Frem and EKCO Group, Inc. on the other, dated as of February 12, 1995 (together with any and all amendments, including the amendment of April 4, 1995, are hereinafter referred to as the "Employment Agreement"). The following constitutes the agreement: 1. You hereby voluntarily resign from your positions as Corporate Director of Manufacturing as well as any and all other positions you now hold either as an officer or director of EKCO and any of its subsidiaries and affiliates. Your resignation will be effective as of September 15, 1995. 2. The severance arrangements recited herein shall be in lieu of and take the place of any and all rights which you may have pursuant to the Employment Agreement, EKCO and Frem severance, vacation accrual and other types of employment policies, and any rights you may have pursuant to any federal, state or local laws, statutes, or ordinances and the regulations promulgated thereunder, relating in any way to your employment with Frem and EKCO, the termination of such employment or severance or compensation benefits incident to either. 3. Upon the execution of this letter agreement EKCO shall pay you in a lump sum the gross amount of $192,088 as detailed specifically on Exhibit A attached hereto less amounts required to be withheld for Federal and State tax purposes also detailed on Exhibit A. Furthermore, through the earlier of September 14, 1997 or when you secure employment either as an employee or as an independent contractor (hereinafter the "Reemploymnet Date), EKCO shall provide you with continuation of the medical, dental and life insurance benefits currently in effect (but not disability insurance of any kind). Should any changes be effected on this coverage such that the benefits are limited or the cost to you increases you agree to accept such changes provided that they are being applied to you on a non-discriminatory basis. 4. From September 15, 1995, you will not be eligible to participate in the Ekco Group, Inc. Employee Stock Purchase Program, the EKCO 401(K) Plan and the Ekco Group, Inc. disability insurance policy and benefits. 2 5. The options detailed below to acquire Ekco Group, Inc. common stock are exercisable up to the dates indicated below in accordance with the terms of the Ekco Group, Inc. 1987 Stock Option Plan and the respective plan agreements. Please contact Linda Millman, Esq. if you desire to exercise any of the options detailed below prior to the date applicable to each such option. OPTIONS: LAST DAY TO EXERCISE 20,000 shares at an option price of $2.25 per share (10/28/88 grant date) 12/14/95 25,000 shares at an option price of $2.5625 per share (1/18/90 grant date) 03/16/96 27,500 shares at an option price of $10.0625 per share (1/13/92 grant date) 03/13/96 60,000 shares at an option price of $11.3125 per share (1/19/93 grant date) 03/16/96 20,000 shares at an option price of $7.5625 per share (1/25/94 grant date) 03/16/96
6. You have purchased 2,540 shares of EKCO common stock pursuant to EKCO's restricted stock purchase plans. As of September 15, 1995 the restrictions against transfer will lapse. Pursuant to Federal income tax regulations EKCO is required to withhold no less than 28% of the value as of September 15, 1995 of such restricted stock (less the initial purchase price paid by you). You have asked and we have withheld Federal income taxes at the rate of 35%. 7. You have returned to EKCO on September 18, 1995 the Cadillac Seville automobile owned by EKCO which you had been utilizing as your company vehicle. EKCO accepts the condition of the automobile as returned by you. 8. You have returned to EKCO on or September 18, 1995, in a condition acceptable to EKCO, the facsimile machine and AST personal lap top computer which are owned by EKCO and were in your possession. You also returned to EKCO on September 18, 1995 all business records and documents and all copies thereof relating to any of EKCO's activities which are not otherwise public documents. 9. You returned to EKCO on September 18, 1995, any and all credit cards, travel cards, travel letters, telephone credit cards, and the like which were in your possession which belong to EKCO. You are further directed and agree not to use any of the above-mentioned cards or credit devices. Effective September 15, 1995 any charges by you to the telephone numbers (508) 979-0542 shall be on your account and not for the account of EKCO. 10. Reference is made to "Section 8, Confidentiality and Non Competition", in the Employment Agreement . You hereby reaffirm and agree to the obligations you assumed pursuant thereto for the period running to and through September 14, 1997. 11. You, on the one hand, and EKCO, on the other hand, acknowledge to one another the obligation to continue the relationship between the two in a fair and responsible manner. As a result, you and EKCO agree not to intentionally disparage or damage the other. 2 3 12. You hereby represent that, except for the continuing obligations of EKCO specifically described in this letter, there are no claims which may or will be made against EKCO, their employees, officers, directors and stockholders and any and all of their subsidiaries and affiliates arising out of any events which occurred prior to today's date. 13. You irrevocably and unconditionally release, remise, and forever discharge EKCO, their affiliates and their officers, directors, employees, agents, owners and attorneys on account of any claim which you may have on the date of this agreement, including, without limitation, any claim arising from or related to your employment relationship with EKCO or the termination thereof including, without limitation, claims for discrimination under the Massachusetts Fair Employment Practices Statute, M.G.L. c. 151B (as amended) (including, but not limited to, claims for discrimination based upon age), the Age Discrimination in Employment Act (as amended), 29 U.S.C.Sections 621 et seq., the Employee Retirement Income Security Act (as amended), the Americans with Disabilities Act, wrongful discharge, breach of express or implied contract, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, misrepresentation, deceit, fraud, negligence, or any other statutory or common law claim under any state or federal law. 14. The parties agree that you shall have until October 12, 1995 to accept the terms of this agreement by signing below, and you are advised to consult an attorney before signing. In addition, should you accept the terms of this agreement, you may rescind your assent to this agreement if, within seven (7) days from the date you sign this agreement, you deliver in writing to Jeffrey A. Weinstein at Ekco Group, Inc., 98 Spit Brook Road, Nashua, NH, a written notice of recision. To be effective, such recision must be: (1) postmarked within the seven-day period; (2) properly addressed to Ekco Group, Inc. 98 Spit Brook Road, Suite 102, Nashua, New Hampshire 03062, Attention Jeffrey A. Weinstein; and (3) sent by certified mail, return receipt requested and include the check presented to you by EKCO on September 22, 1995 in the amount of $110, 204. If you cash the aforementioned check you will have waived your right to rescind this Agreement. You and EKCO and FREM, will execute a mutual, general release in the form attached hereto as Exhibit B. 15. This agreement constitutes the entire agreement between you and EKCO with respect to your separation. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. 16. This Agreement is made pursuant to the laws of the State of New Hampshire, and questions as to its validity and effect shall be governed thereby. Any provision of this Agreement which is prohibited or unenforceable in accordance with such laws shall be ineffective as to the extent of such prohibition and unenforceability without invalidating the remaining provisions hereof. 3 4 If the above accurately represents our agreement, please indicate your acknowledgement thereof by signing your name below where indicated. ACCEPTED AND AGREED: EKCO GROUP, INC. ON BEHALF OF ITSELF AND ITS SUBSIDIARIES AND AFFILIATES /S/RONALD N. FOX By: /S/DONATO A. DENOVELLIS - ----------------------- ---------------------------- Ronald N. Fox Title: EVP/CFO -------------------------
4 EX-10.17.(A) 18 SEVERANCE AGREEMENT WITH N.R. GORDON 1 EXHIBIT 10.17(a) ---------------- EKCO GROUP, INC. 98 Spit Brook Road Nashua, NH 03062 December 28, 1995 Mr. Neil R. Gordon 16 Belknap Drive Andover, MA 01810 RE: SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT ------------------------------------------ Dear Neil: This letter sets forth the terms of your agreement with Ekco Group, Inc. and its subsidiaries and affiliates ("Ekco") regarding the termination of your employment with Ekco. We have agreed as follows: 1. TERMINATION OF EMPLOYMENT: The effective date of the termination of your employment will be January 3, 1996 (the "Separation Date"). You hereby resign from your positions as an employee of and the Treasurer of Ekco Group, Inc, as the Trustee of the Ekco Group, Inc. Employee Stock Ownership Plan ("ESOP"), and from all other offices, directorships and other positions which you hold with Ekco, in each case effective as of the Separation Date. You agree to execute such documents as Ekco may reasonably request to evidence the foregoing and to facilitate the transfer of property held by the ESOP to a successor trustee. From and after the Separation Date you shall have no authority to and shall not represent yourself as an officer, director, trustee, employee or agent of Ekco or the ESOP. 2. SEVERANCE PAY: On the later of the Separation Date and the eighth day following your execution of this Agreement, provided you have not exercised your right of rescission described in Section 11 below, Ekco will pay you by wire transfer a lump sum of Two Hundred Fifty Three Thousand Dollars ($253,000) less such amounts as Ekco customarily deducts and withholds from compensation payments. In addition, Ekco shall also reimburse you for expenses incurred by you in connection with your employment with Ekco in accordance with past practice through the Separation Date, provided that you submit such expense reimbursement request to the President, Chief Financial Officer or Controller of Ekco Group, Inc. prior to January 15, 1996. 3. SEVERANCE BENEFITS: Until the earlier of (i) January 3, 1998 and (ii) the commencement of your full-time employment with an employer who offers you at least comparable benefits in the particular benefit category at the same or at a lower cost than is then being provided by Ekco, Ekco will provide you with medical, dental and group life insurance coverage, in the same amounts and on the same terms and conditions as it now provides such coverage to you to the extent Ekco is able to continue the applicable coverage. You agree to continue to pay Ekco for your share of the cost of such benefits by paying Ekco, within thirty (30) days of the invoice thereof, for such amounts. In the event that an employer offers you comparable benefits in a particular benefit category at a greater cost than that which you are then paying to Ekco, at Ekco's option, you will accept such benefit(s) in lieu of those provided by Ekco, and Ekco will reimburse you for the difference in the cost. If Ekco changes its insurance provider or the amount or terms of such coverage 2 Mr. Neil R. Gordon December 28, 1995 Page 2 for its senior executives, including changes in contribution percentages or cost, it may provide such substitute or changed coverage to you in full satisfaction of its obligations under this Agreement, provided, however, that following a Change of Control (as defined below), Ekco shall have not have the right to change the amount or terms of such coverage from that existing immediately prior to such Change of Control. In the event Ekco cannot continue your coverage under the terms of the applicable policies, Ekco shall cooperate with you in actions which may be reasonably necessary to allow you, to the extent possible, either (i) to buy such insurance policies, or (ii) to continue insurance coverage with the insurer writing Ekco's applicable group policy outside of Ekco's group plan. In the event that Ekco does not or cannot provide you with coverage under its group policies, it shall pay to you 140% of your cost of obtaining comparable coverage, but in no event more than twice the cost which Ekco paid for your coverage under its group policies prior to the Separation Date. For purposes of calculating Ekco's costs of coverage, as to which Ekco self insures, the costs shall be the amount that Ekco then charges individuals who elect to purchase COBRA continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 42 USCS ss.1396a, et. seq., following termination of their employment with Ekco. For purposes of this Agreement "Change of Control" shall mean and shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than Ekco Group, Inc. ("Group") or any employee stock plan of Group, is or becomes the beneficial owner, directly or indirectly, of securities of Group representing fifteen percent (15%) or more of the outstanding Common Stock of Group, or (ii) ten (10) days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by any "person" of fifteen percent (15%) or more of the outstanding Common Stock of Group, provided, however, that at the conclusion of such ten (10) day period such person has not discontinued or rescinded his intention to make such a tender or exchange offer or (iii) if during any consecutive twelve (12) month period beginning on or after the date on which this Agreement is executed individuals who at the beginning of such period were directors of Group cease, for any reason, to constitute at least a majority of the Board of Directors of Group; or (iv) if a merger of, or consolidation involving, Group in which Group's stock is converted into securities of another corporation or into cash shall be consummated, or a plan of complete liquidation of Group (whether or not in connection with a sale of all or substantially all of Group's assets) shall be adopted and consummated, or substantially all of Group's operating assets are sold (whether or not a plan of liquidation shall be adopted or a liquidation occurs), excluding in each case a transaction solely for the purpose of reincorporating Group in a different jurisdiction or recapitalizing Group's stock, PROVIDED, however, that any of the transactions described above which shall have been approved by a resolution adopted by the Board of Directors of Group with at least two-thirds (2/3) of the then serving Group directors who are Group directors as of the date hereof voting in favor, shall not constitute a Change of Control. 4. PERSONAL PROPERTY: On or before the Separation Date, Ekco will transfer to you or your designee, free of all liens and claims other than any incurred by you, the title to the Jeep automobile you are currently using and the laptop computer, excluding any information stored thereon which belongs to Ekco, and facsimile machine currently in your possession. Such transfers 3 Mr. Neil R. Gordon December 28, 1995 Page 3 shall be "as is" and with no warranties. On or before January 3, 1996, you will return to Ekco and not use all property, except as set forth above, which belongs to it or which otherwise pertains to its business, including without limitation any and all documents and copies thereof, compilations of information in any form (including computer storage), software, keys, security access cards, credit cards, and travel letters. From this date forward, you shall not use any such credit card or credit devices except in the ordinary course of business consistent with past practice, and will reimburse Ekco promptly for any personal charges made to date in accordance with the Company's practice. On or before January 3, 1996, you will transfer the account for your cellular phone (508-989-6104) from Ekco to you or your designee. From this date forward, you shall not incur any charges with respect to such account except in the ordinary course of business consistent with past practice. 5. ACKNOWLEDGEMENT/OTHER AGREEMENTS: The terms of this Agreement shall replace any and all rights which you otherwise may have had pursuant to the Employment Agreement dated November 6, 1991, as amended ("Employment Agreement") between you and Ekco, which agreement is hereby terminated except as specified below; Ekco severance, vacation accrual or other type of employment policy; and any rights you may have pursuant to any federal, state or local law, statute, ordinance or regulations, relating in any way to your employment with Ekco, the termination of such employment, or severance or compensation benefits incident to either. Except for any monies and stock in which you are 100% vested pursuant to the terms of the applicable plans due to you pursuant to Ekco's Supplemental Employee Retirement Program (the "SERP"), 401(k) plan, Employee Stock Purchase Plan ("ESPP"), and the ESOP, salary and expense reimbursement with respect to the period through the Separation Date and except as expressly set forth in this Agreement, you acknowledge that you have been paid all wages, commissions, bonuses, vacation pay and any and all other forms of compensation or benefit that may be due you now or in the future in connection with your employment or the termination of your employment with Ekco, including, without limitation, any rights you may have had to outplacement services, or reimbursement therefor, pursuant to your existing Employment Agreement. 6. CONSULTATION/COOPERATION: You shall make yourself available, upon reasonable notice, through January 3, 1998 either by telephone or, in Ekco's discretion, in person, to assist Ekco in any matter relating to the services performed by you during your employment or later consulting with Ekco. You also shall cooperate fully with Ekco in the defense or prosecution of any claims or actions now in existence or which may be brought or threatened in the future against or on behalf of Ekco, including without limitation any claims or actions against its officers, directors and employees. Your cooperation in connection with such actions or claims shall include, without limitation, your being available to meet with Ekco or its designees in connection with any regulatory matters, to prepare for any proceeding (including, without limitation, depositions, consultation, discovery or trial), to provide affidavits, to assist with any audit, inspection, proceeding or other inquiry, or to act as a witness in connection with any litigation or other legal proceeding affecting Ekco. Should you be contacted (directly or indirectly) by any person known by you to be adverse to Ekco with respect to any dispute with Ekco, you shall promptly (within 48 hours) notify 4 Mr. Neil R. Gordon December 28, 1995 Page 4 the President of Ekco Group, Inc. Ekco shall promptly reimburse you for reasonable out of pocket expenses incurred by you at Ekco's request in complying with your obligations hereunder. In the event that you provide more than twenty (20) hours of service to Ekco, at Ekco's request pursuant to the terms of this paragraph, Ekco will compensate you for your time for such excess services at the rate of One Hundred Fifty Dollars ($150.00) per hour. Ekco agrees to indemnify, defend and hold you harmless from damages incurred by you in connection with providing such services to the same extent as Ekco indemnifies its officers pursuant to the terms of Ekco Group, Inc.'s bylaws. 