<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1997
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
RADNOR HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 6719 23-2674715
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
WINCUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 3086 86-0699193
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
WINCUP HOLDINGS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 3086 23-2648231
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
SP ACQUISITION CO.
(Exact name of registrant as specified in its charter)
DELAWARE 6719 75-2524524
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
STYROCHEM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 3086 52-1592452
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
STYROCHEM INTERNATIONAL, LTD.
(Exact name of registrant as specified in its charter)
QUEBEC 3086 NONE
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
RADNOR MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 8741 23-2869197
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
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<PAGE>
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RADNOR HOLDINGS CORPORATION
THREE RADNOR CORPORATE CENTER, SUITE 300
100 MATSONFORD ROAD
RADNOR, PENNSYLVANIA 19087
(610) 995-9200
(Name, address, including zip code, and telephone number,
including area code, of registrants' principal executive offices)
------------
MICHAEL T. KENNEDY, PRESIDENT
RADNOR HOLDINGS CORPORATION
THREE RADNOR CORPORATE CENTER, SUITE 300
100 MATSONFORD ROAD
RADNOR, PENNSYLVANIA 19087
(610) 995-9200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------
WITH A COPY TO:
THOMAS G. SPENCER, ESQ.
DUANE, MORRIS & HECKSCHER
ONE LIBERTY PLACE, 42ND FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-7396
(215) 979-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED NOTE PRICE(1) FEE (2)
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<S> <C> <C> <C> <C>
10% Senior Notes due 2003..... $100,000,000 100.00% $100,000,000 $30,303.03
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Guarantees of WinCup Holdings,
Inc. ........................ -- -- -- None(3)
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Guarantees of WinCup Holdings,
L.P. ........................ -- -- -- None(3)
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Guarantees of SP Acquisition
Co. ......................... -- -- -- None(3)
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Guarantees of StyroChem
International, Inc. ......... -- -- -- None(3)
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Guarantees of StyroChem
International, Ltd. ......... -- -- -- None(3)
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Guarantees of Radnor
Management, Inc. ............ -- -- -- None(3)
</TABLE>
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- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(f)(2).
(3) No separate registration fee is payable pursuant to Rule 457(n).
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION,
DATED JANUARY , 1997
OFFER FOR ALL OUTSTANDING 10% SENIOR NOTES DUE 2003
IN EXCHANGE FOR 10% SENIOR NOTES DUE 2003,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OF
[LOGO OF RADNOR APPEARS HERE]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., PHILADELPHIA TIME,
ON , 1997, UNLESS EXTENDED.
Radnor Holdings Corporation (the "Company" or "Radnor"), a Delaware
corporation, hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange an aggregate principal
amount of up to $100 million of 10% Senior Notes due 2003 (the "New Notes") of
the Company, which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for a like principal amount of the issued and
outstanding 10% Senior Notes due 2003 (the "Old Notes") of the Company from the
registered holders thereof (the "Holders"). The terms of the New Notes are
identical in all material respects to the Old Notes, except for certain
transfer restrictions relating to the Old Notes. The New Notes will evidence
the same class of debt as the Old Notes and will be issued pursuant to and
entitled to the benefits of, the Indenture governing the Old Notes (the
"Indenture"). As used herein, the term "Notes" means the Old Notes and the New
Notes, treated as a single class.
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., Philadelphia time, on , 1997 unless
extended (as so extended, the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange pursuant to the Exchange Offer. The Exchange Offer is subject to
certain other customary conditions. See "The Exchange Offer."
On December 5, 1996, the Company issued $100 million principal amount of Old
Notes (the "Offering") pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws.
Interest on the Notes will be payable semi-annually on June 1 and December 1
of each year, commencing June, 1997. The Notes are not redeemable by the
Company prior to December 1, 2000, except that, at any time on or prior to
December 1, 1999, the Company, at its option, may redeem up to $25.0 million
aggregate principal amount of the Notes from the net proceeds of one or more
Public Equity Offerings (as defined) by the Company, at a redemption price of
110% of the principal amount thereof, plus accrued interest to the date of
redemption; provided that at least $75.0 million in aggregate principal amount
of the Notes remains outstanding following such redemption. On and after
December 1, 2000, the Notes will be redeemable at the option of the Company, in
whole or in part, at the redemption prices set forth herein, plus accrued
interest to the date of redemption. In the event of a Change of Control (as
defined), each holder of Notes may require the Company to repurchase all or a
portion of such holder's Notes at 101% of the principal amount thereof, plus
accrued interest to the repurchase date. See "Description of the Notes--
Optional Redemption" and "--Change of Control."
(Continued on next page)
SEE "RISK FACTORS" ON PAGE 10 OF THIS PROSPECTUS FOR A DESCRIPTION OF CERTAIN
RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE
OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is , 1997.
<PAGE>
(Continued from previous page)
The New Notes will be, and the Old Notes are, senior unsecured obligations
of the Company. The New Notes will rank pari passu in right of payment with
all other existing and future senior indebtedness of the Company, including
the Old Notes. The New Notes will be, and the Old Notes are, effectively
subordinated in right of payment to all existing and future secured
indebtedness of the Company and the Company's subsidiaries, including
indebtedness under the Credit Agreements (as defined). The New Notes will be
fully and unconditionally guaranteed on a joint and several basis by
substantially all of the Company's subsidiaries. The New Guarantees will be
effectively subordinated in right of payment to all existing and future
secured indebtedness of the Guarantors, including their obligations in respect
of the Credit Agreements. Under the terms of the Indenture, the Company is
permitted, upon the satisfaction of certain conditions, to incur additional
secured indebtedness. On a pro forma basis after giving effect to the Offering
and the application of the proceeds thereof, as of September 30, 1996, the
Company and its subsidiaries would have had no outstanding indebtedness other
than the Old Notes and approximately $6.7 million outstanding under the Credit
Agreements. See "Pro Forma Consolidated Financial Data" and "Description of
the Company's Credit Facilities."
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on
the Old Notes, from December 5, 1996. Old Notes accepted for exchange will
cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange
will not receive any payment in respect of accrued interest on such Old Notes.
Old Notes not tendered or not accepted for exchange will continue to accrue
interest from and after the date of consummation of the Exchange Offer. The
New Notes are being offered hereunder in order to satisfy certain obligations
of the Company contained in the Registration Rights Agreement (as defined).
Based on interpretations by the staff of the Securities and Exchange
Commission (the "SEC") as set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by Holders thereof (other than any Holder which is an
"affiliate" of the Company within the meaning of rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holders' business and such Holders have no
arrangement or understanding with any person to engage in a distribution of
such New Notes. However, the SEC has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the SEC would make a similar determination with respect to the Exchange Offer
as in such other circumstances. Each holder of the Old Notes who wishes to
exchange its Old Notes for New Notes in the Exchange Offer will be required to
make certain representations to the Company, including that (i) any New Notes
to be received by it will be acquired in the ordinary course of its business,
(ii) it has no arrangement or understanding with any person to participate in
a public distribution (within the meaning of the Securities Act) of the New
Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company or the Guarantors, or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable to it. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 150 days after the date of this Prospectus, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. In the event
the Company terminates the Exchange Offer and does not accept for exchange any
Old Notes, the Company will promptly return the Old Notes to the Holders
thereof. See "The Exchange Offer."
2
<PAGE>
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes. The
Initial Purchasers (as defined) have advised the Company that they currently
intend to make a market in the New Notes. The Initial Purchasers are not
obligated to do so, however, and any market-making with respect to the New
Notes may be discontinued at any time without notice. The Company does not
intend to apply for listing or quotation of the New Notes on any securities
exchange or stock market.
The Company expects that the New Notes initially will each be represented by
a single global certificate in fully registered form, except that New Notes
issued in exchange for Old Notes (i) originally purchased by institutional
investors that were Institutional Accredited Investors (as defined) who were
not QIBs (as defined) or (ii) held by QIBs who elected to take physical
delivery of these certificates instead of holding their interest through the
Global Note (as defined) (and which were thus ineligible to trade through The
Depository Trust Company) will be issued in registered form.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and is subject to, the
detailed information, consolidated financial statements and notes thereto
contained elsewhere in this Prospectus. As used herein, unless the context
otherwise requires, "Radnor" and the "Company" refer to Radnor Holdings
Corporation and its subsidiaries and their respective predecessors,"StyroChem"
refers to SP Acquisition Co. and its subsidiaries, and "J.R. Cup" refers to the
foam cup and container manufacturing business acquired (the "J.R. Cup
Acquisition") by Radnor from James River Paper Company, Inc. ("James River").
The term "Acquisitions" collectively refers to the Company's acquisition of SP
Acquisition Co. (the "StyroChem Acquisition") and the J.R. Cup Acquisition. See
"The Company--The Acquisitions."
THE COMPANY
The Company is the second largest manufacturer in the U.S. of disposable foam
cup and container products for the foodservice industry, with approximately a
35% share of this market segment in 1995. The Company manufactures foam cups
for hot and cold drinks, foam bowls and containers and thermoformed lids, as
well as the expandable polystyrene ("EPS") beads from which such foam products
are manufactured. The Company's 14 highly automated manufacturing facilities
produced 13 billion foam cups, containers and lids and 115 million pounds of
EPS beads in 1995. The brand names for the Company's foam products enjoy strong
recognition within the industry and include Dixie, COMpac, Profit Pals,
STYROcup, Handi-Kup HK and Simplicity. Through StyroChem, the Company
manufactures EPS beads for its own consumption as well as for third party
manufacturers of foam containers, insulation products and packaging products.
The Company believes that its acquisition of StyroChem, a supplier of EPS beads
to the Company since 1976, will strengthen the Company's competitive position
by lowering raw material costs, improving product quality and enhancing
manufacturing efficiencies. For the nine months ended September 30, 1996, pro
forma for the Acquisitions, the Company had net sales and EBITDA of $172.3
million and $18.6 million, respectively.
Within the foodservice industry, the Company competes primarily in the
disposable cup and container market. An independent industry survey estimated
that this market had more than $2.0 billion of domestic revenues in 1994. The
use of disposable foam cups and containers has increased significantly over the
last two decades, with unit shipments (excluding lids) growing from 13 billion
in 1974 to 28 billion in 1994. Key growth factors for the foam cup and
container segment include the superior insulating quality of foam, lower labor,
maintenance and energy costs as compared to reusable products, sanitary
considerations, the growth in consumption of take-out foods and beverages and
the expansion of fast-food restaurant chains.
The Company sells to more than 1,600 national, institutional and retail
customers located throughout the U.S., in Mexico and in other countries through
its 63-person sales organization and its broad network of more than 50
independent sales representatives. Foam products are sold in the U.S. to nine
of the ten largest foodservice distributors, six of the ten largest supermarket
chains and a number of large national companies and warehouse clubs. Long-term
relationships have been maintained with many of the industry's largest
companies, including Sysco Corporation, Alliant Foodservice Inc. (formerly
known as Kraft Foodservice, Inc.), K-Mart Corporation, WAL-MART Stores, Inc.,
Perseco Co. (the distribution arm for McDonald's Corporation), Sam's Club
Division, Price/Costco, Inc., Fast Food Merchandisers (the distribution arm for
Hardee's Food Systems, Inc.), U.S. Foodservice Inc., Kroger Food Stores, Food
Services of America and Fleming Companies, Inc. Major end users of the
Company's foam products include fast-food restaurant chains, full-service
restaurants, hospitals, nursing homes, educational institutions, airlines,
business offices, movie theaters and other leisure time concessionaires, such
as sports stadiums. The
1
<PAGE>
Company also sells foam products for the consumer market through supermarket
chains, discount clubs and chains and other retailers.
COMPETITIVE STRENGTHS
The Company has a strong competitive position in the foam segment of the
disposable cup and container market. The Company attributes its prominent
market position to the following factors:
. Customer service and quality products. The Company's attention to
customer service and emphasis on high-quality products allow it to
continue to meet the needs of its existing customers and attract new
ones. Customer service is enhanced by the Company's breadth of product
offerings, extensive order-entry system and strategically located
manufacturing facilities. These attributes enable the Company to meet
the national distribution requirements of its customers in an efficient
and cost-effective manner. The Company also coordinates design efforts
with its customers to develop new products, such as the new "flare" cup
that combines an enhanced appearance with a stronger rim construction.
. Proprietary technology. The Company has developed a broad array of
proprietary technology that is utilized in various stages of its
manufacturing operations. Custom-designed and built molding equipment,
for example, allows the Company to better meet customer requests for
specialized container designs, custom printing or embossing, as well as
to maintain high-volume production runs. Other proprietary technology
includes automated materials handling and auto-case packaging machines.
With StyroChem, the Company also has the ability to customize EPS bead
formulations to further enhance manufacturing efficiencies and specific
product features.
. Strong customer relationships. Long-term relationships with its
customers have been an important factor in the Company's success. Of the
Company's ten largest customers, nine have been purchasing products from
the Company for more than ten years. The Company works closely with its
customers to address a variety of needs, including custom product
development and tooling, seasonal marketing programs and specialized
printing requirements. The Company believes that the strength of its
customer relationships results from consistently meeting or exceeding
customer expectations.
. Experienced management team. The Company's management team is highly
experienced, with a majority of the Company's senior sales,
manufacturing, administration and engineering executives having spent
more than 20 years in the foodservice industry. The Company's executive
management also has extensive experience in managing and integrating
acquisitions of businesses in various industries, including the
foodservice industry.
BUSINESS STRATEGY
The Company's business strategy is to increase revenues and profitability and
to further enhance its market position by emphasizing the following
initiatives:
. Cost reduction and productivity enhancements. The Company is continuing
to reduce manufacturing costs by upgrading existing equipment and
developing new equipment and processes that enhance productivity and
improve manufacturing quality. Production costs have also been and will
continue to be reduced by eliminating redundant facilities, lowering
transportation costs and exploiting economies of scale (including raw
material pricing) provided by the Company's high-volume production.
. Integrated manufacturing process. The StyroChem Acquisition will result
in a more integrated manufacturing process, thereby reducing the
Company's cost of raw materials and mitigating the impact of raw
material price fluctuations. Control over EPS bead manufacturing should
also provide more reliable, consistently high-quality EPS beads,
improving the Company's overall manufacturing efficiencies.
2
<PAGE>
. New markets and improved market position. The Company believes it has a
significant opportunity to increase its share of the disposable cup and
container market by positioning its foam products, with their superior
insulating qualities and lower production costs, as an alternative to
comparable paper products. The Company is also pursuing opportunities to
increase sales of its foam products to both current and new customers in
international markets.
. Product development and strategic acquisitions. The Company intends to
pursue further growth opportunities through the introduction of new and
enhanced products. In addition, the Company will seek strategic
acquisitions, joint ventures and alliances that may broaden the
Company's product lines.
THE ACQUISITIONS
In November 1995, the Company sold its cutlery, straws and plastic cup
operations to James River. Following this divestiture, in January 1996, the
Company entered into the J.R. Cup Acquisition, which included the U.S. foam cup
and container operations of James River and which was completed in December
1996. Through the J.R. Cup Acquisition, the Company doubled its revenues, added
four manufacturing facilities and acquired additional proprietary manufacturing
processes, many of which are being integrated into the Company's existing
facilities. The J.R. Cup Acquisition has also permitted the Company's
management to rationalize its production by eliminating certain redundant
facilities. At the same time, the Company has been able to implement new
procurement programs, realign freight and related distribution arrangements
and, on a combined basis, significantly reduce manufacturing overhead and
selling, general and administrative costs. As a result of these and other
initiatives, these costs would have been reduced on a pro forma basis by
approximately $13.8 million for the year ended December 31, 1995. See "Pro
Forma Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Certain Effects Resulting from
the Acquisitions." A substantial majority of these cost savings have been
achieved during the first nine months of operations in 1996. See "The Company."
In December 1996, the Company acquired StyroChem, one of the five largest
producers of EPS beads in the U.S. The Company believes that the StyroChem
Acquisition will strengthen its manufacturing operations by providing more
reliable, consistently high-quality EPS beads at lower prices. The StyroChem
Acquisition will also mitigate the Company's exposure to raw material price
fluctuations by allowing the Company greater flexibility in procuring raw
materials. In addition, the StyroChem Acquisition positions the Company as a
supplier of EPS beads to manufacturers of insulation and packaging products. On
a pro forma basis, StyroChem represented 22.0% of the Company's consolidated
sales for the year ended December 31, 1995. See "The Company."
3
<PAGE>
THE EXCHANGE OFFER
On December 5, 1996, the Company issued $100 million principal amount of Old
Notes. The Old Notes were sold pursuant to exemptions from, or in transactions
not subject to, the registration requirements of the Securities Act and
applicable state securities laws. Alex. Brown & Sons Incorporated and NatWest
Capital Markets Limited (the "Initial Purchasers"), as a condition to their
purchase of the Old Notes, required that the Company agree to commence the
Exchange Offer following the offering of the Old Notes. The New Notes will
evidence the same class of debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture. As used herein, the term
"Notes" means the Old Notes and the New Notes, treated as a single class.
Securities Offered.......... Up to $100 million aggregate principal amount of
Company's 10% Senior Notes Due 2003, which have
been registered under the Securities Act (the
"New Notes"). The terms of the New Notes and the
Old Notes are identical in all material respects
(including principal amount, interest rate,
maturity and ranking), except for certain
transfer restrictions relating to the Old Notes.
The Exchange Offer.......... The New Notes are being offered in exchange for a
like principal amount of Old Notes. The issuance
of the New Notes is intended to satisfy
obligations of the Company contained in the
Exchange and Registration Rights Agreement, dated
December 5, 1996, among the Company, the
Guarantors (as defined) and the Initial
Purchasers (the "Registration Rights Agreement").
For procedures for tendering the Old Notes
pursuant to the Exchange Offer, see "The Exchange
Offer."
Tenders, Expiration Date;
Withdrawal..................
The Exchange Offer will expire at 5:00 p.m.,
Philadelphia time, on , 1997, or such later
date and time to which it is extended (as so
extended, the "Expiration Date"). A tender of Old
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration
Date. Any Old Note not accepted for exchange for
any reason will be returned without expense to
the tendering Holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Federal Income Tax The exchange pursuant to the Exchange Offer
Consequences................ should not result in any income, gain or loss to
the Holders or the Company for federal income tax
purposes. See "Certain U.S. Federal Income Tax
Consequences."
Use of Proceeds............. There will be no proceeds to the Company from the
exchange pursuant to the Exchange Offer.
Exchange Agent.............. First Union National Bank is serving as the
Exchange Agent in connection with the Exchange
Offer.
Shelf Registration Under certain circumstances described in the
Statement................... Registration Rights Agreement, certain holders of
Notes (including holders who are not permitted to
participate in the Exchange Offer or who may not
freely resell New Notes received in the Exchange
Offer) may require the Company and the Guarantors
to file, and
4
<PAGE>
use their best efforts to cause to become
effective, a shelf registration statement under
the Securities Act, which would cover resales of
Notes by such holders (the "Shelf Registration
Statement"). See "The Exchange Offer" and
"Registration Rights."
Conditions to the Exchange The Exchange Offer is not conditioned on any
Offer....................... minimum principal amount of Old Notes being
tendered for exchange. The Exchange Offer is
subject to certain other customary conditions,
each of which may be waived by the Company. See
"The Exchange Offer--Certain Conditions to the
Exchange Offer."
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Notes under the Securities Act. See "Description of
the Notes--Exchange Offer" and "Registration Rights." Based on interpretations
by the staff of the SEC, as set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any holder which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders, other than broker-dealers,
have no arrangement or understanding with any person to participate in the
distribution of such New Notes. However, the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Each holder of
the Old Notes who wishes to exchange its Old Notes for New Notes in the
Exchange Offer will be required to make certain representations to the Company,
including that (i) any New Notes to be received by it will be acquired in the
ordinary course of its business, (ii) it has no arrangement or understanding
with any person to participate in a public distribution (within the meaning of
the Securities Act) of the New Notes and (iii) it is not an "affiliate," as
defined in Rule 405 of the Securities Act, of the Company or the Guarantors, or
if it is such an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable
to it. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, it may be necessary to qualify for
sale or register thereunder the New Notes prior to offering or selling such New
Notes. The Company has agreed, pursuant to the Registration Rights Agreement,
subject to certain limitations specified therein, to register or qualify the
New Notes for offer or sale under the securities laws of such jurisdictions as
any holder reasonably requests in writing. Unless a holder so requests, the
Company does not intend to register or qualify the sale of the New Notes in any
such jurisdictions. See "Risk Factors--Consequences of Failure to Exchange" and
"The Exchange Offer--Consequences of Exchanging Old Notes."
5
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions relating to the Old Notes.
If the Exchange Offer is not consummated by May 4, 1997, the interest rate
borne by the Old Notes will increase by 25 basis points per annum for each 90-
day period following such date until but excluding the date of consummation of
the Exchange Offer, up to a maximum aggregate increase of 100 basis points per
annum. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from December 5, 1996. Accordingly, registered holders of New Notes
on the relevant record date for the first interest payment following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid on the Old Notes or, if no interest
has been paid, from December 5, 1996. Old Notes accepted for exchange will
cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders whose Old Notes are accepted for exchange will not
receive any payment in respect of interest on such Old Notes otherwise payable
on any interest payment date the record date for which occurs on or after the
consummation of the Exchange Offer.
Notes Offered............... $100,000,000 aggregate principal amount of 10%
Senior Notes due 2003.
Maturity Date............... December 1, 2003.
Interest Payment Dates...... June 1 and December 1 of each year, commencing
June 1, 1997.
Optional Redemption......... The New Notes will not be redeemable by the
Company prior to December 1, 2000, except that,
at any time on or prior to December 1, 1999 the
Company, at its option, may redeem up to $25.0
million aggregate principal amount of the Notes
from the net proceeds of one or more Public
Equity Offerings by the Company, at a redemption
price of 110% of the principal amount thereof,
plus accrued interest to the date of redemption;
provided that at least $75.0 million in aggregate
principal amount of the Notes remains outstanding
following such redemption. Thereafter, the New
Notes will be redeemable at the option of the
Company, in whole or in part, at the redemption
prices set forth herein, plus accrued interest to
the date of redemption. See "Description of the
Notes--Optional Redemption."
Change of Control........... In the event of a Change of Control, each holder
of New Notes will have the right to require the
Company to repurchase all or a portion of such
holder's New Notes then outstanding at a purchase
price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if
any, to the repurchase date.
Ranking..................... The New Notes will be senior unsecured
obligations of the Company and will rank pari
passu in right of payment with all other existing
and future senior indebtedness of the Company,
including the Old Notes. The New Notes will be
effectively subordinated in right of payment to
all existing and future secured indebtedness of
the Company and the Company's
6
<PAGE>
subsidiaries, including indebtedness under the
Amended Credit Agreement (as defined) and the
Canadian Credit Agreement (as defined)
(collectively, the "Credit Agreements"). Under
the terms of the Indenture governing the New
Notes, the Company will be permitted, upon the
satisfaction of certain conditions, to incur
additional secured indebtedness. On a pro forma
basis after giving effect to the Offering, as of
September 30, 1996, the Company and its
subsidiaries would have had no outstanding
indebtedness other than the Old Notes and
approximately $6.7 million outstanding under the
Credit Agreements. See "Pro Forma Consolidated
Financial Data" and "Description of the Company's
Credit Facilities."
Guarantees.................. The New Notes will be fully and unconditionally
guaranteed on a joint and several basis (the "New
Guarantees") by substantially all of the
Company's subsidiaries (collectively, the
"Guarantors"). The New Guarantees will be
effectively subordinated in right of payment to
all existing and future secured indebtedness of
the Guarantors, including their obligations in
respect of the Credit Agreements. See
"Description of the Notes--Guarantees."
Certain Covenants........... The Indenture contains certain covenants with
respect to the Company and its subsidiaries that
will restrict, among other things, (a) the
incurrence of additional indebtedness, (b) the
payment of dividends and other restricted
payments, (c) the creation of certain liens, (d)
the use of proceeds from sales of assets and
subsidiary stock, (e) sale and leaseback
transactions and (f) transactions with
affiliates. The Indenture will also restrict the
Company's ability to consolidate or merge with or
into, or to transfer all or substantially all of
its assets to, another person. These restrictions
and requirements are subject to a number of
important qualifications and exceptions. See
"Description of the Notes--Certain Covenants."
Exchange Offer;
Registration Rights......... Holders of New Notes (other than as set forth
below) are not entitled to any registration
rights with respect to the New Notes. Pursuant to
the Registration Rights Agreement, the Company
and the Guarantors have agreed, for the benefit
of the holders of Old Notes, to file an exchange
offer registration statement (the "Exchange Offer
Registration Statement"). The Registration
Statement of which this Prospectus is a part
constitutes the Exchange Offer Registration
Statement referred to therein. Under certain
circumstances described in the Registration
Rights Agreement, certain holders of Notes
(including holders who may not participate in the
Exchange Offer or who may not freely resell New
Notes received in the Exchange Offer) may require
the Company and the Guarantors to file, and use
their best efforts to cause to become effective,
the Shelf Registration Statement. If the Shelf
Registration
7
<PAGE>
Statement is not filed or declared effective or
ceases to be effective within the applicable time
periods related thereto (each, a "Registration
Default"), the interest rate borne by Notes held
by such holders will increase by 25 basis points
per annum for the 90-day period following such
Registration Default. Such interest rate will
increase by an additional 25 basis points per
annum at the beginning of each subsequent 90-day
period, up to a maximum aggregate increase of 100
basis points per annum. If, subsequently, such
Registration Default is cured, the interest rate
borne by such Notes will be reduced by the amount
of the related increase in the interest rate. See
"Registration Rights."
Use of Proceeds............. The Company will not receive any proceeds from
the Exchange Offer. The net proceeds of the
Offering were used to repay certain indebtedness
of the Joint Venture (as defined) relating to
J.R. Cup, to acquire the interest in the Joint
Venture not then held by the Company, to purchase
the outstanding capital stock of and other equity
interests in StyroChem, to redeem certain shares
of the Company's preferred stock and certain
then-outstanding equity warrants held by a third
party and for general corporate purposes.
Risk Factors................ Potential investors in the New Notes should
carefully consider the matters set forth under
the caption "Risk Factors" prior to making an
investment decision with respect to the New
Notes.
8
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following summary financial, operating and pro forma data were derived
from the consolidated financial statements of Radnor, including the notes
thereto (the "Radnor Financial Statements"), as well as the selected financial,
operating and pro forma information included elsewhere in this Prospectus. The
pro forma consolidated statements of operations data reflect the Acquisitions
and the sale of the Notes as if they had occurred on January 1 of each
respective period. The pro forma consolidated balance sheet data reflect the
StyroChem Acquisition and the sale of the Notes as if they had occurred on
September 30, 1996. The pro forma consolidated financial data are based on the
assumptions and adjustments described in the accompanying notes and do not
purport to present the results of operations and financial position of the
Company as if the Acquisitions and the sale of the Notes had actually occurred
on such dates, nor are they necessarily indicative of the results of operations
that may be achieved in the future. The information set forth below should be
read in conjunction with "Pro Forma Consolidated Financial Data," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements (as
defined) included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ ----------------------------
HISTORICAL(1) PRO FORMA HISTORICAL(1) PRO FORMA
------------------------- --------- ----------------- ---------
1993 1994 1995 1995 1995(2) 1996 1996
------- ------- ------- --------- ------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net sales.............. $83,569 $80,850 $86,239 $237,061 $64,094 $128,052 $172,307
Cost of goods sold..... 68,454 64,078 75,690 192,435 54,090 98,534 132,579
------- ------- ------- -------- ------- -------- --------
Gross profit........... 15,115 16,772 10,549 44,626 10,004 29,518 39,728
Distribution expense... 6,599 5,584 6,027 16,505 4,334 9,564 12,369
Selling, general and
administrative
expenses.............. 10,330 8,209 9,051 20,073 6,492 12,818 15,412
Restructuring charges.. -- -- -- -- -- 855 --
------- ------- ------- -------- ------- -------- --------
Income (loss) from op-
erations.............. (1,814) 2,979 (4,529) 8,048 (822) 6,281 11,947
Interest(3)............ 2,518 3,001 2,822 10,675 2,486 3,346 8,008
Other (income) expense,
net................... 386 290 526 (289) 106 153 (193)
------- ------- ------- -------- ------- -------- --------
Income (loss) from con-
tinuing operations be-
fore income taxes..... (4,718) (312) (7,877) (2,338) (3,414) 2,782 4,132
Income tax expense(4).. -- -- -- -- -- -- --
------- ------- ------- -------- ------- -------- --------
Income (loss) from con-
tinuing operations.... $(4,718) $ (312) $(7,877) $ (2,338) $(3,414) $ 2,782 $ 4,132
======= ======= ======= ======== ======= ======== ========
OTHER FINANCIAL AND
OPERATING DATA:
EBITDA(5).............. $ (620) $ 3,992 $(2,675) $ 16,015 $ 348 $ 10,453 $ 18,617
Ratio of EBITDA to in-
terest(3)(5).......... 1.33x 1.50x 0.14x 3.12x 2.32x
Capital expenditures... $ 621 $ 1,645 $ 5,491 $ 9,548 $ 1,684 $ 2,628 $ 4,813
Depreciation and amor-
tization.............. $ 1,580 $ 1,303 $ 2,380 $ 7,678 $ 1,276 $ 3,470 $ 6,477
M Units shipped (in
thousands)(6)......... 12,917 8,996
EPS beads, pounds pro-
duced (in millions)... 115 97
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital........ $ 5,385 $ 10,136
Total assets........... 106,829 152,003
Total debt (including
current portion)...... 54,213 106,685
Stockholders' equity... 7,046 7,588
</TABLE>
- --------
(1) The historical financial data include Radnor and its consolidated
subsidiaries, excluding discontinued operations, for each of the three
years in the period ended December 31, 1995 and as of and for the nine
months ended September 30, 1996. The Company's discontinued operations were
the cutlery, straws and plastic cup operations, which were sold in 1995.
Prior to January 20, 1996, the Company's results from continuing operations
do not include the results of J.R. Cup, which was acquired on that date.
(2) The historical financial data for the nine months ended September 30, 1995
and 1996 are unaudited.
(3) Pro forma interest expense does not include amortization of estimated debt
issuance costs related to the Credit Agreements and the Notes. The interest
rate on the Notes is 10%. The assumed interest rate on the Credit
Agreements is approximately 8.5%.
(4) The Company recorded no federal income tax expense during the periods
presented due to the incurrence of operating losses or the utilization of
net operating loss carryforwards during those periods.
(5) EBITDA represents income (loss) from continuing operations before interest,
income tax expense, depreciation and amortization and restructuring and
other non-recurring charges. EBITDA is presented here to provide additional
information about the Company's ability to meet its future debt service,
capital expenditure and working capital requirements. EBITDA is not a
measure of financial performance under generally accepted accounting
principles ("GAAP") and should not be considered as an alternative either
to net income as an indicator of the Company's operating performance or to
cash flows as a measure of the Company's liquidity.
(6) Each M Unit consists of 1,000 foam cups, containers or lids.
9
<PAGE>
RISK FACTORS
Potential investors in the New Notes, including Holders of the Old Notes
considering the Exchange Offer, should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate
the following before making an investment decision with respect to the New
Notes, although the risk factors set forth below (other than "--Consequences
of Failure to Exchange Old Notes") are generally applicable to the Old Notes
as well as the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Notes under the Securities Act. See "The Exchange
Offer" and "Registration Rights." Based on interpretations by the staff of the
SEC, as set forth in no-action letters issued to third parties, the Company
believes that New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold or otherwise transferred by
holders thereof (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders, other than broker-dealers,
have no arrangement or understanding with any person to participate in the
distribution of such New Notes. However, the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Each holder of
the Old Notes who wishes to exchange its Old Notes for New Notes in the
Exchange Offer will be required to make certain representations to the
Company, including that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any person to participate in a public distribution (within
the meaning of the Securities Act) of the New Notes and (iii) it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or
the Guarantors, or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it. If any Holder is an affiliate of the Company or in
engaged in or intends to engage in or has any arrangement or understanding
with respect to the distribution of the New Notes to be acquired pursuant to
the Exchange Offer, such Holder (i) may not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes pursuant to the Exchange
Offer must acknowledge that such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities and that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 150 days after the date of this Prospectus, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available and is complied with. The
10
<PAGE>
Company has agreed, pursuant to the Registration Rights Agreement, subject to
certain limitations specified therein, to register or qualify the New Notes
for offer or sale under the securities laws of such jurisdictions as any
holder reasonably requests in writing. Unless a holder so requests, the
Company does not currently intend to register or qualify the sale of the New
Notes in any jurisdictions. See "The Exchange Offer."
ADDITIONAL LEVERAGE
On a pro forma basis after giving effect to the sale of the Old Notes and
the application of the estimated net proceeds therefrom, the Company's total
debt would have been $106.7 million as of September 30, 1996, the Company's
ratio of pro forma income before taxes to fixed charges would have been 1.4 to
1 for the nine months ended September 30, 1996 and the Company and the
Guarantors would have had, subject to certain restrictions (including
borrowing base limitations), the ability to draw up to $25.0 million of
additional secured senior indebtedness under the Credit Agreements.
A substantial increase in the Company's leverage and obligations could have
important consequences to the holders of Notes, including (i) the impairment
of the Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions or other purposes, (ii) the use of a
substantial portion of the Company's cash flow from operations for debt
service and (iii) making the Company more vulnerable to economic downturns and
limiting its ability to withstand competitive pressures.
In addition, the Company's operating flexibility with respect to certain
business matters are limited by covenants contained in the Indenture and the
Credit Agreements. Among other things, these covenants limit the ability of
the Company and its subsidiaries to incur additional indebtedness, create
liens upon assets, apply the proceeds from disposal of assets, make dividend
payments and other distributions on capital stock and redeem any capital
stock. There can be no assurance that such covenants will not adversely affect
the Company's ability to finance its future operations or capital needs or to
engage in other business activities that may be in the interest of the
Company. See "Description of the Company's Credit Facilities" and "Description
of the Notes--Certain Covenants."
The Company expects that its cash flow will be sufficient to cover its
expenses, including fixed charges. However, no assurance can be given that the
Company's operating results will be sufficient for the Company to meet such
obligations. The Company's ability to satisfy its obligations will be
dependent upon its future performance, which is subject to prevailing economic
conditions and financial, business and other factors, including factors beyond
the Company's control.