7. RESTRICTED STOCK AND OPTIONS: We mutually acknowledge that as of the date hereof you are the holder of 10,022 shares of Ekco Group, Inc. Common Stock, $.01 par value ("Shares") which are subject to Restricted Stock Purchase Agreements (the "Restricted Shares") and Options to purchase 111,437 Shares pursuant to Stock Option Agreements (the "Option Agreements"). Effective as of the later of the eighth day following your execution of this Agreement and the Separation Date, Ekco Group, Inc.: (i) waives its rights to repurchase the Restricted Shares and waives all restrictions on transfer with respect to such shares other than those imposed by applicable federal and state securities laws and (ii) amends each of the Option Agreements to provide that all options which have not been exercised prior to the date hereof shall be exercisable from and after the date hereof and shall remain exercisable until January 3, 1997. Promptly upon payment of the full purchase price in accordance with the terms of such Option Agreements, Ekco will deliver you the certificates representing such Shares in accordance with the terms of the Option Agreements. You acknowledge that upon waiver of the right of repurchase you will be deemed to have compensation income for federal income tax purposes equal to the fair market value of the Shares less the purchase price you paid for the Shares, and that Ekco is required to withhold no less than 28% of the amount of such income. Further, you acknowledge that upon exercise of the Options you will also be deemed to have income for federal income tax purposes equal to the fair market value of the Shares as of the date of exercise, less the purchase price paid upon such exercise, and that similarly Ekco will be required to withhold on such date in accordance with applicable federal regulations. You hereby agree to cooperate with Ekco in such withholding, and to pay to Ekco amounts which are required under applicable federal and state tax laws, and hereby agree that Ekco may set-off from any amount it owes to you, or your affiliates, any amounts which you have not paid to Ekco as so required. 8. NON-COMPETITION/NON-DISPARAGEMENT/CONFIDENTIALITY: The obligations set forth in "Section 8, Confidentiality and Non-Competition" of your Employment Agreement are reaffirmed and incorporated herein by reference, except that such obligations shall continue until January 3, 1998, and except that (i) the terms thereof shall not prohibit you from performing services for N.R. Gordon and Company, Inc. in connection with its services to Ekco, (ii) a business shall only be deemed competitive if Ekco is now engaged in such business, or has engaged in such business since October, 1987, and (iii) the phrase "the Board of Directors" in the sixteenth line of page 16 of such agreement is replaced with the phrase "an executive officer of Group". Neither you nor Ekco shall make any statements that are disparaging about or adverse to the business interests of the other (including Ekco's officers, directors and employees) or which are intended to harm the reputation of the other including, but not limited to, any statements that disparage any product, service, finances, capability or any other aspect of 5 Mr. Neil R. Gordon December 28, 1995 Page 5 the business of Ekco. All information relating in any way to the subject matter of this Agreement, including the terms and amount of this Agreement, shall be held in confidence by you and Ekco and shall not be publicized or disclosed to any person or entity (other than an immediate family member, legal counsel, accountant or financial advisor, provided that any such individual to whom disclosure is made agrees to be bound by these confidentiality obligations), except as required by applicable law, or as may be required in connection with disputes under this Agreement. You acknowledge that the covenants set forth in this section are reasonable and necessary to protect Ekco's confidential and proprietary information and trade secrets, and that the specific time and scope provisions set forth in this paragraph are reasonable and necessary to protect Ekco's business interests. You further expressly acknowledge and agree that in the event of your breach or threatened breach of the covenants set forth in this paragraph, Ekco would suffer substantial irreparable harm and that Ekco would not have an adequate remedy at law for such breach or threatened breach. You therefore agree that in the event of a breach or threatened breach of any of these covenants, in addition to such other remedies as Ekco may have at law, Ekco, without posting any bond, shall be entitled to obtain, and you agree not to oppose, a request for equitable relief in the form of specific performance, or temporary, preliminary or permanent injunctive relief, or any other equitable remedy which then may be available. The seeking of such injunction or order shall not affect Ekco's right to seek and obtain damages or other relief at law or in equity on account of any such actual or threatened breach. The breach of any portion of this paragraph number 8 shall constitute a material breach of this Agreement and, in addition to any other remedy available to Ekco, shall entitle Ekco to recover all of its costs and expenses, including reasonable attorneys' fees, in enforcing its rights and your obligations under this Agreement. 9. RELEASE OF CLAIMS: You agree and acknowledge that by signing this Agreement and accepting the Severance Payments and Benefits to be provided to you, and other good and valuable consideration provided for in this Agreement, you are waiving your right to assert any form of legal claim against Ekco of any kind whatsoever for any matter occurring from the beginning of time through the Separation Date. Your waiver and release herein is intended to and shall bar any form of legal claim, charge, complaint or any other form of action (jointly referred to as "Claims") against Ekco seeking any form of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, outplacement benefits or compensation, compensatory damages, emotional distress damages, punitive damages, attorneys fees and any other costs) against Ekco through the Separation Date. Without limiting the foregoing general waiver and release, you specifically waive and release Ekco from any Claim arising from or related to your employment relationship with Ekco or the termination thereof, including, without limitation: ** Claims under any state or federal discrimination, fair employment practices or other employment related statute, regulation or executive order (as they may have been amended through the date of this Agreement) 6 Mr. Neil R. Gordon December 28, 1995 Page 6 prohibiting discrimination or harassment based upon any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status or sexual orientation. Without limitation, specifically included in this paragraph are any Claims arising under the New Hampshire anti-discrimination statute, the Federal Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act and the Americans With Disabilities Act. ** Claims under any other state or federal employment related statute, regulation or executive order (as they may have been amended through the date of this Agreement) relating to wages, hours or any other terms and conditions of employment. Without limitation, specifically included in this paragraph are any Claims arising under the Fair Labor Standards Act, the Family and Medical Leave Act of 1993, the National Labor Relations Act, the Employee Retirement Income Security Act and any similar state statute. ** Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence. ** Any other Claim arising under state or federal law. Notwithstanding the foregoing, this Section shall not release Ekco from the obligations expressly set forth in this Agreement, any ongoing indemnification obligation set forth in the Certificate of Incorporation or ByLaws of Ekco Group, Inc. or any of its subsidiaries, or with respect to the Indemnification Agreement dated as of July 30, 1986 between you and Ekco Group, Inc. (the "Indemnification Agreement"), Option Agreements, or distributions not yet made to you under the terms of the SERP, the ESOP, 401(k) or the ESPP. While Ekco is not releasing you from any claims it may have against you, and Ekco has made no specific investigation of the basis for any such claims, Ekco represents to you that its executive officers do not as of the date of this Agreement have actual knowledge of actions or omissions by you which constitute the basis for any claims against you. 10. OLDER WORKERS BENEFITS PROTECTION ACT: Because you are over 40 years of age, you have specific rights under the Older Worker Benefits Protection Act ("OWBPA") which prohibits discrimination on the basis of age. The release set forth in this Agreement is intended to release any right you may have against Ekco alleging discrimination on the basis of age. 11. RECISION RIGHTS: Consistent with the provisions of OWBPA, you shall have twenty-one (21) days to consider and accept the terms of this Agreement by signing below. In addition, you may rescind your assent to this Agreement if, within seven (7) days after the date you sign this Agreement, 7 Mr. Neil R. Gordon December 28, 1995 Page 7 you deliver a notice of rescission to the President of Ekco Group, Inc. To be effective, such rescission must be postmarked or delivered in-hand within the seven (7) day period to the President of Ekco Group, Inc. 12. SPLIT DOLLAR LIFE INSURANCE/LETTER OF CREDIT: On the Separation Date you will return to Ekco that certain letter of credit issued by Fleet Bank of Massachusetts, N.A. in accordance with your existing Employment Agreement. Effective as of the Separation Date, you relinquish all right (including your right to acquire), title and interest, if any, you may have pursuant to that certain life insurance policy issued by The Guardian Life Insurance Company of America, and hereby assign to Ekco Group, Inc. all of your right, title and interest in and to such policy. 13. ENTIRE AGREEMENT: Except as expressly provided for herein, this Agreement supersedes any and all prior oral and/or written agreements, including without limitation your Employment Agreement, and sets forth the entire agreement between Ekco and you, other than the terms of the Stock Option and Restricted Stock Purchase Agreements referred to in paragraph 7, and the terms of Article VII, Section 7 of Ekco's Bylaws and the Indemnification Agreement which shall remain enforceable in accordance with their terms. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. This Agreement shall take effect as an instrument under seal and shall be governed and construed in accordance with the laws of the State of New Hampshire. The terms of this Agreement are severable, and if for any reason any part hereof shall be found to be unenforceable, the remaining terms and conditions shall be enforced in full. You are advised to consult an attorney before accepting this Agreement and acknowledge that you have had an opportunity to do so. This Agreement is executed and shall take effect as an instrument under seal. Very truly yours, Ekco Group, Inc. By: /S/DONATO A. DENOVELLIS -------------------------- Donato A. DeNovellis Executive Vice-President and chief Financial Oficer Agreed: /S/NEIL R. GORDON - ----------------- Neil R. Gordon Date: 12/28/95 -------- EX-10.17.(B) 19 CONSULTING AGREEMENT WITH N.R. GORDON 1 EXHIBIT 10.17(b) ---------------- EKCO GROUP, INC. 98 Spit Brook Road Nashua, New Hampshire 03062 December 28, 1995 Neil R. Gordon, President N.R. Gordon & Company, Inc. 16 Belknap Drive Andover, MA 01810 Dear Neil: We are pleased that N.R. Gordon & Company, Inc. ("N.R. Gordon") has agreed to become a consultant to Ekco Group, Inc. and its subsidiaries and affiliates (the "Company"). This letter will set forth the terms of our agreement ("the Agreement") with respect to (i) N.R. Gordon's services as a consultant to the Company, (ii) N.R. Gordon's agreement not to compete with the Company and (iii) N.R. Gordon's agreement to protect information and property which is confidential and proprietary to the Company or other parties with whom the Company does business. 1. SERVICES OF CONSULTANT. N.R. Gordon shall provide consulting services and advice to the Company in the areas of corporate finance, treasury services, investor relations, mergers and acquisitions, and such other areas as N.R. Gordon and the Company may agree from time to time. N.R. Gordon's services to the Company shall include service as a consultant to the Company, providing services at such times and locations as are mutually agreeable to the Company and N.R. Gordon. Such services shall be performed on behalf of N.R. Gordon by Neil R. Gordon, personally and to the best of his ability, unless otherwise agreed by the Company. During the term of this Agreement, Mr. Gordon shall provide at least one thousand six hundred (1600) hours of services (the "Minimum Commitment"), provided, however, that Mr. Gordon shall not be required to provide more than one hundred and fifty (150) hours of services in any calendar month or more than four hundred (400) hours of services during any three (3) consecutive calendar month period. While such services shall be performed at such times as are mutually agreeable to the Company and N.R. Gordon, N.R. Gordon shall submit an accounting to the Company on a monthly basis indicating the dates of service, and the nature of the services and time incurred performing such services. It is understood and agreed that N.R. Gordon shall provide services only at the request of the Company, and subject to the limits set forth in this Section 1, and that if N.R. Gordon is not requested to perform services, it shall be under no obligation to do so, but shall still be entitled to receive the compensation set forth in Section 3 of this Agreement. In addition, N.R. Gordon shall have the right to reduce the remaining portion of the Minimum Commitment during the remaining term of this Agreement by providing thirty (30) days advance written notice to the Company, in which case, the compensation set forth in Section 3(a) shall be reduced, on a pro rata basis, by the reduction of the Minimum 1 2 Commitment set forth in N.R. Gordon's notice, and if any such amount has been prepaid, you shall promptly reimburse such amount to the Company. N.R. Gordon will be an independent contractor for all purposes including, but not limited to, payroll and tax purposes, and neither it nor its employees shall represent itself or himself to be an employee or officer of the Company, and neither shall have any right to bind the Company in any manner. 2. TERM OF CONSULTING ARRANGEMENT. (a) N.R. Gordon's services as a consultant to the Company shall commence during the week of January 3, 1996 and shall continue through July 3, 1997 (the "Initial Term") and may be extended by mutual agreement; provided, however, that this Agreement shall be terminated earlier upon the first to occur of the following: (i) immediately upon the death of Neil R. Gordon; or (ii) by the Company: (A) following N.R. Gordon's failure, due to illness, accident or any other physical or mental incapacity of Neil R. Gordon, to perform the services provided for hereunder for an aggregate of seventy (70) business days within any period of one hundred (100) consecutive business days during the term hereof; or (B) for Cause, as defined herein; or (C) subject to Section 3(b) hereof, without Cause. or (iii) by N.R. Gordon, upon not less than 60 days written notice to the Company. The right of the Company to terminate its consulting arrangement hereunder shall be exercisable by written notice sent to N.R. Gordon and shall be effective as of the date specified in such notice. (b) For purposes of this Agreement, "Cause" shall mean and be limited to a material breach of any of N.R. Gordon's obligations under this Agreement or any action by N.R. Gordon or any of its agents or employees involving willful malfeasance or gross (but not simple) negligence on the part of N.R. Gordon or any of its agents or employees in a material respect. Notwithstanding the foregoing, following a Change of Control (as defined below), "cause" shall not be deemed to have occurred unless (i) the conduct which is the basis for such material breach is either willful or intentionally unlawful and (ii) N.R. Gordon shall not have ceased such conduct or cured the effect thereof, if curable, so that the breach shall no longer be material within thirty (30) days after N.R. Gordon shall have received written notice from the Company of the Company's intention to terminate this Agreement for Cause, which notice shall specify in detail the basis therefor. 2 3 3. Compensation for Services. ------------------------- (a) The Company shall pay you for your services and agreements hereunder $8,333.00 per month on the first day of each month with respect to services to be performed in the upcoming month for a total of $149,994 during the Initial Term. If the Company requests that you perform in excess of one hundred and fifty (150) hours of services in any calendar month, or four hundred (400) hours of services in any consecutive three (3) calendar month period, or sixteen hundred (1600) hours of services during the Initial Term, and you perform such additional services, the Company will compensate you at an hourly rate to be negotiated between you and the Company for each such excess hour. In addition, if, at the Company's request, employees or consultants to N.R. Gordon other than Neil R. Gordon perform services pursuant to this Agreement, the Company will compensate N.R. Gordon in a manner agreed to by the Company and N.R. Gordon. The Company will also reimburse you for reasonable out-of-pocket expenses incurred by you in performing services for the Company. (b) In the event this consulting arrangement shall be terminated by the Company without Cause during the term of this Agreement, the Company shall continue to pay you the compensation specified in Section 3(a) for the remainder of such term. All payments made under this Section 3(b) shall be made at the times and at the rate specified in Section 3(a) hereof. (c) In the event of a Change of Control (as defined below), the Company shall, immediately upon such Change of Control, prepay the amount specified in paragraph 3(a) for the remainder of the Initial Term, provided that you shall remain obligated to provide services in accordance with this Agreement for the remainder of such term. For purposes of this Agreement "Change of Control" shall mean and shall be deemed to have occurred (i) if any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than Ekco Group, Inc. ("Group") or any employee stock plan of Group, is or becomes the beneficial owner, directly or indirectly, of securities of Group representing fifteen percent (15%) or more of the outstanding Common Stock of Group, or (ii) ten (10) days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by any "person" of fifteen percent (15%) or more of the outstanding Common Stock of Group, provided, however, that at the conclusion of such ten (10) day period such person has not discontinued or rescinded his intention to make such a tender or exchange offer or (iii) if during any consecutive twelve (12) month period beginning on or after the date on which this Agreement is executed individuals who at the beginning of such period were directors of Group cease, for any reason, to constitute at least a majority of the Board of Directors of Group; or (iv) if a merger of, or consolidation involving, Group in which Group's stock is converted into securities of another corporation or into cash shall be consummated, or a plan of complete liquidation of Group (whether or not in connection with a sale of all or substantially all of Group's assets) shall be adopted and consummated, or substantially all of Group's operating assets are sold (whether or not a plan of liquidation shall be adopted or a liquidation occurs), excluding in each case a transaction solely for the purpose of reincorporating Group in a different jurisdiction or recapitalizing Group's stock, PROVIDED, however, that any of the transactions 3 4 described above which shall have been approved by a resolution adopted by the Board of Directors of Group with at least two-thirds (2/3) of the then serving Group directors who are Group directors as of the date hereof voting in favor, shall not constitute a Change of Control. (d) In the event this consulting arrangement shall be terminated either as a result of the death of Neil R. Gordon or by the Company pursuant to Section 2(a)(ii)(A) or (B), no further compensation or benefits of any kind shall be payable to you hereunder. (e) In the event this consulting arrangement shall be terminated by you pursuant to Section 2(a)(iii), no further compensation or benefits of any kind shall be payable to you hereunder, and if the Company shall have prepaid any amounts due to you, you shall reimburse such amounts to the Company. 4. CONTINUING OBLIGATIONS. Your obligations under this Agreement other than the provisions of Section 1 shall not be affected by any termination of this Agreement. 5. PROHIBITED COMPETITION. (a) CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS. (i) You recognize and acknowledge the competitive and proprietary nature of the Company's business operations. You further acknowledge and agree that, during the course of performing services for the Company as a consultant, the Company will furnish, disclose or make available to you confidential and proprietary information related to the Company's business. You also acknowledge that such confidential information has been developed and will be developed by the Company through the expenditure by the Company of substantial time, effort and money and that all such confidential information could be used by you to compete with the Company. (ii) You acknowledge receipt of a copy of that certain Employment Agreement between Ekco Group, Inc. and Neil R. Gordon dated as of November 6, 1991, and a copy of that certain Severance Agreement of even date (the "Severance Agreement"), pursuant to which Neil R. Gordon, individually, has agreed to be bound by the proprietary information and non competition provisions set forth therein. (b) COVENANTS NOT TO COMPETE. During the term of this Agreement (the "Term") and for a period of two (2) years following the expiration or termination of the Term, whether such termination is voluntary or involuntary, N.R. Gordon shall be bound by the provisions set forth in "Section 8, Confidentiality and Non-Competition" of the Employment Agreement between Neil R. Gordon and the Company, as amended by the Severance Agreement, incorporated herein by reference, except that such obligations shall continue for two years following termination of the Term. (c) REASONABLENESS OF RESTRICTIONS. You further recognize and acknowledge that (i) the types of employment which are prohibited by this Section 5 are narrow and reasonable in relation to the skills which 4 5 represent your principal salable asset both to the Company and to your other prospective employers and the consideration to be paid hereby, and (ii) the specific but broad geographical scope of the provisions of this Section 5 is reasonable, legitimate and fair to you in light of the Company's need to market its services and sell its products in a large geographic area in order to have a sufficient customer base to make the Company's business profitable and in light of the limited restrictions on the type of employment prohibited herein compared to the types of employment for which you are qualified to earn your livelihood. (d) SURVIVAL OF ACKNOWLEDGEMENTS AND AGREEMENTS. Your acknowledgements and agreements set forth in this Section 5 shall survive the expiration or termination of this Agreement. 6. PROTECTED INFORMATION. You shall and shall cause your employees and agents to, at all times, both during and after any termination of the consulting arrangement by either the Company or you, maintain in confidence and shall not, without the prior written consent of the Company, use, except in the course of performance of your duties for the Company, disclose or give to others any fact or information which was disclosed to you by the Company of any of its agents, employees or consultants or developed by you during the course of performing services for the Company, and is not generally available to the public including, but not limited to, information and facts concerning business plans, customers, future customers, suppliers, licensors, licensees, partners, investors, affiliates or others, training methods and materials, financial information, sales prospects, client lists, inventions, or any other scientific, technical, trade or business secret or confidential or proprietary information of the Company or of any third party provided to you in the course of your consultancy to the Company. You agree not to make any copies of such confidential or proprietary information of the Company (except when appropriate for the furtherance of the business of the Company or duly and specifically authorized to do so) and promptly upon request, whether during or after the period of the consulting arrangement, to return to the Company any and all documentary, machine-readable or other elements or evidence of such confidential or proprietary information, and any copies that may be in your possession or under your control. 7. RECORDS. Upon termination of your relationship with the Company, you shall deliver to the Company any property of the Company which may be in your possession including products, materials, memoranda, notes, records, reports, computer programs or other documents or information in writing or machine readable form or copies of the same. 8. NO CONFLICTING AGREEMENTS. N.R. Gordon hereby represents and warrants that neither it nor its employees have any commitments or obligations inconsistent with this Agreement. N.R. Gordon agrees to indemnify and hold the Company harmless against any loss, damage, liability or expense arising from any claim based upon circumstances alleged to be inconsistent with such representation and warranty. During the term of this Agreement, N.R. Gordon will not enter into any agreement, either written or oral, which may be in conflict with this Agreement, and will arrange to provide its services to all other persons and entities in such a manner and at such times so as not to conflict with its responsibilities under this Agreement. 5 6 9. NO EMPLOYMENT/AGENCY RELATIONSHIP CREATED. This Agreement does not constitute, and shall not be construed as constituting, an undertaking by the Company to establish an employment or agency relationship between N.R. Gordon or any of its employees and the Company. Neil R. Gordon will be working as an employee of N.R. Gordon, which is acting as an independent contractor to the Company, and not as an employee of the Company, in providing services to the Company hereunder. Neil R. Gordon will not be entitled to receive any of the benefits provided by the Company to its employees and N.R. Gordon and he will be solely responsible for the payment of all federal, state and local taxes, withholdings and contributions imposed or required on income, unemployment insurance, social security and any other law or regulation. 10. General. ------- (a) NOTICES. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv) sent by certified or registered mail, return receipt requested, postage prepaid. If to N.R. Gordon to: Neil R. Gordon, President N.R. Gordon & Company, Inc. 16 Belknap Drive Andover, MA 01810 If to the Company to: Ekco Group, Inc. 98 Spit Brook Road Nashua, New Hampshire 03062 Attn: President and with a copy to Jeffrey A. Weinstein, its General Counsel All notices, requests, consents and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iv) if sent by certified or registered mail, on the fifth business day following the day such mailing is made. (b) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or 6 7 restrict, the express terms and provisions of this Agreement. (c) MODIFICATIONS AND AMENDMENTS. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by the parties hereto. (d) WAIVERS AND CONSENTS. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent. (e) ASSIGNMENT. The Company may assign its rights and obligations hereunder to any person or entity who succeeds to all or substantially all of the Company's business. N.R. Gordon's rights and obligations under this Agreement may not be assigned by it without the prior written consent of the Company. (f) BENEFIT. All statements, representations, warranties, covenants and agreements in this Agreement shall be binding on the parties hereto and on their parents, subsidiaries and other affiliates and shall inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded as a third-party beneficiary of this Agreement. (g) GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of the State of New Hampshire, without giving effect to the conflict of law principles thereof. (h) ARBITRATION. Except with respect to the provisions of Sections 5, 6 and 7 hereof, any controversy, dispute or claim arising out of or in connection with this Agreement, or the breach, termination or validity hereof, shall be settled by final and binding arbitration to be conducted by an arbitration tribunal in Nashua, New Hampshire, pursuant to the rules of the American Arbitration Association. The arbitration tribunal shall consist of three arbitrators. The party initiating arbitration shall nominate one arbitrator in the request for arbitration and the other party shall nominate a second in the answer thereto within thirty (30) days of receipt of the request. The two arbitrators so named will then jointly appoint the third arbitrator. If the answering party fails to nominate its arbitrator within the thirty (30) day period, or if the arbitrators named by the parties fail to agree on the third arbitrator within thirty (30) days, the office of the American Arbitration Association in Nashua, New Hampshire shall make the necessary appointments of such arbitrator(s). The decision or award of the arbitration tribunal (by a majority determination, or if there is no majority, then by the determination of the third arbitrator, if any) shall be final, and judgment upon such decision or award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such decision or award and an order of enforcement. In the event of any procedural matter not covered by the aforesaid rules, the procedural law of the New 7 8 Hampshire shall govern. (i) JURISDICTION AND SERVICE OF PROCESS. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of New Hampshire or of the United States of America for the District of New Hampshire. By execution and delivery of this Agreement, each of the parties hereto accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to the party at its address set forth in Section 10(a) hereof. (j) SEVERABILITY. The parties intend this Agreement to be enforced as written. However, (i) if any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a duly authorized court or arbitration panel having jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law; and (ii) if any provision, or part thereof, is held to be unenforceable because of the duration of such provision or the geographic area covered thereby, the Company and you agree that the court or arbitration panel making such determination shall have the power to reduce the duration and/or geographic area of such provision, and/or to delete specific words and phrases ("blue-pencilling"), and in its reduced or blue-pencilled form such provision shall then be enforceable and shall be enforced. (k) HEADINGS AND CAPTIONS. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify, or affect the meaning or construction of any of the terms or provisions hereof. (l) INJUNCTIVE RELIEF. You hereby expressly acknowledge that any breach or threatened breach of any of the terms and/or conditions set forth in Sections 5, 6 or 7 of this Agreement will result in substantial, continuing and irreparable injury to the Company. Therefore, you hereby agree that, in addition to any other remedy that may be available to the Company, the Company shall be entitled to injunctive or other equitable relief by a court of appropriate jurisdiction in the event of any breach or threatened breach of the terms of Sections 5, 6 or 7 of this Agreement. (m) NO WAIVER OF RIGHTS, POWERS AND REMEDIES. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or 8 9 further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. (n) EXPENSES. Should any party breach this Agreement, in addition to all other remedies available at law or in equity, such party shall pay all of any other party's costs and expenses resulting therefrom and/or incurred in enforcing this Agreement, including reasonable legal fees and expenses. (o) COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. If the foregoing accurately sets forth our agreement, please so indicate by signing and returning to us the enclosed copy of this letter. Very truly yours, Ekco Group, Inc. By:/S/DONATO A. DENOVELLIS ------------------------ Donato A. DeNovellis, Executive Vice President Accepted and Approved by N.R. Gordon & Company, Inc. By: /S/NEIL R. GORDON ------------------------- Neil R. Gordon, President Dated: 12/28/95 -------- 9 EX-10.23.(C) 20 2ND AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT 10.23(c) SECOND AMENDMENT TO CREDIT AGREEMENT This Amendment is made as of March 25, 1996 among EKCO GROUP, INC., a Delaware Corporation ("Group"), EKCO HOUSEWARES, INC., a Delaware corporation and a wholly owned subsidiary of Group ("Housewares"), and FREM CORPORATION, a Massachusetts corporation and a wholly owned subsidiary of Housewares ("Frem" and collectively with Group and Housewares, the "Borrowers"); FLEET BANK OF MASSACHUSETTS, N.A., a national banking association as agent (the "Agent") and the Lenders set forth below under a Credit Agreement dated as of April 11, 1995 (the "Credit Agreement"). WHEREAS, Group proposes to issue $125,000,000 in principal amount of Senior Notes (as defined below) on or about the date of this Second Amendment; WHEREAS, Group will use approximately $66,600,000 of the proceeds of the Senior Notes to repurchase the 12.70% Notes and approximately $18,800,000 of such proceeds to repurchase the 1818 Notes; WHEREAS, the Borrowers and the Lenders have agreed to certain modifications of the Credit Agreement in connection with an issuance of the Senior Notes; NOW, THEREFORE, the parties agree as follows: 1. Section 1.1. Definitions shall be amended as follows: (a) Each of the following definitions shall replace the pre-existing definitions in their entirety: "Applicable Margin - LIBOR Rate" and "Applicable Margin - Base Rate" shall mean the percentage set forth below opposite the Consolidated Total Leverage Ratio in effect as of the last day of the immediately preceding fiscal quarter:
Applicable Margin - Consolidated Total Leverage Ratio Base Rate LIBOR Rate --------------------------------- --------- ---------- Greater than 2.25:1.0 0 1.50% Equal to or less than 2.25:1.0 0 1.25%
1 2 "Borrowers" or "Borrower" shall mean Group. Effective the date of this Second Amendment, Housewares and Frem shall no longer be Borrowers, although they shall remain Guarantors pursuant to Section 10. "Guarantors" shall mean individually each of Cleaning, Ekco Distribution, Frem, Housewares, Kellogg, Manufacturing, Via, Woodstream, Wright-Bernet and any other Person that shall become a guarantor of any Lender Obligations, and collectively all of them; provided, however, that for the purposes of Article 10 of this Agreement, the term "Guarantor" shall be limited to Frem and Housewares. "Interest Period" shall mean with respect to any LIBOR Rate Advance, the period commencing on the date of such LIBOR Rate Advance and ending one, two, three or six months thereafter, as the Borrower may request as provided in Section 2.2 or 2.3(a) hereof; provided that: (i) any Interest Period (other than an Interest Period determined pursuant to clause (ii) below) that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day; (ii) any Interest Period that would otherwise end after the Revolving Credit Termination Date shall end on the Revolving Credit Termination Date; and (iii) notwithstanding clause (ii) above, no Interest Period shall have a duration of less than 30 days, and if any Interest Period applicable to LIBOR Rate Advances would be for a shorter period, such Interest Period shall not be available hereunder. "Maximum Revolving Credit Amount" shall mean $75,000,000. "Obligor" shall mean any Person that is a Borrower under this Agreement or a Guarantor of any Lender Obligations. "Pledge Agreements" shall mean each of the pledge agreements now or hereafter executed by any Person in connection with this Agreement, as the same may be amended, modified or supplemented from time to time. "Revolving Credit Facility" shall mean the secured revolving credit facility in favor of Group. (b) The following definitions shall be deleted: Frem Revolving Credit, Housewares Revolving Credit, Maximum Frem Revolving Credit Amount, Maximum Group Revolving Credit Amount and Maximum Housewares' Revolving Credit Amount. (c) The following definitions shall be added: 2 3 "Ekco Distribution" shall mean Ekco Distribution of Illinois, Inc., a Delaware corporation, and its successors and assigns. "Manufacturing" shall mean Ekco Manufacturing of Ohio, Inc., a Delaware corporation, and its successors and assigns. "Senior Notes" shall mean the senior unsecured notes due 2006 in the principal amount of $125,000,000 issued by Group pursuant to an Indenture among Group, the guarantors named therein and Fleet National Bank of Connecticut, N.A. as Trustee (the "Indenture") on or about the date of this Second Amendment." (d) The definition of "Mortgages" shall be amended by the addition of the following: "Mortgages shall also include (vii) the Mortgage and Security Agreement executed by Housewares with respect to the real property in Chicago, Illinois, and (viii) the Open-End Mortgage and Security Agreement executed by Manufacturing with respect to the real property in Massillon, Ohio." 2. Article 2. The Credits. The introduction shall be amended in its entirety to read as follows: "Subject to the terms and conditions hereof, and in reliance on the representations and warranties contained herein, each of the Lenders hereby establish as a secured Revolving Credit Facility in favor of Group in the respective principal amounts of each Lender's Revolving Credit Commitment. The aggregate principal amount of the Lenders' Revolving Credit Commitments is $75,000,000. All references hereinafter made to Borrowers or Borrower shall mean Group." 3. Section 2.3. Interest; Duration of Interest Periods. Subsection (b) shall be amended in its entirety to read as follows: "(b) With respect to Base Rate Advances, interest shall be payable in arrears on the last day of each calendar month, commencing April 30, 1995 through February 29, 1996 and on the last day of each calendar quarter commencing March 31, 1996 and continuing until all amounts of principal which are Base Rate Advances shall have been fully paid. With respect to LIBOR Rate Advances, interest shall be payable in arrears on the last day of the applicable Interest Period and, if such Interest Period is more than three months, interest shall be paid in three month intervals from the first day of such Interest Period and on the last day of such Interest period, for interest accrued to each such date." 4. Section 5.27. 12.70% Notes is amended in its entirety to read as follows: "12.70% Notes and 1818 Notes. As of the effective date of this Second Amendment, Group has repurchased and retired the 12.70% Notes and the 1818 Notes. 3 4 5. Section 6.1. Quarterly Financial Statements. Clause (ii) is amended in its entirety to read as follows: "deleted." 6. Section 6.2. Annual Financial Statements. Clause (iii) is amended in its entirety to read as follows: "deleted." Clause (vii) is amended in its entirety to read as follows: "the compliance certificate required by Section 4.7(a) of the Indenture governing the Senior Notes; provided, however that the Borrower may defer delivery of such certificate until 120 days after the end of its fiscal year, and such other information with respect to the Senior Notes as the Agent may reasonably request." 7. Section 7.1. Minimum Consolidated EBITDA is restated in its entirety to read as follows: "The Consolidated EBITDA of Group and its Subsidiaries shall not be less than the amount set forth below as measured at the end of each fiscal quarter during the periods indicated, on the basis of the fiscal quarter ending on such date and the three immediately preceding fiscal quarters:
Period Consolidated EBITDA (Group) ------ --------------------------- Fiscal Year End 1995 $43,000,000 First Quarter Fiscal Year 1996 through Third Quarter Fiscal Year 1996 40,000,000 Fiscal Year End 1996 through Third Quarter Fiscal Year 1997 45,000,000 Fiscal Year End 1997 and thereafter 50,000,000"
8. Section 7.2. Ratio of Consolidated EBITA to Consolidated Interest Expense is restated in its entirety to read as follows: "The ratio of Group's Consolidated EBITA to Consolidated Interest Expense shall not be less than the ratios set for below as measured at the end of each fiscal quarter on the basis of the fiscal quarter ending on such date and the three immediately preceding fiscal quarters.