RAW MATERIAL PRICE VOLATILITY
The Company's foam products are manufactured from EPS beads, which are
produced from styrene monomer. Styrene monomer is a commodity petrochemical
that is readily available in bulk quantities from numerous large, vertically
integrated chemical companies. Since the consummation of the StyroChem
Acquisition, the Company has purchased styrene monomer to produce EPS beads
for its own consumption and has also continued to purchase EPS beads from Nova
Chemicals, Inc., which has been a long-term supplier to the Company. There are
currently more suppliers of styrene monomer than there are suppliers of cup-
grade EPS beads. Prices for both styrene monomer and EPS beads will fluctuate,
principally due to fluctuations in petrochemical feedstock prices, but also
because of supply and demand in the styrene monomer and EPS bead markets.
If raw material prices increase and the Company is unable to pass such price
increases on to its customers, employ successful hedging strategies, enter
into long-term supply contracts at favorable prices or buy on the spot market
at favorable prices, the Company's profitability may be adversely affected. To
the extent that the Company's supply of raw materials is hindered and no
alternative source can be found, the Company's profitability may be adversely
affected.
11
<PAGE>
The Company believes that the StyroChem Acquisition and the new long-term
supply agreement with Chevron Chemical Company ("Chevron") for the purchase of
styrene monomer will mitigate the Company's exposure to fluctuations in styrene
monomer prices. The new agreement guarantees a supply of up to 11.6 million
pounds of styrene monomer per month at favorable prices, which include rebates
for all amounts purchased when purchases exceed 120 million pounds per year.
See "Business--Raw Materials."
OPERATING LOSSES
The Company had income from continuing operations for the nine months ended
September 30, 1996 of $2.8 million. Before giving effect to any pro forma
adjustments and without regard to income from discontinued operations, the
Company had losses from continuing operations of approximately $4.7 million,
$0.3 million and $7.9 million for the years ended December 31, 1993, 1994 and
1995, respectively. The losses in 1993 and 1994 were primarily attributable to
the high level of fixed costs in relation to sales and the losses in 1995 were
attributable to the industry-wide increase in raw material costs, partially
offset by an increase in selling prices. On a pro forma basis, the Company
would have had a loss of $2.3 million for the year ended December 31, 1995 and
income from continuing operations of $4.1 million for the nine months ended
September 30, 1996, respectively. There can be no assurance that the Company's
future operations will continue to generate operating or net income or
sufficient cash flow to permit the Company to satisfy its obligations. See "Pro
Forma Consolidated Financial Data," "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
COMPETITION
The Company competes in the highly competitive foodservice industry. Many of
the Company's competitors are larger and have significantly greater resources
than the Company. Within the foam segment of the disposable cup and container
market, the Company competes principally with Dart Container Corp. ("Dart"),
which has significantly greater financial resources than the Company and
controls the largest share of this market segment. See "Business--Competition."
DEPENDENCE ON KEY CUSTOMERS
The Company supplies products to a number of large national companies and to
a number of large foodservice distributors. Pro forma for the Acquisitions, no
customer represented more than 9.0% of the Company's net sales for 1995. In
addition, the five largest accounts represented approximately 30.0% of the
Company's pro forma net sales for the year ended December 31, 1995. Although
the Company has not lost sales from its key customers in 1995, 1996 or 1997 to
date, if any of such customers substantially reduces its level of purchases
from the Company, the Company's profitability may be adversely affected.
Moreover, continued consolidation among distributors in the foodservice
industry could result in an increasingly concentrated customer base or the loss
of certain customers. See "Business--Sales, Marketing and Customers."
SUCCESSFUL INTEGRATION OF ACQUISITIONS
The integration of acquired businesses may result in unforeseen difficulties
that require a disproportionate amount of management's attention and the
Company's resources. There can be no assurance that the Company will be able to
achieve the synergies it anticipates from recent and current acquisitions or
that suitable additional acquisitions will be available.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the management experience and continued services
of the Company's executive officers, including Michael T. Kennedy. The loss of
the services of these officers could have a
12
<PAGE>
material adverse effect on the Company's business. In addition, the Company's
continued growth depends on its ability to attract and retain experienced key
employees.
CONTROL OF THE COMPANY
Michael T. Kennedy, the President, Chief Executive Officer and sole director
of the Company, beneficially owns 85.0% of the voting common stock of the
Company. Consequently, Mr. Kennedy has the ability to control the Company's
management, policies and financing decisions, to elect all of the Company's
directors and to control the vote on all matters coming before the stockholders
of the Company. As a result, circumstances could arise in which the interests
of Mr. Kennedy could be in conflict with the interests of the holders of Notes.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, foreign and local
environmental laws and regulations. As a result, the Company is involved from
time to time in administrative or legal proceedings relating to environmental
matters. There can be no assurance that the aggregate amount of future clean up
costs and other environmental liabilities will not be material. The Company
cannot predict what environmental legislation or regulations will be enacted in
the future, how existing or future laws or regulations will be administered or
interpreted or what environmental conditions may be found to exist. Enactment
of more stringent laws or regulations or more strict interpretation of existing
laws and regulations may require additional expenditures by the Company, some
of which could be material. As part of the StyroChem Acquisition, approximately
$1.4 million of the purchase price has been placed in escrow and may be used by
the Company to offset certain expenses associated with specified environmental
matters relating to StyroChem's Texas and Quebec facilities. However, there can
be no assurance that the escrowed funds will be sufficient to offset all
expenses associated with such environmental matters. See "Business--
Environmental Matters."
FORWARD-LOOKING STATEMENTS
All statements contained in this Prospectus that are not historical facts,
including but not limited to the Company's plans for expansion, facility
consolidation and acquisitions, are based on current expectations. These
statements are forward-looking (as defined in the U.S. Private Securities
Litigation Reform Act of 1995) in nature and involve a number of risks and
uncertainties. Actual results may vary materially, as discussed in this "Risk
Factors" section. The factors that could cause actual results to vary
materially include: the availability and pricing of raw materials; the
availability of capital to finance the Company's expansion plans on terms
satisfactory to the Company; the integration of any new businesses acquired by
the Company; general business and economic conditions and other risks that may
be described from time to time in the reports that the Company will be required
to file with the SEC following consummation of the Exchange Offer. The Company
cautions potential investors not to place undue reliance on any such forward-
looking statements.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Notes may require
the Company to repurchase all or a portion of such holder's Notes. If a Change
of Control were to occur, there can be no assurance that the Company would have
sufficient financial resources, or would be able to arrange financing to pay
the repurchase price for all Notes tendered by holders thereof. Further, the
provisions of the Indenture may not afford holders of Notes protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving the Company that may adversely affect holders
of Notes, if such transaction does not result in a Change of Control. In
addition, the terms of the Credit Agreements may limit the Company's ability to
purchase any Notes and will also identify certain events that would constitute
a Change of Control, as well as certain other events with respect to the
Company or certain of its subsidiaries, that would constitute an event of
default under the Credit
13
<PAGE>
Agreements. See "Description of the Company's Credit Facilities." Any future
credit agreements or other agreements relating to other indebtedness to which
the Company becomes a party may contain similar restrictions and provisions. In
the event a Change of Control occurs at a time when the Company is prohibited
from purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such consent or repay such
borrowing, the Company would remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture, which would, in turn, constitute a
further default under certain of the Company's existing debt agreements and may
constitute a default under the terms of other indebtedness that the Company may
enter into from time to time. See "Description of the Notes--Change of
Control."
RANKING OF THE NOTES
The New Notes will be, and the Old Notes are, senior unsecured obligations of
the Company. The New Notes will rank pari passu in right of payment with all
other existing and future senior indebtedness of the Company, including the Old
Notes. The New Notes will be, and the Old Notes are, effectively subordinated
in right of payment to all existing and future secured indebtedness of the
Company and the Company's subsidiaries, including indebtedness under the Credit
Agreements. Loans under the Amended Credit Agreement are secured by the
inventory, accounts receivable, general intangibles, trademarks and licenses
and the proceeds thereof of the Company and its U.S. subsidiaries. Loans under
the Canadian Credit Agreement are secured by all of the material assets of the
Company's Canadian subsidiary. Under the terms of the Indenture, the Company is
permitted, upon the satisfaction of certain conditions, to incur additional
secured indebtedness. See "Description of the Company's Credit Facilities,"
"Description of the Notes--Ranking" and "--Certain Covenants."
HOLDING COMPANY STRUCTURE; POSSIBLE INVALIDITY OF GUARANTEES
The Company is a holding company, the assets of which consist principally of
the stock of its subsidiaries through which it conducts its operations. The
Company will be dependent upon dividends and other payments from its
subsidiaries to generate the funds necessary to meet its obligations, including
the payment of principal of and interest on the Notes. Therefore, the Company's
ability to pay interest on the Notes and to satisfy its other obligations will
depend upon the future operating performance of its subsidiaries, which will be
affected by economic conditions, and financial, business and other factors,
some of which are beyond the Company's control. In addition, the ability of the
Company's subsidiaries to make such payments are subject to, among other
things, applicable state laws.
The Company's obligations on the New Notes will be, and the Company's
obligations on the Old Notes are, guaranteed on a joint and several basis by
the Guarantors. The incurrence by the Company and the Guarantors of the
indebtedness evidenced by the Notes, the full and unconditional, joint and
several guarantees by the Guarantors of the Old Notes (the "Old Guarantees")
and the New Guarantees, and the use by the Company of the proceeds of the Old
Notes to effect the Acquisitions, may be subject to review under relevant
federal and state fraudulent conveyance statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of the Company or
the Guarantors. Under these statutes, if a court were to find that at the time
the Notes, or the Old Guarantees or the New Guarantees (collectively, the
"Guarantees"), as the case may be, were issued, (a) the Company or any of the
Guarantors issued the Notes or a Guarantee with the intent of hindering,
delaying or defrauding current or future creditors or (b)(i) the Company or any
of the Guarantors received less than reasonably equivalent value or fair
consideration for issuing the Notes or a Guarantee, as the case may be, and
(ii) the Company or any such Guarantor, as the case may be, (A) was insolvent
or was rendered insolvent by reason of the Acquisitions, the Offering and the
Exchange Offer, (B) was engaged, or was about to engage, in a business or
transaction for which its assets constituted unreasonably small capital or (C)
intended to incur, or believed that it would incur, debts beyond its ability to
pay as such debts matured (as all of the foregoing terms are
14
<PAGE>
defined in or interpreted under the fraudulent conveyance statutes), such
court could void the Notes or such Guarantee or subordinate such obligations
to presently existing and future indebtedness of the Company and such
Guarantor.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, however, the Company and the Guarantors would be
considered insolvent if, at the time they incur or incurred the indebtedness
constituting the Notes or the Guarantees, either (a) the fair market value (or
fair saleable value) of their assets on a going concern basis is less than the
amount required to pay the probable liability on their total existing debts
and liabilities (including contingent liabilities) as they become absolute and
matured or (b) they are incurring debt beyond their ability to pay as such
debt matures.
In addition, the Guarantees may be subject to the claim that, since the
Guarantees were incurred for the benefit of the Company (and only indirectly
for the benefit of the Guarantors), they were incurred for less than
reasonably equivalent value or fair consideration. As described above, a court
could therefore void the Guarantees or subordinate them to other obligations
of the Guarantors.
The Company and the Guarantors believe that, at the time of the issuance of
the Notes and the Guarantees, as the case may be, the Company and the
Guarantors were or will be, as the case may be, (a) neither insolvent nor
rendered insolvent thereby, (b) in possession of sufficient capital to pay
their debts as the same mature or become due and to operate their respective
businesses effectively and (c) incurring debts within their respective
abilities to pay. In reaching the foregoing conclusions, the Company and the
Guarantors have relied upon their analysis of internal cash flow projections
and estimated values of assets and liabilities of the Company and the
Guarantors (including rights of contribution and indemnification in connection
with the Guarantees). There can be no assurance, however, that a court passing
on such questions would reach the same conclusions. See "Description of the
Notes--Guarantees."
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on December 5, 1996 to qualified institutional buyers and
institutional accredited investors and the Old Notes issued to qualified
institutional buyers are eligible for trading in PORTAL, the National
Association of Securities Dealers' screenbased, automated market for trading
of securities eligible for resale under Rule 144A under the Securities Act. To
the extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for the remaining untendered Old Notes could be adversely
affected. There can be no assurance regarding the development of a market for
the New Notes, or the ability of holders of the New Notes to sell their New
Notes or the price at which such holders may be able to sell their New Notes.
If such a market were to develop, the New Notes could trade at prices that may
be higher or lower than their principal amount or purchase price, depending on
many factors, including prevailing interest rates, the Company's operating
results and the market for similar securities. Each Initial Purchaser has
advised the Company that it currently intends to make a market in the New
Notes. The Initial Purchasers are not obligated to do so, however, and any
market-making with respect to the New Notes may be discontinued at any time
without notice. In addition, such market-making activities will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be
limited during the Exchange Offer or the pendency of an applicable Shelf
Registration Statement. Therefore, there can be no assurance as to the
liquidity of any trading market for the New Notes or that an active public
market for the New Notes will develop. The Company does not intend to apply
for listing or quotation of the New Notes on any securities exchange or stock
market.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will
not be subject to similar disruptions. Any such disruptions may have an
adverse effect on holders of the New Notes.
15
<PAGE>
THE COMPANY
BACKGROUND
The Company was incorporated as a Delaware corporation in November 1991 in
connection with its acquisition of the plastic and foam cup and container
business of Kimberly-Clark Tissue Company formerly known as Scott Paper Company
("KCTC"). In February 1992, the Company, through WinCup Holdings, Inc.
("WinCup"), acquired all of the capital stock of Scott Container Products
Group, Inc. from Scott Paper Company. In November 1995, the Company sold to
James River its cutlery, straws and plastic cup operations. See Note 1 to the
Radnor Financial Statements.
The Company, through WinCup and J.R. Cup, has been manufacturing foam cups
and containers for more than 30 years. The WinCup foam cup and container
business was established in 1961 and began purchasing EPS beads from StyroChem
when that company began operations in 1976. J.R. Cup's predecessor began
manufacturing foam cups and containers in 1963 and was purchased by James River
in 1986. The Company believes that the consolidation of StyroChem and J.R. Cup
with the Company's foam cup and container operations is a significant strategic
opportunity due to the technological synergies, expected cost reductions and
broader geographic distribution of the combined businesses.
THE ACQUISITIONS
In January 1996, WinCup acquired substantially all of the assets of the U.S.
foam cup and container operations of James River, which comprised James River's
J.R. Cup division. The J.R. Cup Acquisition was structured as a joint venture
between WinCup and James River known as WinCup Holdings, L.P. (the "Joint
Venture"). The Company used a portion of the proceeds of the Offering to
purchase James River's interest in the Joint Venture and repay certain
subordinated notes issued to James River. See Note 1 to the Radnor Financial
Statements. In connection with the purchase of James River's interest in the
Joint Venture, the Company entered into various agreements with James River,
including five-year extensions of a sales agent agreement, an equipment use
agreement and a license relating to certain trademark rights, a sublease on
manufacturing and warehouse facilities and a settlement of a dispute relating
to certain disability claims. See "Business--Proprietary Technology and
Trademarks," "--Facilities" and "--Legal Proceedings."
Through the J.R. Cup Acquisition, the Company doubled its revenues, added
four manufacturing facilities and acquired proprietary manufacturing processes,
many of which are being integrated into the Company's existing facilities. The
J.R. Cup Acquisition has also permitted the Company's management to rationalize
its production by eliminating certain redundant facilities. At the same time,
the Company has been able to implement new procurement programs, realign
freight and related distribution arrangements and, on a combined basis,
significantly reduce manufacturing overhead and selling, general and
administrative costs. As a result of these and other initiatives, these costs
would have been reduced on a pro forma basis by approximately $13.8 million for
the year ended December 31, 1995. See "Pro Forma Consolidated Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Certain Effects Resulting from the Acquisitions." A substantial
majority of these cost savings have been achieved during the first nine months
of operations in 1996.
In December 1996, the Company acquired StyroChem for an aggregate cash
purchase price of $29.0 million plus $2.0 million of assumed indebtedness and
consulting payments. The purchase price is subject to post-closing adjustment
based upon any positive or negative change in StyroChem's net working capital
between August 3, 1996 and the closing date of the acquisition, for which a
$1.0 million escrow account has been created. In addition, approximately $1.4
million of the purchase price has been placed in a separate escrow account, and
may be used by the Company to offset expenses associated with specified
environmental matters relating to StyroChem's Texas and Quebec facilities. See
"Business--Environmental Matters."
16
<PAGE>
As part of the acquisition, StyroChem's President and majority voting
stockholder entered into an agreement with the Company that prohibits him from
engaging in certain businesses competitive with the Company in the U.S. and
Canada for a period of five years and from interfering with or entering into
employment relationships with StyroChem employees for a period of two years.
StyroChem's President and majority stockholder also entered into a six-month
consulting agreement with the Company pursuant to which he provides up to 40
hours a month of consulting services, as requested by the Company.
The Company believes that the StyroChem Acquisition will strengthen the
Company's manufacturing operations by providing more reliable, consistently
high-quality EPS beads at lower prices and will mitigate the Company's
exposure to raw material price fluctuations by allowing greater flexibility in
procuring raw materials. In addition, the StyroChem Acquisition positions the
Company as a supplier of EPS beads to manufacturers of insulation and
packaging products.
GENERAL
The Company's executive offices are located at Three Radnor Corporate
Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087, and its
telephone number is (610) 341-9600.
17
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company as
of September 30, 1996 and the pro forma capitalization of the Company on such
date after giving effect to the StyroChem Acquisition, the Credit Agreements
and the issuance and sale by the Company of the Old Notes and the application
of the net proceeds of the Offering.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------
ACTUAL PRO FORMA
----------- -------------
<S> <C> <C>
Long-term debt, including current portion............
Existing Credit Agreement (/1/).................... $ 35,536 $ --
Amended Credit Agreement (/1/)..................... -- 4,950
Canadian Credit Agreement (/1/).................... -- 1,735
Mortgage Note...................................... 4,616 --
Promissory Notes................................... 14,061 --
Senior Notes due 2003.............................. -- 100,000
----------- ------------
Total long-term debt............................. 54,213 106,685
----------- ------------
Other noncurrent liabilities......................... 17,738 --
Redeemable convertible preferred stock............... 3,000 --
----------- ------------
Stockholders' equity
Common stock and additional paid-in capital........ 7,498 7,498
Retained Earnings (deficit)........................ (452) 90
----------- ------------
Total stockholders' equity....................... 7,046 7,588
----------- ------------
Total capitalization........................... $ 81,997 $ 114,273
=========== ============
</TABLE>
- --------
(1) At September 30, 1996, on a pro forma basis after giving effect to the
StyroChem Acquisition, the Credit Agreements and the issuance and sale of
the Old Notes, the Company would have been able to borrow an additional
$25.0 million of revolving credit under the Credit Agreements.
18
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following pro forma consolidated financial data have been prepared by
the Company based on certain adjustments to the Radnor Financial Statements,
the financial statements of the J.R. Cup Foam Container Operations of James
River Paper Company, Inc., including the notes thereto (the "J.R. Cup
Financial Statements") and the consolidated financial statements of StyroChem,
including the notes thereto (the "StyroChem Financial Statements"), all of
which are included elsewhere herein. The Radnor Financial Statements, the J.R.
Cup Financial Statements and the StyroChem Financial Statements are referred
to collectively as the "Financial Statements." The pro forma consolidated
statements of operations reflect the Acquisitions and the sale of the Notes as
if they had occurred on January 1 of each respective period. The pro forma
consolidated balance sheet reflects the StyroChem Acquisition and the sale of
the Notes as if they had occurred on September 30, 1996. The pro forma
consolidated financial data are based on the assumptions and adjustments
described in the accompanying notes and do not purport to present the results
of operations and financial position of the Company as if the Acquisitions and
the sale of the Notes had actually occurred on such dates, nor are they
necessarily indicative of the results of operations that may be achieved in
the future. See "The Company--The Acquisitions," "Capitalization," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements
appearing elsewhere in this Prospectus.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------------------
HISTORICAL
-------------------------------- PRO FORMA PRO
RADNOR J.R. CUP(/1/) STYROCHEM ADJUSTMENTS FORMA
-------- ------------- --------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $128,052 $4,482 $54,350 $(14,577)(/2/) $172,307
Cost of goods sold...... 98,534 3,599 45,764 (14,577)(/2/)
-- -- -- (741)(/3/) 132,579
-------- ------ ------- -------- --------
Gross profit............ 29,518 883 8,586 741 39,728
Distribution expense.... 9,564 338 2,467 12,369
Selling, general and
administrative
expenses............... 12,818 1,019 2,548 (973)(/4/) 15,412
Restructuring charges... 855 -- -- (855)(/5/) --
-------- ------ ------- -------- --------
Income (loss) from oper-
ations................. 6,281 (474) 3,571 2,569 11,947
Interest................ 3,346 -- 560 4,102 (/6/) 8,008
Other (income) expense,
net.................... 153 (18) (208) (120)(/7/) (193)
-------- ------ ------- -------- --------
Income (loss) from
continuing operations
before income taxes.... 2,782 (456) 3,219 (1,413) 4,132
Income tax expense
(benefit).............. -- -- 1,066 (1,066)(/8/) --
-------- ------ ------- -------- --------
Income (loss) from con-
tinuing operations..... $ 2,782 $ (456) $ 2,153 $ (347) $ 4,132
======== ====== ======= ======== ========
OTHER CONSOLIDATED AND
PRO FORMA DATA:
EBITDA(/9/)............. $ 10,453 $ (214) $ 4,910 $ 3,468 $ 18,617
Ratio of EBITDA to in-
terest(/6/)............ 2.32x
Depreciation and amorti-
zation................. 3,470 242 1,131 1,634 (/4/) 6,477
Capital expenditures.... 2,628 -- 2,185 -- 4,813
</TABLE>
19
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
(1) On January 20, 1996, J.R. Cup was acquired by Radnor, and its operating
results from that date are included in the Radnor statement of operations.
The results of operations for J.R. Cup are from January 1 through January
19, 1996.
(2) Reflects elimination of StyroChem and Radnor intercompany sales.
(3) Reflects savings of $741 related to the Acquisitions as follows:
(a) StyroChem Acquisition:
Reduction in workers compensation, other insurance and employee
benefit plan costs due to more favorable Radnor plan costs........ $315
Reduction for material purchase costs related to the revised Chev-
ron contract due to volume commitment rebates and pricing (see
"Business--Raw Materials")........................................ 675
----
$990
====
(b) J.R. Cup Acquisition (includes only those cost reductions not realized
in the six-month period following the acquisition):
Reduction in shipping costs between manufacturing facilities due to
the addition of J.R. Cup manufacturing facilities................... $ 17
Reduction in manufacturing overhead, including personnel and related
fringe benefits..................................................... 139
Savings related to closing and consolidating the Des Plaines, Illi-
nois facility and West Chicago warehouse into the West Chicago, Il-
linois manufacturing facility....................................... 300
----
$456
====
(c) Other adjustments:
Additional depreciation as a result of the step-up in StyroChem as-
set value......................................................... $(769)
Reduction in depreciation as a result of the step-down in J.R. Cup
asset value....................................................... 121
Change in intercompany profit included in inventory................ (57)
------
$(705)
======
(4) Reflects savings (costs) related to the following:
Elimination of corporate selling and administrative costs allocated
to J.R. Cup by James River during the period from January 1 to
January 19, 1996.................................................. $ 854
Reduction in salary, benefits and bonus expenses related to the
elimination of certain StyroChem general and administrative per-
sonnel............................................................ 842
Elimination of certain professional and bank fees incurred by
StyroChem......................................................... 263
Amortization of deferred financing costs related to the offering of
the Notes......................................................... (375)
Amortization of noncompetition agreement with the former President
of StyroChem...................................................... (714)
Elimination of the amortization of StyroChem's deferred financing
costs............................................................. 103
-----
$ 973
=====
(5) Elimination of restructuring charges related to the closing and relocation
of certain facilities.
(6) Adjustment for interest is comprised of the following:
Estimated interest on the Notes................................... $ 7,500
Elimination of interest on debt repaid............................ (3,398)
-------
$4,102
=======
The interest rate on the Notes is 10%. The assumed interest rate on the
Credit Agreements is approximately 8.5%. Pro forma interest expense does
not include amortization of estimated debt issuance costs related to the
Credit Agreements and the Notes.
(7) Elimination of $120 prepayment penalty for StyroChem notes payable to
stockholders.
(8) Elimination of income tax provision due to the Company's net operating
loss carryforwards, which are available to reduce income tax provisions.
(9) EBITDA represents income (loss) from continuing operations before
interest, income tax expense, depreciation and amortization and
restructuring and other non-recurring charges. EBITDA is presented here to
provide additional information about the Company's ability to meet its
future debt service, capital expenditure and working capital requirements.
EBITDA is not a measure of financial performance under GAAP and should not
be considered as an alternative either to net income as an indicator of
the Company's operating performance or to cash flows as a measure of the
Company's liquidity.
20
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------- ---
HISTORICAL
--------------------------------- PRO FORMA PRO
RADNOR J.R. CUP STYROCHEM(/1/) ADJUSTMENTS FORMA
------- -------- -------------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $86,239 $98,680 $76,221 $(24,079)(/2/) $237,061
Cost of goods sold...... 75,690 80,359 68,122 (24,079)(/2/)
-- -- -- (7,657)(/3/) 192,435
------- ------- ------- -------- --------
Gross profit............ 10,549 18,321 8,099 7,657 44,626
Distribution expense.... 6,027 8,354 2,604 (480)(/4/) 16,505
Selling, general and
administrative
expenses............... 9,051 13,773 3,101 (5,852)(/5/) 20,073
------- ------- ------- -------- --------
Income (loss) from
operations............. (4,529) (3,806) 2,394 13,989 8,048
Interest................ 2,822 -- 799 7,054 (/6/) 10,675
Other (income) expense,
net.................... 526 (225) (590) -- (289)
------- ------- ------- -------- --------
Income (loss) from
continuing operations
before income taxes.... (7,877) (3,581) 2,185 6,935 (2,338)
Income tax expense
(benefit).............. -- -- 954 (954)(/7/) --
------- ------- ------- -------- --------
Income (loss) from
continuing operations.. $(7,877) $(3,581) $ 1,231 $ 7,889 $ (2,338)
======= ======= ======= ======== ========
OTHER CONSOLIDATED AND
PRO FORMA DATA:
EBITDA (/8/)............ $(2,675) $(1,001) $ 3,475 $ 16,216 $ 16,015
Ratio of EBITDA to
interest (/6/)......... 1.50x
Depreciation and
amortization........... 2,380 2,580 491 2,227 (/3/)(/5/) 7,678
Capital expenditures.... 5,491 140 3,917 9,548
</TABLE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER
31, 1995
(IN THOUSANDS)
(1) Amounts for the StyroChem Historical Statement of Operations represent
StyroChem's fiscal year ended March 30, 1996. Management believes the
results for StyroChem for its fiscal year are not materially different
from the calendar year ended December 31, 1995.
(2) Reflects elimination of StyroChem, Radnor and J.R. Cup intercompany sales.
(3) Reflects savings of $7,657 related to the Acquisitions as follows:
(a) StyroChem Acquisition:
<TABLE>
<S> <C>
Reduction in workers compensation, other insurance and employee
benefit plan costs due to more favorable Radnor plan costs....... $ 420
Reduction for material purchase costs related to the revised Chev-
ron contract due to volume commitment rebates and pricing (see
"Business--Raw Materials")....................................... 900
------
$1,320
======
(b) J.R. Cup Acquisition:
Reduction in shipping costs between manufacturing facilities due
to the addition of J.R. Cup manufacturing facilities........... $ 420
Reduction in manufacturing overhead, including personnel and re-
lated fringe benefits.......................................... 2,450
Savings related to closing and consolidating the Des Plaines,
Illinois facility and West Chicago warehouse into the West Chi-
cago, Illinois manufacturing facility.......................... 2,119
Raw material volume purchase discounts associated with the J.R.
Cup Acquisition................................................ 2,116
------
$7,105
======
(c) Other adjustments:
Additional depreciation as a result of the step-up in StyroChem
asset value.................................................... $ (972)
Reduction in depreciation as a result of the step-down in J.R.
Cup asset value................................................ 164
Change in intercompany profit included in inventory............. 40
------
$ (768)
======
</TABLE>
21
<PAGE>
(4) Reflects savings of $480 associated with the closing of the distribution
centers located in Kent, Washington and Tinton Falls, New Jersey.
Operations were consolidated into the Corte Madera, California and
Metuchen, New Jersey facilities, respectively.
(5) Reflects savings (costs) related to the following:
<TABLE>
<S> <C>
Elimination of corporate selling, general and administrative costs
allocated to J.R. Cup by James River............................. $6,201
Reduction in salary, benefits and bonus expenses related to the
elimination of certain StyroChem general and administrative per-
sonnel........................................................... 656
Elimination of certain professional and bank fees incurred by
StyroChem........................................................ 414
Amortization of deferred financing costs related to the offering
of the Notes..................................................... (500)
Amortization of noncompetition agreement with the former President
of StyroChem..................................................... (952)
Elimination of the amortization of StyroChem's deferred financing
costs............................................................ 33
------
$5,852
======
</TABLE>
(6) Adjustment for interest is comprised of the following:
<TABLE>
<S> <C>
Interest on the Notes............................................. $10,000
Elimination of interest on debt repaid............................ (2,946)
-------
$ 7,054
=======
</TABLE>
The interest rate on the Notes is 10%. The assumed interest rate on the
Credit Agreements is approximately 8.5%. Pro forma interest expense does
not include amortization of estimated debt issuance costs related to the
Credit Agreements and the Notes.
(7) Elimination of income tax provision due to the Company's net operating
loss carryforwards, which are available to reduce income tax provisions.
(8) EBITDA represents income (loss) from continuing operations before
interest, income tax expense, depreciation and amortization and
restructuring and other non-recurring charges. EBITDA is presented here to
provide additional information about the Company's ability to meet its
future debt service, capital expenditure and working capital requirements.
EBITDA is not a measure of financial performance under GAAP and should not
be considered as an alternative either to net income as an indicator of
the Company's operating performance or to cash flows as a measure of the
Company's liquidity.
22
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------------------------------------------
FINANCING PURCHASE
RADNOR TRANSACTION STYROCHEM ACCOUNTING PRO
ACTUAL ADJUSTMENTS ACTUAL ADJUSTMENTS FORMA
-------- ----------- --------- ----------- --------
(IN THOUSANDS)
ASSETS
------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash.................. $ 21 $ 29,022 (/1/) $ 28 $(29,022)(/1/) $ 49
Accounts receivable,
net.................. 14,861 12,687 (3,776)(/8/) 23,772
Inventory............. 15,432 7,521 (248)(/9/) 22,705
Deferred tax asset.... -- 1,223 (1,223)(/9/) --
Prepaid expenses and
other................ 2,549 228 2,777
-------- ------- --------
Total current as-
sets............... 32,863 21,687 49,303
Property, plant and
equipment, net......... 72,603 (2,301)(/2/) 7,327 15,384 (/9/) 93,013
Property held for sale.. -- 1,733 (1,733)(/9/) --
Noncompetition agree-
ment................... -- -- 4,760 (/9/) 4,760
Deferred income taxes... -- 1,134 (1,134)(/9/) --
Other assets............ 1,363 3,500 (/3/) 64 4,927
-------- ------- --------
Total assets........ $106,829 $31,945 $152,003
======== ======= ========
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
<S> <C> <C> <C> <C> <C>
Current liabilities
Accounts payable...... $ 16,245 $13,724 $ (3,776)(/8/) $ 26,193
Accrued liabilities... 8,587 $ (320)(/4/) 2,354 10,621
Current portion of
long-term debt....... 2,646 (2,646)(/5/) 2,278 (841)(/9/) 1,437
Taxes payable......... -- 916 916
-------- ------- --------
Total current lia-
bilities........... 27,478 19,272 39,167
Revolving debt.......... 18,241 (13,291)(/5/) 3,133 (3,133)(/9/) 4,950
Term debt............... 14,649 (14,649)(/5/) 1,848 (1,550)(/9/) 298
Mortgage Note........... 4,616 (4,616)(/5/) -- --
Senior Subordinated
Notes.................. 4,442 (4,442)(/5/) -- --
Junior Subordinated
Notes.................. 9,619 (9,619)(/5/) -- --
Senior Notes due 2003... -- 100,000 (/3/) -- 100,000
-------- ------- --------
Total long-term
debt............... 51,567 4,981 105,248
Other noncurrent liabil-
ities.................. 17,738 (17,738)(/5/) -- --
Redeemable convertible
preferred stock........ 3,000 (3,000)(/6/) -- --
Stockholders' equity
Common stock.......... 1 1 (1)(/9/) 1
Additional paid-in
capital.............. 7,497 999 (999)(/9/) 7,497
Foreign currency
translation
adjustment........... -- (95) 95 (/9/) --
Retained earnings
(deficit)............ (452) 542 (/7/) 6,787 (6,787)(/9/) 90
-------- ------- --------
Total stockholders'
equity............. 7,046 7,692 7,588
-------- ------- --------
Total liabilities
and stockholders'
equity........... $106,829 $31,945 $152,003
======== ======= ========
</TABLE>
23
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(1) Net cash proceeds from the sale of the Old Notes paid as consideration for
the StyroChem Acquisition.
(2) J.R. Cup purchase accounting adjustment resulting from discount of Junior
Subordinated Notes of $1.5 million and exercise of call option to complete
the J.R. Cup Acquisition at a discount of $1.2 million, net of an increase
in the redemption value of the non-interest bearing Senior Subordinated
Notes of $0.3 million and a reduction in depreciation of $0.1 million (see
note 7).
(3) Gross proceeds and transaction costs, respectively, related to the
Offering.
(4) Reduction due to payment of accrued interest on the Term Loans, Mortgage
Note and Junior Subordinated Notes and forgiveness of interest from
discount of subordinated notes (see note 2).
(5) Payment of Existing Credit Agreement, Senior Subordinated Notes, Junior
Subordinated Notes, the Mortgage Note and call option to repurchase
minority interest held by James River.