Period Ratio ------ ----- Fiscal Year End 1995 2:45:1.0 First Quarter Fiscal Year 1996 through Third Quarter Fiscal Year 1996 2:25:1.0
4 5
Period Ratio ------ ----- Fiscal Year End 1996 and thereafter 2:75:1.0"
9. Section 7.3. Consolidated Fixed Charge Coverage Ratio is restated in its entirety to read as follows: "The ratio of Group's Consolidated Cash Flow to Consolidated Fixed Charges shall not be less than the ratios set forth below as measured at the end of each fiscal quarter during the periods indicated, on the basis of the fiscal quarter ending on such date and the three immediately preceding fiscal quarters:
Period Ratio ------ ----- Fiscal Year End 1995 1:40:1.0 First Quarter Fiscal Year 1996 through Third Quarter Fiscal Year 1996 1:40:1.0 Fiscal Year End 1996 through Third Quarter Fiscal Year 1997 1:75:1.0 Fiscal Year End 1997 and thereafter 2:00:1.0"
10. Section 7.4. Ratio of Consolidated Senior Funded Indebtedness to Consolidated EBITDA is restated to read as follows: "The ratio of Group's Consolidated Senior Funded Indebtedness to Consolidated EBITDA shall not exceed the ratios set forth below as measured at the end of each fiscal quarter during the periods indicated, on the basis of the fiscal quarter ending on such date and the three immediately preceding fiscal quarters:
Period Ratio ------ ----- Fiscal Year End 1995 2.45:1.0 First Quarter Fiscal Year 1996 through Third Quarter Fiscal Year 1996 3.20:1.0 Fiscal Year End 1996 through Third Quarter Fiscal Year 1997 2.90:1.0 Fiscal Year End 1997 and thereafter 2.50:1.0"
11. Section 7.5. Current Ratio is amended in its entirety to read as follows: "deleted." 5 6 12. Section 7.6. Consolidated Tangible Net Worth is amended in its entirety to read as follows: "deleted." 13. Section 8.10. Additional Mortgages is amended by the addition of the following: "(c) In connection with the execution of this Second Amendment, Housewares has executed and delivered a mortgage in favor of the Agent with respect to property in Chicago, Illinois and Manufacturing has executed and delivered a mortgage in favor of the Agent with respect to property in Massillon, Ohio. The Agent has not currently required a title insurance policy or other due diligence with respect to such mortgages. Within 90 days of a request by Agent, Borrower agrees to provide Agent with (i) a title insurance policy relating to such mortgage in such amount and such form as the Agent may reasonably request, (ii) such opinions of counsel relating to such mortgages as the Agent may reasonably request, including, without limitation, an opinion as to enforceability and zoning; and (iii) such other matters of due diligence as the Agent may reasonably request." 14. Section 8.8. Use of Proceeds is amended in its entirety to read as follows: "Group will use the proceeds of the Revolving Credit Facility (a) to pay off all outstanding Advances made to Housewares or Frem under this Credit Agreement prior to the effective date of this Second Amendment; and (b) for general corporate purposes including, without limitation, working capital for itself and its Subsidiaries. Group will not use any of the proceeds to purchase or carry "margin stock" (as defined in Regulation U)." 15. Section 8.11. Additional Housewares Covenants is amended in its entirety to read as follows: "deleted." 16. Section 9.1. Restrictions on Borrowed Funds Indebtedness is amended by replacing subsection (d) in its entirety by the following: "(d) Borrowed Funds Indebtedness of Group arising from the Senior Notes, or from any refinancing or replacement of the Senior Notes; provided, however, that (i) the aggregate principal amount of such Indebtedness shall not exceed the then outstanding principal balance of the Senior Notes; (ii) the periodic installments of interest or fees under such Indebtedness shall not exceed the periodic installments of interest or fees required under the Senior Notes; (iii) the final maturity of such Indebtedness shall not be earlier than the final maturity of the Senior Notes; and (iv) the Average Life of such Indebtedness shall not be less than the Average Life of the Senior Notes." 17. Section 9.5. Assumptions, Guarantees, Etc., subsection (iv) is amended in its entirety as follows: "Guarantees by Subsidiaries of the Senior Notes and any Indebtedness permitted under Section 9.1(d) as refinancing or replacement of the Senior Notes." 6 7 18. Section 9.6. Mergers and Acquisitions is amended as follows: Subsection (a) is amended by the addition of the following: "and further provided, that no individual acquisition shall involve an expenditure in excess of $25,000,000 and the aggregate of all expenditures for acquisitions during the three year period ending Fiscal Year End 1998 shall not exceed $50,000,000. (For purposes of determining the amount of such expenditures, the fair market value of any securities issued, and the principal amount of any Indebtedness assumed or guaranteed, by the Borrower or any Subsidiary shall be considered expenditures.)" Subsection (b) is amended to read as follows: "deleted." 19. Section 9.13. Amendments to Certain Agreements shall be amended in its entirety to read as follows: "Neither the Borrower nor any of its subsidiaries shall agree to any amendment to the terms and provisions of the Senior Notes relating to an increase in fees or interest rates thereunder, any increase in principal or interest payment amounts or total principal amounts thereunder, an acceleration of the maturity thereof or the scheduled dates of principal and interest or payments thereof, any change to the subordination provisions contained therein, if any, or any change to the financial covenants or other material covenants contained therein making such covenants more restrictive to Group or its subsidiaries, as the case may be." 20. Section 9.14. Transactions with Housewares is deleted. 21. Section 10.1. Guaranties of Lender Obligations. The first sentence is amended in its entirety to read as follows: "For value received and hereby acknowledged, and as an inducement to the Lenders to make the Revolving Credit Facilities and the Advances available hereunder, each of Frem and Housewares (for purposes of this Article 10 each such Person, in its capacity as a guarantor hereunder, is hereinafter referred to as the "Guarantor"), jointly and severally, hereby guarantees to the Lenders the full and punctual payment when due (whether at maturity, by acceleration or otherwise), and the performance by Group, of all its Lender Obligations, whether now existing or hereafter arising (collectively the "Guaranteed Obligations")." 22. Section 10.6. Security; Set-Off is amended by deleting "(other than Housewares)" in the first sentence, and by deleting the last sentence beginning "The Agent" and ending "Housewares." 23. The Agent and the Lenders consent to the repurchase of the 12.70% Notes and 1818 Notes with the proceeds of the Senior Notes. 7 8 24. The Borrower represent and warrants that each of the Schedules to the Credit Agreement remain true, accurate and correct as of the date hereof except as to Schedules 5.4, 5.12, 5.13, 5.14, 5.15, 5.17(c), 5.18, 5.19(a), 5.19(b), 5.23, 5.24 and 8.13 which are replaced by the Schedules attached hereto. 25. The Borrower shall pay an amendment fee to the Agent in connection with the execution of this Second Amendment as set forth in a separate fee letter. 26. The Revolving Credit Commitment and Revolving Credit Commitment Percentage of each Lender is set forth below such Lender's name on the execution page of this Second Amendment, which replace and supersede the Revolving Credit Commitment and Revolving Credit Commitment Percentage set forth on the execution pages to the original Credit Agreement. 27. Except as specifically set forth herein and in the First Amendment to Credit Agreement dated December 31, 1995, the Credit Agreement remains in full force and effect. WITNESS, the execution hereunder under seal as of the date set forth above: BORROWER: EKCO GROUP, INC. By: /s/JOHN T. HARAN ------------------------------------ Name: John T. Haran Title: Vice President and Treasurer 8 9 GUARANTORS: EKCO HOUSEWARES, INC. By: /s/JOHN T. HARAN ------------------------------------ Name: John T. Haran Title: Vice President and Treasurer FREM CORPORATION By: /s/JOHN T. HARAN ------------------------------------ Name: John T. Haran Title: Vice President and Treasurer AGENT: FLEET BANK OF MASSACHUSETTS, N.A., as Agent By: /s/MICHAEL A. PALMER ------------------------------------ Name: Michael A. Palmer Title: Vice President 9 10 LENDERS: FLEET BANK OF MASSACHUSETTS, N.A. By: /s/MICHAEL A. PALMER --------------------------------- Name: Michael A. Palmer Title: Vice President Address: Fleet Bank of Massachusetts, N.A. 75 State Street Boston, Massachusetts 02109 Attn: Thomas F. McNamara, Vice President Telefax: (617) 346-1837 Revolving Credit Commitment Percentage: 53.33% Revolving Credit Commitments: $40,000,000 10 11 ABN AMRO BANK N.V., BOSTON BRANCH By: /s/CAROL A. LEVINE --------------------------------- Name: Carol A. Levine Title: Senior V.P. and Managing Director By: /s/JAMES E. DAVIS --------------------------------- Name: James E. Davis Title: V.P. Address: ABN AMRO Bank, N.V., Boston Branch One Post Office Square - 39th Floor Boston, Massachusetts 02109 Attn: Carol A. Levine, Managing Director Telefax: (617) 988-7910 Revolving Credit Commitment Percentage: 20% Revolving Credit Commitments: $15,000,000 11 12 THE SUMITOMO BANK, LIMITED By: /s/D. G. EASTMAN --------------------------------- Name: D. G. Eastman Title: V.P. and Manager By: /s/ALFRED DeGEMMIS --------------------------------- Name: Alfred DeGemmis Title: V. P. Address: The Sumitomo Bank, Limited One Post Office Square, Suite 3820 Boston, Massachusetts 02109 Attn: Alfred DeGemmis, Vice President Telefax: (617) 423-4884 Revolving Credit Commitment Percentage: 13.33% Revolving Credit Commitments: $10,000,000 PNC BANK, NATIONAL ASSOCIATION By: /s/QUAN L. GRAYS --------------------------------- Name: Quan L. Grays Title: Assistant V. P. Address: PNC Bank, National Association 335 Madison Avenue New York, New York 10017 Attn: Kwan L. Grays Telefax: (212) 409-3737 Revolving Credit Commitment Percentage: 13.33% Revolving Credit Commitments: $10,000,000 12 EX-13 21 FY 1995 FINANCIAL STATEMENTS 1 EXHIBIT 13 FINANCIAL STATEMENTS INDEX Selected Consolidated Financial Data Common Stock Price Range and Dividends Management's Discussion and Analysis of Results of Operations and Financial Condition Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors 1 2 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data of the Company shown below for the five-year period ended December 31, 1995 are derived from the consolidated financial statements of the Company audited by independent certified public accountants. The information set forth below is qualified in its entirety by the more detailed financial statements and the notes thereto included elsewhere herein. The following table should be read in conjunction with Management's Discussion and Analysis of Results of Operations and Financial Condition and the Company's audited Consolidated Financial Statements and Notes thereto appearing elsewhere herein.
FISCAL YEARS 1995(1)(2) 1994(1)(2) 1993(1)(2) 1992(2) 1991 ---------- ---------- ---------- ------- ---- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED BALANCE SHEET DATA Current assets $102,610 $111,627 $ 89,831 $ 79,679 $ 64,808 Total assets 304,375 317,783 307,961 255,081 211,484 Current liabilities 57,935 51,118 64,062 41,113 45,173 Long-term obligations, less current portion 74,700 102,580 89,982 71,264 71,644 7% Convertible Subordinated Note 22,000 22,000 22,000 22,000 - Series B ESOP Convertible Preferred Stock, net 3,458 3,096 2,686 2,111 1,649 Stockholders' equity 135,925 129,116 116,864 110,567 86,841 Common shares outstanding 18,414 18,069 17,844 17,148 14,676 CONSOLIDATED STATEMENT OF OPERATIONS DATA Net revenues $277,995 $267,048 $246,428 $206,628 $166,717 Cost of sales 191,343 175,451 161,349 129,085 99,130 Consolidation and restructuring charge - - 11,000 - - Selling, general and administrative 52,783 53,433 50,841 46,581 43,220 EBITDA (3) 50,062 52,261 35,753 39,627 31,008 Amortization of excess of cost over fair value 4,437 4,438 4,195 3,557 2,770 Net interest expense 13,493 12,491 12,206 10,680 9,594 Income before income taxes 15,939 21,235 6,837 16,725 12,003 Income taxes 7,894 9,812 4,578 8,078 6,109 Income before cumulative effect of accounting changes 8,045 11,423 2,259(4) 8,647 5,894 Earnings per common share before cumulative effect of accounting changes .40 .57 .11(4) .46 .35 Cash dividends per common share and Series B ESOP Convertible Preferred share .08 - - - - (1) Includes operations of Kellogg Brush Manufacturing Co. and subsidiaries acquired on April 1, 1993. (2) Includes operations of Frem Corporation acquired on January 8, 1992. (3) EBITDA represents earnings before interest, taxes, depreciation, amortization of excess of cost over fair value and other amortization. (4) During Fiscal 1993, the Company recorded a charge of $3,247,000 (net of income taxes of $1,954,000) to reflect the cumulative effect of changes in the method of accounting for post-retirement and post-employment benefits.
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 1995 First Quarter 5 7/8 6 3/4 Second Quarter 5 5/8 6 3/8 Third Quarter 5 7/8 6 7/8 Fourth Quarter 5 3/8 6 1/2 1994 First Quarter 6 1/2 8 1/8 Second Quarter 6 1/2 7 3/8 Third Quarter 6 1/2 7 3/4 Fourth Quarter 5 7/8 7 1/8
On March 6, 1996, the Company had 2,090 stockholders of record. The Company's bank credit facilities and certain debt instruments restrict dividends and payments that the Company's operating subsidiaries may make to the Company. 3 4 EKCO GROUP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS The following discussion of the consolidated results of operations for the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995 ("Fiscal 1994") and January 2, 1994 ("Fiscal 1993") and the discussion of financial condition at December 31, 1995 should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto. The Company is a manufacturer and marketer of multiple categories of branded housewares for everyday home use. The Company operates in one industry segment, with revenues derived from sales in five principal product categories: (i) bakeware, (ii) kitchenware, (iii) cleaning products, (iv) pest control and small animal care and control products and (v) molded plastic products. The following table summarizes the changes in the components of the Company's net revenues by product category over the last three fiscal years: NET REVENUE BY PRODUCT CATEGORY (AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- Bakeware......................................... $ 81,261 29.2% $ 76,557 28.7% $ 67,104 27.2% Kitchenware...................................... 73,006 26.3 72,022 27.0 68,114 27.6 Cleaning products (a)............................ 55,191 19.9 53,003 19.8 36,922 15.0 Pest control and small animal care and control products...................... 34,034 12.2 31,943 12.0 29,693 12.1 Molded plastic products.......................... 30,991 11.1 33,523 12.5 31,277 12.7 VIA! (b)......................................... 3,512 1.3 - - - - Other (c)........................................ - - - - 13,318 5.4 -------- ----- -------- ----- -------- ----- Total net revenues...................... $277,995 100.0% $267,048 100.0% $246,428 100.0% ======== ===== ======== ===== ======== ===== (a) The Company acquired its cleaning products business on April 1, 1993. (b) The Company introduced its VIA! line of products in January 1995, substantially all revenues from the sale of VIA! products occurred in the second half of Fiscal 1995. (c) The Company sold its plastic sporting goods business in January 1994.
FISCAL 1995 VS. FISCAL 1994 NET REVENUES Net revenues for Fiscal 1995 increased approximately $10.9 million (4.1%) from the prior year. Sales increased for four of the Company's five product categories in Fiscal 1995 despite a weak retail sales environment. The increase in net revenues was principally due to increases in revenues in the Company's bakeware, pest control and cleaning products businesses, as well as from the introduction of the Company's new line of VIA! products. The increase was partially offset by a decline in revenues from molded plastic products. The increase in bakeware revenues was primarily due to increased distribution, higher levels of promotions and the Company placing the promotions with retailers earlier than in prior years. The increase sales of pest control products was principally due to new product introductions, including Roach Magnet(TM), and increased distribution. Increased sales of cleaning products resulted from increased distribution and the substantial growth of several hardware/home-center customers. Net revenues from the Company's new line of VIA! products were approximately $3.5 million, substantially all of which were recognized in the second half of Fiscal 1995. Revenues from the sale of molded plastic products declined because retailers reduced planned promotions in response to consumer resistance to increased retail selling prices resulting from significant increases in plastic resin prices. 4 5 EKCO GROUP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS (CONTINUED) GROSS PROFIT The Company's gross profit margin declined from approximately 34.3% for Fiscal 1994 to approximately 31.2% for Fiscal 1995. The primary factors contributing to this decline were (i) the significant year-over-year increase in the prices of plastic resin and other raw materials, (ii) increases in manufacturing and distribution costs incurred in anticipation of a higher than realized volume of sales, (iii) a shift in customer mix, resulting from the substantial growth of several hardware/home-center customers and (iv) increased promotional discounting in the fourth quarter of Fiscal 1995. These factors were partially offset by price increases initiated during the beginning of Fiscal 1995. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses in Fiscal 1995 decreased approximately $650,000 (1.1%) from the prior year. Selling, general and administrative expense as a percentage of net revenues declined from 20.0% in Fiscal 1994 to 19.0% in Fiscal 1995, as a result, in part, of efficiencies realized from the Company's restructuring plan. The decrease included the collection of an amount due relating to a 1987 real estate transaction ($1.1 million) which had previously been written off. The increase in expenses of approximately $450,000 excluding this transaction reflects increased product placement and advertising costs as well as costs associated with the growth of VIA!. NET INTEREST EXPENSE Net interest expense increased $1.0 million from the Fiscal 1994 level of $12.5 million. The higher year-over-year expense was attributable to higher average borrowings and higher interest rates. INCOME TAXES The effective income tax rate increased to 49.5% in Fiscal 1995 from 46.2% in Fiscal 1994. The increase occurred primarily because amortization of goodwill, which is not deductible for income taxes, represents a higher percentage of income before income taxes. FISCAL 1994 VS. FISCAL 1993 NET REVENUES Net revenues for Fiscal 1994 increased approximately $20.6 million (8.4%) from the prior year. Net revenues for Fiscal 1994 included first-quarter revenues of $12.7 million from the Company's cleaning products business, which was acquired by the Company on April 1, 1993. Net revenues for Fiscal 1993 included $13.3 million associated with the Company's plastic sporting goods business; the assets of which were sold in January 1994. Excluding the foregoing acquisition and divestiture, net revenues for Fiscal 1994 increased approximately $21.2 million (8.6%) over net revenues for Fiscal 1993. Each of the Company's business units contributed to the growth in net revenues. Retailers, while continuing to adhere to stringent inventory controls, remained committed to maintaining high service levels for their customers. As a result, retailers kept their shelves stocked, contributing to the Company's growth in 5 6 EKCO GROUP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS (CONTINUED) NET REVENUES (CONTINUED) revenues. Approximately $9.5 million of the increase resulted from increased sales of the Company's bakeware products, which benefited from the introduction of new products such as Crisp It(TM) pizza pans and Healthy Cooking broiler and meat loaf pans, along with strong growth in Baker's Secret(R) bakeware products. Approximately $4.0 million of the increase resulted from increased sales of the Company's kitchen tool and gadget products, which benefitted from a store aisle merchandising program introduced in the second half of Fiscal 1993. The remaining increase of approximately $8.0 million was a result of increases in the Company's other businesses, including molded plastic products, pest control and small animal care and control products. GROSS PROFIT The Company's gross profit margin in Fiscal 1994 remained essentially unchanged from the 34.5% in Fiscal 1993. The Company was able to maintain its gross profit margin despite increases in raw material costs and warehousing and distribution costs through improved utilization of facilities, primarily at the Company's cleaning product business, and changes in product mix. Although the cost of raw materials increased in general, the majority of the increase resulted from the approximate doubling of prices of plastic resin, the primary raw material used in the Company's molded plastic products business. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for Fiscal 1994 increased $2.6 million, (5.0%) from the prior year. Selling, general and administrative expense as a percentage of net revenues declined from 20.6% for Fiscal 1993 to 20.0% for Fiscal 1994. Selling, general and administrative expense for Fiscal 1993 included $2.6 million associated with the Company's plastic sporting goods business. Additionally, selling, general and administrative expense for Fiscal 1994 included first quarter expenses of $1.9 million from the Company's cleaning products business. Excluding the above acquisition and divestiture, selling, general and administrative expense for Fiscal 1994 increased approximately $3.3 million (6.7%). The increase was primarily due to increased display and sales promotion costs associated with the Company's 1994 bakeware media campaign and costs associated with the start-up of VIA!. The increase was partially offset by benefits associated with implementation of the Company's restructuring plan. NET INTEREST EXPENSE Net interest expense for Fiscal 1994 increased $285,000 from the prior year. The increase was primarily due to the additional debt associated with the acquisition of the Company's cleaning products business on April 1, 1993. INCOME TAXES The effective income tax rate declined to 46% in Fiscal 1994 from 67% in Fiscal 1993. The decline occurred primarily because amortization of goodwill for Fiscal 1994 represents a lower percentage of income before income taxes. 6 7 EKCO GROUP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE The Company recorded an $11.0 million charge ($6.6 million after income taxes) for restructuring/reorganization and excess facilities during the fourth quarter of Fiscal 1993. The restructuring was the result of management's analysis of the Company's operations and future strategy. The items covered by the charge were (i) severance and other costs related to a reduction in personnel;(ii) costs arising from the consolidation of different distribution and information systems (including the closing of facilities and write-off of equipment no longer relevant to the Company's operating strategy); and (iii) costs associated with excess facilities currently classified as held for sale. Of this $11.0 million charge, approximately $2.7 million was non-cash, and $8.3 million was cash. Of the $8.3 million cash portion of the charge, $5.0 million was expended in Fiscal 1994 and $3.3 million was expended in Fiscal 1995. See Note 17 to the Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES During Fiscal 1995, the Company generated approximately $21.7 million in cash from operations. Such cash, together with proceeds of $3.3 million from the sale of property and equipment and proceeds of $3.6 million from investments previously pledged as collateral, was used for capital expenditures of approximately $12.7 million, dividend payments of approximately $1.6 million, the reduction of debt of approximately $13.4 million and net repurchases/issuances of Common Stock of $900,000. On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior Notes due 2006, at a price of 99.291% of face value, in a private offering to institutional investors. The Company used the net proceeds of the Senior Note offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0% Subordinated Convertible Note due 2002 and (ii) to repay substantially all amounts outstanding under the Revolving Credit Facility. Concurrently with closing the sale of the 9.25% Senior Notes, the Company entered into an amendment to its Revolving Credit Facility, which amendment consolidated the outstanding debt and borrowing capacity of Housewares and Frem with that of the Company and revised certain financial covenants. Borrowings under the amended Revolving Credit Facility bear interest at the bank's prime rate, or at LIBOR plus 1.25% or 1.5%, depending on the Company's borrowing strategy and the ratio of total debt to cash flow. The Revolving Credit Facility provides for a commitment fee of three-eighths of one percent on the unused portion of the commitment amount and a $60,000 annual agency fee. Borrowings under the Revolving Credit Facility mature in December 1998. The Senior Notes, as well as the Revolving Credit Facility, will contain certain financial covenants that will restrict the sale of assets, the incurrence of additional indebtedness and certain investments and acquisitions by the Company. The early extinguishment of the 12.70% Notes and 7% Convertible Subordinated Note will result in an extraordinary charge against first quarter 1996 earnings of approximately $6.0 million (before income taxes). 7 8 EKCO GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS (CONTINUED) The Company believes that the net proceeds from the Senior Note offering, together with borrowing capacity under the amended Revolving Credit Facility will provide sufficient borrowing capacity to finance its ongoing operations for the foreseeable future. The Company may, however, require additional funds to finance any further acquisitions. A facility located in Hudson, New Hampshire classified as held for sale was sold on October 5, 1995 for $2.8 million in cash. Proceeds from the sale were used to repay borrowings under the Revolving Credit Facility. The Company's remaining properties held for sale include a former manufacturing facility located in Chicago, Illinois and a warehouse located in Lititz, Pennsylvania. The Company is actively pursuing the sale or lease of these properties, and has leased the Lititz warehouse facility. The Company plans to sell these properties within the next two years. The aggregate carrying values of such properties $2.8 million at December 31, 1995, are periodically reviewed and are stated at the lower of cost or market. The Company has provided approximately $3.5 million for environmental remediation and ongoing operation, maintenance and ground water monitoring costs associated with facilities owned or occupied by the Company's cleaning products business. The Company believes the provision is adequate, but will continue to monitor and adjust the provision, as appropriate, should additional sites be identified or further remediation measures be required or undertaken or interpretation of current laws or regulations be modified. RECENT ACCOUNTING PRONOUNCEMENTS In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 121 "Accounting For The Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of" ("FAS 121"). The Company will adopt FAS 121 in fiscal 1996 and does not expect it to have a material impact on the financial statements. The Company has not adopted the recently issued Statement of Financial Accounting Standard No. 123 "Accounting for Stock-based Compensation" ("FAS 123") which is required to be adopted in fiscal 1996. The Company currently intends to continue to record compensation based on the provisions of Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," as allowed by FAS 123. Although the Company has not determined the ultimate impact of adopting FAS 123 on its present accounting disclosure, it does not believe, based on the number of options previously granted, that adoption of FAS 123 will have a material impact on its current accounting disclosure. INFLATION Inflation in general was not considered to be a significant factor in the Company's operations during the periods discussed above. BUSINESS OUTLOOK This Annual Report, including the "Letter to Shareholders" and "Management's Discussion and Analysis of Results of Operations and Financial Condition," contains forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. Such factors and uncertainties include, but are not limited to: the impact of the level of the Company's indebtedness; restrictive covenants contained in the Company's various debt documents; general economic conditions and conditions in the retail environment; the Company's dependence on a few large customers; price fluctuations in the raw materials used by the Company; competitive conditions in the Company's markets; the seasonal nature of the Company's businesses; and the impact of federal, state and local environmental requirements (including the impact of current or future environmental claims against the Company). As a result, the Company's operating results may fluctuate, especially when measured on a quarterly basis. 8 9 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, JANUARY 1, 1995 1995 ----------- ---------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) ASSETS Current assets Cash and cash equivalents $ 142 $ 129 Accounts receivable, net of allowance for doubtful accounts of $1,048 and $1,739, respectively 43,823 46,030 Inventories 47,565 48,242 Prepaid expenses and other current assets 6,719 6,296 Deferred income taxes 4,361 7,330 Investments pledged as collateral - 3,600 -------- -------- Total current assets 102,610 111,627 Property and equipment, net 56,380 52,361 Property held for sale or lease, net of accumulated depreciation of $2,830 and $8,323, respectively 2,830 7,373 Other assets 5,955 5,440 Excess of cost over fair value of net assets acquired, net of accumulated amortization of $27,727 and $23,290, respectively 136,600 140,982 -------- -------- Total assets $304,375 $317,783 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Note payable $ - $ 3,643 Current portion of long-term obligations 18,079 36 Accounts payable 15,607 15,652 Accrued expenses 23,711 27,843 Income taxes 538 3,944 -------- -------- Total current liabilities 57,935 51,118 -------- -------- Long-term obligations, less current portion 74,700 102,580 -------- -------- Other long-term liabilities 9,859 9,375 -------- -------- 7% Convertible Subordinated Note 22,000 22,000 -------- -------- Series B ESOP Convertible Preferred Stock, net; outstanding 1,488 shares and 1,568 shares, respectively redeemable at $3.61 per share 3,458 3,096 -------- -------- Commitments and contingencies - - -------- -------- Minority interest 498 498 -------- -------- Stockholders' equity Common stock, $.01 par value; outstanding 18,414 shares and 18,069 shares, respectively 184 181 Capital in excess of par value 106,916 105,448 Cumulative translation adjustment 929 771 Retained earnings 33,614 27,172 Unearned compensation (3,970) (2,968) Pension liability adjustment (1,748) (1,488) -------- -------- 135,925 129,116 -------- -------- Total liabilities and stockholders' equity $304,375 $317,783 ======== ========
See accompanying notes to consolidated financial statements. 9 10 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED DECEMBER 31, JANUARY 1, JANUARY 2, 1995 1995 1994 ------------ ---------- ---------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues $277,995 $267,048 $246,428 -------- -------- -------- Costs and expenses Cost of sales 191,343 175,451 161,349 Selling, general and administrative 52,783 53,433 50,841 Restructuring/reorganization and excess facilities charge - - 11,000 Amortization of excess of cost over fair value 4,437 4,438 4,195 -------- -------- -------- 248,563 233,322 227,385 -------- -------- -------- Income before interest and income taxes 29,432 33,726 19,043 -------- -------- -------- Net interest expense Interest expense 13,590 12,824 12,755 Investment income (97) (333) (549) -------- -------- -------- 13,493 12,491 12,206 -------- -------- -------- Income before income taxes and cumulative effect of accounting changes 15,939 21,235 6,837 Income taxes 7,894 9,812 4,578 -------- -------- -------- Income before cumulative effect of accounting changes 8,045 11,423 2,259 Cumulative effect of changes in method of accounting for post-retirement and post-employment benefits (net of income taxes of $1,954) - - (3,247) -------- -------- -------- Net income (loss) $ 8,045 $ 11,423 $ (988) ======== ======== ======== Per share data Earnings before cumulative effect of accounting changes $ .40 $ .57 $ .11 Cumulative effect of accounting changes - - (.19) -------- -------- -------- Net income (loss) $ .40 $ .57 $ (.08) ======== ======== ======== Weighted average number of shares used in computation of per share data Earnings before cumulative effect of accounting changes 20,318 20,115 19,999 Cumulative effect of accounting changes - - 17,148
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, 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) Shares issued under common stock purchase and option plans and dividend re- investment 226 2 769 - - - - Net shares issued under restricted common stock purchase plans 243 2 1,515 - - (1,437) - Income tax reductions relating to stock plans - - 74 - - - - Shares issued upon preferred stock conversion 80 1 288 - - - - Purchases of treasury stock (204) (2) (1,178) - - - - Net income for the year - - - - 8,045 - - Dividends paid - - - - (1,603) - - Foreign currency translation adjustment - - - 158 - - - Amortization of unearned compensation - - - - - 435 - Pension liability adjustment - - - - - - (260) ------ ---- -------- ----- ------- ------- ------- Balance, December 31, 1995 18,414 $184 $106,916 $ 929 $33,614 $(3,970) $(1,748) ====== ==== ======== ===== ======= ======= =======