(6) Represents the effect of the repurchase of the redeemable convertible
preferred stock, which has a face value of $3.0 million.
(7) Effect on retained earnings of interest forgiveness from Junior
Subordinated Notes of $0.4 million and depreciation reduction due to
purchase accounting adjustments for $0.1 million (see notes 2 and 4).
(8) Elimination of intercompany accounts receivable and payable resulting from
WinCup purchases of EPS beads from StyroChem.
(9) Purchase accounting adjustments related to the acquisition of StyroChem,
including repayment of certain existing StyroChem debt and distribution of
certain assets held for sale to the stockholders of StyroChem immediately
prior to the StyroChem Acquisition.
24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of December 31,
1994 and 1995, and for the years ended December 31, 1993, 1994 and 1995, have
been derived from the audited Radnor Financial Statements and should be read
in conjunction with such audited Radnor Financial Statements which are
included herein. The selected consolidated financial data presented below as
of December 31, 1991, 1992 and 1993 and for the years ended December 31, 1991
and 1992 have been derived from Radnor's and its predecessors' unaudited
consolidated financial statements not included herein. The data as of and for
the nine months ended September 30, 1995 and September 30, 1996 have been
derived from the unaudited Radnor Financial Statements included herein. The
unaudited Radnor Financial Statements have been prepared on the same basis as
the audited Radnor Financial Statements included herein and, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the Company's financial
position and results of operations for the period. The results of operations
for interim periods are not necessarily indicative of the results to be
expected for the full year. Financial results for the nine months ended
September 30, 1996 are not fully comparable to the nine months ended September
30, 1995 because of the January 1996 acquisition of the J.R. Cup business. The
nine months ended September 30, 1995 and the years ended December 31, 1993,
1994 and 1995 contain only the results of operations from the Radnor foam cup
and container business and exclude any adjustments to reflect the J.R. Cup
Acquisition. The selected consolidated financial data should be read in
conjunction with "Pro Forma Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Radnor Financial Statements included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(/1/) RADNOR(/1/)
------------------------- -------------------------------------------------------------
YEAR ENDED JANUARY 1- FEBRUARY 29- NINE MONTHS ENDED
DECEMBER 31, FEBRUARY 28, DECEMBER 31, YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------ ------------ ------------ --------------------------- -------------------
1991 1992 1992 1993 1994 1995 1995 1996(/2/)
------------ ------------ ------------ ------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales.............. $ 97,418 $12,883 $67,904 $83,569 $ 80,850 $ 86,239 $ 64,094 $128,052
Cost of goods sold..... 86,680 2,878 57,231 68,454 64,078 75,690 54,090 98,534
-------- ------- ------- ------- -------- -------- -------- --------
Gross profit........... 10,738 5 10,673 15,115 16,772 10,549 10,004 29,518
Distribution expense... 7,982 1,018 4,427 6,599 5,584 6,027 4,334 9,564
Selling, general and
administrative
expenses.............. 17,442 3,245 8,298 10,330 8,209 9,051 6,492 12,818
Restructuring charges.. -- -- -- -- -- -- -- 855
-------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
operations............ (14,686) (4,258) (2,052) (1,814) 2,979 (4,529) (822) 6,281
Interest............... -- -- 1,562 2,518 3,001 2,822 2,486 3,346
Other (income) expense,
net................... 2,269 222 386 290 526 106 153
-------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes... (16,955) (4,258) (3,836) (4,718) (312) (7,877) (3,414) 2,782
Income tax
expense(/3/).......... -- -- -- -- -- -- -- --
-------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
continuing operations. $(16,955) $(4,258) $(3,836) $(4,718) $ (312) $ (7,877) $ (3,414) $ 2,782
======== ======= ======= ======= ======== ======== ======== ========
OTHER FINANCIAL AND
OPERATING DATA:
EBITDA(/4/)............ $(10,742) $(3,232) $(1,609) $ (620) $ 3,992 $ (2,675) $ 348 $ 10,453
Ratio of earnings to
fixed charges(/5/).... 1.63x
Deficiency of earnings
available to cover
fixed charges(/5/).... $(16,955) $(4,258) $(3,836) $(4,718) $ (312) $ (7,877) $ (3,414)
Capital expenditures... $ 621 $ 1,645 $ 5,491 $ 1,684 $ 2,628
Depreciation and
amortization.......... $6,213 $ 1,026 $ 665 $ 1,580 $ 1,303 $ 2,380 $ 1,276 $ 3,470
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital........ $ 14,325 $ (647) $ (112) $ 1,620 $(10,362) $ (934) $ 5,385
Total assets........... 61,789 48,851 36,650 43,033 41,828 40,428 106,829
Total debt (including
current portion)...... -- 26,446 31,531 35,410 16,252 34,585 54,213
Stockholders' equity
(deficit)............. 56,708 5,751 (6,576) (14,969) 3,554 (27,373) 7,046
</TABLE>
25
<PAGE>
- --------
(1) The historical financial data for the periods prior to February 29, 1992
and as of December 31, 1991 include only the results of operations and
balance sheet data of Scott Container Products Group, Inc. which was
acquired by Radnor from KCTC on February 28, 1992. The Company's financial
data do not include the results from the cutlery, straws and plastic cup
operations, which were sold in 1995 and reflected as discontinued
operations in the Radnor Financial Statements. See Note 1 to the Radnor
Financial Statements.
(2) The historical financial data include Radnor and its consolidated
subsidiaries, excluding discontinued operations, as of and for the nine
months ended September 30, 1996. Prior to January 20, 1996, the Company's
results from continuing operations do not include the results of J.R. Cup,
which was acquired on that date.
(3) The Company recorded no federal income tax expense during the periods
presented due to the incurrence of operating losses or the utilization of
net operating loss carryforwards during those periods.
(4) EBITDA represents income (loss) from continuing operations before
interest, income tax expense, depreciation and amortization and
restructuring and other non-recurring charges. EBITDA is presented here to
provide additional information about the Company's ability to meet its
future debt service, capital expenditure and working capital requirements.
EBITDA is not a measure of financial performance under GAAP and should not
be considered as an alternative either to net income as an indicator of
the Company's operating performance or to cash flows as a measure of the
Company's liquidity.
(5) For purposes of this computation, fixed charges consist of interest,
amortization of deferred financing fees and that portion of lease rental
expense representative of the interest factor (deemed to be one-third of
lease rental expense). Earnings consist of income from continuing
operations before income taxes plus fixed charges.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is the second largest producer in the U.S. of foam cup and
container products for the foodservice industry. The Company manufactures foam
cups for hot and cold drinks, foam bowls and containers and thermoformed lids
and sells its products to national, institutional and retail customers located
throughout the U.S., in Mexico and in other countries. The Company, through
its predecessors, has been manufacturing foam cups and containers since 1961.
The Company was organized in 1991 to facilitate the acquisition of Scott
Container Products Group, Inc. from KCTC, which occurred in February 1992. In
January 1996, the Company executed a joint venture agreement with James River,
which resulted in the acquisition of its J.R. Cup business. In December 1996,
the Company purchased James River's interest in the Joint Venture and repaid
certain subordinated notes issued to James River. For a further description of
the J.R. Cup Acquisition, see Note 1 to the Radnor Financial Statements. In
addition, at the same time, the Company also purchased the outstanding capital
stock of and other equity interests in StyroChem. StyroChem supplies the
Company with approximately 50% of the EPS beads used in its manufacture of
foam products. See "The Company--The Acquisitions."
Net sales
Net sales represent the gross sales of the Company's products less cash
discounts and allowances, which historically have averaged approximately 2% of
net sales. Sales incentives and volume rebates to customers are classified as
selling expenses and are included in selling, general and administrative
expenses.
Cost of goods sold
Raw material costs represent a large portion of the Company's cost of goods
sold and are susceptible to price fluctuations based upon supply and demand
and general market conditions. Beginning in April 1994 and continuing through
August 1995, prices of raw materials reached historically high levels. Since
that time, raw material prices have declined and are near early 1994 levels.
Although future raw material prices cannot be predicted with accuracy, the
prices for the raw materials used in the Company's products are forecasted by
independent industry surveys and producer reports to remain stable over the
next several years.
In connection with the Company's engineering initiatives, the Company has
invested significant resources in research and development. The Company
expenses all research and development costs in the period incurred and
includes such costs in cost of goods sold. As a percentage of net sales, these
costs have represented 0.6%, 0.5%, 0.9% and 1.1% in 1993, 1994, and 1995 and
for the nine months ended September 30, 1996, respectively.
Distribution expense
The Company ships its products from manufacturing locations using a
combination of common carriers, its own fleet and leased vehicles.
Distribution expense consists of the costs to ship products, including costs
of labor and leased vehicles.
Selling, general and administrative expenses
Selling, general and administrative expenses were partially allocated to the
cutlery, straws and plastic cup operations which were sold and reported as
discontinued operations in 1995. These allocated
27
<PAGE>
expenses were not eliminated but were absorbed in the remaining business in
anticipation of the J.R. Cup Acquisition in January 1996. The J.R. Cup
Acquisition also required the Company to incur additional sales and marketing
costs.
Restructuring charges
During the first quarter of 1996, the Company closed its Des Plaines,
Illinois manufacturing facility and consolidated those operations into its
West Chicago, Illinois facility. In addition, the Company consolidated certain
warehousing facilities and relocated its executive offices to Radnor,
Pennsylvania. The plant and warehouse consolidations, together with the
relocation of its executive offices, resulted in $0.9 million of restructuring
charges during the nine months ended September 30, 1996.
Net operating loss carryforwards
The Company had net operating loss carryforwards of approximately $11.7
million as of September 30, 1996. The carryforwards expire through 2010.
Management believes that the Company's future taxable income will be
sufficient to use the $11.7 million of net operating loss carryforwards prior
to their expiration; however, there can be no assurance that the Company's net
operating loss carryforwards will become available or that the Company will
generate future taxable income. The benefit of the net operating loss
carryforwards has not been reflected in the Company's financial statements.
COMPARABILITY OF PERIODS
Financial results for the nine months ended September 30, 1996 are not fully
comparable to the nine months ended September 30, 1995 because of the January
1996 acquisition of the J.R. Cup business. The nine months ended September 30,
1995 and the years ended December 31, 1993, 1994 and 1995 contain only the
results of operations from the Radnor foam cup and container business and
exclude any adjustments to reflect the J.R. Cup Acquisition.
28
<PAGE>
CERTAIN EFFECTS RESULTING FROM THE ACQUISITIONS
The Company believes that the Acquisitions will result in certain cost
savings, including, but not limited to, the following: (i) the consolidation
of certain manufacturing and administrative functions, (ii) reductions in raw
material costs, (iii) the elimination of redundant facilities and (iv) the
realignment of customer shipping locations. The Company believes that, had
such cost savings been implemented as of January 1, 1995, such savings would
have approximated $16.2 million and $3.5 million in the aggregate for 1995 and
the nine months ended September 30, 1996, respectively, as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
StyroChem Acquisition:
Reduction in workers compensation, other insurance
and employee benefit plan costs due to more
favorable Radnor plan costs...................... $ 420 $ 315
Reduction for material purchase costs related to
the revised Chevron contract due to volume
commitment rebates and pricing................... 900 675
Elimination of certain general, administrative and
corporate costs.................................. 1,070 1,105
Change in intercompany profit included in
inventory........................................ 40 (57)
Elimination of prepayment penalty for StyroChem
notes payable to stockholders.................... -- 120
------- ------
2,430 2,158
------- ------
J.R. Cup Acquisition:
Reduction in shipping costs between manufacturing
facilities due to the addition of J.R. Cup
manufacturing facilities......................... 420 17
Reduction in manufacturing overhead, including
personnel and related fringe benefits............ 2,450 139
Savings related to closing and consolidating the
Des Plaines, Illinois plant and the West Chicago
warehouse into the West Chicago, Illinois
manufacturing facility........................... 2,119 300
Raw material volume purchase discounts associated
with the J.R. Cup Acquisition.................... 2,116 --
Elimination of warehouses in Kent, Washington and
Tinton Falls, New Jersey, which were consolidated
into the Corte Madera, California and Metuchen,
New Jersey manufacturing facilities,
respectively..................................... 480 --
Elimination of corporate selling, general and
administrative expenses allocated to J.R. Cup by
James River...................................... 6,201 854
------- ------
13,786 1,310
------- ------
$16,216 $3,468
======= ======
</TABLE>
In addition to these cost savings, the Company believes that it may be able
to achieve additional cost savings from (i) reductions in facility costs
arising from renegotiated rents or reduced space, (ii) a reduction in labor
costs from production efficiencies and a reduced number of direct production
employees and (iii) potential further raw materials cost reductions from the
StyroChem Acquisition.
29
<PAGE>
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Radnor Financial Statements
included elsewhere in this Prospectus.
The following table sets forth, for the periods indicated, certain operating
data as a percentage of net sales.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
---------------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net sales............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................... 81.9 79.3 87.8 84.4 76.9
----- ----- ----- ------ ------
Gross profit.......................... 18.1 20.7 12.2 15.6 23.1
Distribution expense.................. 7.9 6.9 7.0 6.8 7.5
Selling, general and administrative
expenses............................. 12.4 10.1 10.5 10.1 10.0
Restructuring charges................. -- -- -- -- 0.7
----- ----- ----- ------ ------
Income (loss) from operations......... (2.2) 3.7 (5.3) (1.3) 4.9
Interest.............................. 3.0 3.7 3.3 3.9 2.6
Income (loss) from continuing
operations........................... (5.6%) (0.4%) (9.1%) (5.3%) 2.2%
===== ===== ===== ====== ======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
Net sales for the nine months ended September 30, 1996 were $128.1 million,
almost double the net sales of $64.1 million for the nine months ended
September 30, 1995. The increase was due primarily to the acquisition of J.R.
Cup on January 20, 1996.
Costs of goods sold increased to $98.5 million or 76.9% of net sales for the
nine months ended September 30, 1996, from $54.1 million or 84.4% of net sales
for the same period in 1995. The decline in cost of goods sold as a percentage
of net sales was due primarily to a decline in raw material prices resulting
from improved market conditions, the increased purchasing power of the
combined company and reductions in manufacturing overhead as a result of the
J.R. Cup Acquisition.
Gross profit increased to $29.5 million or 23.1% of net sales for the nine
months ended September 30, 1996, from $10.0 million or 15.6% of net sales for
the same period in 1995. The increase in gross profit as a percentage of net
sales was due primarily to lower raw material prices and cost reductions
related to the J.R. Cup Acquisition.
Distribution expense increased to $9.6 million or 7.5% of net sales for the
nine months ended September 30, 1996, from $4.3 million or 6.8% of net sales
for the same period in 1995. The increase in distribution expense as a
percentage of net sales was due primarily to rate increases by freight
carriers and a higher percentage of consumer sales, which require greater
delivery costs. The Company also temporarily incurred additional freight costs
as a result of a plant closure and the realignment of customer shipping
locations.
Selling, general and administrative expenses increased to $12.8 million or
10.0% of net sales for the nine months ended September 30, 1996, from $6.5
million or 10.1% of net sales for the same period in 1995. Selling, general
and administrative expenses were constant as a percentage of net sales due
primarily to the cutlery, straws and plastic cup operations which were sold
and reported as discontinued operations in 1995. These allocated expenses were
not eliminated but were absorbed in the remaining business.
30
<PAGE>
Income (loss) from operations increased to $6.3 million or 4.9% of net sales
for the nine months ended September 30, 1996, from a loss from operations of
$0.8 million for the same period in 1995. As noted above, during the nine
months ended September 30, 1996, the Company recorded restructuring charges of
$0.9 million, due primarily to a plant closure and the relocation of its
executive offices.
Interest increased to $3.3 million or 2.6% of net sales for the nine months
ended September 30, 1996, from $2.5 million or 3.9% of net sales for the same
period in 1995 due primarily to an increase in borrowings related to the J.R.
Cup Acquisition.
Other expense, net increased to $0.2 million or 0.1% of net sales for the
nine months ended September 30, 1996 from $0.1 million or 0.2% of net sales
for the same period in 1995. The increase in other expenses, net was due
primarily to bank charges.
Income (loss) from continuing operations increased to $2.8 million or 2.2%
of net sales for the nine months ended September 30, 1996, from a loss from
continuing operations of $3.4 million for the same period in 1995, for the
reasons outlined above.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Net sales increased to $86.2 million in 1995, representing an increase of
$5.3 million or 6.6% over net sales of $80.9 million in 1994. The increase in
net sales was primarily due to increased selling prices announced in the
fourth quarter of 1994 as a result of rising raw material costs experienced by
the industry. Unit volume for 1995 remained constant due primarily to
increases in consumer product sales, offset by a reduction in institutional
sales volume.
Cost of goods sold increased to $75.7 million or 87.8% of net sales in 1995,
from $64.1 million or 79.3% of net sales in 1994. The increase in cost of
goods sold as a percentage of net sales was due primarily to the industry-wide
rise in raw material costs, which began in April 1994 and continued through
August 1995.
Gross profit decreased to $10.6 million or 12.2% of net sales in 1995, from
$16.8 million or 20.7% of net sales in 1994. The decrease in gross profit as a
percentage of net sales was due primarily to the rise in raw material costs,
which was only partially offset by selling price increases during 1995.
Distribution expense increased slightly to $6.0 million or 7.0% of net sales
in 1995, from $5.6 million or 6.9% of net sales in 1994. The increase in
distribution expense as a percentage of net sales for 1995 was due primarily
to slightly higher freight rates incurred in early 1995.
Selling, general and administrative expenses increased to $9.1 million or
10.5% of net sales in 1995, from $8.2 million or 10.1% of net sales in 1994.
The increase in selling, general and administrative expenses as a percentage
of net sales was due primarily to an increase in commissions related to retail
sales.
Income (loss) from operations declined to a loss from operations of $4.5
million in 1995, from income from operations of $3.0 million in 1994. The
reduction in income from operations was due primarily to the increase in raw
material costs, partially offset by an increase in selling prices.
Interest decreased to $2.8 million or 3.3% of net sales in 1995, from $3.0
million or 3.7% of net sales in 1994. The decrease in interest as a percentage
of net sales was due primarily to lower debt levels as a result of a
divestiture in 1995.
Other expense, net was $0.5 million for 1995, as compared to $0.3 million in
1994.
Loss from continuing operations was $7.9 million in 1995, as compared to
$0.3 million in 1994. The increase in the loss from continuing operations
resulted from the industry-wide increase in raw material costs, partially
offset by an increase in selling prices.
31
<PAGE>
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net sales decreased to $80.9 million for 1994, representing a decrease of
$2.7 million over net sales of $83.6 million in 1993. The decline in net sales
was due primarily to a decline in sales volume due to the closure of the
Company's Tinton Falls, New Jersey plant in September 1993.
Cost of goods sold decreased to $64.1 million or 79.3% of net sales in 1994,
from $68.5 million or 81.9% of net sales in 1993. The decline in cost of goods
sold as a percentage of net sales was due primarily to the September 1993
closure of the Tinton Falls plant that had higher manufacturing costs as
compared to the Company's other locations.
Gross profit increased to $16.8 million or 20.7% of net sales in 1994, from
$15.1 million or 18.1% of net sales in 1993. The increase in gross profit as a
percentage of net sales was due primarily to the plant closure described
above.
Distribution expense decreased to $5.6 million or 6.9% of net sales in 1994,
from $6.6 million or 7.9% of net sales in 1993. The increase in distribution
expense as a percentage of net sales was due primarily to a realignment of
customers as a result of the plant closure.
Selling, general and administrative expenses decreased to $8.2 million or
10.1% of net sales in 1994, from $10.3 million or 12.4% of net sales in 1993.
The decrease in selling, general and administrative expenses as a percentage
of net sales was due primarily to a reduction in the number of independent
sales representatives and administrative personnel together with related
overhead expenses.
Income (loss) from operations increased to $3.0 million or 3.7% of net sales
in 1994, from a loss from operations of $1.8 million in 1993. The increase in
income from operations was due primarily to lower operating expenses as a
result of staff reductions and lower manufacturing costs.
Interest increased to $3.0 million or 3.7% of net sales in 1994, from $2.5
million or 3.0% of net sales in 1993. The increase in interest as a percentage
of net sales was due primarily to a higher level of borrowings.
Other expense, net was $0.3 million in 1994 related to the sale of a
manufacturing location, compared to $0.4 million in 1993.
Loss from continuing operations was $0.3 million in 1994, as compared to
$4.7 million in 1993, for the reasons outlined above.
LIQUIDITY AND CAPITAL RESOURCES
During the years ended December 31, 1993, 1994 and 1995 and the nine months
ended September 30, 1996, the Company's principal sources of funds consisted
of cash from operations and financing sources. For the nine months ended
September 30, 1996, cash provided by operating activities was $4.3 million
compared to cash provided by operating activities of $2.1 million for the same
period in 1995. While net income for the nine months ended September 30, 1996
was $3.5 million compared to a net loss for the same period in 1995 of $4.9
million, working capital increased by $6.3 million in the nine months ended
September 30, 1996, primarily from an increase of accounts receivable and
inventory due to a higher level of sales following the J.R. Cup Acquisition.
The Company has managed its growth in working capital through a combination of
working capital financing, favorable terms from vendors and proceeds of debt
financing for capital expenditures.
As of September 30, 1996, the outstanding balance under the $28.0 million
Revolver was $18.2 million. In connection with the consummation of the
Offering, the Company entered into the Amended Credit Agreement under which
the Existing Credit Agreement was amended and restated primarily to increase
the revolving credit facility to $30.0 million and to include Radnor, WinCup,
SP Acquisition Co.
32
<PAGE>
and StyroChem International, Inc. as borrowers. See "Description of the
Company's Credit Facilities--The Amended Credit Agreement." Also, in February
1994, the Company's Canadian subsidiary entered into the Canadian Credit
Agreement, certain terms of which have been amended through an annual review
process. The Canadian Credit Agreement consists of a term loan in the
principal amount of $0.7 million Canadian and a revolving credit facility of
up to $2.5 million Canadian. See "Description of the Company's Credit
Facilities--The Canadian Credit Agreement."
The Company's principal uses of cash for the next several years will be
working capital requirements and capital expenditures. The reduction in debt
service requirements resulting from the offering of the Notes and the
amendment of the Credit Agreements will provide the Company with increased
flexibility to make capital expenditures that management believes will provide
an attractive return on investment. Management expects that annual capital
expenditures will increase from historical levels during the next few years as
the Company pursues new development and cost-reduction opportunities.
Management has identified potential capital investment opportunities of
approximately $6.0 million over the next twelve months, in addition to
approximately $2.0 million of non-discretionary capital expenditures
anticipated during such period.
The Company's capital expenditures for the years ended December 31, 1994 and
1995 and the nine months ended September 30, 1996 were $1.6 million, $5.5
million and $2.6 million, respectively. Total capital expenditures increased
in 1995 due to the implementation of the engineering initiatives, which began
in 1994 and are expected to be approximately $5.0 million for 1996.
Management believes that cash generated from operations plus funds from
revolving credit facilities under the Credit Agreements will be sufficient to
meet the Company's expected operating needs, planned capital expenditures and
debt service requirements. However, there can be no assurance that sufficient
funds will be available from operations or borrowings under the Credit
Agreements to meet the Company's cash needs.
33
<PAGE>
BUSINESS
GENERAL
The Company is the second largest manufacturer in the U.S. of disposable
foam cup and container products for the foodservice industry, with
approximately a 35% share of this market segment in 1995. The Company
manufactures foam cups for hot and cold drinks, foam bowls and containers and
thermoformed lids, as well as the EPS beads from which such foam products are
manufactured. The Company's 14 highly automated manufacturing facilities
produced 13 billion foam cups, containers and lids and 115 million pounds of
EPS beads in 1995. Through StyroChem, the Company manufactures EPS beads for
its own consumption as well as for third party manufacturers of foam
containers, insulation products and packaging products. The Company believes
that its acquisition of StyroChem, a supplier of EPS beads to the Company
since 1976, will strengthen the Company's competitive position by lowering raw
material costs, improving product quality and enhancing manufacturing
efficiencies. For the nine months ended September 30, 1996, pro forma for the
Acquisitions, the Company had net sales and EBITDA of $172.3 million and $18.6
million, respectively.
HISTORY
The Company, through WinCup and J.R. Cup, has been manufacturing foam cups
and containers for more than 30 years. The WinCup foam cup and container
business was established in 1961 and began purchasing EPS beads from StyroChem
when that company began operations in 1976. J.R. Cup's predecessor began
manufacturing foam cups and containers in 1963 and was purchased by James
River in 1986. The Company believes that the consolidation of StyroChem and
J.R. Cup with the Company's foam cup and container operations is a significant
strategic opportunity due to the technological synergies, economies of scale
and broader geographic distribution of the combined businesses.
INDUSTRY OVERVIEW
The Company competes primarily within the disposable cup and container
market of the foodservice industry, which includes products manufactured with
paper, plastic, foam and other materials. A recent independent industry survey
estimated that sales of disposable foodservice products were in excess of $7.0
billion in 1994, with sales of disposable cups and containers estimated to
have been more than $2.0 billion. The foam segment of the disposable cup and
container market, which the Company believes had sales of approximately $550.0
million in 1995, is highly concentrated, with the Company and its primary
competitor accounting for more than 80%. The market for other plastic and
paper cups and containers is more fragmented, with at least six different
manufacturers.
The factors that originally gave rise to the use of disposable products
continue to support the market's growth. These include lower labor,
maintenance and energy costs as compared to reusable products, as well as
sanitary considerations and growth in the consumption of take-out foods and
beverages. The expansion of fast-food restaurant chains and the consolidation
of some foodservice distributors into larger companies with a national
presence have also increased the use of disposable products.
In addition to the factors described above, the use of foam cups and
containers has increased significantly over the last two decades due to the
superior insulating qualities of foam and its lower production costs, as
compared to paper. Industry unit shipments of foam cups and containers grew
from 13 billion in 1974 to 28 billion in 1994. The success of foam cups to
date has been primarily in the hot drink cup segment. The Company believes
there is significant growth opportunity in the sale of foam cold drink cups,
particularly the large (16 through 44 ounce) sizes on which the Company makes
higher margins.
34
<PAGE>
In addition to being used in the manufacture of foam cups and containers,
EPS beads are also used by manufacturers of insulation products and packaging
products. Insulation products are typically used as insulation materials for
roofs, walls and foundations. Packaging products are usually custom molded and
are used to protect products such as computers, electronic consumer products
and appliances from damage while being shipped.
COMPETITIVE STRENGTHS
The Company has a strong competitive position in the foam segment of the
disposable cup and container market. The Company attributes its prominent
market position to the following factors:
. Customer service and quality products. The Company's attention to customer
service and emphasis on high-quality products allow it to continue to meet
the needs of its existing customers and attract new ones. Customer service
is enhanced by the Company's breadth of product offerings, extensive order-
entry system and strategically located manufacturing facilities. These
attributes enable the Company to meet the national distribution
requirements of its customers in an efficient and cost-effective manner.
The Company also coordinates design efforts with its customers to develop
new products, such as the new "flare" cup that combines an enhanced
appearance with a stronger rim construction.
. Proprietary technology. The Company has developed a broad array of
proprietary technology that is utilized in various stages of its
manufacturing operations. Custom-designed and built molding equipment, for
example, allows the Company to better meet customer requests for
specialized container designs, custom printing or embossing, as well as to
maintain high-volume production runs. Other proprietary technology includes
automated materials handling and auto-case packaging machines. With
StyroChem, the Company also has the ability to customize EPS bead
formulations to further enhance manufacturing efficiencies and specific
product features.
. Strong customer relationships. Long-term relationships with its customers
have been an important factor in the Company's success. Of the Company's
ten largest customers, nine have been purchasing products from the Company
for more than ten years. The Company works closely with its customers to
address a variety of needs, including custom product development and
tooling, seasonal marketing programs and specialized printing requirements.
The Company believes that the strength of its customer relationships
results from consistently meeting or exceeding customer expectations.
. Experienced management team. The Company's management team is highly
experienced, with a majority of the Company's senior sales, manufacturing,
administration and engineering executives having spent more than 20 years
in the foodservice industry. The Company's executive management also has
extensive experience in managing and integrating acquisitions of businesses
in various industries, including the foodservice industry.
BUSINESS STRATEGY
The Company's business strategy is to increase its revenues and
profitability and to further enhance its market position by emphasizing the
following initiatives:
. Cost reduction and productivity enhancements. The Company is continuing to
reduce manufacturing costs by upgrading existing equipment and developing
new equipment and processes that enhance productivity and improve
manufacturing quality. The Company's goal is to move toward a just-in-time
manufacturing process. Production costs have also been and will continue to
be reduced by eliminating redundant facilities, lowering transportation
costs and exploiting economies of scale (including raw material pricing)
provided by the Company's high-volume production. The Company has closed
several manufacturing and distribution facilities and the Company continues
to evaluate consolidation opportunities. In addition, the Company has taken
advantage of its nationwide network of manufacturing facilities to route
product shipments from the nearest plant, thereby reducing transportation
costs.
35
<PAGE>
. Integrated manufacturing process. The StyroChem Acquisition will result in
a more integrated manufacturing process, thereby reducing the Company's
cost of raw materials and mitigating the impact of raw material price
fluctuations. Control over EPS bead manufacturing should also provide more
reliable, consistently high-quality EPS beads, improving the Company's
overall manufacturing efficiencies. Following the StyroChem Acquisition,
the Company has continued to purchase a significant amount of its EPS beads
requirements from Nova Chemicals, Inc. The Company intends to increase over
time the amount of EPS beads manufactured for its own internal consumption.
. New markets and improved market position. The Company believes it has a
significant opportunity to increase its share of the disposable cup and
container market by positioning foam products, with their superior
insulating qualities and lower production costs, as an alternative to
comparable paper products. The Company is developing new products, such as
the "flare" cup, that will provide potential customers with an attractive
low-cost alternative to paper cups. In addition, the Company is pursuing
opportunities to increase sales of its foam products to both current and
new customers in international markets. In particular, the Company believes
that there are significant growth opportunities in European and Asian
markets. Foam cup and container use in these markets is significantly less
than in the U.S. The Company has had discussions with suppliers and
customers regarding expansion in these markets.
. Product development and strategic acquisitions. The Company intends to
pursue further growth opportunities through the introduction of new and
enhanced products. In addition, the Company will seek strategic
acquisitions, joint ventures and alliances that may broaden the Company's
product lines.
PRODUCTS
The Company manufactures a broad range of foam cups, bowls and containers,
foam packaging products and thermoformed plastic lids. The use of foam
provides an insulating feature to the Company's products, allowing them to be
used for both hot and cold beverages and food products while enhancing comfort
for the end user. Foam cups are manufactured in varying sizes (4 to 44 ounces)
for both hot and cold beverages and are sold under the Dixie, COMpac, Profit
Pals, STYROcup, Handi-Kup HK and Simplicity brand names. Foam bowls and other
containers are made in varying sizes (3.5 to 32 ounces) for both hot and cold
food products and are sold under the STYROcontainers brand name. The Company
also manufactures thermoformed leak-resistant plastic lids for its cups, bowls
and containers. These lids feature a "stacking ring" that minimizes the
shifting of a second cup when placed on top of the first cup. Other enhanced
lid features include vents, tear-away tabs and straw slots, depending on the
intended use. Cups, bowls, containers and lids are designed so that the same
lid can be interchanged with many different cup, bowl or container sizes,
which simplifies inventory and display area requirements.
The Company's cups, bowls and containers are available in both smooth and
patterned designs and are available with custom offset or embossed printing.
The Company also manufactures a broad range of custom-designed foam containers
for many of its large national accounts. A significant component of this line
of business is the manufacture of containers for customers such as Nissin Food
Products Co., Ltd., Maruchan, Inc. and Campbell Soup Co., which use the
containers for dried noodle products sold through retail grocery and
supermarket chains. The Company also supplies its products in private label
packaging for certain of its customers.
The Company works continuously with its customers to develop new products.
The recently introduced "flare" cup design, for example, replaces the heavier
rim typically built into the top of a foam cup with a smooth, flared edge that
improves the stability of the cup's construction. Management believes that the
flare cup has been well-received by customers because it combines the
favorable appearance of paper with the insulating qualities of foam.
StyroChem manufactures EPS beads for the Company's internal consumption, in
addition to selling directly to third party manufacturers of foam containers,
insulation products and packaging products.
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<PAGE>
StyroChem has been a long-term supplier of EPS beads to the Company. The EPS
beads are categorized by grade, with the highest grade, cup-grade beads, used
to manufacture foam cups and containers. Block-grade and shape-grade beads are
sold to manufacturers of insulation and packaging products, respectively.
SALES, MARKETING AND CUSTOMERS
The Company sells its products through a 63-person sales organization and
through an extensive network of more than 50 independent sales
representatives. Sales and marketing efforts are directed by the Company's
Senior Vice President of Sales and Marketing and are supported by 12 senior
sales managers with an average of more than 14 years' experience in the
foodservice industry. The Company believes its experienced sales team and
long-term representative relationships enhance the Company's ability to
provide high levels of customer service and specialized marketing programs,
including custom-designed foam products. Major end users of the Company's
products include fast-food restaurants, full-service restaurants, hospitals,
nursing homes, educational institutions, airlines, business offices, movie
theaters and other leisure time concessionaires, such as sports stadiums.
The Company sells to more than 1,600 national, institutional and retail
accounts throughout the U.S., in Mexico and in other countries. This customer
base, which includes many of the foodservice industry's largest companies, can
be divided into three major categories:
. National Accounts. National accounts are customers that utilize foam
products in the sale of their own products and consist primarily of large
fast-food restaurant chains and convenience stores. During 1995, sales to
these customers accounted for approximately 14.5% of the Company's net
sales pro forma for the Acquisitions, and included Perseco Co. (the
distribution arm for McDonald's Corporation), Fast Food Merchandisers (the
distribution arm for Hardee's Food Systems, Inc.), Kentucky Fried Chicken
Corp., Marriott International, Inc., Dunkin' Donuts Incorporated and The
Southland Corporation.
. Institutional Accounts. Institutional accounts are customers that purchase
foam products with a view toward reselling such products in bulk to
institutional end users, such as hospitals, nursing homes, educational
institutions, airlines, movie theaters and similar leisure time
concessionaires, such as sports stadiums. These customers, representing
approximately 49.7% of the Company's net sales in 1995 pro forma for the
Acquisitions, are primarily large foodservice distributors and warehouse
clubs. Companies such as Sysco Corporation, Alliant Foodservice Inc., U.S.
Foodservice Inc. and Food Services of America have all been customers for
more than ten years. This group also includes key buying organizations such
as ComSource Independent Foodservices Cos., Inc. and Affiliated Paper
Companies, Inc.
. Retail Accounts. Retail accounts are customers that purchase foam products
for resale to actual consumers of the products and consist primarily of
supermarket chains and discount stores. In 1995, retail customers accounted
for approximately 12.8% of the Company's net sales pro forma for the
Acquisitions and also included ten of the largest supermarket chains in the
U.S. Representative customers include Sam's Club Division, WAL-MART Stores,
Inc., K-Mart Corporation, Kroger Food Stores, Winn-Dixie Stores, Inc., Food
Lion, Inc. and Albertson's, Inc.
Pro forma for the Acquisitions, no customer represented more than 9.0% of
the Company's net sales for 1995. In addition, the five largest accounts
represented approximately 30.0% of the Company's pro forma net sales for 1995.
Approximately 10% of the Company's foam product sales are made pursuant to
contracts under which product prices are automatically adjusted based on
changes in EPS bead prices. Substantially all of the Company's other foam
product sales are made pursuant to contracts or other arrangements under which
the Company has the right to change product prices on 30 to 60 days' prior
written notice.
37
<PAGE>
MANUFACTURING
The Company's highly automated manufacturing facilities produced 13 billion
foam cups, containers and lids and 115 million pounds of EPS beads,
respectively, in 1995. The Company's foam products are made with custom-
designed foam cup molding machines, lid production machines and foam cup and
container printing machines. The Company's ten foam plants, located throughout
the U.S., generally operate 24 hours a day, seven days a week and 355 days a
year. StyroChem operates four plants located in the U.S. and Canada that
manufacture EPS beads from styrene monomer.
Manufacturing Process
The manufacture of EPS beads, the primary raw material in the manufacture of
foam products, has two steps: polymerization and impregnation. In the
polymerization phase, styrene monomer, which is a commodity petrochemical
derived primarily from benzene and ethylene, is suspended in water and then
treated with chemicals and catalysts to produce polystyrene crystal in various
sizes, each of which has different end-use applications. To produce EPS beads,
the crystal is impregnated with a high-purity pentane gas.
The Company manufactures its foam cups and containers utilizing a custom
molding process. First, the cup-grade EPS beads are blended with a lubricating
agent and then pre-expanded so that the EPS beads are of the appropriate
density. These pre-expanded EPS beads are then fed through special screeners
to remove undersized and oversized beads. The pre-expanded EPS beads are then
injected into machine molds and fused by injecting steam into the mold cavity.
After the EPS beads are fused, the mold shells are cooled, the mold halves are
opened and the finished cups are ejected. The finished products are vacuum
tested, counted and packaged.
The Company's lid products are produced from high-impact polystyrene
("HIPS"), which is subjected to heat and pressure, after which the product is
extruded through a thin die. The lids are then trimmed for finished goods
packing, while the scrap is ground and reintroduced into the original material
blend. In order to further reduce costs, the Company intends to examine
whether StyroChem can produce HIPS.
Quality Control
The Company's manufacturing quality control program involves random testing
performed at least hourly at each facility for four attributes: seepage,
weight, appearance and strength. A statistical analysis of these test results
is completed and reviewed by the Company. In addition, each machine operator
and packer performs various quality checks during the production process. The
Company also obtains random samples of finished products from its various
manufacturing facilities and performs an analysis similar to that described
above at its Phoenix laboratory.
In addition to the Company's own programs, certain of the Company's larger
customers have established their own product standards and perform periodic
manufacturing audits at the Company's facilities, either through their own
personnel or through an independent testing group such as the American
Institute of Baking.
The Company utilizes its quality, service, manufacturing and customer
partners to enact and follow through on initiatives consistent with total
quality management and good manufacturing practices. Through these programs,
the Company works with its customers to ensure product quality and to create
new products that reflect the present and future needs of its customers.
StyroChem's quality control laboratory includes infrared spectrograph and
atomic absorption units. Laboratory chemists are capable of performing complex
chemical and atomic analysis of styrene monomer, polystyrene crystal,
expandable polystyrene and all other material components of EPS bead
production. This gives StyroChem the ability to customize EPS bead formulas to
meet any special customer requirements. StyroChem's quality control program
includes testing every production batch of EPS beads to ensure it meets
specific customer requirements. Each batch is tested for particle sizes,
pentane gas volume and, if the EPS beads are to be used for insulation, their
fire retardation capability.
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<PAGE>
Engineering
The Company employs more than 40 full-time technical personnel, including 30
full-time engineers and engineering managers, based in the Phoenix, Corte
Madera and Fort Worth facilities. The engineering staff uses computer-aided
design and computer-aided manufacturing systems to design advanced, three-
dimensional models of products and molds. Once an electronic image of the
machine and mold part design is generated, the part can be custom
manufactured. The Company has the capacity to construct all of the proprietary
equipment and machines used in the production, testing and packaging of its
foam products. The Company has also developed and is installing in its
manufacturing facilities automated materials handling equipment which includes
in-line printing, automatic case packaging equipment and more advanced molding
machines.
The Company continually examines how to improve its manufacturing process
efficiencies. Sophisticated infra-red imaging systems, providing real-time
video displays, are used to evaluate the thermal efficiency of molds and
machines under development. The Company also can create special prototype mold
forms for new lid designs and single-cavity cup and container molds, both of
which enhance the Company's ability to evaluate customer design requests
rapidly.
RAW MATERIALS
The Company's foam products are manufactured from EPS beads, which are
produced from styrene monomer. Styrene monomer is a commodity petrochemical
that is readily available in bulk quantities from numerous large, vertically
integrated chemical companies. Styrene monomer prices have fluctuated
significantly as a result of changes in petrochemical prices and the capacity,
supply and demand for styrene monomer. For example, the contract price for
styrene monomer ranged from $.23 to $.25 per pound during 1993, rose to $.40
per pound during 1994 and to $.52 per pound during 1995, before decreasing to
$.29 per pound by the end of 1995. During 1996, styrene monomer prices have
ranged from $.27 to $.30 per pound. Styrene monomer purchases during 1995
represented approximately 34% of the Company's cost of goods sold on a pro
forma basis.
The StyroChem Acquisition will not insulate the Company from price
fluctuations for styrene monomer, although it will mitigate the impact of such
fluctuations by increasing the Company's flexibility to purchase styrene
monomer. StyroChem has historically purchased all of its styrene monomer
pursuant to a contract with Chevron. In December 1996, the Company
renegotiated its contract with Chevron, to provide a long-term supply of
styrene monomer with volume discounts. The initial term of the new contract
will extend for seven years. Under the contract, the Company will be required
to purchase the first 120 million pounds of its styrene monomer requirements
per year from Chevron and will have certain rights to purchase additional
styrene monomer.
The Company also has a short-term supply contract for EPS beads with Nova
Chemicals, Inc. This contract provides that the Company has the obligation to
purchase 16 million pounds of EPS beads at a price based upon a styrene
monomer index published in an industry trade journal by an independent third
party. The Company purchases additional amounts of EPS beads from Nova
Chemicals, Inc. on substantially the same terms as this contract.
StyroChem purchases high-purity pentane, which is used as the expanding
agent in the production of EPS beads, from South Hampton Refining Co. and
Ashland Chemical Company. High-purity pentane is available from a limited
number of suppliers. Should high-purity pentane become unavailable, however,
high-purity butane may be substituted as the expanding agent.
The raw materials used by the Company for the manufacture of thermoformed
lids are primarily plastic resins such as HIPS. The Company's HIPS resin
supplies are purchased under agreements with Huntsman Chemical Corp., Chevron,
BASF Corporation and Fina Oil & Chemical Company. Most of the Company's
agreements to purchase HIPS resin contain minimum and maximum purchase
requirements. Furthermore, with the exception of the Company's agreement with
Chevron, the price the Company pays for HIPS resin is determined at the time
of purchase. Most of the plastic resins used by the Company, including HIPS,
are available from a variety of sources.
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<PAGE>
PROPRIETARY TECHNOLOGY AND TRADEMARKS
The Company has developed a broad array of proprietary technology that is
utilized in various stages of its manufacturing operations. The Company relies
primarily upon confidentiality agreements and restricted plant access to
protect its proprietary technology. The Company does own or hold license
rights with respect to numerous patents relating to its lid design in
manufacturing, embossed cup design and continuous formed foam cup
manufacturing processes. However, the Company does not consider these patents
material to its operations.
The Company holds approximately 30 registered trademarks. The Company does
not consider these trademarks material to its operations.
Pursuant to a license agreement (the "Dixie Agreement"), James River granted
the Company a royalty-free, non-exclusive, non-transferable license to use the
Dixie name on boxes, packaging materials, plastic drinking cups and lids
manufactured by the Company and sold to Sam's Club Division. The Dixie
Agreement terminates on the expiration of a separate Sales Agent Agreement
between the Company and James River concerning sales to Sam's Club Division.
This Sales Agent Agreement, scheduled to expire on January 20, 1997, has been
extended for a new, five-year term in connection with the purchase of James
River's interest in the Joint Venture and will expire on January 20, 2002.
Pursuant to another license agreement, James River granted the Company a
royalty-free, non-exclusive, non-transferable license to use a patent relating
to a beverage container lift tab lid with an accordion hinge.
COMPETITION
The Company competes in the highly competitive foodservice industry. The
foam segment of the disposable cup and container market is highly concentrated
and, within this segment, the Company competes principally with Dart, which
has significantly greater financial resources than the Company and controls
the largest share of this market segment. The Company does not believe that
companies operating in related markets are likely to enter the foam segment
due to the significant investment that would be required.
The Company believes that competition within the foam segment of the market
is based primarily on customer service, product quality and the price at which
products are offered. The Company believes that its market position is
attributable to its high level of customer service and product quality,
strategically located manufacturing facilities, proprietary technology and
experienced management team.
The Company also competes with the paper segment, which is more fragmented
than the foam segment. The Company believes that competition between foam and
paper is based on product appearance, quality and price.
StyroChem also competes in a concentrated industry. Management believes that
each of Nova Chemicals, Inc., Huntsman Chemical Corp. and BASF Corporation,
which are larger and have greater financial resources than the Company,
controls a significant share of the market for supplying EPS beads to
manufacturers of insulation and packaging products. The Company believes that
competition within this industry is primarily based on price, although
customer service and support can be a significant competitive factor,
particularly among the smaller manufacturers of foam insulation and packaging
products.
ENVIRONMENTAL MATTERS
The Company's facilities are used for manufacturing or warehousing of foam
container products or the EPS beads from which such products are manufactured.
Many of these facilities are subject to federal, state, local and, in one
case, foreign laws and regulations relating to, among other things, emissions
to air, discharges to water and the generation, handling, storage,
transportation and disposal of hazardous and non-hazardous materials and
wastes.
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<PAGE>
Certain of the Company's manufacturing facilities generate air emissions,
including volatile organic compounds and particulate matter, that are
regulated and require permits and/or emissions control equipment. While the
Company believes that the majority of the air emissions from its facilities
are properly permitted and controlled, certain of the Company's facilities
have been cited for instances of noncompliance or have failed to report
certain emissions as required, and it is possible that certain of these
permits do not address all regulated emissions and that certain of the
facilities are not in full compliance with all permit conditions. Although the
Company believes that, based on historical experience, the costs of achieving
and maintaining compliance with laws and regulations regarding air emissions
are unlikely to have a material adverse effect on the Company's financial
condition or operating results, it is possible that the Company could incur
significant fines, penalties or capital costs associated with any confirmed
noncompliance. Furthermore, there can be no assurance that future
environmental laws or regulations, or permit requirements under Title V of the
Clean Air Act, will not require substantial expenditures by the Company or
significant modifications of the Company's operations.
Certain of the Company's manufacturing facilities generate wastewater that
is regulated and requires permits for discharge. While the Company believes
that the majority of the wastewater discharges from its facilities are
properly permitted, certain of the Company's facilities have been cited for
instances of past noncompliance, and it is possible that certain of the
Company's facilities currently lack proper wastewater discharge permits and/or
are not in full compliance with all permit conditions. Although the Company
believes that, based on historical experience, the costs of achieving and
maintaining compliance with laws and regulations regarding wastewater
discharges is unlikely to have a material adverse effect on the Company's
financial condition or operating results, it is possible that the Company
could become subject to significant fines, penalties or capital costs
associated with any confirmed noncompliance. Furthermore, there can be no
assurance that future environmental laws or regulations will not require
substantial expenditures by the Company or significant modifications of the
Company's operations.
The Company generates and handles certain hazardous substances, including
petroleum products, and wastes in connection with its manufacturing processes.
The handling and disposal of these substances and wastes is subject to
federal, state and local regulations, and site contamination originating from
the release or disposal of such substances or wastes can lead to significant
liabilities. It is possible that certain of the Company's current or former
facilities are or were not in full compliance with applicable laws regarding
the handling and disposal of these substances and wastes. The soil and shallow
groundwater at certain of the Company's facilities are known to contain
elevated levels of various contaminants, and the Company is investigating
these conditions to determine whether remedial action is necessary. As such,
the Company may become liable for significant fines or penalties for any
confirmed noncompliance, or for cleanup costs for site contamination. Although
such liability has not had a material adverse effect on the financial
condition or operating results of the Company in the past, and the Company has
no knowledge of claims that could be expected to have a material adverse
effect on its financial condition or operations, there can be no assurance
that the Company will not incur significant costs in connection with
historical on- or off-site handling or disposal of such substances and wastes.
The Company owns and operates underground storage tanks ("USTs") at two of
its facilities for the storage of liquid pentane and diesel fuel. Leak
detection or containment systems are in place at both facilities. One of the
tanks, located at the StyroChem Fort Worth, Texas facility, was recently
pressure tested and no leaks were detected. USTs are generally subject to
federal, state and local laws and regulations that require testing and
upgrading of USTs and remediation of polluted soils and groundwater resulting
from leaking USTs. In addition, if leakage from the Company's UST migrates
onto the property of others, the Company may be subject to civil liability to
third parties for remediation costs or other damages. Based on historical
experience, the Company believes that its liabilities associated with UST
testing, upgrades and remediation are unlikely to have a material adverse
effect on its financial condition or operating results.
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Certain of the Company's current and former facilities are located in
industrial areas and have been in operation for many years. As a consequence,
it is possible that historical or neighboring activities have affected
properties currently or formerly owned by the Company and that, as a result,
additional environmental issues may arise in the future, the precise nature of
which the Company cannot now predict.
As part of the StyroChem Acquisition, approximately $1.4 million of the
purchase price has been placed in escrow and may be used by the Company to
offset certain expenses associated with specified environmental matters
relating to StyroChem's Texas and Quebec facilities. The categories of
expenses which may be offset with these escrowed funds include consulting
fees, fines and penalties, costs of process changes, costs of changes to and
upgrades, purchases and installation of equipment and/or facilities and any
other capital expenditures for fixed assets, and costs of investigation and
remediation work. The specified environmental matters include matters relating
to compliance with air, wastewater, hazardous and solid waste, and stormwater
permits and laws, as well as matters relating to soil, surface water and
shallow groundwater conditions associated with past operations at StyroChem's
Texas and Quebec facilities and at neighboring properties. However, there can
be no assurance that the escrowed funds will be sufficient to offset all
expenses associated with such environmental matters.
FACILITIES
The Company leases approximately 8,000 square feet in Radnor, Pennsylvania,
a suburb of Philadelphia, for its executive offices.
The Company owns or leases manufacturing, office and warehouse facilities at
the locations shown in the following table:
<TABLE>
<CAPTION>
SIZE
(APPROX.
OWNED/ SQUARE TYPE OF
LOCATION LEASED FEET) FACILITY(1)
-------- ------ -------- -----------
<S> <C> <C> <C>
Radnor Facilities:
Corte Madera, California (3 facilities)............. L 40,880 M
L 38,000 W
L 6,590 O/MA
Richmond, California................................ L 103,000 W
El Campo, Texas..................................... O 91,000 M/W
Higginsville, Missouri.............................. O 68,000 M/W
Jacksonville, Florida............................... L 128,090 M/W
Edison, New Jersey.................................. L 94,696 W
Metuchen, New Jersey................................ O 85,000 M
Mount Sterling, Ohio................................ O 50,000 M/W
Shreveport, Louisiana............................... O 73,260 M/W
Stone Mountain, Georgia (2 facilities).............. L 170,375 M
L 145,000 W
Phoenix, Arizona (2 facilities)..................... L 169,840 M
L 12,174 MA
West Chicago, Illinois (4 facilities)............... O 87,249 M
O 67,620 W
O 42,411 O/W
L 90,000 W
StyroChem Facilities:
Fort Worth, Texas (2 facilities).................... O 20,874 M/W/O
L 54,810 W
Saginaw, Texas (2 facilities)....................... O 36,988 M/W/O
O 68,999 M/W/O
Baie D'Urfe, Quebec (2 facilities).................. O 16,200 M/O
L 74,000 W
</TABLE>
- --------
(1) M = Manufacturing; W = Warehouse; O = Office; MA = Machine assembly.
42
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The Company's Corte Madera, California facilities are leased by a third
party landlord to James River. In connection with the purchase of James
River's interest in the Joint Venture, the Company and James River entered
into a sublease expiring June 30, 1998 for the Corte Madera facilities. The
Company intends to use reasonable efforts to negotiate a new lease for the
manufacturing and warehouse facilities with the landlord prior to the
expiration of the sublease.
The Company occupies its Baie D'Urfe, Quebec warehouse facility under a
month-to-month sublease that is terminable by either party upon 45 days' prior
notice.
The Company believes that its present facilities are adequate for its
current and projected operations.
EMPLOYEES
As of September 30, 1996, Radnor and StyroChem had 1,330 and 148 full-time
employees, respectively. The Company's employees are not represented by any
union. The Company considers its relations with its employees to be good.
LEGAL PROCEEDINGS
On November 25, 1996, Jackson National Life Insurance Company ("Jackson")
and Benchmark Holdings, Inc. ("Holdings") filed suit in Cook County, Illinois
Circuit Court against Michael T. Kennedy, Radnor, WinCup, the Joint Venture,
James River and James River Corporation of Virginia. The suit relates to the
November 1995 sale to James River by Holdings of substantially all of
Holdings' assets, consisting of its cutlery and straws operations, and by
WinCup of its plastic cup operations. See Note 1 to the Radnor Financial
Statements. Holdings had issued to Jackson certain shares of nonvoting
preferred stock in connection with the May 1991 acquisition of the cutlery and
straws operations, in which Jackson previously held an unsecured subordinated
debt position.
The suit alleges that, in connection with such sale, (i) certain terms of
the nonvoting preferred stock held by Jackson were breached, (ii) Mr. Kennedy
breached his fiduciary duties to Jackson and Holdings and (iii) Radnor and
certain defendants committed fraud that prevented Jackson from exercising
certain alleged rights as a nonvoting preferred stockholder in a timely manner
so as to prevent the sale from occurring. The suit seeks a broad range of
remedies, including rescission of the November 1995 sale to James River,
payment to Holdings of the profits received by James River and the Joint
Venture since the sale and the Joint Venture's formation, disgorgement of $2.5
million received by certain former key employees of Holdings in consideration
for certain noncompetition covenants, payment by WinCup to Holdings of the $10
million of sale proceeds allocated to the assets sold by WinCup, payment to
Holdings of all funds distributed to WinCup, Radnor and James River in
connection with the formation of the Joint Venture and costs of suit.
Alternatively, the suit seeks actual damages in excess of $30 million and
punitive damages in excess of $10 million, together with costs of suit.
The Company believes that the allegations in the complaint are without
merit. Holdings, through its investment banker, actively solicited a large
number of prospective purchasers regarding the sale of the cutlery and straws
operations. The Company believes that Jackson had no right to prevent the sale
of Holdings' assets. In connection with the sale, Holdings obtained opinions
from independent investment banking firms as to the fairness, from a financial
point of view, of the transaction to Holdings' stockholders and as to the
reasonableness of the negotiated value of the noncompetition agreements. The
proceeds received by Holdings from the sale of the cutlery and straws
operations, together with all remaining assets of Holdings, were significantly
less than the aggregate outstanding indebtedness of Holdings. As a result, no
proceeds were available for distribution to any of Holdings' stockholders,
including Jackson. The Company intends to defend this suit vigorously and does
not believe that the suit will have a material adverse effect on the Company's
financial condition or results of operations.
43
<PAGE>
The Company is also involved in a number of legal proceedings arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company's financial condition or results of operations.
44
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The sole director and executive officers of the Company and their ages as of
January 5, 1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael T. Kennedy.......... 42 President, Chief Executive Officer and Director
Michael V. Valenza.......... 37 Senior Vice President--Finance
Richard C. Hunsinger........ 48 Senior Vice President--Sales and Marketing
Donald D. Walker............ 55 Senior Vice President--Operations
John P. McNiff.............. 35 Senior Vice President--Corporate Development
R. Radcliffe Hastings....... 46 Senior Vice President, Treasurer
Donald C. Rogalski.......... 51 Senior Vice President--Administration
John P. McKelvey............ 56 Vice President--Human Resources
Van D. Groenwold............ 64 Vice President--Engineering
</TABLE>
Michael T. Kennedy has served as President, Chief Executive Officer and the
sole director of the Company since its formation in November 1991. Between
March 1985 and July 1990, Mr. Kennedy served as Chief Financial Officer of
Airgas, Inc., a New York Stock Exchange-listed distributor of industrial
gases. Mr. Kennedy is also a director of Consolidated Asset Management, Inc.
Michael V. Valenza has served as Senior Vice President-Finance of the
Company since April 1993. He joined the Company in September 1992 as Director
of Finance. From 1984 until joining the Company, Mr. Valenza served in a
variety of positions with Arthur Andersen LLP, most recently as a manager in
the Enterprise Group.
Richard C. Hunsinger has served as Senior Vice President-Sales and Marketing
of the Company since its formation in November 1991. From 1979 through August
1991, Mr. Hunsinger served in various management positions, including Vice
President of Sales and Marketing, for Winkler/Flexible Products, Inc., a
former division of The Coca Cola Company.
Donald D. Walker has served as Senior Vice President-Operations of the
Company since November 1992. Mr. Walker served as Vice President of
Manufacturing and as Director of Manufacturing of the Company from February
1992 through November 1992. From 1969 until February 1992, Mr. Walker served
in various management positions with Scott Container Products Group, Inc.
(WinCup's predecessor), WMF Corporation and Thompson Industries.
John P. McNiff has served as Senior Vice President-Corporate Development of
the Company since its formation in November 1991. Previously Mr. McNiff was
Vice President-Corporate Development of Airgas, Inc., a New York Stock
Exchange-listed distributor of industrial gases. Mr. McNiff is also a director
of Consolidated Asset Management, Inc.
R. Radcliffe Hastings has served as Senior Vice President and Treasurer of
the Company since June 1996. Previously, Mr. Hastings was with Continental
Bank, N.A. and its successor, Bank of America, for 18 years. Mr. Hastings has
held a variety of management positions in the U.S. banking group and in Bank
of America's securities operation, BA Securities, Inc. and was most recently
Managing Director of the Money Manager Group.
Donald C. Rogalski has served as Senior Vice President-Administration of the
Company since July 1993. Previously Mr. Rogalski held the positions of Chief
Financial Officer and Vice President of Finance for Stiffel Lamp Co. for seven
years. Prior to that, Mr. Rogalski worked for Packard Instrument Company for
nine years, with his last position there as Controller.
45
<PAGE>
John P. McKelvey has served as Vice President--Human Resources for the
Company since October 1992. From February 1992 until October 1992, Mr.
McKelvey was Director of Human Resources for the Company. From 1971 until
joining the Company, Mr. McKelvey served in a variety of human resources
management positions for Scott Container Products Group, Inc., Texstyrene
Corporation, WMF Corporation and Thompson Industries.
Van D. Groenwold has served as Vice President--Engineering for the Company
since November 1992. From February 1992 until November 1992, Mr. Groenwold was
Director of Engineering for the Company. From 1982 until joining the Company,
Mr. Groenwold held various engineering and quality assurance management
positions with Scott Container Products Group, Inc., WMF Corporation and
Thompson Industries.
The Company anticipates adding directors, including non-employee directors,
to its Board of Directors following the consummation of the Exchange Offer.
DIRECTOR AND EXECUTIVE COMPENSATION
Mr. Kennedy does not receive separate compensation for his service as a
director of the Company. The following table sets forth certain information
concerning the compensation paid to the Company's chief executive officer and
the Company's four other most highly compensated executive officers whose
total annual salary and bonus exceeded $100,000 (collectively, the "Named
Executive Officers") for the year ended December 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Michael T. Kennedy...................... 1996 $683,489 -- $4,276
President and Chief Financial Officer
Michael V. Valenza...................... 1996 126,923 $100,000 3,536
Senior Vice President--Finance
Richard C. Hunsinger.................... 1996 146,742 50,000 4,654
Senior Vice President--Sales and
Marketing
Donald D. Walker........................ 1996 146,154 50,000 5,550
Senior Vice President--Operations
R. Radcliffe Hastings................... 1996 86,058 200,266 275
Senior Vice President--and Treasurer
</TABLE>
- --------
(1) Includes Company matching contributions under the 401(k) Retirement
Savings Plan and payments of premiums for certain supplementary term life
insurance coverage as follows:
<TABLE>
<CAPTION>
LIFE
401(K) INSURANCE
NAME YEAR CONTRIBUTION PREMIUM
---- ---- ------------ ---------
<S> <C> <C> <C>
Michael T. Kennedy.................................. 1996 $3,766 $ 510
Michael V. Valenza.................................. 1996 3,359 177
Richard C. Hunsinger................................ 1996 4,070 584
Donald D. Walker.................................... 1996 4,073 1,477
R. Radcliffe Hastings............................... 1996 -- 275
</TABLE>
46
<PAGE>
FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS AT
DECEMBER 31, 1996(/1/)
-------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
<S> <C> <C>
Michael T. Kennedy.................................... -- --
Michael V. Valenza.................................... 16 22
Richard C. Hunsinger.................................. 50 50
Donald D. Walker...................................... 45 55
R. Radcliffe Hastings................................. -- --
</TABLE>
- --------
(1) As of December 31, 1996, based on the estimated fair value (as determined
by the Company's Board of Directors) of the underlying securities, there
were no unexercised in-the-money options.
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into an employment agreement with
Michael T. Kennedy pursuant to which Mr. Kennedy serves as the President,
Chief Executive Officer and Chairman of the Board of Directors. The agreement
is for an initial term of five years and, absent 180 days' prior written
notice by either party before the end of the initial or any renewal term,
renews from year to year thereafter; provided, however, that the agreement is
terminable by Mr. Kennedy at any time on 180 days' prior written notice. Mr.
Kennedy is entitled to an annual salary of $360,000, subject to annual review
by the Board of Directors. The agreement contains a covenant not to compete in
any business that sells or manufactures one-piece foam cups in the U.S. or
Canada during his employment and for a period of five years following any
termination of such employment.
In May 1993, the Company entered into an employment agreement with Richard
C. Hunsinger, which was amended in January 1996, pursuant to which Mr.
Hunsinger serves as Senior Vice President--Sales and Marketing of the Company.
The agreement is for an initial term of seven years and six months and, absent
180 days' prior written notice by either party before the end of the initial
or any renewal term, renews from year to year thereafter. Under the agreement
as amended, Mr. Hunsinger is entitled to an annual salary of not less than
$145,000 beginning in 1996, subject to annual cost of living increases. The
agreement contains a covenant not to engage in any business that is
competitive with the business of the Company in any geographical area in which
it does business during the term of the agreement and for a period of two
years immediately following the termination of the agreement.
In April 1996, the Company entered into an employment agreement with R.
Radcliffe Hastings, pursuant to which Mr. Hastings serves as Senior Vice
President and Treasurer of the Company. The agreement is for an initial term
of three years and, absent 90 days' prior written notice by either party
before the end of the initial or any renewal term, renews from year to year
thereafter. Mr. Hastings received a bonus of $64,000 upon the signing of the
agreement, and is entitled to an annual salary of not less than $125,000,
subject to annual review by the Board of Directors. The agreement contains a
covenant not to compete in any business that is competitive with the business
of the Company in the U.S. during the term of the agreement.
CERTAIN TRANSACTIONS
The Company has agreed to advance up to $75,000 on a non-interest-bearing
basis to Michael V. Valenza, the Company's Senior Vice President--Finance, for
certain incurred relocation costs. As of January 1, 1997, $47,000 was
outstanding under the advance.
47
<PAGE>
LIMITATION OF LIABILITY; INDEMNIFICATION
As permitted by the General Corporation Law of the State of Delaware, the
Company's Certificate of Incorporation provides that directors of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company 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 General Corporation Law of the State of Delaware, relating to prohibited
dividends, distributions and repurchases or redemptions of stock, or (iv) for
any transaction from which the director derives an improper personal benefit.
However, such limitation of liability would not apply to violations of the
federal securities laws, nor does it limit the availability of non-monetary
relief in any action or proceeding against a director. The Certificate of
Incorporation also includes provisions for indemnification of the Company's
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware as now or hereafter in effect. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
48
<PAGE>
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 5, 1997,
with respect to each person who is known by the Company to own beneficially 5%
or more of each class of voting securities of the Company.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
NAME OF INDIVIDUAL TITLE OF CLASS OF BENEFICIALLY OF
OR IDENTITY OF GROUP CAPITAL STOCK OWNED(/1/) CLASS
-------------------- ------------------- ------------ -------
<S> <C> <C> <C>
Michael T. Kennedy..................... Voting Common Stock 510.1 85.02%
Three Radnor Corporate Center
Suite 300
100 Matsonford Road
Radnor, PA 19087
John P. McNiff......................... Voting Common Stock 60.0 10.00%
Three Radnor Corporate Center
Suite 300
100 Matsonford Road
Radnor, PA 19087
</TABLE>
- --------
(1) Gives effect to the recapitalization in October 1996, pursuant to which
each outstanding share of Voting Common Stock was converted into 0.1
shares of Voting Common Stock and 0.9 shares of Class B Nonvoting Common
Stock.
The following table sets forth certain information as of January 5, 1997,
with respect to beneficial ownership of each class of equity securities of the
Company by (a) the director of the Company, (b) the Named Executive Officers
and (c) the director and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
NAME OF INDIVIDUAL TITLE OF CLASS OF BENEFICIALLY OF
OR IDENTITY OF GROUP CAPITAL STOCK OWNED(/1/) CLASS(/2/)
-------------------- ------------------------------ ------------ ----------
<S> <C> <C> <C>
Michael T. Kennedy...... Voting Common Stock 510.1 85.02%
Class B Nonvoting Common Stock 3,929.9 72.78%
Michael V. Valenza...... Nonvoting Common Stock 44.0 16.36%
Richard C. Hunsinger.... Nonvoting Common Stock 120.0 38.10%
Donald D. Walker........ Nonvoting Common Stock 115.0 37.10%
R. Radcliffe Hastings... Voting Common Stock 29.9 4.98%
Class B Nonvoting Common Stock 370.1 6.85%
Director and executive
officers as a group
(9 persons)............ Voting Common Stock 600.0 100.00%
Class B Nonvoting Common Stock 4,840.0(/2/) 89.63%
Nonvoting Common Stock 453.0 89.17%
</TABLE>
- --------
(1) Includes shares of Nonvoting Common Stock that certain individuals have
the right to acquire, on or before January 1, 1997, upon the exercise of
stock options granted pursuant to the Company's Equity Incentive Plan, as
follows: Michael V. Valenza--24; Richard C. Hunsinger--70; Donald D.
Walker--65; and the director and all executive officers as a group--263.
Gives effect to the recapitalization in October 1996, pursuant to which
each outstanding share of Voting Common Stock was converted into 0.1
shares of Voting Common Stock and 0.9 shares of Class B Nonvoting Common
Stock.
(2) Based upon 600, 245 and 5,400 outstanding shares of Voting Common Stock,
Nonvoting Common Stock and Class B Nonvoting Common Stock, respectively.
49
<PAGE>
DESCRIPTION OF THE COMPANY'S CREDIT FACILITIES
THE AMENDED CREDIT AGREEMENT
On December 5, 1996, the Company entered into an Amended and Restated
Revolving Credit and Security Agreement (the "Amended Credit Agreement") with
The Bank of New York Commercial Corporation, as agent and lender, pursuant to
which the Revolving Credit, Term Loan and Security Agreement dated January 22,
1996 among WinCup, the Joint Venture and the Bank (the "Existing Credit
Agreement") was amended and restated. The Amended Credit Agreement includes
the Company and its U.S. subsidiaries as borrowers.
The Amended Credit Agreement provides for a revolving credit facility in the
aggregate principal amount of up to $30.0 million. Revolving loans under the
Amended Credit Agreement are limited, in the aggregate, to the lesser of the
$30.0 million commitment amount and a "borrowing base" amount less, in each
case, the principal amount of outstanding letters of credit. The borrowing
base may not exceed the sum of: (i) 85% of eligible accounts receivable, plus
(ii) the lesser of $15.0 million or 60% of eligible raw materials and finished
goods inventories of the Company and its U.S. subsidiaries. In addition, there
is a $5.0 million sublimit on standby letters of credit and a $1.0 million
sublimit on documentary letters of credit.
Revolving loans under the Amended Credit Agreement bear interest payable at
the Company's option at a rate not greater than either (i) the sum of 0.25%
plus a rate equal to the greater of (a) Bank of New York's prime rate or (b)
the sum of the federal funds rate plus 0.5% or (ii) the sum of 1.75% plus a
rate equal to the LIBOR rate with respect to the period during which such
interest rate shall be applicable. The revolving loans under the Amended
Credit Agreement will mature on January 22, 2001. In addition, the Amended
Credit Agreement provides for a fee of 0.375% per annum on the undrawn amount
of the credit facility and letter of credit fees of 1.75% and 1.5% of the
aggregate face amount of standby letters of credit and documentary letters of
credit, respectively, under the Amended Credit Agreement. The Amended Credit
Agreement provides for an agency fee, payable annually during the term of the
Amended Credit Agreement, in the amount of $90,000 per year. Under certain
circumstances, if the Company elects to terminate the Amended Credit
Agreement, the Company will incur a prepayment penalty of $1.5 million prior
to January 22, 1997, $1.0 million prior to January 22, 1998 and $500,000 prior
to January 22, 1999.