See accompanying notes to consolidated financial statements. 12 13 EKCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED DECEMBER 31, JANUARY 1, JANUARY 2, 1995 1995 1994 ----------- ---------- ---------- (AMOUNTS IN THOUSANDS) Cash flows from operating activities Net income (loss) $ 8,045 $ 11,423 $ (988) Adjustments to reconcile net income (loss) to net cash provided by operations Depreciation 9,234 9,227 9,545 Restructuring/reorganization and excess facilities charge - - 2,677 Amortization of excess of cost over fair value 4,437 4,438 4,195 Amortization of deferred finance costs 590 499 467 Other amortization 6,959 4,870 2,970 Deferred income taxes 3,388 1,679 (554) Cumulative effect of accounting change - - 3,247 Other (353) (102) 586 Change in certain assets and liabilities, net of effects from acquisition and dispositions of businesses, affecting cash provided by operations Accounts and note receivable 2,666 (10,313) (4,431) Inventories 719 (15,231) (6,622) Prepaid marketing costs (4,877) (4,127) (5,490) Other assets (951) 4,319 (2,453) Accounts payable and accrued expenses (4,742) (3,348) 6,885 Income taxes payable (3,395) (931) (361) -------- -------- -------- Net cash provided by operations 21,720 2,403 9,673 -------- -------- -------- Cash flows from investing activities Proceeds from sale of property and equipment 3,300 5,219 194 Capital expenditures (12,652) (11,106) (15,111) Acquisition of business - - (26,428) -------- -------- -------- Net cash used in investing activities (9,352) (5,887) (41,345) -------- -------- -------- Cash flows from financing activities Proceeds from issuance of note payable and long-term obligations 35,183 32,118 30,274 Proceeds from sale of investment held as collateral 3,600 - - Payments of dividends (1,603) - - Purchases of treasury stock (1,180) - - Purchase of common stock for Employee Stock Ownership Plan - (950) - Payments of note and long-term obligations (48,627) (29,417) (17,049) Other 259 1,484 1,663 -------- -------- -------- Net cash provided by financing activities (12,368) 3,235 14,888 Effect of exchange rate changes on cash 13 51 113 -------- -------- -------- Net increase (decrease) in cash and cash equivalents 13 (198) (16,671) Cash and cash equivalents at beginning of year 129 327 16,998 -------- -------- -------- Cash and cash equivalents at end of year $ 142 $ 129 $ 327 ======== ======== ======== Cash paid during the year for Interest $ 12,557 $ 12,050 $ 12,181 Income taxes 7,912 9,061 4,753
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"). The Company's principal operating subsidiaries are wholly-owned Ekco Housewares, Inc. ("Housewares"), Frem Corporation ("Frem"), Kellogg Brush Manufacturing Co. and subsidiaries ("Kellogg"), and majority-owned Woodstream Corporation ("Woodstream"). All significant intercompany accounts and transactions have been eliminated. BASIS OF PRESENTATION The Company uses a 52-53 week fiscal year ending on the Sunday nearest December 31. Accordingly, the accompanying consolidated financial statements include the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995 ("Fiscal 1994") and January 2, 1994 ("Fiscal 1993"). CASH AND CASH EQUIVALENTS The Company considers all short-term investments which have an original maturity of 90 days or less to be cash equivalents. MARKET EXPANSION PROGRAMS AND ADVERTISING COSTS The Company incurs certain costs in connection with expanding its market position at retail. These costs are deferred and amortized using the straight-line method over the lesser of the period of benefit or the program period. Program periods currently range from one to three years. It is the Company's policy to periodically review and evaluate whether the benefits associated with these costs are expected to be realized and that continued deferral and amortization is justified. Approximately $3.5 million and $4.4 million of these costs are included in prepaid expenses at December 31, 1995 and January 1, 1995, respectively. The Company expenses all advertising costs as incurred. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out ("FIFO") basis for all subsidiaries except for Kellogg, whose cost is determined on a last-in, first-out ("LIFO") basis. INVESTMENTS Investments are carried at cost which approximates market. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Assets acquired through business combinations accounted for under the purchase method are recorded at appraised value determined as of the acquisition date. The Company provides for depreciation and amortization over the estimated useful lives of assets or terms of capital leases on the straight-line method. Improvements are capitalized, while repair and maintenance costs are charged to operations. When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed from the accounts, and gains or losses, if any, are included in operations. PROPERTY HELD FOR SALE OR LEASE It is the Company's policy to make available for sale or lease property considered no longer necessary for the operations of the Company. The aggregate carrying values of such property are periodically reviewed and are stated at the lower of cost or market. 14 15 INTANGIBLE ASSETS The excess of cost over fair value of net assets acquired ("goodwill") is being amortized over 12 to 40 year periods. It is the Company's policy to periodically review and evaluate the recoverability of goodwill by assessing long-term trends of profitability and cash flows and to determine whether the amortization of goodwill over its remaining life can be recovered through expected future results of operations and cash flows. Favorable lease rights included in other assets are being amortized over the life of the lease. Deferred financing costs included in other assets are debt issuance costs which have been deferred and are being amortized over the terms of the respective financing arrangements. INCOME RECOGNITION Revenues from product sales are recognized at the time the product is shipped. Investment income is accrued as earned. TRANSLATION OF FOREIGN CURRENCY The assets and liabilities of the Company's Canadian and United Kingdom subsidiaries are translated at year-end exchange rates. Income and expenses are translated at exchange rates prevailing during the year. The resulting net translation adjustment for each year is included as a separate component of stockholders' equity. INCOME TAXES Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect, if any, on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Provision for U.S. income taxes on the undistributed earnings of foreign subsidiaries is made only on those amounts in excess of the funds considered to be permanently reinvested. USE OF ESTIMATES The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECENT ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board has issued two Statements of Financial Accounting Standards, "Accounting For The Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of" No. 121 ("FAS 121") and "Accounting for Stock-based Compensation" No. 123 ("FAS 123"). The Company will adopt both these standards in fiscal 1996; it does not expect the adoption of either FAS 121 or FAS 123 to have a material effect on the financial statements. 15 16 (2) INVENTORIES The components of inventory were as follows:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Raw materials $11,489 $15,229 Work in process 3,097 4,047 Finished goods 32,979 28,966 ------- ------- $47,565 $48,242 ======= =======
At December 31, 1995, and January 1, 1995, inventories carried under the LIFO method represented approximately 16.9% and 17.4%, respectively, of total year-end inventories. The effect of using LIFO for these inventories for Fiscal 1995 and Fiscal 1994 was immaterial to the assets and gross profit of the Company. During Fiscal 1995 and Fiscal 1994, there was no effect on net income from liquidation of LIFO layers. (3) PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Property and equipment at cost Land, buildings and improvements $22,856 $22,261 Equipment, furniture and fixtures 71,922 59,839 ------- ------- 94,778 82,100 Less accumulated depreciation and amortization 38,398 29,739 ------- ------- $56,380 $52,361 ======= =======
(4) NOTE PAYABLE The note payable, which represented borrowings of the Company's Employee Stock Ownership Plan (the "ESOP") guaranteed by the Company (the "ESOP Loan") was paid on March 30, 1995. Interest expense charged to operations for Fiscal 1995, Fiscal 1994 and Fiscal 1993 relating to the ESOP Loan was $52,000, $131,000 and $148,000, respectively. (5) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES Long-term obligations consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Revolving Credit Facility $32,693 $ 42,424 12.70% Notes, due 1998 60,000 60,000 Other 86 192 ------- -------- 92,779 102,616 Less current portion 18,079 36 ------- -------- $74,700 $102,580 ======= ======== 7% Convertible Subordinated Note, due 2002 $22,000 $ 22,000 ======= ========
16 17 Other long-term liabilities consisted of the following: Accrued pension cost (see Note 8) $1,950 $1,408 Deferred income taxes 1,369 948 Other long-term liabilities 6,540 7,019 ------ ------ $9,859 $9,375 ====== ======
During Fiscal 1995, the Company entered into a bank credit agreement (the "Revolving Credit Facility") which provides a total line of credit of $75 million allocated among the Company ($30.0 million), Housewares ($35.0 million) and Frem ($10.0 million). The proceeds from the Revolving Credit Facility were used to retire certain loans under previous agreements. As of December 31, 1995, $34.4 million was available for general corporate purposes under the Revolving Credit Facility, net of approximately $6.9 million in outstanding letters of credit. The facility matures on December 1, 1998. Loans under the Revolving Credit Facility bear interest at the bank's prime rate or the prime rate plus 0.25% or the LIBOR rate plus 1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of total debt to cash flow, as defined. The Revolving Credit Facility provides for a commitment fee of three-eighths of one percent on the unused portion of the commitment amount and a $60,000 annual agency fee. Borrowings under the Revolving Credit Facility are collateralized by substantially all of the assets of the Company. The Revolving Credit Facility contains certain financial and operating covenants. The most restrictive covenant requires the Company to maintain a minimum level of cash flow. Certain information with respect to credit agreements follows:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES) Average interest rate of borrowings outstanding at end of year 7.48% 8.20% 6.13% Maximum amount of borrowings outstanding at any month-end $56,533 $42,434 $47,239 Average aggregate borrowings during the year $43,392 $38,391 $30,898 Weighted average interest rate during the year 8.08% 6.51% 6.12%
The 12.70% Notes are obligations of Housewares and its subsidiaries, principally Ekco Canada, Inc. and Frem ("Ekco Housewares"). The principal is payable as follows: $18 million on each of December 15, 1996 and 1997, and $24 million on December 15, 1998. In the event of a Change in Control (as defined), each Noteholder may require Ekco Housewares to prepay the Notes held by such Noteholder. In addition, if, after a Change in Control, Ekco Housewares fails to perform or observe any Triggering Covenant (as defined) in stated time periods and specified circumstances, then each Noteholder may require Ekco Housewares to prepay the Notes held by such Noteholder and to pay a premium (approximately $7.9 million at December 31, 1995). The 12.70% Notes restrict the payments Ekco Housewares can make to the Company, and contain certain financial and operating covenants which limit or restrict the sale of assets, additional indebtedness, and certain investments and acquisitions. Under the most restrictive financial covenant, Ekco Housewares must maintain a current ratio of 1.25 to 1.00. At December 31, 1995, the total amount that could be paid to the Company by Ekco Housewares was approximately $800,000. Total net assets (total assets less total liabilities) of Ekco Housewares excluding intercompany items were approximately $83 million at December 31, 1995. 17 18 The 7% Convertible Subordinated Note is due November 30, 2002, and is convertible into common stock at a conversion price of $10.50 per share subject to certain adjustments. It is callable until December 1996 if the price of the common stock averages $18 or more for 45 consecutive days immediately preceding the call notice date. After four years, the Note is callable at an initial premium of 3.5%, which declines to zero in the final year of maturity. The Note requires the Company to maintain a minimum net worth of $84 million subject to adjustment under certain circumstances. The total of long-term obligations, with the exception of the 7% Convertible Subordinated Note, mature over the three years ending December 1998 as follows (amounts in thousands): 1996- $18,079; 1997- $18,007; 1998- $56,693. (6) ACCRUED EXPENSES Accrued expenses consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Payroll $ 2,456 $ 2,145 Compensated absences 1,831 1,933 Sales and promotional allowances 6,417 6,131 Provisions related to restructuring/ reorganization and excess facilities costs - 3,305 Interest and non-income taxes 3,745 3,944 Insurance 2,562 2,509 Professional fees 956 1,605 Provision for environmental matters 2,099 2,080 Other 3,645 4,191 ------- ------- $23,711 $27,843 ======= =======
(7) INCOME TAXES Total income tax expense for Fiscal 1995, Fiscal 1994 and Fiscal 1993 was allocated as follows:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) Income from operations $7,894 $9,812 $4,578 Stockholders' equity, for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes (74) (327) (318) ------ ------ ------ $7,820 $9,485 $4,260 ====== ====== ======
A reconciliation of the provision for income taxes to the statutory income tax rate applied to combined domestic and foreign income before income taxes for Fiscal 1995, Fiscal 1994 and Fiscal 1993 was as follows: 18 19
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES) Income (loss) before income taxes Domestic $16,319 $21,543 $7,573 Foreign (380) (308) (736) ------- ------- ------ $15,939 $21,235 $6,837 ======= ======= ====== Federal income tax at normal rates 35% 35% 35% State income taxes, net of federal benefit 4% 4% 11% Change in federal rate - - (3%) Difference between foreign and federal effective rates 1% - 2% Amortization of excess of cost over fair value 10% 7% 22% ------- ------- ------ 50% 46% 67% ======= ======= ======
The components of the provision for income taxes were as follows:
FEDERAL STATE FOREIGN TOTAL ------- ----- ------- ----- (AMOUNTS IN THOUSANDS) FISCAL 1995 Current $3,894 $ 641 $ (29) $4,506 Deferred 2,968 404 16 3,388 ------ ------ ----- ------ $6,862 $1,045 $ (13) $7,894 ====== ====== ===== ====== FISCAL 1994 Current $7,119 $1,098 $ (84) $8,133 Deferred 1,324 310 45 1,679 ------ ------ ----- ------ $8,443 $1,408 $ (39) $9,812 ====== ====== ===== ====== FISCAL 1993 Current $3,640 $1,484 $ 8 $5,132 Deferred (38) (372) (144) (554) ------ ------ ----- ------ $3,602 $1,112 $(136) $4,578 ====== ====== ===== ======
The significant components of deferred income tax expense attributable to income from operations for Fiscal 1995, Fiscal 1994 and Fiscal 1993 were as follows:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) Utilization of net operating loss and tax credits $ - $ - $ 2,303 Depreciation 2,008 (969) (1,438) Inventory 106 (527) (173) Benefit plans (63) (258) 1,815 Restructuring/reorganization and excess facilities charge - - (4,400) Accruals, provisions and other liabilities 1,928 3,623 1,453 Other (591) (190) (114) ------ ------ ------- $3,388 $1,679 $ (554) ====== ====== =======
19 20 The tax effects of temporary differences and carryforwards that give rise to significant portions of net deferred tax asset (liability) consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Receivables $ 341 $ 518 Inventory 1,322 1,428 Benefit plans 3,405 3,342 Accruals, provisions and other liabilities 3,385 5,313 Depreciation (5,663) (3,655) Other 202 (564) ------- ------- $ 2,992 $ 6,382 ======= =======
The Company's federal income tax returns for all years subsequent to December 1987 are subject to review by the Internal Revenue Service. (8) RETIREMENT PLANS, POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS The Company and certain of its subsidiaries have various pension plans which cover certain of their employees and provide for periodic payments to eligible employees upon retirement. Benefits for non-union employees are generally based upon earnings and years of service prior to 1989 and certain non-union employees receive benefits from allocated accounts under a defined contribution plan. Benefits for certain union employees are based upon dollar amounts attributed to each year of credited service; certain other union employees receive benefits from allocated accounts under a defined contribution plan and from prior contributions to a multi-employer plan. The Company's policy is to make contributions to these plans sufficient to meet the minimum funding requirements of applicable laws and regulations, plus such amounts, if any, as the Company's actuarial consultants determine to be appropriate. The Company also provides supplemental retirement benefits for certain management personnel based on earnings and years of service. At December 31, 1995 and January 1, 1995, the Company reported, as a separate component of stockholders' equity, the amount of the additional liability in excess of the unrecognized prior service costs of its pension plans. Net pension expense consisted of the following:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) U.S. defined benefit plans Service cost-benefits earned during the period $ 211 $ 257 $ 229 ----- ----- ----- Interest accrued on projected benefit obligation 597 559 528 ----- ----- ----- Expected return on assets Actual return (582) (196) (373) Unrecognized gain (loss) 69 (368) (183) ----- ----- ----- (513) (564) (556) Amortization of prior service cost and unrecognized loss 110 120 54 Settlement loss 89 138 38 ----- ----- ----- U.S. defined benefit plans, net 494 510 293 Canadian defined benefit plan (2) (7) (2) U.S. defined contribution plans 113 127 129 ----- ----- ----- Total net pension expense $ 605 $ 630 $ 420 ===== ===== =====
20 21 The following sets forth the funded status of the Company's defined benefit pension plans and amounts recognized in the consolidated balance sheets:
DECEMBER 31, 1995 JANUARY 1, 1995 ------------------------- ------------------------- PLANS WITH PLANS WITH PLANS WITH PLANS WITH ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEEDING BENEFITS EXCEEDING BENEFITS ACCUMULATED EXCEEDING ACCUMULATED EXCEEDING BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) Accumulated benefit obligation Vested $(1,595) $(6,938) $(1,342) $(6,592) Nonvested (38) (65) (40) (44) ------- ------- ------- ------- Total (1,633) (7,003) (1,382) (6,636) Effect of projected compensation increases (260) - (233) - ------- ------- ------- ------- Projected benefit obligation (1,893) (7,003) (1,615) (6,636) Plan assets 2,534 4,844 2,338 4,864 ------- ------- ------- ------- Plan assets in excess of (less than) projected benefit obligations 641 (2,159) 723 (1,772) Unrecognized actuarial net gain (losses) (211) 1,957 (263) 1,852 Unrecognized prior service cost 107 42 115 47 Additional liability - (1,790) - (1,535) ------- ------- ------- ------- Prepaid (accrued) pension cost included in consolidated balance sheet $ 537 $(1,950) $ 575 $(1,408) ======= ======= ======= =======
Plan assets are invested primarily in pooled funds maintained by insurance companies. The projected benefit obligation was determined using an assumed discount rate of 7.5% for December 31, 1995 and 8.0% for January 1, 1995. The nature of the domestic pension plans is such that an estimate of future compensation increases is not required. The assumed long-term rate of return on plan assets was 9% for Fiscal 1995, Fiscal 1994 and Fiscal 1993. At December 31, 1995, the various plans held an aggregate of 8,900 shares of the Company's common stock. The Company sponsors defined benefit post-retirement health and life insurance plans that cover certain retired and active employees. The Company expects to continue these benefits indefinitely, but reserves the right to amend or discontinue all or any part of the plans at any time. Effective January 4, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Post-retirement Benefits Other Than Pensions" ("FAS 106") and recognized immediately the cumulative effect of the change in accounting for post-retirement benefits of $2.9 million ($1.8 million after income taxes) which represents the accumulated post-retirement benefit obligation existing at January 1, 1993. FAS 106 requires that the cost of these benefits be recognized in the financial statements during the employees' active working lives. Previously, costs were recognized as claims were incurred. The Company's funding policy for these plans remains on a pay-as-you-go basis. 21 22 The following sets forth the amounts recognized in the consolidated balance sheets for the Company's post-retirement benefit plans:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Accumulated post-retirement benefit obligation Fully eligible active employees $ 778 $ 649 Retirees 1,103 1,518 Other active employees 658 547 ------ ------ 2,539 2,714 Plan assets - - Unrecognized net (gain) loss (29) 55 ------ ------ Accrued post-retirement benefit cost $2,510 $2,769 ====== ======
Post-retirement benefit expense consisted of the following:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) Service cost (benefits attributed to employee services during the year) $ 43 $ 46 $ 44 Interest expense on the accumulated post-retirement benefit obligation 182 199 206 ---- ---- ---- Net periodic post-retirement benefit expense $225 $245 $250 ==== ==== ====
The discount rates used in determining the accumulated post-retirement benefit obligation as of December 31, 1995 and January 1, 1995 were 7.5% and 8.0%, respectively. The Company subsidy is a defined dollar amount and will not increase in the future; therefore, no medical trend rate has been assumed and the results of the calculation of the plan liabilities will not be affected by future medical cost trends. The pay-as-you-go expenditures for post-retirement benefits were $484,000, $415,000 and $170,000 for Fiscal 1995, Fiscal 1994 and Fiscal 1993, respectively. The Company also adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Post-employment Benefits" ("FAS 112") effective January 4, 1993, resulting in an after-tax charge of $1.4 million (net of income taxes of $900,000). The Company accrues benefits provided to former or inactive employees after employment but before retirement. The ongoing impact of FAS 112 is not expected to have a material effect on earnings in future years. There was no cash flow impact associated with either the adoption of FAS 106 or FAS 112. (9) EMPLOYEE STOCK OWNERSHIP PLAN On February 23, 1989, the Company's Board of Directors adopted the Ekco Group, Inc. Employees' Stock Ownership Plan (the "ESOP") for non-union United States employees of the Company and subsidiaries designated by the Company's Board of Directors as participants in the ESOP. The ESOP holds Company preferred and common stock. SERIES B ESOP CONVERTIBLE PREFERRED STOCK The Company sold 1.8 million shares of the Series B ESOP Convertible Preferred Stock at a price of $3.61 per share to the ESOP trust in 1989. At December 31, 1995, approximately 1.5 million shares of the Company's common stock were reserved for conversion of Series B ESOP Convertible Preferred Stock. 22 23 An unearned ESOP compensation amount is reported as an offset to the Series B ESOP Convertible Preferred Stock amount in the consolidated balance sheets. The unearned compensation is being amortized as shares in the Series B ESOP Convertible Preferred Stock are allocated to employees. Shares are allocated ratably over the life of the ESOP Loan or, if less, the actual period of time over which the indebtedness is repaid. The allocation of shares is based upon a formula equal to a percentage of the Company's payroll costs. The percentage is determined by the Company's Board of Directors annually and may require principal prepayments. The Company's Board of Directors has approved principal prepayments of $480,000, $477,000 and $439,000 for Fiscal 1995, Fiscal 1994 and Fiscal 1993 to be paid in 1996, 1995 and 1994, respectively. For Fiscal 1995, Fiscal 1994 and Fiscal 1993, $652,000, $687,000 and $686,000, respectively, has been charged to operations. The actual cash contributions, excluding the above mentioned prepayments, to the ESOP by the Company during Fiscal 1995, Fiscal 1994 and Fiscal 1993 were $302,000, $390,000 and $390,000, respectively. Upon retirement or termination from the Company, each employee has the option to either convert the vested Series B ESOP Convertible Preferred Stock into Common Stock of the Company or redeem the Series B ESOP Convertible Preferred Stock for cash at a price of $3.61 per share. The change in the principal amount of the Series B ESOP Convertible Preferred Stock from year to year is solely due to redemptions and conversions by vested employees retiring or leaving the Company. The Series B ESOP Convertible Preferred Stock pays a dividend equal to the dividend on the Company's common stock. Series B ESOP Convertible Preferred Stock, net, consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- (AMOUNTS IN THOUSANDS) Series B ESOP Convertible Preferred Stock, par value $.01 $ 5,372 $ 5,662 Unearned compensation (1,914) (2,566) ------- ------- $ 3,458 $ 3,096 ======= =======
ESOP COMMON STOCK In October 1990, the Company's Board of Directors authorized the Trustee of the ESOP to purchase up to 1.0 million shares of the Company's common stock. The Company agreed to finance the purchase through a 20-year 10% loan from the Company to the ESOP. During Fiscal 1994, the Company provided the ESOP with approximately $950,000 to purchase approximately 137,000 shares of the Company's common stock in the public market. As of January 1, 1995, the ESOP had purchased, in open market transactions, a total of 1.0 million shares of the Company's common stock at a total cost of approximately $3.3 million. Unearned compensation equal to such cost (included as a component of stockholders equity) is being amortized as shares of the Company's common stock are allocated to employee accounts. Shares are allocated ratably over the life of the loan or, if less, the actual period of time over which the indebtedness is repaid, subject to the minimum allocation of 50,000 shares in any one year. For each of Fiscal 1995, Fiscal 1994 and Fiscal 1993, 50,000 shares were allocated to employees' accounts. For Fiscal 1995, Fiscal 1994 and Fiscal 1993, $165,000, $155,000 and $136,000, respectively, have been charged to operations. (10) MINORITY INTEREST Minority interest consists of 5% cumulative preferred stock of Woodstream Corporation, $50 par value (redeemable at Woodstream's option at $52 per share). Dividends on the 5% cumulative preferred stock are included in interest expense. (11) STOCKHOLDERS' EQUITY PREFERRED STOCK, $.01 PAR VALUE On February 12, 1987, the Company's stockholders authorized a class of 20 million shares of preferred stock which may be divided and issued in one or more series having such relative rights and preferences as may be determined by the Company's Board of Directors. 23 24 PREFERRED STOCK RIGHTS In 1987, the Board of Directors of the Company declared a dividend payable to stockholders of record as of April 9, 1987, of one preferred share purchase right ("Right") for each outstanding share of common stock. In 1988, 1989 and 1992, the Company's Board of Directors amended the preferred share purchase rights plan. The amended plan provides that each Right, when exercisable, will entitle the holder thereof until April 9, 1997, to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $.01 per share, at an exercise price of $20, subject to certain anti-dilution adjustments. The Rights will not be exercisable or transferable apart from shares of common stock until the earlier of (i) the tenth day after a public announcement that a person or group has acquired beneficial ownership of 15% or more of the outstanding shares of common stock, other than, so long as certain conditions are met, as a result of the beneficial ownership of certain common stock or securities convertible into common stock held by The 1818 Fund, L.P., a Delaware limited partnership (an "Acquiring Person") or (ii) the tenth day after a person commences, or announces an intention to commence, a tender or exchange offer for 15% or more of the outstanding shares of common stock. The Rights are redeemable by the Company at $.02 per Right at any time prior to the time that a person or group becomes an Acquiring Person. In the event that the Company is a party to a merger or other business combination transaction in which the Company is not the surviving entity, each Right will entitle the holder to purchase, at the exercise price of the Right, that number of shares of the common stock of the acquiring company which, at the time of such transaction would have a market value of two times the exercise price of the Right. In addition, if a person or group becomes an Acquiring Person, each Right not owned by such person or group would become exercisable for the number of shares of common stock which, at that time, would have a market value of two times the exercise price of the Right. COMMON STOCK, $.01 PAR VALUE Share information regarding common stock consisted of the following:
DECEMBER 31, 1995 JANUARY 1, 1995 ----------------- --------------- Authorized shares 60,000,000 60,000,000 ========== ========== Shares issued 27,854,441 27,292,641 Shares held in treasury 9,440,577 9,223,600 ---------- ---------- Shares outstanding 18,413,864 18,069,041 ========== ==========
TREASURY STOCK During Fiscal 1993, the Company issued 564,651 shares of treasury stock in connection with the acquisition of Kellogg. During Fiscal 1995, the Company purchased approximately 205,000 shares of its common stock in open-market transactions at a cost of approximately $1.2 million. STOCK OPTION PLANS At December 31, 1995, approximately 1.5 million shares of the Company's common stock were available for grants of options to employees and directors under the Company's stock option plans. Options granted under the plans are granted at prices not less than 100% of the fair market value (as defined) on the dates the options are granted and, accordingly, there have been no charges to income in connection with the options other than incidental expenses. Options must be exercised within the period prescribed by the respective stock option plan agreements, but not later than 10 years for certain options and 11 years for others. 24 25 Changes in options and option shares under the plans during the respective fiscal years were as follows:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------------------- ----------------------- ----------------------- OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF PER SHARE SHARES PER SHARE SHARES PER SHARE SHARES ------------ --------- ------------ --------- ------------ --------- Options outstanding, beginning of year $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721 $2.13-$10.06 1,857,248 Options granted $6.06-$ 6.56 340,895 $6.81-$ 7.56 424,584 $7.44-$11.31 746,773 Options exercised $2.19-$ 3.38 (150,814) $2.25-$ 2.63 (59,600) $2.25-$ 5.19 (15,100) Options cancelled $2.63-$11.31 (231,738) $2.56-$11.31 (256,612) $2.56-$11.31 (104,200) --------- --------- --------- Options outstanding, end of year $2.13-$11.31 2,551,436 $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721 ========= ========= ========= Options exercisable, end of year $2.13-$11.31 2,047,779 $2.13-$11.31 1,946,153 $2.13-$11.31 1,723,292 ========= ========= ========= Shares reserved for future grants 1,479,231 1,588,388 1,756,360 ========= ========= =========
25 26
OPTION PRICE AND MARKET VALUE AT DATE OF GRANT ---------------------------------------------- NUMBER OF SHARES PER SHARE AMOUNT --------- --------- ------ Options outstanding at December 31, 1995, which were granted during fiscal years: 1987 380,000 $ 3.69 $ 1,401,250 1988 430,428 $2.13-$ 2.25 924,749 1989 31,373 $ 3.38 100,001 1990 159,100 $ 2.56 407,694 1991 44,600 $ 2.63 117,075 1992 334,950 $7.25-$10.06 3,331,372 1993 497,540 $7.44-$11.31 5,266,261 1994 351,550 $6.81-$ 7.56 2,625,284 1995 321,895 $6.06-$ 6.56 2,057,119 --------- ----------- 2,551,436 $16,230,805 ========= ===========
Of the options outstanding at December 31, 1995, options to acquire 1,688,069 shares at a weighted average exercise price of $5.82 per share became exercisable on the grant date. Under certain circumstances, a portion of shares purchased pursuant to the exercise of such options are subject to repurchase by the Company within three years of the date of grant of the option at the option exercise price. At December 31, 1995, 377,825 of such shares were subject to such repurchase. The remaining options outstanding at December 31, 1995, which cover the acquisition of 863,367 shares at a weighted average exercise price of $7.43 per share are exercisable from the date of grant through the date of exercise up to one-fifth of the number of shares covered by such options on or after each of the first five anniversaries of the date of grant. All such options will be fully exercisable on and after the fifth such anniversary. RESTRICTED STOCK PURCHASE PLANS Under the Company's restricted stock purchase plans, the Company may offer to sell shares of common stock to employees of the Company and its subsidiaries at a price per share of not less than par value ($.01) and not more than 10% of market value on the date the offer is approved, and on such other terms as deemed appropriate. Shares are awarded in the name of the employee, who has all rights of a stockholder, subject to certain repurchase provisions. Restrictions on the disposition of shares for the shares purchased expire annually, over a period not to exceed five years, if certain performance targets are achieved, otherwise they lapse on the tenth anniversary. Common stock reserved for future grants aggregated 838,520 shares at December 31, 1995. The following table summarizes the activity of the restricted stock purchase plans during the respective fiscal years (fair market value determined at date of purchase).
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- NUMBER FAIR NUMBER FAIR NUMBER FAIR OF MARKET OF MARKET OF MARKET SHARES VALUE SHARES VALUE SHARES VALUE ------ ------ ------ ------ ------ ------ (AMOUNTS IN THOUSANDS) Unvested shares outstanding, beginning of year 51 $ 312 177 $ 654 291 $ 988 Shares issued 288 1,824 - - 25 184 Shares repurchased (45) (297) - - (14) (171) Shares vested (27) (118) (126) (342) (125) (347) --- ------ ---- ----- ---- ----- Unvested shares outstanding, end of year 267 $1,721 51 $ 312 177 $ 654 === ====== ==== ===== ==== =====
26 27 The difference between the issue price and the fair market value of the shares at the date of issuance is accounted for as unearned compensation and amortized to expense over the lapsing of restrictions. During Fiscal 1995, Fiscal 1994 and Fiscal 1993, unearned compensation charged to operations was $270,000, $279,000 and $307,000, respectively. To the extent the amount deductible for income taxes exceeds the amount charged to operations for financial statement purposes, the related tax benefits are credited to additional paid-in-capital when realized. EMPLOYEE STOCK PURCHASE PLAN The Company has an employee stock purchase plan (the "Plan") that permits employees to purchase up to a maximum of 500 shares per quarter of the Company's common stock at a 15% discount from market value. During Fiscal 1995, Fiscal 1994 and Fiscal 1993, employees purchased 72,844 shares, 88,938 shares and 73,880 shares, respectively, for a total of approximately $376,000, $503,000 and $545,000, respectively. At December 31, 1995, approximately 1.1 million shares were reserved for future grants under the Plan. There have been no charges to income in connection with the Plan other than incidental expenses. ACCOUNTING FOR STOCK-BASED COMPENSATION The Company has not adopted the recently issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-based Compensation" ("FAS 123"), which is required to be adopted in Fiscal 1996. The Company currently intends to continue to record compensation based on the provisions of Accounting Principles Board Opinion No. 25. "Accounting for Stock Issued to Employees" as allowed by FAS 123. Although the Company has not determined the ultimate impact of adopting FAS 123 on its present disclosure, it does not believe, based on the number of options previously granted, that the adoption will have a material impact on its current disclosure. INCOME TAX BENEFITS Income tax benefits relating to stock option plans, restricted stock plans and employee stock purchase plan credited to additional paid-in-capital as realized in Fiscal 1995, Fiscal 1994 and Fiscal 1993 were $74,000, $327,000 and $318,000, respectively. (12) EARNINGS PER COMMON SHARE Primary earnings per common share are based upon the weighted average of common stock and dilutive common stock equivalent shares, including Series B ESOP Convertible Preferred Stock, outstanding during each period. Fully diluted earnings per share have been omitted since they are either the same as primary earnings per share or anti-dilutive. The weighted average number of shares used in computation of earnings per share consisted of the following for the periods presented.