The Amended Credit Agreement contains certain restrictive covenants that,
among other things, impose limitations upon the Company's ability to merge,
consolidate or dispose of assets; incur liens; make loans and investments;
incur indebtedness; engage in certain transactions with affiliates; incur
certain contingent obligations; pay dividends and other distributions; enter
into lease arrangements; form subsidiaries and make capital expenditures. The
obligations of the Company under the Amended Credit Agreement are secured by a
lien on all of the Company's and its U.S. subsidiaries' inventory, accounts
receivable, general intangibles, trademarks and licenses and the proceeds
thereof.
The Amended Credit Agreement contains events of default customary for
facilities of its type, including without limitation, the Company's failure to
pay principal, interest, fees or other amounts when due; the Company's
material breach of any covenants, representations or warranties; cross-default
and cross-acceleration; change of control of the Company; bankruptcy,
insolvency or similar events involving the Company or its U.S. subsidiaries;
certain adverse events under ERISA plans of the Company or its U.S.
subsidiaries and any of the agreements or liens securing payment of the
obligations under the Amended Credit Agreement ceasing to be enforceable.
THE CANADIAN CREDIT AGREEMENT
The Company's Canadian subsidiary has entered into the Agreement Respecting
a Term Loan and other Credit Facilities dated February 25, 1994 between
StyroChem International, Ltd. ("StyroChem Limited") and the Bank of Montreal
(as amended through annual review processes, the "Canadian Credit
50
<PAGE>
Agreement"). The credit facilities under the Canadian Credit Agreement consist
of the following: (i) a term loan in the principal amount of $0.7 million
Canadian (the "Canadian Term Loan") and (ii) a revolving credit facility with
a borrowing capacity of up to $2.5 million Canadian, that includes a letter of
credit subfacility and a Foreign Exchange Future Contracts subfacility (the
"Canadian Revolver").
Canadian Dollar advances under the Canadian Revolver bear interest at a rate
equal to the Bank of Montreal's prime rate plus 1.0%. U.S. Dollar advances
under the Canadian Revolver bear interest at the Bank of Montreal's U.S. base
rate plus 1.0%. Loans under the Canadian Revolver are payable on demand. The
Canadian Term Loan bears interest at the Bank of Montreal's prime rate plus
1.5% and is payable in equal quarterly installments of $81,250 Canadian
through the last banking day of November 1998. The Canadian Term Loan is
subject to mandatory prepayments in an amount equal to 100% of the net cash
proceeds from the permitted sale or sale/leaseback of any of StyroChem
Limited's fixed assets, to the extent such proceeds are not reinvested in
replacement assets.
The Canadian Credit Agreement contains covenants that, among other things,
impose limitations upon StyroChem Limited's ability to merge, consolidate or
dispose of assets; make loans and investments; incur indebtedness; engage in
certain transactions with affiliates; pay dividends and other distributions;
make capital expenditures and amend certain material contracts to which it is
a party.
The obligations of StyroChem Limited under the Canadian Credit Agreement are
secured by a first priority perfected security interest in all of the material
assets of StyroChem Limited. In addition, SP Acquisition Co. guaranteed the
obligations of StyroChem Limited under the Canadian Credit Agreement up to a
maximum amount of $3.3 million Canadian. SP Acquisition Co. has pledged all of
the issued and outstanding shares of StyroChem Limited as security for its
obligations under its guarantee. Certain long-term advances payable by
StyroChem Limited to SP Acquisition Co. and StyroChem International, Inc. are
subordinated to the obligations of StyroChem Limited under the Canadian Credit
Agreement.
The Canadian Credit Agreement contains customary events of default,
including without limitation, the following: StyroChem Limited's failure to
pay principal, interest, fees or other amounts when due; StyroChem Limited's
violation or material breach of any covenants, representations or warranties;
cross-default and cross-acceleration; change of control of StyroChem Limited;
bankruptcy, insolvency or similar events involving StyroChem Limited;
cessation of StyroChem Limited's business and the levy of certain material
judgments against StyroChem Limited.
51
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
Philadelphia time, on , 1997; provided, however, that if the Company, in
its sole discretion, has extended the period of time during which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $100 million aggregate principal amount
of the Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1997, to all holders of
Old Notes known to the Company. The Company's obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain customary
conditions as set forth under "--Certain Conditions to the Exchange Offer"
below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby acceptance for exchange of any Old Notes, by giving oral or written
notice of such extension to the holders thereof as described below. During any
such extension, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Old Notes
not accepted for exchange for any reason will be returned without expense to
the tendering holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange
Offer specified below under "--Certain Conditions to the Exchange Offer." The
Company will give oral or written notice of any extension, amendment, non-
acceptance or termination to the holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued by means of
a press release or other public announcement no later than 9:00 a.m.,
Philadelphia time, on the next business day after the previously scheduled
Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
Only a registered holder of Old Notes may tender such Old Notes in the
Exchange Offer. The tender to the Company of Old Notes by a holder thereof as
set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a holder who
wishes to tender Old Notes for exchange pursuant to the Exchange Offer must
transmit a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to First
Union National Bank (the "Exchange Agent") at one of the addresses set forth
below under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, (ii) a timely confirmation of a
book-entry transfer ("a Book-Entry Confirmation") of such Old Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange
Agent prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below. THE METHOD OF
52
<PAGE>
DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering
such owner's Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such beneficial owner's name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal Rights"), as the case may be, must be guaranteed (see
"--Guaranteed Delivery Procedures") unless the Old Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the Old
Notes who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution (as defined below). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Program or the Stock Exchanges
Medallion Program (collectively, "Eligible Institutions"). If Old Notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Notes surrendered for exchange must be endorsed by or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered holder exactly as the name or names of the
registered holder or holders appear on the Old Notes with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or not to accept any
particular Old Note which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to
waive any defects or irregularities or conditions of the Exchange Offer as to
any particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender Old
Notes in the Exchange Offer). The interpretation of the terms and conditions
of the Exchange Offer as to any particular Old Notes either before or after
the Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the
Company shall determine. None of the Company, the Exchange Agent or any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted with the Letter of Transmittal.
53
<PAGE>
By tendering, each holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, and that neither the holder
nor such other person has any arrangement or understanding with any person to
participate in the distribution of the New Notes. If any holder or any such
other person is an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company or is engaged in or intends to engage in, or has an
arrangement or understanding with any person to participate in, a distribution
of such New Notes to be acquired pursuant to the Exchange Offer, such holder
or any such other person (i) may not rely on the applicable interpretation of
the staff of the SEC and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-
dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of
the Old Notes. See "--Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company will be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive as set forth below under "Description of the Notes--Book-Entry,
Delivery and Form" a New Note having a principal amount equal to that of the
surrendered Old Note. Accordingly, registered holders of the New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the
most recent date to which interest has been paid on the Old Notes or, if no
interest has been paid, from December 5, 1996. Old Notes accepted for exchange
will cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders whose Old Notes are accepted for exchange will not
receive any payment in respect of accrued interest on such Old Notes otherwise
payable on any interest payment date the record date for which occurs on or
after consummation of the Exchange Offer. If the Exchange Offer is not
consummated by May 4, 1997, the interest rate borne by the Old Notes shall be
increased by 25 basis points per annum for each 90-day period from and
including May 4, 1997 until but excluding the date of consummation of the
Exchange Offer, up to a maximum aggregate increase of 100 basis points per
annum. Old Notes not tendered or not accepted for exchange will continue to
accrue interest from and after the date of consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-
Entry Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount
than the holder desires to exchange, such unaccepted or non-exchanged Old
Notes will be returned without expense to the tendering holder thereof (or, in
the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
procedures described below, such non-exchanged Old Notes will be credited to
an account maintained with such
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Book-Entry Transfer Facility) as promptly as practicable after the expiration
or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the Book-
Entry Transfer Facility, the Letter of Transmittal or a facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at one of
the addresses set forth below under "--Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through
DTC's communication system in place of sending a signed, hard copy of the
Letter of Transmittal. DTC is obligated to communicate those electronic
instructions to the Exchange Agent. To tender Old Certificates through ATOP,
the electronic instructions sent to DTC and transmitted by DTC to the Exchange
Agent must contain the character by which the participant acknowledges its
receipt of, agrees to be bound by and confirms the representations, warranties
and other statements made by or deemed to be made by the participant pursuant
to the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) on or prior to 5:00 p.m.,
Philadelphia time, on the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that within
three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution within three NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
Philadelphia time, on the Expiration Date. For a withdrawal to be effective, a
written or electronic ATOP transmission (for DTC participants) notice of
withdrawal must be received by the Exchange Agent at one of the addresses set
forth below under "--Exchange Agent." Any such notice of withdrawal must
specify the name of the person being tendered the Old Notes to be withdrawn,
identify the Old Notes to be withdrawn (including
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the principal amount of such Old Notes), and (where certificates for Old Notes
have been transmitted) specify the name in which such Old Notes are registered,
if different from that of the withdrawing holder. If certificates for Old Notes
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the release of such certificates the withdrawing holder must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such holder is an Eligible Institution in which case such guarantee will
not be required. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination will be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the Book-
Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, and subject to
its obligations pursuant to the Registration Rights Agreement, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any
time before the acceptance of such New Notes for exchange, any of the following
event shall occur:
(i) any injunction, order or decree shall have been issued by any court
or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with the Exchange
Offer; or
(ii) the Exchange Offer will violate any applicable law or any applicable
interpretation of the staff of the SEC.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in whole or in part at any time and from time to time
in its sole discretion. The failure by the Company at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
In addition, the Company will not accept for exchange any Old Notes tendered,
and no New Notes will be issued in exchange for any such Old Notes, if at such
time any stop order is threatened by the SEC or in effect with respect to the
Registration Statement of which this Prospectus is a part or the qualification
of the Indenture under the Trust Indenture Act of 1939, as amended.
The Exchange Offer is not conditioned on any minimum principal amount of Old
Notes being tendered for exchange.
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EXCHANGE AGENT
First Union National Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent addressed as follows:
First Union National Bank, Exchange Agent
123 South Broad Street
12th Floor
PA 1249
Corporate Trust Administration
Philadelphia, PA 19109
By Hand or Overnight Courier:
123 South Broad Street
12th Floor
PA 1249
Corporate Trust Administration
Philadelphia, PA 19109
By Facsimile:
(215) 985-3428
Confirm by Telephone:
(215) 985-7207
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$150,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes
not tendered or not accepted in the Exchange Offer be returned to, a person
other than the registered tendering holder will be responsible for the payment
of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Notes under the Securities Act. See " The Exchange
Offer" and "Registration Rights." Based on interpretations by the staff of the
SEC, as set forth in no-action letters issued to third parties, the Company
believes that New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold or
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otherwise transferred by holders thereof (other than any such holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course or such holders' business and such holders,
other than broker-dealers, have no arrangement or understanding with any person
to participate in the distribution of such New Notes. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in such other
circumstances. Each holder of the Old Notes who wishes to exchange its Old
Notes for New Notes in the Exchange Offer will be required to make certain
representations to the Company, including that (i) any New Notes to be received
by it will be acquired in the ordinary course of its business, (ii) it has no
arrangement or understanding with any person to participate in a public
distribution (within the meaning of the Securities Act) of the New Notes and
(iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act,
of the Company or the Guarantors, or if it is such an affiliate, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it. If any holder is an affiliate of
the Company or is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder (i) may not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes pursuant to the Exchange
Offer must acknowledge that such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities and that it
will deliver a prospectus in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 150 days after the date of this Prospectus, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or any exemption from registration or qualification is
available and is complied with. The Company has agreed, pursuant to the
Registration Rights Agreement, subject to certain limitations specified
therein, to register or qualify the New Notes for offer or sale under the
securities laws of such jurisdictions as any holder reasonably requests in
writing. Unless a holder so requests, the Company does not currently intend to
register or qualify the sale of the New Notes in any such jurisdictions.
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DESCRIPTION OF THE NOTES
GENERAL
The Old Notes were issued under an Indenture dated December 5, 1996 (the
"Indenture") among the Company, as issuer, substantially all of the Company's
subsidiaries (collectively, the "Guarantors") and First Union National Bank,
as trustee (the "Trustee"). The terms and conditions of the Notes include
those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act") as in
effect on the Issue Date. The Notes are subject to all such terms and
conditions, and reference is made to the Indenture and the Trust Indenture Act
for a statement thereof. The following statements are summaries of the
provisions of the Notes and the Indenture and do not purport to be complete.
Such summaries make use of certain terms defined in the Indenture and are
qualified in their entirety by express reference to the Indenture. Certain of
such defined terms are set forth below under "--Certain Definitions." For
purposes of this "Description of the Notes," the "Company" means Radnor
Holdings Corporation. A copy of the Indenture will be available upon request
to the Company.
The Notes are limited to $100.0 million aggregate principal amount and
issued in fully registered form without coupons in denominations of $1,000 and
any integral multiple of $1,000. In the case of certificated Notes, principal
of, premium, if any, and interest on the Notes are payable, and the Notes are
transferable, at the corporate trust office or agency of the Trustee
maintained for such purposes in Philadelphia, Pennsylvania. Initially, the
Trustee is acting as paying agent and registrar under the Indenture. The
Company may act as paying agent and registrar under the Indenture, and the
Company may change any paying agent and registrar without notice to the
Persons who are registered holders ("Holders") of the Notes. The Company may
pay principal, premium and interest by check and may mail an interest check to
a Holder's registered address. Holders of certificated Notes must surrender
such Notes to the paying agent to collect principal and premium payments. No
service charge will be made for any registration of transfer or exchange of
the Notes, except for any tax or other governmental charge that may be imposed
in connection therewith.
PAYMENT TERMS
Interest on the New Notes will accrue from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on
the Old Notes, from December 5, 1996 and will be payable semi-annually on June
1 and December 1 of each year, commencing June 1, 1997, at the rate of 10% per
annum (unless such rate has been temporarily or permanently increased under
the circumstances described in "Registration Rights" below) to holders of the
Notes as of the close of business on the May 15 and November 15 next preceding
the applicable interest payment date. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months. The Notes mature on
December 1, 2003.
Payment of the Old Notes is, and payment of the New Notes will be,
guaranteed by the Guarantors, jointly and severally, on a senior basis. See
"--Guarantees."
RANKING
The Old Notes are, and the New Notes will be, senior unsecured obligations
of the Company and rank pari passu in right of payment with all other existing
and future senior indebtedness of the Company. The Old Notes are, and the New
Notes will be, effectively subordinated in right of payment to all existing
and future secured indebtedness of the Company and the Company's subsidiaries,
including indebtedness under the Credit Agreements. Loans under the Amended
Credit Agreement are secured by the inventory, accounts receivable, general
intangibles, trademarks and licenses and the proceeds thereof of the Company
and its U.S. subsidiaries. Loans under the Canadian Credit Agreement are
secured by all of the material assets and a pledge of the stock of the
Company's Canadian subsidiary. Pursuant to the
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Indenture governing the Notes, the Company and the Guarantors are permitted,
upon the satisfaction of certain conditions, to incur additional secured
indebtedness or provide guarantees of secured indebtedness. See "Risk
Factors--Ranking of the Notes" and "Description of the Company's Credit
Facilities."
Holders of secured indebtedness of the Company or the Guarantors have claims
with respect to the assets constituting collateral for such indebtedness that
are prior to the claims of Holders of the Notes and the Guarantees,
respectively. In the event of a default on the Notes, or a bankruptcy,
liquidation or reorganization of the Company or the Guarantors, such assets
will be available to satisfy obligations with respect to the indebtedness
secured thereby before any payment therefrom could be made on the Notes or the
Guarantees, as the case may be. To the extent that the value of such
collateral is not sufficient to satisfy the indebtedness secured thereby,
amounts remaining outstanding on such indebtedness would be entitled to share,
together with the indebtedness under the Notes and the Guarantees, as the case
may be, with respect to any other assets of the Company and the Guarantors.
GUARANTEES
The Guarantors have, jointly and severally, fully and unconditionally
guaranteed the due and punctual payment of principal of, premium, if any, and
interest on, the Old Notes. The Guarantors will also jointly and severally,
full and unconditionally guarantee the due and punctual payment of principal
of, premium, if any, and interest on the New Notes. The Old Guarantees are,
and the New Guarantees will be, senior unsecured obligations of each
Guarantor, and rank pari passu in right of payment with all other existing and
future senior indebtedness of such Guarantor and senior to all subordinated
indebtedness of such Guarantor. The Old Guarantees are, and the New Guarantees
will be, effectively subordinated in right of payment to all existing and
future secured indebtedness of the Guarantors, including their obligations in
respect of the Credit Agreements.
The Guarantors on the Issue Date included substantially all of the Company's
then existing Subsidiaries and will thereafter include such other Subsidiaries
of the Company that become Guarantors as described under "--Certain
Covenants--Subsidiary Guarantees." The Indenture provides that the obligations
of the Guarantors under their respective Guarantees will be reduced to the
extent necessary to prevent the Guarantees from violating or becoming voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer
or similar laws affecting the rights of creditors generally. See "Risk
Factors--Holding Company Structure; Possible Invalidity of Guarantees."
Upon any sale, exchange, transfer or other disposition, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all
or substantially all of the assets of, any Guarantor, which is in compliance
with the Indenture, such Guarantor will be released from all its obligations
under its Guarantee.
OPTIONAL REDEMPTION
The Notes are not redeemable at the option of the Company prior to December
1, 2000. On or after that date, the Notes will be redeemable at the option of
the Company, in whole or in part from time to time, on not less than 30 nor
more than 60 days' prior notice, mailed by first-class mail to the Holders'
registered addresses, in cash, at the following redemption prices (expressed
as percentages of the principal amount), if redeemed in the 12-month period
commencing December 1 in the year indicated below, in each case plus accrued
and unpaid interest to the date fixed for redemption:
<TABLE>
<CAPTION>
YEAR REDEMPTION
---- ----------
<S> <C>
2000......................................................... 105.00 %
2001......................................................... 102.50 %
2002 and thereafter.......................................... 100.00 %
</TABLE>
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The Notes are not subject to, or entitled to the benefits of, any sinking
fund.
Notwithstanding the foregoing, at any time on or prior to December 1, 1999,
the Company, at its option, may redeem up to $25.0 million aggregate principal
amount of the Notes from the net proceeds of one or more Public Equity
Offerings by the Company, at a redemption price of 110% of the principal
amount thereof, plus accrued interest to the date of redemption; provided that
at least $75.0 million in aggregate principal amount of the Notes remains
outstanding following such redemption.
Notes may be redeemed or repurchased as set forth below under "--Change of
Control" and "--Certain Covenants--Limitations on Asset Sales" in part in
multiples of $1,000. If less than all the Notes issued under the Indenture are
to be redeemed, the Trustee will select the Notes to be redeemed pro rata, by
lot or by any other method which the Trustee deems fair and appropriate. The
Indenture provides that if any Note is to be redeemed or repurchased in part
only, the notice which relates to the redemption or repurchase of such Note
will state the portion of the principal amount of such Note to be redeemed or
repurchased and will state that on or after the date fixed for redemption or
repurchase a new Note equal to the unredeemed portion thereof will be issued.
On and after the date fixed for redemption or repurchase, interest will
cease to accrue on the Notes or portions thereof called for redemption or
tendered for repurchase.
CHANGE OF CONTROL
The Indenture provides that in the event of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Company will notify
the Holders in writing of such occurrence and will make an irrevocable offer
(the "Change of Control Offer") to purchase on a business day (the "Change of
Control Payment Date") not later than 60 days following the Change of Control
Date, all Notes then outstanding at a purchase price (the "Purchase Price")
equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the Change of Control Payment Date.
Notice of a Change of Control Offer will be mailed by the Company to the
Holders at their registered addresses not less than 30 days nor more than 60
days before the Change of Control Payment Date. The Change of Control Offer is
required to remain open for at least 20 business days and until 5:00 p.m., New
York City time, on the Change of Control Payment Date. The notice will contain
all instructions and materials necessary to enable Holders to tender (in whole
or in part in a principal amount equal to $1,000 or a whole multiple thereof)
their Notes pursuant to the Change of Control Offer.
The notice, which governs the terms of the Change of Control Offer, will
state: (i) that the Change of Control Offer is being made pursuant to this
covenant as described herein; (ii) the Purchase Price and the Change of
Control Payment Date; (iii) that any Notes not surrendered or accepted for
payment will continue to accrue interest; (iv) that any Notes accepted for
payment pursuant to the Change of Control Offer will cease to accrue interest
after the Change of Control Payment Date; (v) that any Holder electing to have
a Note purchased (in whole or in part) pursuant to a Change of Control Offer
will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to the Paying
Agent at the address specified in the notice (or otherwise make effective
delivery of the Note pursuant to book-entry procedures and the related rules
of the applicable depositories) at least five business days before the Change
of Control Payment Date, and (vi) that any Holder will be entitled to withdraw
its election if the Paying Agent receives, not later than three business days
prior to the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing its election to have such Note purchased.
On the Change of Control Payment Date, the Company will: (i) accept for
payment the Notes, or portions thereof, surrendered and properly tendered and
not withdrawn, pursuant to the Change of
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Control Offer; (ii) deposit with the Paying Agent money sufficient to pay the
Purchase Price of all the Notes, or portions thereof, so accepted; and (iii)
deliver to the Trustee the Notes so accepted together with an officer's
certificate stating that such Notes have been accepted for payment by the
Company. The Paying Agent will promptly mail or deliver to Holders of Notes so
accepted payment in an amount equal to the Purchase Price. Holders whose Notes
are purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered.
"Change of Control" is defined in the Indenture to mean the occurrence of
any of the following events: (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders (as defined below), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will 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), directly or indirectly, of more than 50% of the voting
power of the total outstanding Voting Stock of the Company voting as one
class; (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board or whose
nomination for election by the stockholders 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 or nomination for
election was previously so approved) for any reason cease to constitute a
majority of such Board of Directors then in office; (iii) the Company
consolidates with or merges with or into any Person or conveys, transfers or
leases all or substantially all of its assets to any Person other than a
wholly-owned Subsidiary (in one transaction or a series of related
transactions), or any corporation consolidates with or merges into or with the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities
or other property, and as a result of such transaction any "person" or
"group," other than Permitted Holders, is or becomes the "beneficial owner"
(as described in clause (i) above) immediately after such transaction,
directly or indirectly, of more than 50% of the voting power of the total
outstanding Voting Stock of the surviving corporation voting as one class; or
(iv) the Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under "--Merger, Consolidation and Sale of Assets."
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, any other tender offer rules under the
Exchange Act and other securities laws or regulations in connection with the
offer to repurchase and the repurchase of the Notes as described above.
The Company's ability to repurchase the Notes pursuant to a Change of
Control Offer will be limited by, among other things, the Company's financial
resources at the time of repurchase. There can be no assurance that sufficient
funds will be available at the time of any Change of Control to make any
required repurchases. Furthermore, there can be no assurance that the Company
will be able to fund the repurchase of Notes upon a Change of Control within
the limitations imposed by the terms of other then-existing Senior
Indebtedness. In addition, the terms of the Credit Agreements may limit the
Company's ability to purchase any Notes upon the occurrence of a Change of
Control. In the event a Change of Control occurs at a time when the Company is
prohibited from purchasing Notes, the Company will be required under the
Indenture, within 30 days following a Change of Control to (i) seek the
consent of its lenders to the purchase of the Notes or (ii) refinance the
Indebtedness that prohibits such purchase. If the Company does not obtain such
a consent or refinance such borrowings, the Company will remain prohibited
from repurchasing Notes. The Company's failure to purchase tendered Notes or
make a Change of Control Offer following a Change of Control would constitute
an Event of Default under the Indenture. An amendment of or waiver under the
Indenture may not waive the Company's obligation to make a Change of Control
Offer without the consent of the Holders of at least two-thirds in outstanding
principal amount of the Notes.
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The existence of the right of Holders to require the Company to repurchase
their Notes upon the occurrence of a Change of Control may deter a third party
from acquiring the Company in a transaction which would constitute a Change of
Control. Subject to certain limitations described below in "--Certain
Covenants," including the limitation on incurrence of additional Indebtedness,
the Company could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the Indenture, but that could increase
the amount of Senior Indebtedness (or any other Indebtedness) outstanding at
such time or otherwise affect the Company's capital structure or credit
ratings. The Change of Control provisions will not prevent a leveraged buyout
led by the Company management, a recapitalization of the Company or a change
in a majority of the members of the Board of Directors of the Company which is
approved by the then-present Board of Directors, as the case may be.
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, create or permit to exist or become effective
any restriction (other than restrictions not more restrictive than those in
effect under the Credit Agreements or Existing Indebtedness) that would
materially impair the ability of the Company to make a Change of Control Offer
to purchase the Notes or, if such Change of Control Offer is made, to pay for
the Notes tendered for purchase.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitations on Indebtedness. The Indenture provides that the Company will
not, and will not permit its Restricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become liable
with respect to or become responsible for the payment of, contingently or
otherwise ("incur"), any Indebtedness (including any Acquired Indebtedness);
provided, however, that the Company, or a Restricted Subsidiary of the
Company, may incur Indebtedness if at the time of such incurrence and after
giving pro forma effect thereto, the Company's Interest Coverage Ratio for the
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Indebtedness is incurred, calculated on a pro forma basis as if such
Indebtedness was incurred on the first day of such four full fiscal quarter
period, would be at least 2.0 to 1.0.
The Indenture further provides that notwithstanding the foregoing
limitations, the incurrence of the following will not be prohibited:
(a) Indebtedness of the Company evidenced by the Old Notes and
Indebtedness of any Guarantor evidenced by the Old Guarantees;
(b) Indebtedness of the Company evidenced by the New Notes and
Indebtedness of any Guarantor evidenced by the New Guarantees;
(c) Indebtedness of the Company or any Restricted Subsidiary constituting
Existing Indebtedness and any extension, deferral, renewal, refinancing or
refunding thereof;
(d) Indebtedness of the Company or any Restricted Subsidiary incurred
under the Credit Agreements in an aggregate principal amount at any one
time outstanding not to exceed the greater of (x) $30.0 million and (y) the
Borrowing Base at the time such Indebtedness was incurred, or any
refinancing, refunding, deferral, renewal or extension thereof not in
excess of such amount;
(e) Capitalized Lease Obligations of the Company or any Restricted
Subsidiary and Indebtedness of the Company or any Restricted Subsidiary
secured by Liens that secure the payment of all or part of the purchase
price of assets or property acquired or constructed in the ordinary course
of business after the Issue Date; provided, however, that the aggregate
principal amount of such Capitalized Lease Obligations plus such
Indebtedness of the Company and all of the Restricted Subsidiaries does not
exceed $3.0 million outstanding at any time;
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(f) Indebtedness of the Company to any Restricted Subsidiary or of any
Restricted Subsidiary to the Company or another Restricted Subsidiary (but
only so long as such Indebtedness is held by the Company or a Restricted
Subsidiary);
(g) Indebtedness in respect of Hedging Obligations; provided, however,
that the notional principal amount of any such Hedging Obligation does not
exceed the principal amount of the Indebtedness to which such Hedging
Obligation relates;
(h) Indebtedness represented by performance, completion, guarantee, surety
and similar bonds provided by the Company or any Restricted Subsidiary in
the ordinary course of business consistent with past practice;
(i) In addition to any Indebtedness otherwise permitted to be incurred
under the Indenture, up to $10.0 million aggregate principal amount of
Indebtedness at any one time outstanding; and
(j) Any refinancing, refunding, deferral, renewal or extension (each, a
"Refinancing") of any Indebtedness of the Company or any Restricted
Subsidiary permitted by the initial paragraph of this covenant (the
"Refinancing Indebtedness"); provided, however, that (x) such Refinancing
does not increase the total Consolidated Indebtedness of the Company and
its Restricted Subsidiaries outstanding at the time of such Refinancing,
(y) the Refinancing Indebtedness does not provide for any mandatory
redemption, amortization or sinking fund requirement in an amount greater
than or at a time prior to the amounts and times specified in the
Indebtedness being refinanced, refunded, deferred, renewed or extended and
(z) if the Indebtedness being refinanced, refunded, deferred, renewed or
extended is subordinated to the Notes, the Refinancing Indebtedness
incurred to refinance, refund, defer, renew or extend such Indebtedness is
subordinated in right of payment to the Notes on terms at least as
favorable to the Holders as those contained in the documentation governing
the Indebtedness being so refinanced, refunded, deferred, renewed or
extended.
Limitations on Restricted Payments. The Indenture provides that the Company
will not, nor will it cause, permit or suffer any Restricted Subsidiary to,
(i) declare or pay any dividends or make any other distributions (including
through mergers, liquidations or other transactions) on any class of Equity
Interests of the Company or such Restricted Subsidiary (other than dividends
or distributions payable by a wholly-owned Restricted Subsidiary on account of
its Equity Interests held by the Company or another Restricted Subsidiary or
payable in shares of Capital Stock of the Company other than Redeemable
Stock), (ii) make any payment on account of, or set apart money for a sinking
or other analogous fund for, the purchase, redemption or other retirement of
such Equity Interests, (iii) purchase, defease, redeem or otherwise retire any
Indebtedness issued by the Company or any Restricted Subsidiary that is
Subordinated Indebtedness to the Notes, or (iv) make any Restricted
Investment, either directly or indirectly, whether in cash or property or in
obligations of the Company (all of the foregoing being called "Restricted
Payments"), unless, (x) in the case of a dividend, such dividend is payable
not more than 60 days after the date of declaration and (y) after giving
effect to such proposed Restricted Payment, all the conditions set forth in
clauses (1) through (3) below are satisfied (A) at the date of declaration (in
the case of any dividend), (B) at the date of such setting apart (in the case
of any such fund) or (C) on the date of such other payment or distribution (in
the case of any other Restricted Payment) (each such date being referred to as
a "Computation Date"):
(1) no Default or Event of Default has occurred and is continuing or would
result from the making of such Restricted Payment;
(2) at the Computation Date for such Restricted Payment and after giving
effect to such Restricted Payment on a pro forma basis, the Company or such
Restricted Subsidiary could incur $1.00 of additional Indebtedness pursuant
to the covenant described in the initial paragraph under "--Limitations on
Indebtedness;" and
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(3) the aggregate amount of Restricted Payments declared, paid or
distributed subsequent to the Issue Date (including the proposed Restricted
Payment) does not exceed the sum of (i) 50% of the cumulative Consolidated
Net Income of the Company for the period (taken as one accounting period)
commencing on the first day of the first full quarter after the Issue Date
to and including the last day of the Company's last fiscal quarter ending
prior to the Computation Date (each such period to constitute a
"Computation Period") (or, in the event Consolidated Net Income of the
Company during the Computation Period is a deficit, then minus 100% of such
deficit), (ii) the aggregate Net Cash Proceeds of the issuance or sale or
the exercise (other than to a Subsidiary or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries
for the benefit of their employees) of the Company's Equity Interests
(other than Redeemable Stock) subsequent to the Issue Date, and (iii) $3.0
million.
If no Default or Event of Default has occurred and is continuing or would
occur as a result thereof, the prohibitions set forth above are subject to the
following exceptions: (a) Restricted Investments acquired by the Company in
connection with any Asset Sale consummated in accordance with the covenant
described under "--Limitations on Asset Sales" to the extent such Investments
are permitted under such covenant, provided, however, that such Restricted
Investments will be excluded in the calculation of the amount of Restricted
Payments previously made for purposes of clause (3) of the preceding
paragraph; (b) any purchase or redemption of Equity Interests or Subordinated
Indebtedness made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Equity Interests of the Company (other than Redeemable
Stock and other than Equity Interests issued or sold to a Subsidiary or an
employee stock ownership plan), provided, however, that (x) such purchase or
redemption will be excluded in the calculation of the amount of Restricted
Payments previously made for purposes of clause (3) of the preceding paragraph
and (y) the Net Cash Proceeds from such sale will be excluded for purposes of
clause 3(ii) of the preceding paragraph to the extent utilized for purposes of
such purchase or redemption; (c) any purchase or redemption of Subordinated
Indebtedness of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Subordinated Indebtedness of the Company
or any Restricted Subsidiary which is permitted to be issued pursuant to the
provisions of the covenant described under "--Limitation on Indebtedness,"
provided, however, that such purchase or redemption will be excluded in the
calculation of the amount of Restricted Payments previously made for purposes
of clause (3) of the preceding paragraph; (d) the purchase of Capital Stock
held by employees of the Company or any Subsidiary pursuant to any employee
stock ownership plan thereof upon the termination, retirement or death of any
such employee in accordance with the provisions of any such plan in an amount
not greater than $500,000 in any calendar year, provided, however, that any
such purchase will be included in the calculation of the amount of Restricted
Payments previously made for purposes of clause (3) of the preceding
paragraph; and (e) Investments described in clause (vi) of the definition of
Permitted Investments, provided, however, that such Investments will be
included in the calculation of the amount of Restricted Payments previously
made for purposes of clause (3) of the preceding paragraph.
For purposes of this covenant, (a) the amount of any Restricted Payment
declared, paid or distributed in property of the Company or any Restricted
Subsidiary will be deemed to be the net book value of any such property that
is intangible property and the Fair Market Value (as determined in good faith
by and set forth in a resolution of the Board of Directors) of any such
property that is tangible property at the Computation Date, in each case,
after deducting related reserves for depreciation, depletion and amortization;
(b) the amount of any Restricted Payment declared, paid or distributed in
obligations of the Company or any Restricted Subsidiary will be deemed to be
the principal amount of such obligations as of the date of the adoption of a
resolution by the Board of Directors or such Restricted Subsidiary authorizing
such Restricted Payment; and (c) a distribution to holders of the Company's
Equity Interests of (i) shares of Capital Stock or other Equity Interests of
any Restricted Subsidiary of the Company or (ii) other assets of the Company,
without, in either case, the receipt of equivalent consideration therefor will
be regarded as the equivalent of a cash dividend equal to the excess of the
Fair Market Value of the Equity Interests or other assets being so distributed
at the time of such distribution over the consideration, if any, received
therefor.
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Limitations on Liens. The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary to, create, incur, assume or suffer
to exist any Lien upon any of their respective assets or properties now owned
or acquired after the Issue Date, or any income or profits therefrom, unless
the Notes are directly secured equally and ratably (or prior to in the case of
Liens with respect to Indebtedness subordinated to the Notes or the
Guarantees, as the case may be), excluding, however, from the operation of the
foregoing any of the following:
(a) Liens existing as of the Issue Date or pursuant to an agreement in
existence on the Issue Date, including the Credit Agreements;
(b) Permitted Liens;
(c) Liens on assets or properties of the Company, or on assets or
properties of Restricted Subsidiaries, to secure the payment of all or a
part of the purchase price of assets or property acquired or constructed
after the Issue Date; provided, however, that (i) the aggregate principal
amount of Indebtedness secured by such Liens does not exceed the original
cost or purchase price of the assets or property so acquired or
constructed, (ii) the Indebtedness secured by such Liens is otherwise
permitted to be incurred under the Indenture and (iii) such Liens do not
encumber any other assets or property of the Company or any Restricted
Subsidiary and the Indebtedness secured by the Lien may not be created more
than 90 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of full
operation of the property subject to the Lien;
(d) Liens on the assets or property acquired by the Company or any
Restricted Subsidiary after the Issue Date; provided, however, that (i)
such Liens existed on the date such asset or property was acquired and were
not incurred as a result of or in anticipation of such acquisition and (ii)
such Liens do not extend to or cover any property or assets of the Company
or any Restricted Subsidiary other than the property or assets so acquired;
(e) Liens securing Indebtedness which is incurred to refinance
Indebtedness which has been secured by a Lien permitted under the Indenture
and which is permitted to be refinanced under the Indenture; provided,
however, that such Liens do not extend to or cover any property or assets
of the Company or any Restricted Subsidiary not securing the Indebtedness
so refinanced;
(f) Liens on assets or property of the Company or any Restricted
Subsidiary that is subject to a Sale and Leaseback Transaction, provided,
that the aggregate principal amount of Attributable Indebtedness in respect
of all Sale and Leaseback Transactions then outstanding does not at the
time such a Lien is incurred exceed $5.0 million;
(g) Liens on property or shares of Capital Stock of a Person at the time
such Person becomes a Restricted Subsidiary; provided, however, that such
Liens are not created, incurred or assumed in contemplation of the
acquisition thereof by the Company or a Subsidiary; provided further, that
such Liens may not extend to any other property owned by the Company or a
Restricted Subsidiary;
(h) Liens securing Indebtedness of a Restricted Subsidiary owing to the
Company or a wholly-owned Restricted Subsidiary;
(i) Liens on inventory, accounts receivable, general intangibles,
trademarks and licenses and the proceeds thereof of the Company or any
Restricted Subsidiary securing the obligations under clause (d) of the
covenant described under "--Limitations on Indebtedness;" and
(j) Liens securing Indebtedness in respect of Hedging Obligations
permitted to be incurred pursuant to the provisions of the covenant
described under "--Limitations on Indebtedness."
Limitations on Payment Restrictions Affecting Restricted Subsidiaries. The
Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to (i) pay dividends
or make any other distribution to the Company or its Restricted Subsidiaries
on its Equity Interests, (ii) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (iii) make loans or advances to the Company or
any other
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Restricted Subsidiary or (iv) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except (A) consensual encumbrances
or restrictions contained in or created pursuant to the Credit Agreements and
other Existing Indebtedness listed on a schedule to the Indenture, (B)
consensual encumbrances or restrictions in the Notes and the Indenture, (C)
any restriction, with respect to a Restricted Subsidiary of the Company that
is not a Subsidiary of the Company on the Issue Date, in existence at the time
such entity becomes a Restricted Subsidiary of the Company and not created as
a result of or in anticipation of such entity becoming a Restricted Subsidiary
of the Company; provided that such encumbrance or restriction is not created
in anticipation of or in connection with such entity becoming a Subsidiary of
the Company and is not applicable to any Person or the properties or assets of
any Person other than a Person that becomes a Subsidiary, (D) any encumbrances
or restrictions pursuant to an agreement effecting a refinancing of
Indebtedness referred to in clauses (A) or (C) of this covenant or contained
in any amendment to any agreement creating such Indebtedness, provided that
the encumbrances and restrictions contained in any such refinancing or
amendment are not more restrictive taken as a whole (as determined in good
faith by the chief financial officer of the Company) than those provided for
in such Indebtedness being refinanced or amended, (E) encumbrances or
restrictions contained in any other Indebtedness permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of the covenant
described under "--Limitations on Indebtedness", provided that any such
encumbrances or restrictions are not more restrictive taken as a whole (as
determined in good faith by the chief financial officer of the Company) than
the most restrictive of those provided for in the Indebtedness referred to in
clauses (A) or (C) of this covenant, (F) any such encumbrance or restriction
consisting of customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the lease,
(G) any restriction with respect to a Restricted Subsidiary imposed pursuant
to an agreement entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
in compliance with the Indenture pending the closing of such sale or
disposition, provided that such restrictions apply solely to the Capital Stock
or assets of such Restricted Subsidiary which are being sold; or (H) any
encumbrance or restriction due to applicable law.
Limitations on Asset Sales. The Indenture provides that the Company will
not, and will not permit any Restricted Subsidiary to, make any Asset Sale
(other than to the Company or another Restricted Subsidiary) unless (i) the
Company or such Restricted Subsidiary receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the assets sold or
otherwise disposed of, and at least 85% of the consideration received by the
Company or such Restricted Subsidiary from such Asset Sale is in the form of
cash or Cash Equivalents and (ii) the Net Proceeds received by the Company or
such Restricted Subsidiary from such Asset Sale are applied in accordance with
the following paragraphs.
If all or a portion of the Net Proceeds of any Asset Sale are not required
to be applied to repay permanently any Senior Indebtedness of the Company then
outstanding as required by the terms thereof, or the Company determines not to
apply such Net Proceeds to the permanent prepayment of any Senior Indebtedness
outstanding or if no such Senior Indebtedness is then outstanding, then the
Company may within 180 days of the Asset Sale, invest the Net Proceeds in the
Company or one or more Restricted Subsidiaries. The amount of such Net
Proceeds neither used to permanently repay or prepay Senior Indebtedness nor
used or invested as set forth in this paragraph constitutes "Excess Proceeds."
When the aggregate amount of Excess Proceeds from one or more Asset Sales
equals $5.0 million or more, the Company will apply 100% of such Excess
Proceeds within 180 days subsequent to the consummation of the Asset Sale
which resulted in the Excess Proceeds equaling $5.0 million or more to the
purchase of Notes tendered to the Company for purchase at a price equal to
100% of the principal amount thereof, plus accrued interest, if any, to the
date of purchase pursuant to an offer to purchase made by the Company (an
"Asset Sale Offer") with respect to the Notes. Any Asset Sale Offer may
include a pro rata offer under similar circumstances to purchase other Senior
Indebtedness requiring a similar offer. Any Asset Sale Offer will be made
substantially in accordance with the procedures for a Change of
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Control Offer described under "--Change of Control." Until such time as the
Net Proceeds from any Asset Sale are applied in accordance with this covenant,
such Net Proceeds will be segregated from the other assets of the Company and
the Subsidiaries and invested in cash or Cash Equivalents, except that the
Company or any Restricted Subsidiary may use any Net Proceeds pending the
utilization thereof in the manner (and within the time period) described
above, to repay revolving loans (under the Credit Agreements or otherwise)
without a permanent reduction of the commitment thereunder.
The Company will cause a notice of any Asset Sale Offer to be mailed to the
Holders at their registered addresses not less than 30 days nor more than 60
days before the purchase date. Such notice will contain all instructions and
materials necessary to enable Holders to tender their Notes to the Company.
Upon receiving notice of an Asset Sale Offer, Holders may elect to tender
their Notes in whole or in part in integral multiples of $1,000 in exchange
for cash. To the extent that Holders properly tender Notes in an amount
exceeding the Asset Sale Offer, Notes of tendering Holders will be repurchased
on a pro rata basis (based on amounts tendered).
The Credit Agreements and any future credit agreements to which the Company
becomes a party may restrict the Company's ability to repurchase the Notes
pursuant to an Asset Sale Offer. In the event the Company is required to make
an Asset Sale Offer at a time when the Company is prohibited from making such
Offer, the Company will be required under the Indenture, on or prior to the
date that the Company is required to make an Asset Sale Offer, to (i) seek the
consent of its lenders to repurchase Notes pursuant to such Asset Sale Offer
or (ii) refinance the Indebtedness that prohibits such Asset Sale Offer. If
the Company does not obtain such a consent or refinance such borrowings, the
Company will remain prohibited from making such Offer. The Company's failure
to purchase Notes pursuant to an Asset Sale Offer or make such Asset Sale
Offer would constitute an Event of Default under the Indenture.
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, any other tender offer rules under the
Exchange Act and other securities laws or regulations in connection with any
offer to repurchase and the repurchase of the Notes as described above.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, create or permit to exist or become effective any restriction (other than
restrictions not more restrictive than those in effect under the Credit
Agreements or Existing Indebtedness) that would materially impair the ability
of the Company to comply with the provisions of this "Limitations on Asset
Sales" covenant.
Limitations on Sale and Leaseback Transactions. The Indenture provides that
the Company will not, and will not permit any Restricted Subsidiary to, enter
into any Sale and Leaseback Transaction unless (i) at the time of the
occurrence of such transaction and after giving effect to such transaction and
(x) in the case of a Sale and Leaseback Transaction which is a Capitalized
Lease Obligation, giving effect to the Indebtedness in respect thereof, and
(y) in the case of any other Sale and Leaseback Transaction, giving effect to
the Attributable Indebtedness in respect thereof, the Company or such
Restricted Subsidiary could incur $1.00 of additional Indebtedness pursuant to
the covenant described in the initial paragraph under "--Limitations on
Indebtedness," (ii) at the time of the occurrence of such transaction, the
Company or such Restricted Subsidiary could incur Indebtedness secured by a
Lien on property in a principal amount equal to or exceeding the Attributable
Indebtedness in respect of such Sale and Leaseback Transaction pursuant to the
covenant described under "--Limitations on Liens", and (iii) the transfer of
assets in such Sale and Leaseback Transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, the covenant
described under "--Limitations on Asset Sales."
Limitations on Mergers; Sales of Assets. The Indenture provides that the
Company will not consolidate with or merge into, or sell, assign, convey,
lease or transfer all or substantially all of its assets and those of its
Subsidiaries taken as a whole to, any Person, unless (i) the resulting,
surviving or transferee Person expressly assumes all the obligations of the
Company under the Notes and the Indenture; (ii) such
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Person is organized and existing under the laws of the United States of
America, a state thereof or the District of Columbia; (iii) at the time of the
occurrence of such transaction and after giving effect to such transaction on
a pro forma basis, such Person could incur $1.00 of additional Indebtedness
pursuant to the covenant described in the initial paragraph under "--
Limitations on Indebtedness"; (iv) at the time of the occurrence of such
transaction and after giving effect to such transaction on a pro forma basis,
the Consolidated Net Worth of such Person is equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(v) each Guarantor, to the extent applicable, will by supplemental indenture
confirm that its Guarantee will apply to such Person's obligations under the
Notes; and (vi) immediately before and immediately after giving effect to such
transaction and treating any Indebtedness which becomes an obligation of the
Company or any of its Subsidiaries or of such Person as a result of such
transaction as having been incurred by the Company or such Subsidiary or such
Person, as the case may be, at the time of such transaction, no Default or
Event of Default has occurred and is continuing.
The Indenture provides that no Guarantor will, and the Company will not
permit a Guarantor to, in a single transaction or series of related
transactions merge or consolidate with or into any other corporation (other
than the Company or any other Guarantor) or other entity, or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of
its properties and assets to any entity (other than the Company or any other
Guarantors) unless at the time and giving effect thereto: (i) either (1) such
Guarantor is the continuing corporation or (2) the entity (if other than such
Guarantor) formed by such consolidation or into which such Guarantor is merged
or the entity which acquires by sale, assignment, conveyance, transfer, lease
or disposition the properties and assets of such Guarantor is a corporation
duly organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and expressly assumes
by a supplemental indenture, executed and delivered to the Trustee, in a form
reasonably satisfactory to the Trustee, all the obligations of such Guarantor
under the Notes and the Indenture; and (ii) immediately before and immediately
after giving effect to such transaction, no Default or Event of Default has
occurred and is continuing. The provisions of this paragraph will not apply to
any transaction (including any Asset Sale made in accordance with "--
Limitations on Asset Sales" above) with respect to any Guarantor if the
Guarantee of such Guarantor is released in connection with such transaction in
accordance with the applicable provisions of the Indenture. Upon any sale,
exchange, transfer or other disposition, to any Person not an Affiliate of the
Company, of all of the Company's or a Restricted Subsidiary's Equity Interests
in, or all or substantially all of the assets of, any Guarantor, which is in
compliance with the Indenture, such Guarantor will be released from all its
obligations under its Guarantee.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs
in which the Company or any Guarantor is not the continuing corporation, the
successor Person formed or remaining will succeed to, and be substituted for,
and may exercise every right and power of, the Company or such Guarantor, as
the case may be, and the Company or such Guarantor, as the case may be, would
be discharged from its obligations under the Indenture, the Notes or its
Guarantee, as the case may be.
Subsidiary Guarantees. The Indenture provides that if (i) any Subsidiary of
the Company becomes a Restricted Subsidiary after the Issue Date, (ii) the
Company or any Subsidiary of the Company that is a Guarantor transfers or
causes to be transferred, in one transaction or a series of related
transactions, property or assets (including, without limitation, businesses,
divisions, real property, assets or equipment) which in the aggregate have a
value equal to or greater than 15% of the Company's total assets determined on
a consolidated basis as of the time of transfer to any Subsidiary or
Subsidiaries of the Company that is not a Guarantor or are not Guarantors, or
(iii) any Subsidiary of the Company which has a value equal to or greater than
5% of the Company's total assets determined on a consolidated basis as of the
time of determination directly or indirectly guarantees or otherwise becomes
obligated with respect to any Senior Indebtedness of the Company, the Company
will cause such Subsidiary or Subsidiaries to execute and
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deliver to the Trustee a supplemental indenture pursuant to which such
Subsidiary or Subsidiaries will unconditionally guarantee all of the Company's
obligations under the Indenture and the Notes on the same terms as the other
Guarantors, which Guarantee will rank pari passu with any Senior Indebtedness
of such Subsidiary. See "--Guarantees". The provisions of clauses (ii) and
(iii) of this paragraph will not apply to any transaction permitted by the
covenant described under "--Limitations on Asset Sales" above.
Transactions with Affiliates. The Indenture provides that the Company and
its Restricted Subsidiaries will not, directly or indirectly, enter into any
transaction or series of related transactions with or for the benefit of any
of their respective Affiliates other than with the Company or any Restricted
Subsidiaries, except on an arm's-length basis and if (x)(i) in the case of any
such transaction in which the aggregate remuneration, rental value or other
consideration (including the value of a loan), together with the aggregate
remuneration, rental value or other consideration (including the value of a
loan) of all such other transactions consummated in the year during which such
transaction is proposed to be consummated, exceeds $500,000, the Company
delivers board resolutions to the Trustee evidencing that the Board of
Directors and the Independent Directors that are disinterested each have (by a
majority vote) determined in good faith that such transaction is in the best
interests of the Company and that the aggregate remuneration, rental value or
other consideration (including the value of any loan) inuring to the benefit
of such affiliate from any such transaction is not greater than that which
would be charged to or extended by the Company or its Subsidiaries, as the
case may be, on an arm's-length basis for similar properties, assets, rights,
goods or services by or to a Person not affiliated with the Company or its
Subsidiaries, as the case may be, and (ii) in the case of any such transaction
in which the aggregate remuneration, rental value or other consideration
(including the value of any loan), together with the aggregate remuneration,
rental value or other consideration (including the value of any loan) of all
such other transactions consummated in the year during which such transactions
are proposed to be consummated, exceeds $2.5 million, in addition to the
requirements set forth in clause (x)(i) above, the Company delivers to the
Trustee an opinion evidencing that a nationally recognized investment banking
firm, unaffiliated with the Company and the Affiliate which is party to such
transaction, has determined that the aggregate remuneration, rental value or
other consideration (including the value of a loan) inuring to the benefit of
such Affiliate from any such transaction is not greater than that which would
be charged to or extended by the Company or its Subsidiaries, as the case may
be, on an arm's-length basis for similar properties, assets, rights, goods or
services by or to a Person not affiliated with the Company or its
Subsidiaries, as the case may be, and (y) all such transactions referred to in
clauses x(i) and (ii) are entered into in good faith. Any transaction required
to be approved by Independent Directors pursuant to the preceding paragraph
must be approved by at least one such Independent Director.
The provisions of the preceding paragraph do not prohibit (i) any Restricted
Payment permitted to be paid pursuant to the provisions of the covenant
described under "--Limitations on Restricted Payments", (ii) any issuance of
securities, or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii)
loans or advances to employees in the ordinary course of business consistent
with past practices, not to exceed $500,000 aggregate principal amount
outstanding at any time, and (iv) the payment of fees and compensation to, and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any of its Subsidiaries, as determined by the Board of
Directors in good faith and as paid or provided pursuant to agreements or
arrangements entered into in the ordinary course of business.
Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries. The Indenture provides that the Company (i) will not, and will
not permit any Restricted Subsidiary to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Restricted Subsidiary to any
person other than the Company or a wholly-owned Restricted Subsidiary, unless
(a) such transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Restricted Subsidiary and (b) the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition are applied in
accordance with the
covenant "--Limitation on Asset Sales" covenant, and (ii) will not permit any
Restricted Subsidiary to issue
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any of its Capital Stock (other than directors' qualifying shares) to any
Person other than to the Company or a wholly-owned Restricted Subsidiary.
Limitations on Investments. The Indenture provides that the Company will not,
and will not permit any Restricted Subsidiaries, directly or indirectly, to
make any Investment after the Issue Date, other than (i) Permitted Investments
and (ii) Restricted Investments to the extent permitted pursuant to the
covenant described under "--Limitations on Restricted Payments."
Provision of Financial Statements. The Indenture provides that, whether or
not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the
Company will, to the extent permitted under the Exchange Act, file with the SEC
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the SEC pursuant to such Section 13(a) or
15(d) if the Company were so subject, such documents to be filed with the SEC
on or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders of Notes, as their
names and addresses appear in the security register, without cost to such
Holders and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act if the
Company were subject to such Sections and (y) if filing such documents by the
Company with the SEC is not permitted under the Exchange Act, promptly upon
written request and payment of the reasonable cost of duplication and delivery,
supply copies of such documents to any prospective holder of Notes at the
Company's cost.
Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in the City of New York; (iii) arrangements
regarding the handling of money held in trust; (iv) maintenance of corporate
existence; (v) payment of taxes and other claims; (vi) maintenance of
properties; and (vii) maintenance of insurance.
DEFAULTS AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in payment of Interest on the Notes; (ii)
default in payment of principal of, or premium with respect to, the Notes;
(iii) failure by the Company or a Guarantor, if applicable, to comply with the
covenants entitled "Limitations on Restricted Payments," "Limitations on
Indebtedness," "Subsidiary Guarantees," "Limitations on Liens," "Limitations on
Asset Sales," "Limitations on Sale and Leaseback Transactions," "Limitations on
Issuances and Sales of Capital Stock of Restricted Subsidiaries," "Change of
Control," and "Limitations on Mergers; Sales of Assets;" (iv) failure by the
Company or a Guarantor, if applicable, to comply with any of its other
agreements in the Indenture, or the Notes for a period that continues for 60
days after receipt of written notice from the Trustee or from the Holders of at
least 25% of the aggregate principal amount of the Notes then outstanding,
specifying such default; (v) the Company denies or disaffirms in writing its
obligations under the Indenture or the Notes; (vi) a Guarantor denies or
disaffirms in writing its obligations under its Guarantee, or any Guarantee for
any reason ceases to be, or is asserted in writing by any Guarantor or the
Company not to be, in full force and effect and enforceable in accordance with
its terms, except to the extent contemplated by the Indenture and any such
Guarantee; (vii) a default under any Indebtedness of the Company or any of its
Subsidiaries, which default (A) is caused by a failure to pay the final
scheduled principal installment on such Indebtedness on the stated maturity
date thereof (which failure continues beyond any applicable grace period) or
(B) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness with respect to which
the principal amount remains unpaid at its final maturity or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (viii) final
judgments rendered against the Company or any
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of its Restricted Subsidiaries (other than any judgment as to which and only
to the extent, a reputable insurance company has acknowledged coverage of such
claim in writing) of $5.0 million or more which remain undischarged or
unstayed for a period of 60 days, and (ix) certain events of bankruptcy or
insolvency of the Company or any of the Restricted Subsidiaries.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the Notes may declare the Notes due and
payable immediately. However, if an Event of Default resulting from bankruptcy
or insolvency occurs, such amount will be due and payable without any
declaration or any act on the part of the Trustee or the Holders. Such
declaration or acceleration may be rescinded and past defaults may be waived
by the Holders of a majority in principal amount of the Notes upon conditions
provided in the Indenture.
Holders may not enforce the Indenture, or the Notes, except as provided
therein. The Trustee may require an indemnity satisfactory to it before
enforcing the Indenture or the Notes. Subject to certain limitations, Holders
of a majority in principal amount of the Notes will 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 on the
Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or such Indenture, that is unduly prejudicial to the rights
of any Holder or that would subject the Trustee to personal liability. The
Trustee may withhold from the Holders of the Notes notice of any continuing
default (except a default in payment of principal, premium, if any, or
interest) if it determines in good faith that withholding notice is in their
interest. The Company is required to file periodic reports with the Trustee as
to the absence of Default. If a Default exists, the Company is required to
describe the Default and efforts undertaken to remedy the Default.
Directors, officers, employees or stockholders, as such, of the Company, the
Guarantors and the other Subsidiaries of the Company will not have any
liability for any obligations of the Company or any Guarantors under the
Notes, any Guarantee or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations. Each Holder of a Note by accepting a
Note waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Notes. Such waiver may not be
effective to waive liabilities under the Federal securities laws and it is the
view of the SEC that such a waiver is against public policy.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law. The Registrar need not transfer or exchange any Note previously selected
for redemption. A registered Holder of a Note will be treated as the owner
thereof for all purposes. No Note will be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
Note. Each Note will become effective on the date upon which it is so signed.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the Holders of a majority in principal amount of
the Notes then outstanding. Without the consent of any Holder, the Company and
the Guarantors may amend or supplement the Indenture or the Notes to comply
with the provisions of the Indenture in the case of a consolidation, merger or
sale of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole, to provide for uncertificated Notes in addition
to or in place of certificated Notes, to cure any ambiguity, defect or
inconsistency, to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the Trust Indenture Act, to comply
with any requirement of the SEC or applicable law to effectuate the Exchange
Offer, to
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add additional guarantees with respect to the Notes, to further secure the
Notes or the Guarantees, to add to the covenants of the Company or any
Subsidiary for the benefit of the Holders of the Notes, to surrender any right
or power conferred upon the Company or any Subsidiary or to make any other
change that does not adversely affect the rights of any Holder.
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder) (i) reduce the
principal amount of Notes whose Holders must consent to an amendment or
waiver; (ii) reduce the rate of, or change the time for payment of, interest,
including default interest, on any Notes; (iii) reduce the principal of or
change the fixed maturity of any Note(s), or alter the optional redemption
provisions, or alter the price at which the Company will offer to purchase
such Notes pursuant to an Asset Sale Offer or a Change of Control Offer; (iv)
make any Note payable in money other than that stated in such Note; (v) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of the Notes to receive payments of
principal of or interest on the Notes; (vi) waive a Default or Event of
Default in the payment of principal of, premium if any, or interest on the
Notes, including any such obligation arising pursuant to an Asset Sale Offer,
a Change of Control Offer (except a rescission of acceleration of the Notes by
the Holders of at least a majority (or, in the case of the failure to make a
Change of Control Offer, two-thirds) in principal amount of the Notes then
outstanding and a waiver of the payment default that resulted from such
acceleration); (vii) waive the obligation to make an Asset Sale Offer or any
payment required to be made pursuant to an Asset Sale Offer, a Change of
Control Offer or a Guarantee; or (viii) make any change in the foregoing
amendment and waiver provisions. An amendment or waiver may not waive the
Company's obligation to make a Change of Control Offer without the consent of
the Holders of at least two-thirds in outstanding principal amount of the
Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of the
obligations of the Company and each Guarantor discharged with respect to the
outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest on such Notes when such payments are due but only from
assets deposited by the Company pursuant to clause (i) of the following
paragraph, (ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration or transfer of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions
of the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company and any Guarantor released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations will
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described
under "Events of Default" will no longer constitute an Event of Default with
respect to the Notes.
In order to effect either a Legal Defeasance or a Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable 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, to pay the principal of, premium, if any, and interest on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, of such principal or installment of principal of,
premium, if any, or interest on the outstanding Notes; (ii) in the case of
Legal Defeasance, the Company will deliver to the Trustee an opinion of
counsel reasonably acceptable to the Trustee confirming that (A) the Company
has received from the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable Federal income tax law,
including by means of a Revenue Ruling published by the Internal Revenue
Service, in either case to the effect that, and based thereon such
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opinion of counsel will confirm that, the Holders of the outstanding Notes
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; (iii) in the case of
Covenant Defeasance, the Company will deliver to the Trustee an opinion of
counsel reasonably acceptable to the Trustee confirming that the Holders of
the outstanding Notes 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, on 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; (iv) no Default or Event of Default has occurred and is continuing
on the date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance will not result in a breach or violation of, or constitute a
default under any material agreement or instrument (other than the Indenture)
to which the Company or any Guarantor is a party or by which the Company or
any Guarantor is bound; (vi) the Company will deliver to the Trustee an
opinion of counsel to the effect that (A) the trust funds will not be subject
to any rights of holders of Senior Indebtedness of the Company or of any
Guarantor and (B) after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii)
the Company will deliver to the Trustee an officers' certificate stating that
the deposit was not made by the Company with the intent of preferring the
Holders of Notes or any Guarantee over the other creditors of the Company or
any Guarantor or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or any Guarantor or others; and (viii) the
Company will deliver to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in their exercise as a prudent
Person would exercise under the circumstances in the conduct of such Person's
own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company or any Guarantor, to obtain payment of claim
in certain cases or to realize on certain property received by it in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting
interest, it must eliminate such conflict or resign.
The Company or any Guarantor may have customary banking relationships with
the Trustee in the ordinary course of business.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully
registered form. Except as described in the next paragraph, the Company
expects that the New Notes initially will each be represented by a single
global certificate in fully registered form (the "Global Note") and will be
deposited with the Trustee as custodian for The Depository Trust Company
("DTC") and registered in the name of a nominee of DTC.
New Notes issued in exchange for Old Notes (i) originally purchased by
institutional investors that were "accredited investors" (as defined in Rule
501(a)(1),(2),(3) or (7) under the Securities Act) ("Institutional Accredited
Investors") who were not "Qualified Institutional Buyers" (as defined in Rule
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144A under the Securities Act) ("QIBs"), or (ii) held by QIBs who elected to
take physical delivery of their certificates instead of holding their interest
through the Global Note (and which were thus ineligible to trade through DTC)
(collectively referred to herein as the "Non-Global Purchasers") will be
issued in registered form (the "Certificated Notes"). The Company expects that
upon the transfer to a QIB of Certificated Notes initially issued to a Non-
Global Purchaser, such Certificated Notes will, unless the transferee requests
otherwise or the Global Note has previously been exchanged in whole for
Certificated Notes, be exchanged for an interest in the Global Note.
Global Note. The Company expects that upon the issuance of the Global Note,
DTC or its custodian will credit, on its book-entry registration and transfer
system, the respective principal amount of Notes of the individual beneficial
interests represented by such Global Note to the accounts of Persons who have
accounts with such depositary. Such accounts initially will be designated by
or on behalf of the Initial Purchaser. Ownership of beneficial interests in
the Global Note will be limited to Persons who have accounts with DTC
("participants") or Persons who hold interests through participants. Ownership
of beneficial interests in the Global Note will be shown on, and the transfer
of that ownership will be effected only through, records maintained by DTC or
its nominee (with respect to interests of participants) and the records of
participants (with respect to interests of Persons other than participants).
QIBs may hold their interests in the Global Note directly through DTC if they
are participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in the Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture.
Payments of the principal of, premium (if any) and interest on, the Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. Neither the Company, the Trustee nor any Paying Agent will have
any responsibility or liability for any aspect of the record relating to or
payments made on account of beneficial ownership interests in the Global Note
or for maintaining, supervising or reviewing any record relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global Note
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
The Company expects that transfers between participants in DTC will be
effected in the ordinary way in accordance with DTC rules and will be settled
in clearinghouse funds. If a holder requires physical delivery of a
Certificated Note for any reason, including to sell Notes to Persons in states
which require physical delivery of such Notes or to pledge such Notes, such
holder must transfer its interest in the Global Note in accordance with the
normal procedures of DTC and the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Note is credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Notes or the Indenture, DTC will
exchange the Global Note for Certificated Notes, which it will distribute to
its participants.
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To the Company's knowledge, DTC is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchasers), banks, trust companies and clearing
corporations and certain other organizations. Indirect access to the DTC
system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").
Although DTC customarily agrees to the foregoing procedures in order to
facilitate transfers of interests in global notes among participants of DTC,
it is under no obligation to perform such procedures, and such procedures may
be discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Company within 90 days, Certificated Notes will be issued in
exchange for the Global Note.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person (the "Acquired Person") existing at the time
the Acquired Person merges with or into, or becomes a Subsidiary of, such
specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Subsidiary of, such specified Person.
"Affiliate" means, with respect to any party, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such party including any estate or trust under will of such
party. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided, however, that beneficial ownership of 5%
or more of the voting securities of a Person will be deemed to be control.
"Asset Sale" means, with respect to the Company or any Restricted
Subsidiary, the sale, lease, conveyance or other disposition (including,
without limitation, by way of merger or consolidation, and whether by
operation of law or otherwise) to any Person other than the Company or a
wholly-owned Restricted Subsidiary of any of the Company's or such Restricted
Subsidiary's assets (including, without limitation, (x) any sale or other
disposition of Equity Interests of any Restricted Subsidiary and (y) any sale
or other disposition of any non-cash consideration received by the Company or
such Restricted Subsidiary from any prior transaction or series of related
transactions that constituted an Asset Sale under the Indenture), whether
owned on the Issue Date or subsequently acquired, in one transaction or a
series of related transactions; provided, however, that the following will not
constitute Asset Sales: (i) transactions (other than transactions described in
clause (y) above) in any calendar year with aggregate cash and/or Fair Market
Value of any other consideration received (including, without limitation, the
unconditional assumption of Indebtedness) of less than $500,000; (ii) a
transaction or series of related transactions that results in a Change in
Control; (iii) any sale of assets of the Company and the Restricted
Subsidiaries or merger permitted under the covenant described under "Certain
Covenants--Limitations on Mergers; Sales of Assets"; (iv) any sale or other
disposition of inventory, property (whether real, personal or mixed) or
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equipment that has become worn out, obsolete or damaged or otherwise
unsuitable or no longer needed for use in connection with the business of the
Company or any Restricted Subsidiary, as the case may be, in the good faith
determination of the Board of Directors; and (v) any sale of inventory to
customers in the ordinary and customary course of business.
"Attributable Indebtedness" means, with respect to any Sale and Leaseback
Transaction, as at the time of determination, the greater of (i) the Fair
Market Value of the property subject to such transaction and (ii) the present
value (discounted at a rate equivalent to the Company's then current weighted
average cost of funds for borrowed money, compounded on a semi-annual basis)
of the total net obligations of the lessee for rental payments during the
remaining term of the lease included in such arrangement (including any period
for which such lease has been extended). As used in the preceding sentence,
the "total net obligations of the lessee for rental payments" under any lease
for any such period means 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 also includes the amount of such penalty, but no rent
will be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
85% of the net book value of the accounts receivable of the Company and its
Restricted Subsidiaries as of such date, and (b) 60% of the net book value of
the inventory owned by the Company and its Restricted Subsidiaries as of such
date, all calculated on a consolidated basis and in accordance with GAAP. To
the extent that information is not available as to the amount of accounts
receivable or inventory as of a specific date, the Company may utilize the
most recent available quarterly or annual financial report for purposes of
calculating the Borrowing Base.
"Capital Stock" means, with respect to any Person, any common stock,
preferred stock and any other capital stock of such Person and shares,
interest, participations or other ownership interest (however designated), of
any Person and any rights (other than debt securities convertible into, or
exchangeable for, capital stock), warrants or options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each
general and limited partnership interest of such Person if such Person is a
partnership.
"Capitalized Lease Obligation" means Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP and the amount of such Indebtedness will be
the capitalized amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" mean (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) having maturities of not more
than 90 days from the date of acquisition, (ii) time deposits and certificates
of deposit with maturities of not more than 90 days from the date of
acquisition, of any commercial banking institution that is a member of the
Federal Reserve System having capital and surplus in excess of $500.0 million,
whose debt has a rating at the time of any such investment of at least "A-1"
or the equivalent thereof by Standard & Poor's Ratings Group or at least "P-1"
or the equivalent thereof by Moody's Investors Service, Inc., or any bank or
financial institution party to the Credit Agreements, (iii) fully secured
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) entered into with any bank or
financial institution meeting the qualifications specified in clause (ii)
above, (iv) commercial paper issued by the parent corporation of any
commercial banking institution that is a member of the Federal
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Reserve System having capital and surplus in excess of $500.0 million and
commercial paper or master notes of issuers, rated at the time of any such
investment at least "A-1" or the equivalent thereof by Standard & Poor's
Ratings Group or at least "P-1" or the equivalent thereof by Moody's Investors
Service, Inc., or any bank or financial institution party to the Credit
Agreements, and in each case maturing within 270 days after the date of
acquisition, and (v) any shares in an open-end mutual fund organized by a bank
or financial institution having combined capital and surplus of at least
$500.0 million investing solely in investments permitted by the foregoing
clauses (i), (ii) and (iv).