FISCAL FISCAL FISCAL 1995 1994 1993 ------ ------ ------ (AMOUNTS IN THOUSANDS) Weighted average shares of common stock outstanding during the year 18,354 17,953 17,616 Weighted average common equivalent shares due to stock options 426 545 713 Series B ESOP Convertible Preferred Stock 1,538 1,617 1,670 ------ ------ ------ 20,318 20,115 19,999 ====== ====== ======
(13) COMMITMENTS AND CONTINGENCIES EMPLOYMENT CONTRACTS The Company has employment agreements with certain of its executive officers and management personnel. These agreements generally continue until terminated by the executive or the Company, and provide for salary continuation for a specified number of months under certain circumstances. Certain of the agreements provide the employees with certain additional rights after a Change of Control (as defined) of the Company occurs. A portion of the Company's obligations under certain of these agreements are secured by 27 28 letters of credit. The agreements include a covenant against competition with the Company, which extends for a period of time after termination for any reason. As of December 31, 1995, if all of the employees under contract were to be terminated by the Company without good cause (as defined) under these contracts, the Company's liability would be approximately $6.6 million ($10.0 million following a Change of Control). SEVERANCE POLICY The Board of Directors of the Company has adopted a severance policy for all exempt employees of the Company. In the event of a Change of Control (as defined), each exempt employee of the Company whose employment is terminated, whose duties or responsibilities are substantially diminished, or who was directed to relocate within 12 months after such Change of Control, will receive, in addition to all other severance benefits accorded to similarly situated employees, salary continuation benefits for a period of months determined by dividing his or her then yearly salary by $10,000, limited to not more than 12 months. This policy does not apply to any exempt employee of the Company who is a party to a contractual commitment with the Company which provides him or her with greater than 12 months salary, severance payment or salary continuation upon his or her termination in the event of a Change of Control. This policy may be rescinded at any time by the Company's Board of Directors prior to a Change of Control. LEASES The Company leases offices, warehouse facilities, vehicles and equipment under operating and capital leases. The terms of certain leases provide for payment of minimum rent, real estate taxes, insurance and maintenance. Rents of approximately $3.4 million, $2.4 million and $1.9 million, were charged to operations for Fiscal 1995, Fiscal 1994 and Fiscal 1993, respectively. The Company receives rental income from properties currently held for sale. Rental income included in selling, general and administrative expenses was approximately $154,000, $200,000 and $1.5 million, for Fiscal 1995, Fiscal 1994 and Fiscal 1993, respectively. Minimum rental payments and income required under leases that had initial or remaining noncancellable lease terms in excess of one year as of December 31, 1995, were as follows:
OPERATING RENTAL LEASES INCOME --------- ------ (AMOUNTS IN THOUSANDS) FISCAL YEAR 1996 $2,241 $160 1997 1,609 166 1998 1,300 170 1999 1,294 - 2000 971 -
LEGAL PROCEEDINGS The Company is a party to several pending legal proceedings and claims. Although the outcome of such proceedings and claims cannot be determined with certainty, the Company's management, after consultation with outside legal counsel, is of the opinion that the expected final outcome should not have a material adverse effect on the Company's financial position, results of operations or liquidity. ENVIRONMENTAL MATTERS From time to time, the Company has had claims asserted against it by regulatory agencies or private parties for environmental matters relating to the generation or handling of hazardous substances by the Company or its predecessors and has incurred obligations for investigations or remedial actions with respect to certain of such matters. While the Company does not believe that any such claims asserted or obligations incurred to date will result in a material adverse effect upon the Company's financial position, results of operations or liquidity, the Company is aware that at its facilities at Massillon and Hamilton, Ohio; Easthampton, Massachusetts; Chicago, Illinois; Lititz, Pennsylvania and at the previously owned facility in Hudson, New Hampshire hazardous substances and oil have been detected and that additional investigation will be, and 28 29 remedial action will or may be, required. Operations at these and other facilities currently or previously owned or leased by the Company utilize, or in the past have utilized, hazardous substances. There can be no assurance that activities at these or any other facilities owned or operated by the Company or future facilities may not result in additional environmental claims being asserted against the Company or additional investigations or remedial actions being required. In connection with the acquisition of Kellogg by the Company in 1993, the Company engaged environmental engineering consultants ("Consultants") to review potential environmental liabilities at all of Kellogg's properties. Additional investigation and testing resulted in the identification of likely environmental remedial actions, operation, maintenance and ground water monitoring and the estimated costs therefore. Management, based upon the engineering studies, originally estimated the total remediation and ongoing ground water monitoring costs to be approximately $6.0 million, including the effects of inflation, and accordingly at that time, recorded a liability of approximately $3.8 million, representing the undiscounted costs of remediation and the net present value of future costs discounted at 6%. Based upon the most recent cost estimates provided by the Consultants, the Company believes the total remaining remediation costs will be approximately $2.0 million and the expense for the ongoing operation, maintenance and ground water monitoring will be approximately $50,000 for fiscal 1996 and approximately $25,000 for each of the thirty years thereafter. As of December 31, 1995, the liability recorded by the Company was approximately $3.5 million. The Company expects to pay approximately $325,000 of the remediation costs in fiscal 1996 with the balance being paid out in fiscal 1997 and fiscal 1998. During Fiscal 1995, the Company paid approximately $211,000 of such costs. The estimates may subsequently change should additional sites be identified or further remediation measures be required or undertaken or interpretation of current laws or regulations be modified. The Company has not anticipated any insurance proceeds or third-party payments in arriving at the above estimates. CONCENTRATIONS OF CREDIT RISK Financial instruments which subject the Company to concentrations of credit risk consist primarily of trade receivables. Mass merchandisers comprise a significant portion of the Company's customer base. The Company had trade receivables of approximately $10.0 million and $11.4 million from mass merchandisers at December 31, 1995 and January 1, 1995, respectively. Although the Company's exposure to credit risk associated with non-payment by mass merchandisers is affected by conditions or occurrences within the retail industry, trade receivables from mass merchandisers were current at December 31, 1995 and no retailer exceeded 10% of the Company's receivables at that date. (14) INDUSTRY AND GEOGRAPHIC AREA INFORMATION The Company is a manufacturer and marketer of multiple categories of branded housewares products for everyday home use. The Company operates in one industry segment, with revenues derived from sales in five principal product categories: (i) bakeware, (ii) kitchenware, (iii) cleaning products, (iv) pest control and small animal care and control products and (v) molded plastic products. Sales and marketing operations outside the United States are conducted principally through a subsidiary in Canada and by direct sales. One customer accounted for net revenues of approximately $37.3 million (13.4%) and $31.3 million (11.8%) for Fiscal 1995 and Fiscal 1994, respectively. Two customers each accounted for 9.5% or approximately $23.0 million and $22.9 million of net revenues for Fiscal 1993. 29 30 The following table shows information by geographic area:
UNAFFILIATED INCOME BEFORE NET REVENUES INCOME TAXES TOTAL ASSETS ------------ ------------- ------------ (AMOUNTS IN THOUSANDS) FISCAL 1995 United States $265,535 $16,423 $301,896 Canada 12,460 (380) 7,742 Eliminations - (104) (5,263) -------- ------- -------- Consolidated $277,995 $15,939 $304,375 ======== ======= ======== FISCAL 1994 United States $254,608 $21,576 $315,829 Canada 12,440 (308) 7,111 Eliminations - (33) (5,157) -------- ------- -------- Consolidated $267,048 $21,235 $317,783 ======== ======= ======== FISCAL 1993 United States $232,447 $ 7,677 $303,933 Canada 13,981 (736) 9,152 Eliminations - (104) (5,124) -------- ------- -------- Consolidated $246,428 $ 6,837 $307,961 ======== ======= ========
United States revenues include approximately $9.4 million, $9.7 million and $10.6 million of export sales to unaffiliated customers for Fiscal 1995, Fiscal 1994 and Fiscal 1993, respectively. (15) SUPPLEMENTAL INFORMATION The following amounts were charged to costs and expenses:
FISCAL 1995 FISCAL 1994 FISCAL 1993 ----------- ----------- ----------- (AMOUNTS IN THOUSANDS) Advertising $6,475 $5,971 $4,920 ====== ====== ====== Provision for doubtful accounts $ (442) $ 247 $ 449 ====== ====== ====== Amortization of excess of cost over fair value $4,437 $4,438 $4,195 ====== ====== ====== Amortization of deferred finance costs $ 590 $ 499 $ 467 ====== ====== ====== Other Amortization Prepaid marketing costs $5,799 $3,676 $1,768 Unearned compensation 1,087 1,121 1,129 Favorable lease rights 73 73 73 ------ ------ ------ $6,959 $4,870 $2,970 ====== ====== ======
30 31 (16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following table presents the unaudited quarterly results of operations for Fiscal 1995 and Fiscal 1994:
FIRST SECOND THIRD FOURTH TOTAL QUARTER QUARTER QUARTER QUARTER YEAR ------- ------- ------- ------- ----- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) FISCAL 1995 Net revenues $58,732 $61,691 $83,041 $74,531 $277,995 Gross profit 18,007 18,462 26,106 24,077 86,652 Income before income taxes 255 1,546 8,442 5,696 15,939 Net income 134 811 4,647 2,453 8,045 Net income per share .01 .04 .23 .12 .40 FISCAL 1994 Net revenues $54,354 $59,199 $78,623 $74,872 $267,048 Gross profit 17,746 19,542 27,112 27,197 91,597 Income before income taxes 1,849 1,989 8,321 9,076 21,235 Net income 979 1,033 4,476 4,935 11,423 Net income per share .05 .05 .22 .25 .57
(17) RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE The Company recorded an $11.0 million charge ($6.6 million after income taxes) for restructuring/reorganization and excess facilities during the fourth quarter of Fiscal 1993. The restructuring was the result of management's analysis of the Company's operations and future strategy. The items covered by the charge were (i) severance and other costs related to a reduction in personnel, (ii) costs arising from the consolidation of different distribution and information systems (including the closing of facilities and write-off of equipment no longer relevant to the Company's operating strategy); and (iii) costs associated with excess facilities classified as held for sale. In 1995, the combination of the Company's principal housewares business units into a single operating division completed this restructuring/reorganization. Of the $11.0 million charge, approximately $2.7 million was non-cash, and $8.3 million was cash. Of the $8.3 million cash portion of the charge, $5.0 million was expended in Fiscal 1994 and $3.3 million was expended in Fiscal 1995. The table below shows the components of the original charge and the amounts charged against the reserve. 31 32
PROVISION FISCAL RESERVE FISCAL RECORDED 1994 BALANCE AT 1995 IN FISCAL RESERVE JANUARY 1, RESERVE 1993 ACTIVITY 1995 ACTIVITY --------- -------- ---------- -------- (AMOUNTS IN THOUSAND) Accrued Expenses Severance and other related personnel costs $ 3,200 $1,135 $2,065 $2,065 Costs associated with implementing distribution and operating strategy 2,600 2,600 - - Costs associated with excess facilities 2,023 783 1,240 1,240 Other 500 500 - - ------- ------ ------ ------ Total Cash Items 8,323 $5,018 $3,305 $3,305 ====== ====== ====== Non Cash Charges and Write-offs Property held for resale 1,000 Write-off of equipment 1,250 Other 427 ------- $11,000 =======
The Company estimates the benefit it received in Fiscal 1994 from the restructuring at approximately $2.4 million and an additional benefit of $1.9 million during Fiscal 1995. The benefit is primarily due to lower expenses associated with the reduction, in personnel. (18) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity of these items. The carrying amount of the debt issued pursuant to the Company's bank credit agreement approximates fair value because the interest rates change with market interest rates. There are no quoted market prices for the 12.70% Notes, 7% Convertible Subordinated Note or Series B ESOP Preferred Stock. Because each of these securities contain unique terms, conditions, covenants and restrictions, there are no identical obligations that have quoted market prices. In order to determine the fair value of the 7% Convertible Subordinated Note, the Company compared it to obligations which trade publicly and concluded that the fair value of the Note is approximately its book value, $22 million. In order to determine the fair value of the 12.70% Notes, the Company discounted the cash payments on the Notes using discount rates ranging from 7.50% to 7.70%. Based upon such discount rates, the fair value of the $60 million 12.70% Notes would be approximately $65.6 million. Each share of Series B ESOP Preferred Stock is redeemable at a price of $3.61 per share or convertible into one share of the Company's common stock. Assuming all shares were allocated and all employees were fully vested, the redemption value of the ESOP Preferred Stock would be $5.7 million. Given these same assumptions the shares could be converted into common stock having a market value of $10.0 million at January 1, 1995. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. 32 33 (19) SUBSEQUENT EVENT On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior Notes due 2006, at a price of 99.291% of face value, in a private offering to institutional investors. The Company used the net proceeds of the Senior Note offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0% Subordinated Convertible Note due 2002 and (ii) to repay substantially all amounts outstanding under the Revolving Credit Facility. Concurrently with closing the sale of the 9.25% Senior Notes, the Company entered into an amendment to its Revolving Credit Facility, which amendment consolidated the outstanding debt and borrowing capacity of Housewares and Frem with that of the Company and revised certain financial covenants. Borrowings under the amended Revolving Credit Facility bear interest at the bank's prime rate, or at LIBOR plus 1.25% or 1.5%, depending on the Company's borrowing strategy and the ratio of total debt to cash flow. The Revolving Credit Facility provides for a commitment fee of three-eighths of one percent on the unused portion of the commitment amount and a $60,000 annual agency fee. Borrowings under the Revolving Credit Facility mature in December 1998. The Senior Notes, as well as the Revolving Credit Facility, will contain certain financial covenants that will restrict the sale of assets, the incurrence of additional indebtedness and certain investments and acquisitions by the Company. The early extinguishment of the 12.70% Notes and 7% Convertible Subordinated Note will result in an extraordinary charge against first quarter earnings of approximately $6.0 million (before income taxes). 33 34 REPORT OF INDEPENDENT AUDITORS Board of Directors and Stockholders Ekco Group, Inc. We have audited the accompanying consolidated balance sheets of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the fiscal years in the three-year period ended December 31, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. In 1993, the Company changed its method of accounting for income taxes, post-retirement benefits other than pensions and post-employment benefits. /s/ KPMG Peat Marwick LLP Boston, Massachusetts February 5, 1996, except as to Note 19, which is as of March 25, 1996 34 EX-21 22 SUBSIDIARIES OF EKCO GROUP, INC. 1 EXHIBIT 21 SUBSIDIARIES OF EKCO GROUP, INC. The following are the subsidiaries of the registrant, all of which are wholly-owned except for Woodstream Corporation, which is majority-owned:
Jurisdiction of Subsidiary Name Incorporation - --------------- --------------- OPERATING SUBSIDIARIES Ekco Housewares, Inc. Delaware Ekco Canada Inc. Ontario, Canada Ekco Distribution of Illinois, Inc. Delaware Ekco Manufacturing of Ohio, Inc. Delaware Ekco International Housewares Limited United Kingdom Frem Corporation Massachusetts Woodstream Corporation Pennsylvania Kellogg Brush Manufacturing Co. Massachusetts Cleaning Specialty Co. Tennessee Wright-Bernet, Inc. Ohio B. VIA International Housewares, Inc. Delaware INACTIVE SUBSIDIARIES Delhi Manufacturing Corporation Delaware Ekco Capital Enterprises, Inc. Delaware Ekco Wood Products Co. Delaware Fenwick California FPI, Inc. Washington Trappe of Aspen, Inc. Pennsylvania
EX-23 23 CONSENT OF KPMG PEAT MARWICK, LLP 1 EXHIBIT 23 ---------- Consent of Independent Auditors ------------------------------- The Board of Directors and Stockholders Ekco Group, Inc. We consent to incorporation by reference in the Registration Statement (No. 33-42785) on Form S-8 pertaining to the 1984 and 1985 Restricted Stock Plans of Ekco Group, Inc., in the Registration Statement (No. 33-50800) on Form S-8 pertaining to the 1984 Employee Stock Purchase Plan of Ekco Group, Inc., in the Registration Statement (No. 33-50802) on Form S-8 pertaining to the 1987 Stock Option Plan of Ekco Group, Inc., in the Registration Statement (No. 33-29448) on Form S-8 pertaining to the 1988 Directors' Stock Option Plan of Ekco Group, Inc., and in the Registration Statement (No. 33-58319) on Form S-3 pertaining to the Dividend Reinvestment and Stock Purchase Plan of Ekco Group, Inc., of our report dated February 5, 1996, with respect to the consolidated balance sheets of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the fiscal years in the three-year period ended December 31, 1995, which report appears in the December 31, 1995 Form 10-K of Ekco Group, Inc. /s/ KPMG Peat Marwick LLP Boston, Massachusetts March 25, 1995 EX-27 24 FINANCIAL DATA SCHEDULE
5 YEAR DEC-31-1995 DEC-31-1995 142 0 44,871 1,048 47,565 102,610 94,778 38,398 304,375 57,935 96,700 3,458 0 184 135,741 304,375 277,995 277,995 191,343 244,126 4,437 (443) 13,590 15,939 7,894 8,045 0 0 0 8,045 .40 .40
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