"Consolidated Indebtedness" means the Indebtedness of the Company and its
consolidated Restricted Subsidiaries determined on a consolidated basis in
conformity with GAAP.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, excluding
amortization of any deferred financing fees, plus, to the extent not included
in such interest expense, (i) interest expense attributable to Capitalized
Lease Obligations, (ii) amortization of debt discount and debt issuance cost,
(iii) capitalized interest, (iv) non-cash interest expense, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing, (vi) interest actually paid by the Company
or any such Restricted Subsidiary under any guarantee of Indebtedness or other
obligation of any other Person, (vii) net costs associated with Hedging
Obligations (including fees and amortization of discounts), (viii) Preferred
Stock dividends in respect of all Redeemable Stock of the Company held by
Persons other than the Company or a wholly-owned Restricted Subsidiary and
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
loans incurred by such plan or trust to purchase newly issued or treasury
shares of the Capital Stock of the Company.
"Consolidated Net Income" means, for any period, and as to any Person, the
aggregate Net Income of such Person and its Subsidiaries (other than, in the
case of the Company, the Unrestricted Subsidiaries of the Company) for such
period determined on a consolidated basis in accordance with GAAP; provided
that (i) the Net Income of any Person which is not a Subsidiary of such Person
but which is consolidated with such Person or is accounted for by such Person
by the equity method of accounting will be included only to the extent of the
amount of cash dividends or cash distributions actually paid to such Person or
a wholly-owned Subsidiary of such Person (other than, in the case of the
Company, the Unrestricted Subsidiaries of the Company), (ii) the Net Income of
any Person acquired by such Person or a Subsidiary of such Person in a pooling
of interests transaction for any period prior to the date of such acquisition
will be excluded, (iii) the Net Income of any Subsidiary of such Person that
is subject to restrictions, direct or indirect, on the payment of dividends or
the making of distributions to such Person will be excluded to the extent of
such restrictions, (iv) the Net Income of (A) any Unrestricted Subsidiary and
(B) any Subsidiary less than 80% of whose securities having the right (apart
from the right under special circumstances) to vote in the election of
directors are owned by the Company or its wholly-owned Restricted Subsidiaries
will be included only to the extent of the amount of cash dividends or cash
distributions actually paid by such Subsidiary to the Company or a wholly-
owned Restricted Subsidiary of the Company, and (v) all gains (but not losses)
which are extraordinary or are either unusual or nonrecurring (including any
gain realized upon the termination of any employee pension benefit plan and
any gain from the sale or other disposition of assets other than in the
ordinary course of business or from the issuance or sale of any Equity
Interests) will be excluded.
"Consolidated Net Worth" means, for any Person, the total of the amounts
shown on the balance sheet of such Person and its consolidated Subsidiaries,
determined on a consolidated basis without duplication in accordance with
GAAP, as of the end of the most recent fiscal quarter of such Person ending at
least 45 days prior to the taking of any action for the purpose of which the
determination is being made, as (i) the amount of Capital Stock (other than
Redeemable Stock) plus (ii) the amount of surplus and retained earnings (or,
in the case of a surplus or retained earnings deficit, minus the amount of
such deficit).
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"EBITDA" for any period means the Consolidated Net Income of the Company and
its Restricted Subsidiaries for such period, plus, without duplication, the
following to the extent included in calculating such Consolidated Net Income:
(i) Consolidated Interest Expense, (ii) consolidated income tax expense and
(iii) consolidated depreciation and amortization expense.
"Equity Interests" means shares, interests, participations or other
equivalents (however designated) of Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security which
is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer Registration Statement" means the registration statement to
be filed by the Company and the Guarantors with the SEC with respect to an
offer to exchange the Old Notes and Old Guarantees for another series of
senior notes of the Company and guarantees by the Guarantors registered under
the Securities Act with substantially identical terms to the Old Notes and the
Old Guarantees.
"Existing Indebtedness" means all Indebtedness (other than Indebtedness
outstanding pursuant to the Credit Agreements) of the Company or any
Restricted Subsidiary existing on the Issue Date and listed on a schedule to
the Indenture.
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair Market Value will be determined
by a majority of the members of the Board of Directors, and a majority of the
disinterested members of such Board of Directors, if any, acting in good faith
and will be evidenced by a duly and properly adopted resolution of the Board
of Directors.
"GAAP" means 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, which are in effect from time to time.
"Hedging Obligations" means the obligations of any Person or entity pursuant
to any swap or cap agreement, exchange agreement, collar agreement, option,
futures or forward hedging contract or other similar agreement or arrangement
designed to protect such Person or entity against fluctuations in interest
rates or foreign exchange rates or the price of raw materials and other
chemical products used or produced in the Company's business as the case may
be.
"incur" has the meaning ascribed thereto in the covenant described under "--
Certain Covenants--Limitations on Indebtedness"; provided that (a) with
respect to any Indebtedness of any Restricted Subsidiary that is owing to the
Company or another Restricted Subsidiary, any disposition, pledge or transfer
of such Indebtedness to any Person (other than the Company or a wholly-owned
Restricted Subsidiary) will be deemed to be an incurrence of such Indebtedness
and (b) with respect to any Indebtedness of the Company or a Restricted
Subsidiary that is owing to another Restricted Subsidiary, any transaction
pursuant to which a wholly-owned Restricted Subsidiary to which such
Indebtedness is owing ceases to be a wholly-owned Restricted Subsidiary will
be deemed to be an incurrence of such Indebtedness, and provided, further that
any Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary will be deemed to be incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary. The term
"incurrence" has a corresponding meaning.
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"Indebtedness" of any Person means, without duplication, all liabilities
with respect to (i) indebtedness for money borrowed or which is evidenced by a
bond, debenture, note or other similar instrument or agreement, but excluding
trade accounts payable and other accrued liabilities arising in the ordinary
course of business; (ii) reimbursement obligations, letters of credit and
bankers' acceptances; (iii) indebtedness with respect to Hedging Obligations;
(iv) Capitalized Lease Obligations; (v) indebtedness, secured or unsecured,
created or arising in connection with the acquisition or improvement of any
property or asset or the acquisition of any business; (vi) all indebtedness
secured by any Lien upon property owned by such Person and all indebtedness
secured in the manner specified in this clause even if such Person has not
assumed or become liable for the payment thereof; (vii) all indebtedness of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person or
otherwise representing the deferred and unpaid balance of the purchase price
of any such property, including all indebtedness created or arising in the
manner specified in this clause even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property; (viii) guarantees, direct or indirect,
of any indebtedness of other Persons referred to in clauses (i) through
(vii) above, or of dividends or leases, taxes or other obligations of other
Persons, excluding any guarantee arising out of the endorsement of negotiable
instruments for collection in the ordinary course of business; (ix) contingent
obligations in respect of, or to purchase or otherwise acquire or be
responsible or liable for, through the purchase of products or services,
irrespective of whether such products are delivered or such services are
rendered, or otherwise, any such indebtedness referred to in clauses (i)
through (vii) above, (x) any obligation, contingent or otherwise, arising
under any surety, performance or maintenance bond; and (xi) Redeemable Stock
of the Company valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends; which indebtedness,
Capitalized Lease Obligation, guarantee or contingent or other obligation such
Person has directly or indirectly created, incurred, assumed, guaranteed or
otherwise become liable or responsible for, whether then outstanding or
thereafter created in the case of (i) through (x) above, to the extent any of
the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability on the balance sheet of such Person
in accordance with GAAP. For purposes of the foregoing definition, the
"maximum fixed repurchase price" of any Redeemable Stock which does not have a
fixed repurchase price will be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were purchased on any date on
which Indebtedness is required to be determined pursuant to the Indenture. As
used herein, Indebtedness with respect to any Hedging Obligation means, with
respect to any specified Person on any date, the net amount (if any) that
would be payable by such specified Person upon the liquidation, close-out or
early termination on such date of such Hedging Obligation. For purposes of the
foregoing, any settlement amount payable upon the liquidation, close-out or
early termination of a Hedging Obligation will be calculated by the Company in
good faith and in a commercially reasonable manner on the basis that such
liquidation, close-out or early termination results from an event of default
or other similar event with respect to such specified Person. Any reference in
this definition to indebtedness will be deemed to include any renewals,
extensions and refundings of any such indebtedness or any indebtedness issued
in exchange for such indebtedness.
"Independent Director" means a director of the Company other than a director
(i) who (apart from being a director of the Company or any of its
Subsidiaries) is an employee, insider, associate or Affiliate of the Company
or any of its Subsidiaries or has held any such position during the previous
year or (ii) who is a director, an employee, insider, associate or Affiliate
of another party to the transaction in question.
"Interest Coverage Ratio" as of any date of determination means the ratio of
(i) the aggregate amount of EBITDA for the period of the most recent four
consecutive fiscal quarters for which internal financial statements are
available prior to the date of such determination to (ii) Consolidated
Interest Expense for such four fiscal quarters of the Company and its
Restricted Subsidiaries; provided, however, that (A) if the Company or any
Restricted Subsidiary has incurred any Indebtedness since the beginning of
such period that remains outstanding or if the transaction giving rise to the
need to calculate the Interest Coverage
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Ratio is an incurrence of Indebtedness, or both, EBITDA and Consolidated
Interest Expense for such period will be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been issued
on the first day of such period and the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of
such new Indebtedness as if such discharge had occurred on the first day of
such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary has made any Asset Sale, EBITDA for such period will be
reduced by an amount equal to EBITDA (if positive), directly attributable to
the assets which are the subject of such Asset Sale for such period, or
increased by an amount equal to EBITDA (if negative), directly attributable
thereto for such period and Consolidated Interest Expense for such period will
be reduced by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with any such
sale or other disposition for such period (or, if the Capital Stock of any
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (C) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) has made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any acquisition
of assets occurring in connection with a transaction causing a calculation to
be made under the Indenture, which constitutes all or substantially all of an
operating unit of a business, EBITDA and Consolidated Interest Expense for
such period will be calculated after giving pro forma effect thereto
(including the incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (D) in making such
computation, Consolidated Interest Expense attributable to any Indebtedness
incurred under any revolving credit facility will be computed based on the
average daily balance of such Indebtedness during such period. For purposes of
this definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto, and the amount of
Consolidated Interest Expense associated with any Indebtedness incurred in
connection therewith, the pro forma calculations will be determined in good
faith by a responsible financial or accounting officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the
entire period.
"Investment" means any direct or indirect advance, loan, other extension of
credit or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, purchase or acquisition of Equity Interests, bonds, notes,
debentures or other securities of, or purchase or other acquisition of all or
a substantial part of the business, Equity Interests or other evidence of
beneficial ownership of, or any other investment in or guarantee of any
Indebtedness (other than guarantees of Indebtedness of the Company or any
Restricted Subsidiary permitted by the covenant described under "Limitations
on Indebtedness") of, any Person or any other item that would be classified as
an investment on a balance sheet prepared in accordance with GAAP. Investments
do not include advances to customers and suppliers in the ordinary and
customary course of business and on commercially reasonable terms.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Lien" means any mortgage, pledge, lien, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).
"Net Cash Proceeds" means, with respect to any issuance or sale of Equity
Interests or debt securities that have been converted into or exchanged for
Equity Interests, as referred to under "--Certain Covenants--Limitations on
Restricted Payments," the proceeds of such issuance or sale in the form of
cash or cash equivalents, net of attorneys' fees, accountants' fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
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"Net Income" of any Person, for any period, means the net income (loss) of
such Person and its Subsidiaries (other than, in the case of the Company, its
Unrestricted Subsidiaries) determined in accordance with GAAP.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, the proceeds of insurance paid on account of the loss of
or damage to any property, or compensation or other proceeds for any property
taken by condemnation, eminent domain or similar proceedings, and any non-cash
consideration received by the Company or any Restricted Subsidiary from any
Asset Sale that is converted into or sold or otherwise disposed of for cash
within 90 days after the relevant Asset Sale), net of (i) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions), (ii) any taxes paid or
payable as a result thereof, (iii) all amounts required to be applied to the
repayment of, or representing the amount of permanent reductions in the
commitments relating to, Indebtedness secured by a Lien on the asset or assets
the subject of such Asset Sale which Lien is permitted pursuant to the terms
of the Indenture, (iv) any reserve for adjustment in respect of the sale price
of such asset or assets required by GAAP, and (v) all distributions and other
payments required to be made (including any amounts held pending distribution)
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale. The amount of any Net Proceeds other than cash will be the
Fair Market Value thereof as determined in good faith by the Board of
Directors of the Company. The amount of any taxes required to be accrued as a
liability under GAAP as a consequence of an Asset Sale will be the amount
thereof as determined in good faith by the Board of Directors of the Company.
"Permitted Holders" means (i) Michael T. Kennedy; (ii) the spouse and
children or grandchildren (including children or grandchildren by adoption) of
Michael T. Kennedy; (iii) any controlled Affiliate of any of the foregoing;
(iv) in the event of the incompetence or death of any of the Persons described
in clause (i), such Person's estate, executor, administrator, committee or
other personal representative, in each case who at any particular date will
beneficially own or have the right to acquire, directly or indirectly, Capital
Stock of the Company; or (v) any trusts created for the benefit of the Persons
described in clause (i), (ii), or (iv) or any trust for the benefit of any
such trust.
"Permitted Investment" means (i) any Investment in Cash Equivalents, (ii)
any Investment in the Company, (iii) Investments in existence on the Issue
Date, (iv) intercompany notes permitted under clause (f) of the covenant
described under "--Certain Covenants--Limitations on Indebtedness," (v)
Investments in any wholly-owned Restricted Subsidiary or any Person which, as
a result of such Investment, becomes a wholly-owned Restricted Subsidiary, and
(vi) Investments that do not at one time outstanding exceed $3.0 million in
joint ventures, corporations, limited liability companies, partnerships or
Unrestricted Subsidiaries.
"Permitted Liens" means as of any particular time, any one or more of the
following:
(a) Liens for taxes, rates and assessments not yet past due or, if past
due, the validity of which is being contested in good faith by the Company
or any Restricted Subsidiary by appropriate proceedings promptly instituted
and diligently conducted and against which the Company has established
appropriate reserves in accordance with GAAP;
(b) the Lien of any judgment rendered which is being contested in good
faith by the Company or any Restricted Subsidiary by appropriate
proceedings promptly instituted and diligently conducted and against which
the Company has established appropriate reserves in accordance with GAAP
and which does not have a material adverse effect on the ability of the
Company and its Restricted Subsidiaries to operate their business or
operations;
(c) other than in connection with Indebtedness, any Lien arising in the
ordinary course of business (i) to secure payments of workers'
compensation, unemployment insurance, pension or other social security or
retirement benefits, or to secure the performance of bids, tenders, leases,
progress payments, contracts (other than for the payment of money) or to
secure public or statutory
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obligations of the Company, or any Restricted Subsidiary, or to secure
surety or appeal bonds to which the Company or any Restricted Subsidiary is
a party, (ii) imposed by law dealing with materialmen's, mechanics',
workmen's, repairmen's, warehousemen's, landlords', vendors' or carriers'
Liens created by law, or deposits or pledges which are not yet due or, if
due, the validity of which is being contested in good faith by the Company
or any Restricted Subsidiaries by appropriate proceedings promptly
instituted and diligently conducted and against which the Company has
established appropriate reserves in accordance with GAAP and (iii) rights of
financial institutions to setoff and chargeback arising by operation of law;
and (iv) similar Liens;
(d) servitudes, licenses, easements, encumbrances, restrictions, rights-
of-way and rights in the nature of easements or similar charges which will
not in the aggregate materially adversely impair the use of the subject
property by the Company or a Restricted Subsidiary;
(e) zoning and building by-laws and ordinances, municipal bylaws and
regulations, and restrictive covenants, which do not materially interfere
with the use of the subject property by the Company or a Restricted
Subsidiary as such property is used as of the Issue Date; and
(f) any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), as a whole or in
part, of any of the Liens referred to in clauses (a) through (e) of this
definition or the Indebtedness secured thereby; provided that (i) such
extension, renewal, substitution or replacement Lien is limited to that
portion of the property or assets, now owned or hereafter acquired, that
secured the Lien prior to such extension, renewal, substitution or
replacement Lien and (ii) the Indebtedness secured by such Lien (assuming
all available amounts were borrowed) at such time is not increased.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Equity Interests of any corporation,
means stock of any class or classes (however designated) which is preferred
over shares of stock of any other class of such corporation as to the
distribution of assets on any voluntary or involuntary liquidation or
dissolution of such corporation or as to dividends.
"Public Equity Offering" means an underwritten public offering of newly
issued shares of common stock of the Company pursuant to an effective
registration statement under the Securities Act, on a primary basis (whether
alone or in conjunction with any secondary public offering).
"Redeemable Stock" means any Equity Interest that by its terms or otherwise
(i) is required to be redeemed prior to the maturity of the Notes, (ii) matures
or is redeemable, in whole or in part, at the option of the Company, any
Subsidiary or the holder thereof or pursuant to a mandatory sinking fund at any
time prior to the maturity of the Notes, or (iii) is convertible into or
exchangeable for debt securities which provide for any scheduled payment of
principal prior to the maturity of the Notes at the option of the issuer at any
time prior to the maturity of the Notes, until the right to so convert or
exchange is irrevocably relinquished.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means (i) any Guarantor, (ii) any Subsidiary of the
Company in existence on the date hereof to which any line of business or
division (and the assets associated therewith) of any Guarantor are transferred
after the Issue Date, (iii) any Subsidiary of the Company organized or acquired
after the Issue Date, unless such Subsidiary has been designated as an
Unrestricted Subsidiary by a resolution of the Board of Directors as provided
in the definition of "Unrestricted Subsidiary" and (iv) any Unrestricted
Subsidiary which is designated as a Restricted Subsidiary by the Board of
Directors; provided,
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that immediately after giving effect to any such designation (A) no Default or
Event of Default has occurred and is continuing and (B) in the case of any
designation referred to in clause (iii) or (iv) hereof, the Company could
incur at least $1.00 of Indebtedness pursuant to the covenant described in the
initial paragraph under "--Certain Covenants--Limitations on Indebtedness," on
a pro forma basis taking into account such designation. The Company will
evidence any such designation to the Trustee by promptly filing with the
Trustee an officers' certificate certifying that such designation has been
made and complies with the requirements of the immediately preceding sentence.
Notwithstanding any provision of the Indenture to the contrary, each Guarantor
will be a Restricted Subsidiary.
"Sale and Leaseback Transaction" with respect to any Person, means any
arrangement with another Person for the leasing of any real or tangible
personal property, which property has been or is to be sold or transferred by
such Person to such other Person in contemplation of such leasing.
"Senior Indebtedness" means Indebtedness of any Person which is not
Subordinated Indebtedness.
"Subordinated Indebtedness" means Indebtedness of the Company, any Guarantor
or any other Person which expressly provides that such Indebtedness is junior
or subordinated in right of payment to the Notes or any Guarantee, as the case
may be.
"Subsidiary" means, with respect to the Company, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors, under ordinary
circumstances, is at the time owned, directly or indirectly, by the Company,
by the Company and one or more of its Subsidiaries or by one or more of the
Company's Subsidiaries or (ii) any other Person or entity of which at least a
majority of voting interest, under ordinary circumstances, is at the time
owned, directly or indirectly, by the Company, by the Company and one or more
of its Subsidiaries or by one or more of the Company's Subsidiaries.
"Unrestricted Subsidiary" means, until such time at it may be designated as
a Restricted Subsidiary by the Board of Directors as provided in and in
compliance with the definition of "Restricted Subsidiary," (i) any Subsidiary
of the Company organized or acquired after the Issue Date designated as an
Unrestricted Subsidiary by the Board of Directors in which all investments by
the Company or any Restricted Subsidiary are made only from funds available
for the making of Restricted Payments as described under "--Certain
Covenants--Limitations on Restricted Payments" and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary unless such Subsidiary owns any Equity Interests
of, or owns, or holds any Lien upon, any property of, any Subsidiary of the
Company which is not a Subsidiary of such Subsidiary to be so designated;
provided that each Subsidiary to be so designated and each of its Subsidiaries
has not, at the time of designation, and does not thereafter, directly or
indirectly, incur any Indebtedness pursuant to which the lender has recourse
to any of the assets of the Company or any of its Restricted Subsidiaries. The
Company will evidence any such designation by promptly filing with the Trustee
an officers' certificate certifying that such designation has been made and
complies with the requirements of the immediately preceding sentence.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clause (i) or (ii) above, are not callable or redeemable at the option
of the issuer thereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
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<PAGE>
REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company and the
Guarantors agreed, for the benefit of holders of the Old Notes, that they
would, at their expense (i) on or prior to the February 3, 1997, file the
Exchange Offer Registration Statement with the Commission with respect to the
New Notes, which will have terms identical to the Old Notes and will be
guaranteed by the Guarantors on the same terms as the Old Guarantees (except
that the New Notes will not contain terms with respect to the transfer
restrictions or any provision relating to this paragraph) and (ii) use their
best efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act by April 4, 1997. The Registration
Statement of which this Prospectus is a part constitutes the Exchange Offer
Registration Statement. Upon effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors agreed that they would offer to all
holders of the Old Notes an opportunity to exchange their securities for a
like principal amount of the New Notes. The Company and the Guarantors agreed
to keep the Exchange Offer open for acceptance for not less than 20 business
days after the date of this Prospectus, and will comply with Regulation 14E
and Rule 13e-4 under the Exchange Act (other than the filing requirements of
Rule 13e-4). For each Old Note surrendered to the Company for exchange
pursuant to the Exchange Offer, the holder of such Note will receive a New
Note having a principal amount at maturity equal to that of the surrendered
Old Note. Interest on each New Note will accrue from the last interest payment
date on which interest was paid on the Old Note surrendered in exchange
therefor or if no interest has been paid on such Old Note, from December 5,
1996.
Under existing interpretations of the staff of the Commission's Division of
Corporation Finance (the "Staff"), the New Notes will generally be freely
transferable after the Exchange Offer without further registration under the
Securities Act; provided that broker-dealers ("Participating Broker-Dealers")
receiving New Notes in the Exchange Offer will be subject to a prospectus
delivery requirement with respect to resales of such New Notes. To date, the
Staff has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to transactions involving
an exchange of securities such as the exchange pursuant to the Exchange Offer
(other than a resale of an unsold allotment from the sale of the Old Notes to
the Initial Purchasers) with this Prospectus. Pursuant to the Registration
Rights Agreement, the Company has agreed to permit Participating Broker-
Dealers and other persons, if any, subject to similar prospectus delivery
requirements to use this Prospectus in connection with the resale of such New
Notes.
Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations
to the Company, including that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any person to participate in a public distribution (within
the meaning of the Securities Act) of the New Notes and (iii) it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or
the Guarantors, or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it.
In addition, each holder who is not a broker-dealer will be required to
represent that it is not engaged in, and does not intend to engage in, a
public distribution of the New Notes. Each holder who is a broker-dealer and
who receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus
in connection with any resale by it of such New Notes.
In the event for any reason the Exchange Offer is not consummated by May 4,
1997, or if the Initial Purchasers so request with respect to the Old Notes
not eligible to be exchanged for New Notes in the Exchange Offer or if any
holder of Old Notes is not eligible to participate in the Exchange Offer or
does not receive freely tradeable New Notes in the Exchange Offer, the Company
and the Guarantors will, at their expense, (a) promptly file a shelf
registration statement (a "Shelf Registration Statement" and together with the
Exchange Offer Registration Statement, the "Registration Statements")
permitting
85
<PAGE>
resales from time to time of the Notes, (b) use their best efforts to cause
such registration statement to become effective and (c) use their best efforts
to keep such registration statement current and effective until three years
from the date it becomes effective or such shorter period that will terminate
when all the Notes covered by such registration statement have been sold
pursuant thereto. The Company and the Guarantors, at their expense, will
provide to each holder of the Notes copies of the prospectus, which is a part
of the Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Notes from time to time. A
holder of Notes who sells such Notes pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such holder (including
certain indemnification obligations).
In the event that (i) the Exchange Offer is not consummated on or prior to
May 4, 1997, (ii) the Shelf Registration Statement is not filed or declared
effective within the required time periods or (iii) any of the Registration
Statements required by the Registration Rights Agreement is declared effective
but thereafter ceases to be effective (except as specifically permitted
therein) for a period of 15 consecutive days without being succeeded
immediately by any additional Registration Statement filed and declared
effective (each such event, a "Registration Default"), the interest rate borne
by the Notes shall be increased by 25 basis points per annum for the 90-day
period following such Registration Default. Such interest rate will increase
by an additional 25 basis points per annum at the beginning of each subsequent
90-day period following such Registration Default, up to a maximum aggregate
increase of 100 basis points per annum. Upon (x) the consummation of the
Exchange Offer or (y) the filing or the effectiveness of the Shelf
Registration Statement, as the case may be, the interest rate borne by the
Notes will be reduced from and including the date on which any of the events
specified in clauses (x) or (y) above occur by the amount of the related
increase in the interest rate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available upon request to the Company.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes certain of the material U.S.
federal income tax aspects of the acquisition, ownership and disposition of
the New Notes. This discussion is based upon the Internal Revenue Code of
1986, as amended (the "Code"), Treasury Regulations, Internal Revenue Service
("IRS") rulings and judicial decisions now in effect, all of which are subject
to change (possibly with retroactive effect) or different interpretations.
This discussion is generally limited to the tax consequences to initial
holders and does not purport to deal with all aspects of federal income
taxation that may be relevant to a particular investor's decision to purchase
the New Notes. This discussion is not intended to be wholly applicable to all
categories of investors, some of which, such as dealers in securities, banks,
insurance companies and tax-exempt organizations, may be subject to special
rules. In addition, this discussion is limited to persons that will hold the
New Notes represented thereby as a "capital asset" within the meaning of
section 1221 of the Code.
ALL PROSPECTIVE PURCHASERS OF THE NEW NOTES ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NEW NOTES.
Exchange Offer. The exchange of the New Notes for the Old Notes pursuant to
the Exchange Offer will not be treated as an "exchange" for U.S. federal
income tax purposes because the New Notes will not be considered to differ
materially in kind or extent from the Old Notes. Rather, the New Notes
86
<PAGE>
received by a holder will be treated as a continuation of the Old Notes in the
hands of such holder. As a result, there will be no U.S. federal income tax
consequences to holders exchanging the Old Notes for the New Notes pursuant to
the Exchange Offer. The holder must continue to include stated interest in
income as if the exchange had not occurred. Similarly, there would be no U.S.
federal income tax consequences to a holder of Old Notes that does not
participate in the Exchange Offer.
Market Discount. Investors acquiring New Notes pursuant to this Prospectus
should note that the resale of the New Notes may be adversely affected by the
market discount provisions of sections 1276 through 1278 of the Code. Under
the market discount rules, if a holder of a New Note (other than a holder who
purchased the New Note upon original issuance) purchases it at a market
discount (i.e., at a price below its stated redemption price at maturity) in
excess of a statutorily-defined de minimis amount and thereafter recognizes
gain upon a disposition or retirement of the New Note, then the lesser of the
gain recognized or the portion of the market discount that accrued on a
ratable basis (or, if elected, on a constant interest rate basis) generally
will be treated as ordinary income at the time of the disposition. Moreover,
any market discount in a New Note may be taxable to an investor to the extent
of appreciation at the time of certain otherwise non-taxable transactions
(e.g., gifts). Absent an election to include market discount in income as it
accrues, a holder of a market discount debt instrument may be required to
defer a portion of any interest expense that otherwise may be deductible on
any indebtedness incurred or maintained to purchase or carry such debt
instrument until the holder disposes of the debt instrument in a taxable
transaction.
Sale, Exchange or Retirement of the New Notes. Each holder of New Notes
generally will recognize gain or loss upon the sale, exchange, repurchase,
redemption, retirement or other disposition of those New Notes measured by the
difference (if any) between (i) the amount of cash and the fair market value
of any property received (except to the extent that such cash or other
property is attributable to the payment of accrued interest not previously
included in income, which amount will be taxable as ordinary income) and (ii)
the holder's adjusted tax basis in those New Notes (including any market
discount previously included in income by the holder). Any such gain or loss
recognized on the sale, exchange, repurchase, redemption, retirement or other
disposition of a New Note should be capital gain or loss (except as discussed
under "Market Discount" above), and would be long-term capital gain or loss if
the New Note had been held for more than one year at the time of the sale or
exchange. An investor's initial basis in a New Note will be the same as such
investor's basis in the Old Note at the time of the Exchange Offer.
Backup Withholding. A holder of New Notes may be subject to "backup
withholding" at a rate of 31% with respect to certain "reportable payments,"
including interest payments and, under certain circumstances, principal
payments on the New Notes. These backup withholding rules apply if the holder,
among other things, (i) fails to furnish a social security number or other
taxpayer identification number ("TIN") certified under penalties of perjury
within a reasonable time after the request therefor, (ii) furnishes an
incorrect TIN, (iii) fails to report properly interest, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties
of perjury, that the TIN furnished is the correct number and that such holder
is not subject to backup withholding. A holder who does not provide the
Company with its correct TIN also may be subject to penalties imposed by the
IRS. Any amount withheld from a payment to a holder under the backup
withholding rules is creditable against the holder's federal income tax
liability, provided that the required information is furnished to the IRS.
Backup withholding will not apply, however, with respect to payments made to
certain holders, including corporations, tax-exempt organizations and certain
foreign persons ("exempt recipients"), provided their exemptions from backup
withholding are properly established.
The amount of any "reportable payments" including interest made to the
holders of New Notes (other than to holders which are exempt recipients) and
the amount of tax withheld, if any, with respect to such payments will be
reported to such holders and to the IRS for each calendar year.
87
<PAGE>
Foreign Holders. The following discussion is a summary of certain U.S.
federal income tax consequences to a Foreign Person that holds a New Note. The
term "Foreign Person" means a nonresident alien individual or foreign
corporation, but only if the income or gain on the New Note is not
"effectively connected with the conduct of a trade or business within the
U.S." If the income or gain on the New Note is "effectively connected with the
conduct of a trade or business within the U.S.," then the nonresident alien
individual or foreign corporation will be subject to tax on such income or
gain in essentially the same manner as a U.S. citizen or resident or a
domestic corporation, as discussed above, and in the case of a foreign
corporation, may also be subject to the branch profits tax.
Under the portfolio interest exception to the general rules for the
withholding of tax on interest paid to a Foreign Person, a Foreign Person will
not be subject to U.S. federal income tax (or to withholding) on interest
payments on a New Note, provided that (i) the Foreign Person does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and is not a controlled
foreign corporation with respect to the U.S. that is related to the Company
through stock ownership, and (ii) the Company, its paying agent or the person
who would otherwise be required to withhold tax receives either (A) a
statement (an "Owner's Statement") signed under penalties of perjury by the
beneficial owner of the New Note in which the owner certifies that the owner
is not a U.S. person and which provides the owner's name and address, or (B) a
statement signed under penalties of perjury by the Financial Institution
holding the New Note on behalf of the beneficial owner, together with a copy
of the Owner's Statement. The term "Financial Institution" means a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business and that
holds a New Note on behalf of the owner of the New Note. A Foreign Person who
does not qualify for the "portfolio interest" exception, would, under current
law, generally be subject to U.S. federal withholding tax at a flat rate of
30% (or lower applicable treaty rate) on interest payments.
In general, gain recognized by a Foreign Person upon the redemption, sale or
exchange of a New Note (including any gain representing accrued market
discount) will not be subject to U.S. federal income tax. However, a Foreign
Person may be subject to U.S. federal income tax at a flat rate of 30% (unless
exempt by an applicable treaty) on any such gain if the Foreign Person is an
individual present in the U.S. for 183 days or more during the taxable year in
which the New Note is redeemed, sold or exchanged, and certain other
requirements are met.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Based on interpretations by the staff of the SEC, as set
forth in no-action letters issued to third parties, the Company believes that
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may
be offered for resale, resold or otherwise transferred by holders thereof
(other than any such holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders, other than broker-dealers, have no
arrangement or understanding with any person to participate in the
distribution of such New Notes. However, the SEC has not considered the
Exchange Offer in the content of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Each holder of
the Old Notes who wishes to exchange its Old Notes for New Notes in the
Exchange Offer will be required to make certain representations to the
Company, including that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any person to participate in a public distribution (within
the meaning of the Securities Act) of the New Notes and (iii) it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company or
the Guarantors, or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it. If any Holder is an affiliate of the Company or in
engaged in or intends to engage in or has any arrangement or understanding
with respect to the distribution of the New Notes to be acquired pursuant to
the Exchange Offer, such Holder (i) may not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes pursuant to the Exchange
Offer must acknowledge that such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities and that
it will deliver a prospectus in connection with any resale of such New Notes.
The Company has agreed that, for a period of 150 days after the date of this
Prospectus, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of New Notes
and any commission or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
The Company has agreed, pursuant to the Registration Rights Agreement, to
pay all expenses incident to the Exchange Offer (including the expenses of one
counsel for all the holders of the Notes as a single
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<PAGE>
class) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters relating to the New Notes offered hereby will be
passed upon for the Company by Duane, Morris & Heckscher, Philadelphia,
Pennsylvania.
EXPERTS
The audited consolidated financial statements of the Company and J.R. Cup
included in this Prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The consolidated financial statements of StyroChem as of and for the years
ended March 30, 1996 and April 1, 1995 included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and have been so included in reliance upon the
opinion of such firm given upon their authority as experts in accounting and
auditing.
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ADDITIONAL INFORMATION
A Registration Statement on Form S-4, including amendments thereto, relating
to the New Notes and New Guarantees offered hereby has been filed with the
Company and the Guarantors with the SEC. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents
of any contract or any other document referred to are not necessarily complete
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement. For further
information with respect to the Company and the New Notes offered hereby,
reference is hereby made to the Registration Statement, exhibits and
schedules. A copy of the Registration Statement may be inspected by anyone
without charge and may be obtained at rates prescribed by the SEC at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at its regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661
and Seven World Trade Center, Suite 1300, New York, New York 10048. In
addition, copies of such material may be accessed electronically by means of
the SEC's home page on the Internet at http://www.sec.gov. Copies of such
material can be obtained from the Company upon request. Any such request
should be addressed to the Company's principal office at Three Radnor
Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087,
Attention: Treasurer (telephone number (610) 341-9600).
The Company and the Guarantors will be required to file periodic reports in
accordance with Section 13 or 15(d) of the Exchange Act with the SEC from and
after the effective date of the Registration Statement with respect to the
fiscal year in which the Registration Statement is declared effective and for
such time thereafter as the Exchange Act and the rules and regulations of the
SEC promulgated thereunder so require. The Company has agreed that, whether or
not it is then subject to Section 13 or 15(d) of the Exchange Act, it will
file with the SEC the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act if the Company were
subject to such Sections. Such periodic reports and other information may be
inspected by anyone without charge and may be obtained at rates prescribed by
the SEC at the SEC offices referenced above. In addition, the Company will
furnish, upon the request of any holder of a Note, such information as is
specified in paragraph (d)(4) of Rule 144A, to such holder or to a prospective
purchaser of such Note which such holder informs the Company that such holder
reasonably believes is a QIB within the meaning of Rule 144A, in order to
permit compliance by such holder with Rule 144A in connection with the resale
of such Note by such holder unless, at the time of such request, the Company
is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RADNOR HOLDINGS CORPORATION
Report of Independent Public Accountants................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and unau-
dited September 30, 1996............................................... F-3
Consolidated Statements of Operations for the Years Ended December 31,
1993, 1994 and 1995 and for the unaudited Nine Month Periods Ended
September 30, 1995 and 1996............................................ F-4
Consolidated Statements of Stockholders' (Deficit) Equity for the Years
Ended December 31, 1993, 1994 and 1995 and for the unaudited Nine Month
Period Ended September 30, 1996........................................ F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1993, 1994 and 1995 and for the unaudited Nine Month Periods Ended
September 30, 1995 and 1996............................................ F-6
Notes to Consolidated Financial Statements.............................. F-7
J.R. CUP FOAM CONTAINER OPERATIONS OF JAMES RIVER PAPER COMPANY, INC.
Report of Independent Public Accountants................................ F-18
Balance Sheets as of December 25, 1994 and December 31, 1995............ F-19
Statements of Operations for the Years Ended December 26, 1993, December
25, 1994 and December 31, 1995......................................... F-20
Statements of Changes in Owner's Investment for the Years Ended December
26, 1993, December 25, 1994 and December 31, 1995...................... F-21
Statements of Cash Flows for the Years Ended December 26, 1993, December
25, 1994 and December 31, 1995......................................... F-22
Notes to Financial Statements........................................... F-23
S.P. ACQUISITION CO. AND SUBSIDIARIES
Independent Auditors' Report............................................ F-27
Consolidated Balance Sheets as of April 1, 1995, March 30, 1996 and un-
audited September 28, 1996............................................. F-28
Consolidated Statements of Income for the Years Ended April 1, 1995 and
March 30, 1996 and for the unaudited Six Month Periods Ended September
30, 1995 and September 28, 1996........................................ F-29
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended April 1, 1995 and March 30, 1996 and for the unaudited Six Month
Period Ended September 28, 1996........................................ F-30
Consolidated Statements of Cash Flows for the Years Ended April 1, 1995
and March 30, 1996 and for the unaudited Six Month Periods Ended Sep-
tember 30, 1995 and September 28, 1996................................. F-31
Notes to Consolidated Financial Statements for the Years Ended April 1,
1995 and March 30, 1996 and for the unaudited Six Month Periods Ended
September 30, 1995 and September 28, 1996.............................. F-32
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Radnor Holdings Corporation:
We have audited the accompanying consolidated balance sheets of RADNOR
HOLDINGS CORPORATION (a Delaware corporation) (formerly Benchmark Corporation
of Delaware) as of December 31, 1994 and 1995, and the related consolidated
statements of operations, stockholders' (deficit) equity and cash flows for
the years ended December 31, 1993, 1994 and 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 Radnor
Holdings Corporation as of December 31, 1994 and 1995, and the results of its
operations and its cash flows for the years ended December 31, 1993, 1994 and
1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
August 9, 1996
(except with respect to the matters discussed in Note 11,
as to which the date is December 5, 1996)
F-2
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
ASSETS 1994 1995 1996
------ -------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash....................................... $ 4 $ 5 $ 21
Accounts receivable, net................... 8,267 8,402 14,861
Inventories, net........................... 8,002 6,494 15,432
Prepaid expenses and other................. 312 1,777 2,549
Net current assets of discontinued
operations (Note 1)....................... 4,961 982 --
-------- ------- --------
21,546 17,660 32,863
-------- ------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land....................................... 1,515 401 2,038
Supplies and spare mold parts.............. 2,004 1,964 2,062
Buildings and improvements................. 3,832 7,000 11,333
Machinery and equipment.................... 15,750 18,939 60,118
-------- ------- --------
23,101 28,304 75,551
Less accumulated depreciation.............. (2,961) (4,690) (2,948)
-------- ------- --------
20,140 23,614 72,603
-------- ------- --------
OTHER ASSETS:
Net noncurrent assets of discontinued
operations (Note 1)....................... 472 -- --
Organization costs, net ................... 753 430 149
Other assets............................... 122 124 1,214
-------- ------- --------
1,347 554 1,363
-------- ------- --------
$ 43,033 $41,828 $106,829
======== ======= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY
---------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable........................... $ 12,942 $12,369 $ 16,245
Accrued liabilities........................ 6,650 6,653 8,587
Current portion of long-term debt (Note 3). 334 9,000 2,646
-------- ------- --------
19,926 28,022 27,478
-------- ------- --------
LONG-TERM DEBT, net of current portion (Note
3).......................................... 35,076 7,252 51,567
-------- ------- --------
OTHER NONCURRENT LIABILITIES (Note 1)........ -- -- 17,738
-------- ------- --------
COMMITMENTS AND CONTINGENCIES (Note 4)
REDEEMABLE CONVERTIBLE PREFERRED STOCK, $.10
par value, 2,000 shares authorized, 2,000
shares issued and outstanding (Notes 5 and
9).......................................... 3,000 3,000 3,000
-------- ------- --------
STOCKHOLDERS' (DEFICIT) EQUITY (Note 5):
Voting and nonvoting common stock, $.10 par
value, 17,300 shares authorized, 6,245
shares issued and outstanding............. 1 1 1
Additional paid-in capital................. 7,497 7,497 7,497
Accumulated deficit........................ (22,467) (3,944) (452)
-------- ------- --------
Total stockholders' (deficit) equity..... (14,969) 3,554 7,046
-------- ------- --------
$ 43,033 $41,828 $106,829
======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTH
PERIOD ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- ----------------
1993 1994 1995 1995 1996
-------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET SALES..................... 83,569 80,850 86,239 64,094 128,052
COST OF GOODS SOLD............ 68,454 64,078 75,690 54,090 98,534
-------- ------- ------- ------- -------
GROSS PROFIT.................. 15,115 16,772 10,549 10,004 29,518
-------- ------- ------- ------- -------
OPERATING EXPENSES:
Distribution................ 6,599 5,584 6,027 4,334 9,564
Selling, general and
administrative............. 10,330 8,209 9,051 6,492 12,818
Restructuring charges (Note
7)......................... -- -- -- -- 855
-------- ------- ------- ------- -------
16,929 13,793 15,078 10,826 23,237
-------- ------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS. (1,814) 2,979 (4,529) (822) 6,281
-------- ------- ------- ------- -------
OTHER (INCOME) EXPENSE:
Interest.................... 2,518 3,001 2,822 2,486 3,346
Other, net.................. 386 290 526 106 153
-------- ------- ------- ------- -------
2,904 3,291 3,348 2,592 3,499
-------- ------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING
OPERATIONS................... (4,718) (312) (7,877) (3,414) 2,782
-------- ------- ------- ------- -------
DISCONTINUED OPERATIONS:
Income (loss) from
operations................. (7,804) (5,082) 534 (1,491) --
Gain on disposal............ -- -- 2,038 -- --
-------- ------- ------- ------- -------
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS...... (7,804) (5,082) 2,572 (1,491) --
-------- ------- ------- ------- -------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM........... (12,522) (5,394) (5,305) (4,905) 2,782
-------- ------- ------- ------- -------
EXTRAORDINARY ITEM-GAIN ON
EARLY EXTINGUISHMENT OF DEBT. -- -- 23,828 -- 710
-------- ------- ------- ------- -------
NET INCOME (LOSS)............. $(12,522) $(5,394) $18,523 $(4,905) $ 3,492
======== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
FOR THE UNAUDITED NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
VOTING AND
NONVOTING
COMMON STOCK ADDITIONAL
------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992...... 6,000 $ 1 $7,302 $ (4,551) $ 2,752
Issuance of nonvoting common
stock........................ 245 -- 195 -- 195
Net loss...................... -- -- -- (12,522) (12,522)
----- --- ------ -------- --------
BALANCE, December 31, 1993...... 6,245 1 7,497 (17,073) (9,575)
Net loss...................... -- -- -- (5,394) (5,394)
----- --- ------ -------- --------
BALANCE, December 31, 1994...... 6,245 1 7,497 (22,467) (14,969)
Net income.................... -- -- -- 18,523 18,523
----- --- ------ -------- --------
BALANCE, December 31, 1995...... 6,245 1 7,497 (3,944) 3,554
Net income (unaudited)........ -- -- -- 3,492 3,492
----- --- ------ -------- --------
BALANCE, September 30, 1996
(unaudited).................... 6,245 $ 1 $7,497 $ (452) $ 7,046
===== === ====== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTH
PERIOD ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1993 1994 1995 1995 1996
-------- ------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)............ $(12,522) $(5,394) $ 18,523 $(4,905) $ 3,492
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities--
Depreciation............... 1,050 1,190 2,057 1,016 3,027
Amortization............... 530 113 323 260 443
Extraordinary gain on early
extinguishment of debt.... -- -- (23,828) -- (710)
Discontinued operations
(Note 1).................. 7,804 4,411 (2,572) 1,491 --
Changes in operating assets
and liabilities, net of
effects of acquisition and
disposition of
businesses--
Accounts receivable, net. 5 (353) (135) 362 (6,459)
Inventories.............. 791 (2,052) 1,508 (1,125) (710)
Prepaid expenses and
other................... 195 119 (1,465) (615) (772)
Accounts payable......... (364) 2,902 (573) (285) 3,876
Accrued liabilities...... (335) (147) 3 3,407 1,089
-------- ------- -------- ------- --------
Net cash provided by
(used in) continuing
operations............ (2,846) 789 (6,159) (394) 3,276
Net cash provided by
(used in) discontinued
operations............ (4,210) (6,079) 5,978 2,525 982
-------- ------- -------- ------- --------
Net cash provided by
(used in) operating
activities............ (7,056) (5,290) (181) 2,131 4,258
-------- ------- -------- ------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures......... (621) (1,645) (5,491) (1,684) (2,628)
Disposal of building and
land........................ 692 835 -- -- --
Acquisition of business, net
of cash acquired (Note 1)... -- -- -- -- (21,042)
Proceeds from sale of
discontinued operations
(Note 1).................... -- -- 50,995 -- --
(Increase) decrease in other
assets...................... 59 39 (2) (6) (1,252)
-------- ------- -------- ------- --------
Net cash provided by (used
in) investing activities.. 130 (771) 45,502 (1,690) (24,922)
-------- ------- -------- ------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings (payments) on
revolving credit lines and
unsecured notes payable..... 7,389 6,562 (15,802) (438) 9,110
(Payments) borrowings on
mortgage note............... (110) (500) -- -- 364
(Payments) borrowings of bank
term loans.................. (563) -- (29,518) -- 17,295
Net payments of subordinated
notes payable............... -- -- -- -- (6,089)
Issuance of nonvoting common
stock....................... 195 -- -- -- --
-------- ------- -------- ------- --------
Net cash provided by (used
in) financing activities.. 6,911 6,062 (45,320) (438) 20,680
-------- ------- -------- ------- --------
NET INCREASE (DECREASE) IN
CASH.......................... (15) 1 1 3 16
CASH, beginning of period...... 18 3 4 4 5
-------- ------- -------- ------- --------
CASH, end of period............ $ 3 $ 4 $ 5 $ 7 $ 21
======== ======= ======== ======= ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period
for interest, including
discontinued operations..... $ 5,122 $ 2,990 $ 4,702 $ 0 $ 1,488
======== ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION, ACQUISITIONS AND DISCONTINUED OPERATIONS:
The Company
Radnor Holdings Corporation (the Company) (formerly Benchmark Corporation of
Delaware) was incorporated in Delaware on November 6, 1991 to acquire the
outstanding stock of Benchmark Holdings, Inc. (Benchmark) and WinCup Holdings,
Inc. (WinCup). The Company manufactures and distributes foam cups and
containers, thermoformed lids and various other products used by the
foodservice industry. The Company's products are primarily sold to national,
institutional and retail customers throughout the U.S., in Mexico and in other
countries. The Company and its subsidiaries market their products under a
variety of brand and trade names, including "WinCup" and "Handi-Kup."
The Company has a number of large national accounts and supplies products to
a number of large foodservice distributors. The five largest accounts
represented approximately 35% and 38% of the Company's net sales for fiscal
year 1995 and the nine months ended September 30, 1996, respectively. Although
the Company has not lost sales from its key customers in fiscal year 1995 or
1996 to date, if any of such customers substantially reduces its level of
purchases from the Company, the Company's profitability could be adversely
affected. Moreover, continued consolidation among distributors in the
foodservice industry could result in an increasingly concentrated customer
base or the loss of certain customers.
As further discussed below, (i) the Company sold substantially all of the
assets of Benchmark's cutlery and straws business as well as the assets of
WinCup's thermoformed cup business pursuant to an Asset Purchase Agreement
dated October 31, 1995, and (ii) the Company acquired the assets of the J. R.
Cup foam cup division (J. R. Cup) of James River Paper Company, Inc. (James
River) through the formation of a joint venture (the Joint Venture) on January
20, 1996.
Joint Venture
On January 20, 1996, WinCup entered into the Joint Venture with James River,
whereby both parties contributed their fixed assets, leasehold improvements,
technology, patents, trademarks, real property and other noncurrent assets
associated with their foam cup and container and thermoformed lid
manufacturing operations and all inventory, spare parts and other current
assets, excluding cash and accounts receivable. The Joint Venture is
structured as a Delaware limited partnership with WinCup as the sole general
partner and James River as the sole limited partner. Ownership interests are
allocated 55% to WinCup and 45% to James River.
The formation and capitalization of the Joint Venture has been accounted for
as a business combination in accordance with Accounting Principles Board
Opinion No. 16 (APB No. 16), Business Combinations. Because WinCup is the sole
general partner of the Joint Venture with a 55% controlling interest, the
contribution of its assets and liabilities has been accounted for at WinCup's
historical cost basis in such assets and liabilities. The contribution of
assets and liabilities by James River has been accounted for as a purchase by
WinCup in accordance with APB No. 16 and, accordingly, the assets and
liabilities of James River have been recorded at their estimated fair values
at the date of the purchase.
The purchase price consisted of approximately (i) $19.1 million of cash,
(ii) $16.8 million of promissory notes (Note 3), (iii) the assumption of $1.0
million of liabilities and (iv) estimated additional consideration of $17.7
million for James River's 45% interest in the Joint Venture which is included
in the accompanying balance sheet as payable to James River.
F-7
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
The fair value of the assets acquired has been allocated as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Inventories................................................ $ 8,200
Property, plant and equipment.............................. 46,400
-------
$54,600
=======
</TABLE>
Pursuant to the Joint Venture Agreement (the Agreement), WinCup has the
option to acquire all or part of James River's interest at the times and for
the applicable prices as set forth in the Agreement. The price for 100% of
James River's interest ranges from $15.0 million at January 20, 1996, to $37.3
million at January 20, 2001. Furthermore, James River may at any time
beginning on the fifth anniversary of the Agreement require WinCup to acquire
its 45% interest for $37.3 million. In either case, the purchase price is
increased by any amounts remaining outstanding to James River under certain
promissory notes discussed in Note 3, except that if WinCup exercises its
option to purchase James River's interest (i) within fifteen months of the
Agreement, $6.0 million of the promissory notes described in Note 3 may be
redeemed at 75% of their face value and (ii) on or before the second
anniversary of the Agreement, the interest on such notes will be forgiven.
As discussed above, James River can require WinCup to acquire its 45%
interest in the Joint Venture at any time after the fifth anniversary of the
Agreement; therefore, the transaction has been accounted for as if WinCup
purchased 100% of the Joint Venture. Furthermore, management anticipates
exercising its option to purchase James River's interest on or before June 30,
1997 at approximately $17.7 million, which is the present value of the price
set forth in the Agreement corresponding to the estimated purchase date.
Management has included the anticipated cost of exercising its option as part
of the purchase price allocated to the net assets acquired. Any change to the
estimated option exercise price due to a change in the timing of the purchase
of James River's interest will be reflected as an increase or decrease to the
cost of net assets acquired.
WinCup
On February 28, 1992, WinCup entered into a Stock Purchase Agreement (the
WinCup Agreement) with Kimberly-Clark Tissue Company, formerly known as Scott
Paper Company (KCTC), for the purchase of Scott Container Products Group, Inc.
(SCPG) and WinCup, Inc. (WinCup, Inc.). The acquisition was accounted for as a
purchase in accordance with APB No. 16 and, accordingly, the purchased assets
and assumed liabilities of SCPG and WinCup, Inc. were recorded at their
estimated fair values at the date of acquisition.
Pursuant to the WinCup Agreement, KCTC was granted warrants (that expire on
April 30, 2002) for the purchase of shares of nonvoting common stock of the
Company representing up to 20 percent of the then outstanding capital stock of
the Company at a price of $25,000 per each 1 percent of the total outstanding
capital stock acquired. Furthermore, depending on the annual performance of
WinCup, additional cash of up to $5.0 million (no more than $1.0 million in
any fiscal year beginning with December 31, 1993 and ending on December 31,
1997) may be paid to KCTC. No amounts have been paid to KCTC pursuant to this
provision of the WinCup Agreement. The Company also indemnified KCTC for up to
$3.0 million related to draws made by WinCup's bank lenders on a letter of
credit issued by KCTC in WinCup's favor. During 1995, KCTC exercised its
indemnification rights under the WinCup Agreement in conjunction with the
formation of the Joint Venture. This $3.0 million was recorded as additional
long-term debt and contributed to the Joint Venture.
F-8
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
Benchmark
Pursuant to an Asset Purchase Agreement among Benchmark, WinCup and James
River dated as of October 31, 1995, Benchmark and WinCup agreed to sell to
James River all of the assets of Benchmark's cutlery and straws business and
all of the assets of WinCup's thermoformed cup business, except for cash,
accounts receivable and prepaid assets. The only liabilities of Benchmark and
WinCup assumed by James River were obligations arising after the closing under
the assumed leases and assumed material contracts and vacation pay, holiday
pay and sick pay earned or accrued during 1995. The sales price was $51.0
million. The gain on the sale was approximately $2.0 million.
The operations of Benchmark's cutlery and straws business and WinCup's
thermoformed cup business have been accounted for as discontinued operations
in the accompanying consolidated financial statements.
Summary operating results for the operations sold, excluding the gain on
sale, are as follows (in thousands):
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED DECEMBER 31, PERIOD ENDED
------------------------- SEPTEMBER 30,
1993 1994 1995 1995
------- ------- ------- -------------
<S> <C> <C> <C> <C>
Net sales........................ $60,109 $59,953 $58,472 $51,585
Cost of goods sold............... 53,585 50,668 45,016 41,857
------- ------- ------- -------
Gross profit..................... 6,524 9,285 13,456 9,728
Operating expenses............... 11,211 10,276 9,306 8,138
------- ------- ------- -------
Income (loss) from operations.... (4,687) (991) 4,150 1,590
Other expense.................... (3,117) (4,091) (3,616) (3,081)
------- ------- ------- -------
Net income (loss)................ $(7,804) $(5,082) $ 534 $(1,491)
======= ======= ======= =======
</TABLE>
The components of net current and net noncurrent assets of discontinued
operations as of December 31, 1994 and 1995, are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1995
-------- ------
<S> <C> <C>
Cash and accounts receivable............................. $ 6,157 $ 653
Inventories.............................................. 10,372 --
Prepaid expenses and other............................... 168 1,284
Accounts payable and accrued liabilities................. (11,736) (955)
-------- ------
Net current assets of discontinued operations.......... 4,961 982
-------- ------
Property, plant and equipment, net....................... 29,812 --
Goodwill and other noncurrent assets..................... 10,338 --
Long-term debt........................................... (39,678) --
-------- ------
Net long-term assets of discontinued operations........ 472 --
-------- ------
Total net assets of discontinued operations............ $ 5,433 $ 982
======== ======
</TABLE>
The Company used a portion of the proceeds of the sale to retire certain
outstanding debt totaling approximately $48.0 million. An additional $23.8
million of principal and accrued interest was forgiven by the bank as part of
this transaction. As a result, at the closing of the above transaction, the
total amount of debt outstanding to the Company's primary bank was reduced to
$9.0 million. In connection with the Joint Venture, the bank was paid $8.25
million in full satisfaction of the obligation upon execution of the Joint
Venture Agreement.
F-9
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
WinCup, Radnor and the Joint Venture. All material intercompany balances and
transactions have been eliminated in consolidation.
Accounts Receivable, Net
Included in accounts receivable are allowances for doubtful accounts of
$418,000, $496,000 and $498,000 at December 31, 1994 and 1995 and September
30, 1996, respectively.
Inventories
Raw materials and finished goods are recorded at the lower of cost (first-
in, first-out) or market. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
<S> <C> <C> <C>
Raw materials................................. $2,160 $1,860 $ 3,002
Finished goods................................ 5,842 4,634 12,430
------ ------ -------
$8,002 $6,494 $15,432
====== ====== =======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment additions are recorded at cost and are
depreciated using the straight-line method over estimated useful lives which
range from 5 to 40 years. Leasehold improvements are amortized over the lesser
of their estimated useful lives or the term of the lease using the straight-
line method. Repair and maintenance costs are expensed as incurred.
Supplies and Spare Mold Parts
Supplies and spare mold parts include maintenance parts maintained in a
central stores location. When parts are needed at the various manufacturing
facilities, the parts are shipped and expensed in that current period.
Organization Costs, Net
Costs incurred to organize the Company have been capitalized and are being
amortized on a straight-line basis over five years. Such costs are net of
accumulated amortization of $1.1 million, $1.4 million and $1.7 million at
December 31, 1994 and 1995 and September 30, 1996, respectively.
Financing Acquisition Costs
Costs of $1.2 million incurred during 1996 in connection with obtaining
long-term financing have been capitalized, are included in other assets in the
accompanying financial statements and are being amortized on a straight-line
basis over the term of the Term Loan and Revolver (Note 3).
Accounts Payable
Included in accounts payable are amounts relating to outstanding checks of
$1.3 million, $1.5 million and $3.4 million at December 31, 1994, 1995, and
September 30, 1996, respectively.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross of
any cash discounts. Any discounts subsequently taken by the customer are
recorded as a reduction to sales revenue.
F-10
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
Research and Development
Research and development expenses are charged to expense as incurred.
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
disclosure 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.
Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined by the
Company using the available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the
estimates may not be indicative of the amounts the Company could realize in a
current market exchange.
The carrying values of cash, accounts receivable, accounts payable and
accrued liabilities approximate fair value due to the short-term maturities of
these instruments.
The carrying amounts of the Company's bank term loans, line of credit and
mortgage note payable approximate fair value because they have variable
interest rates based on either prime rate or LIBOR.
The carrying values of noninterest-bearing subordinated promissory notes A,
B and C approximate their fair values since they have been discounted using
the Company's incremental borrowing rate, which approximates the prime rate.
The carrying values of subordinated promissory notes D, E and F approximate
their fair values as they bear interest at rates based on the prime rate.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, which was adopted by the Company in 1996, did not have a material effect
on the Company's financial position or its results of operations upon
adoption. SFAS No. 123, Accounting for Stock-Based Compensation, is required
to be adopted by the Company in 1996. Pursuant to the provisions of SFAS No.
123, the Company will continue to account for transactions with its employees
pursuant to Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees. Therefore, this statement is not expected to have a
material effect on the Company's financial position or its results of
operations when adopted.
Unaudited Interim Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows for all periods
presented have been made.
F-11
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(3) LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- SEPTEMBER 30,
1994 1995 1996
------- ------ -------------
<S> <C> <C> <C>
Bank term loan (Term Note) bearing interest at
either prime (8.25% at September 30, 1996)
plus 1% or LIBOR (5.625% at September 30,
1996) plus 2.75%, principal of $214,000 plus
interest due monthly secured by substantially
all assets of the Joint Venture and WinCup,
matures January 22, 2001...................... $ -- $ -- $17,295
Outstanding balance under $28.0 million
revolving line of credit (Revolver), bearing
interest at either prime plus 0.75% or LIBOR
plus 2.5%, interest payable monthly with the
outstanding principal balance and any accrued
interest due on January 22, 2001, secured by
substantially all assets of the Joint Venture
and WinCup. The interest rate is subject to
adjustment downward of up to 0.5% in the event
the Joint Venture meets certain defined
financial targets............................. -- -- 18,241
Senior subordinated promissory note (Note A),
non interest bearing, principal due upon
meeting certain conditions as set forth in the
promissory note agreement..................... -- -- 4,158
Subordinated promissory note (Note B),
noninterest bearing, terms the same as Note A,
to be paid ratably with Note C................ -- -- 284
Subordinated promissory note (Note C),
noninterest bearing, terms the same as Note B,
to be paid ratably with Note B................ -- 300 321
Subordinated promissory note (Note D), interest
at 10% through January 1998, 12% thereafter.
Interest during the first two years is added
to principal, thereafter, interest is paid
quarterly if Notes A, B and C are paid in full
and interest on Note E is current. Quarterly
principal payments of $415,625 due beginning
January 20, 1999. Unpaid principal and accrued
interest due January 20, 2001................. -- -- 6,100
Subordinated promissory note (Note E), terms
the same as Note D, except that quarterly
principal payments are $168,750............... -- 2,700 2,890
Subordinated promissory note (Note F), terms
the same as Note E, except three quarterly
payments of $100,000 with the final payment
including all accrued interest................ -- -- 308
Mortgage note payable, interest at 6% in 1994
and 1995, interest same as Term Note plus 1%
in 1996, payable quarterly, due January 2001,
secured by certain buildings and
improvements.................................. 4,252 4,252 4,616
Outstanding balance under $24,737,500,
revolving lines of credit bearing interest
ranging from 1 to 2% over the bank's reference
rate, due February 28, 1995, collateralized by
inventories, accounts receivable and the
common stock of the Company................... 21,895 9,000 --
Bank term loans bearing interest ranging from 1
to 2% over the bank's reference rate, due on
various dates beginning April 15, 1993,
collateralized by certain machinery,
equipment, other assets and the common stock
of the Company................................ 9,263 -- --
------- ------ -------
35,410 16,252 54,213
Less current portion........................... (334) (9,000) (2,646)
------- ------ -------
$35,076 $7,252 $51,567
======= ====== =======
</TABLE>
F-12
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
The Revolver and Term Note agreements contain certain restrictive covenants
which include, among other things, restrictions on the declaration or payment
of dividends, incurrence of additional debt, the amount of capital
expenditures and sale or disposition of assets. The agreements also require
the Company to maintain required net worth and debt to equity, current, debt
coverage and earnings to interest expense ratios. The Company is currently in
compliance with all financial covenants.
Future debt maturities are as follows for the three months ended December
31, 1996, and subsequent years (in thousands):
<TABLE>
<S> <C>
1996.............................................................. $ 642
1997.............................................................. 2,568
1998.............................................................. 2,568
1999.............................................................. 5,206
2000.............................................................. 4,906
2001 and thereafter............................................... 38,323
-------
$54,213
=======
</TABLE>
(4) COMMITMENTS AND CONTINGENCIES:
Leases
The Company leases certain of its manufacturing and warehouse facilities
under noncancelable operating lease arrangements. The future minimum payments
under these leases are as follows for the three months ended December 31, 1996
and subsequent years (in thousands):
<TABLE>
<S> <C>
1996............................................................... $ 892
1997............................................................... 3,276
1998............................................................... 2,369
1999............................................................... 360
2000............................................................... 36
2001............................................................... 36
------
$6,969
======
</TABLE>
Litigation
The Company is involved in various legal actions arising in the normal
course of business. After taking into consideration legal counsel's evaluation
of such actions, management believes that these actions will not have a
material effect on the Company's financial position or results of operations.
In July 1996, StyroChem (defined below) filed suit in the United States
District Court for the Northern District of Texas against James River for
breach of a supply contract between StyroChem and James River. The contract in
question required James River to purchase from StyroChem all of the expandable
polystyrene bead (EPS) requirements for its foam operations through February
1999, provided that the material satisfied certain product specifications.
Because the product supplied by StyroChem did not meet such specifications,
James River ceased purchasing EPS from StyroChem and did not assign the
contract to the Joint Venture in connection with its formation. The Joint
Venture agreed to indemnify James River for certain liabilities relating to
the failure of James River to assign the contract in question to the Joint
Venture and the Joint Venture has assumed the defense of such litigation,
subject to certain reservations
F-13
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
of rights. The lawsuit has been stayed pending the outcome of the acquisition
(see Note 11), and management believes the lawsuit will be dismissed with
prejudice following the consummation of the acquisition. However, in the event
the StyroChem acquisition is not consummated, management does not believe the
ultimate outcome of the lawsuit will have a material effect on the Company's
financial position or results of operations.
Letters of Credit
The Company maintained letters of credit to support various self-insurance
programs in place through December 31, 1994. Letters of credit outstanding
totaled approximately $2.2 million as of December 31, 1994.
Supply Agreement
The Company is committed under a purchase agreement to buy from StyroChem
all of the EPS requirements for the former WinCup plants up to 40 million
pounds of EPS annually plus 75% of those plants' annual requirements in excess
of 40 million pounds at prevailing market prices. The agreement is for an
eight-year period ending February 2000, with options for yearly extensions
thereafter. The Company is currently negotiating to acquire StyroChem. (See
Note 11).
(5) REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY:
The Company is authorized to issue up to 11,650 shares of voting common
stock, 5,650 shares of nonvoting common stock and 2,000 shares of redeemable
convertible preferred stock. At September 30, 1996, there are 6,000 shares of
voting common stock, 245 shares of nonvoting common stock and 2,000 shares of
redeemable convertible preferred stock outstanding. All shares have a par
value of $.10.
In January 1996, the holder of the redeemable convertible preferred stock
agreed to modify the optional and mandatory redemption terms of such stock.
Pursuant to the modifications, the Company may at its option at any time
through January 20, 1999, redeem all of the outstanding redeemable convertible
preferred stock for an aggregate price of $2.0 million. On and after January
20, 1999, the holders of the outstanding redeemable convertible preferred
stock have the right to require the Company to redeem all such shares for an
aggregate price of $3.0 million. If the Company fails to pay the mandatory
redemption price, the outstanding redeemable convertible preferred stock is
converted into an unsecured promissory note in an amount equal to the
mandatory redemption price plus interest at 10% per annum. All accrued and
unpaid interest and principal are due two years from the date of the note. The
note shall not be subordinated to any other obligation of the Company.
Prior to the modification of the optional and mandatory redemption terms,
the mandatory redemption price was $3,500 per share which was increased by a
7% return compounded annually. The redeemable convertible preferred stock has
been recorded outside of stockholders' equity at the $3.0 million mandatory
redemption price for all years presented (see Note 11).
The redeemable convertible preferred stock is entitled to a $3,500
liquidating preference, which is increased each year the shares are
outstanding by a 7% compounded annual return, plus any accrued but unpaid
dividends that have been declared. There have been no dividends declared as of
September 30, 1996. The total liquidation value at September 30, 1996, is
approximately $9.6 million.
On March 10, 1993, the Board of Directors, pursuant to a plan, granted
certain members of management the right to purchase up to 620 shares of the
Company's nonvoting common stock. Under
F-14
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
the terms of the grants, the participants could purchase stock for a period of
60 days from the date of grant at $800 per share, the fair value on that date,
for cash or through a note to be repaid through payroll deductions. During
1993, 245 shares were purchased under the plan for $180,000 in cash and
$15,000 in notes. No grants were made or shares purchased under the plan in
1994, 1995 or the nine month period ended September 30, 1996.
(6) RELATED PARTY TRANSACTION:
During 1993, the Company paid $125,000 for management services to Trinity
Capital Partners, Inc. of which the President, sole director and majority
stockholder of the Company is the President, a director and sole shareholder.
Certain members of the Joint Venture's board of directors are employed by the
Company's primary legal counsel and the Company's investment banker. Amounts
paid to the law firm since the formation of the Joint Venture are
approximately $313,000. In connection with the formation of the Joint Venture,
the Company paid approximately $550,000 of investment banking fees to its
investment banker.
(7) RESTRUCTURING CHARGES:
In connection with the formation of the Joint Venture, the Company accrued
approximately $855,000 in the nine months ended September 30, 1996 for certain
estimated future costs related to the consolidation and restructuring of
certain existing and acquired plants.
(8) INCOME TAXES:
The Company accounts for income taxes under SFAS No. 109, Accounting for
Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are
recorded based on the differences between the financial statement and tax
bases of assets and liabilities at the tax rates in effect when these
differences are expected to reverse. There is no provision for taxes for the
years ended December 31, 1995, 1994 and 1993, as the Company generated net
operating losses for the years then ended.
The provision for income taxes for each of the three years in the period
ended December 31, 1995 and for the nine month periods ended September 30,
1995 and 1996, is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER NINE MONTH PERIOD
31, ENDED SEPTEMBER 30,
------------------------ -------------------
1993 1994 1995 1995 1996
------- ------ ------- --------- ---------
<S> <C> <C> <C> <C> <C>
Current:
Federal...................... $ -- $ -- $ -- $ -- $ --
State........................ -- -- -- -- --
Deferred....................... (1,783) (999) 30 20 (128)
(Generation) utilization of net
operating loss carryforwards.. (3,569) (741) 2,274 1,706 1,396
Change in valuation allowance.. 5,352 1,740 (2,304) (1,726) (1,268)
------- ------ ------- --------- ---------
$ -- $ -- $ -- $ -- $ --
======= ====== ======= ========= =========
</TABLE>
F-15
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
The components of deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards...... $ 8,355 $ 6,081 $ 4,685
Alternative minimum tax credit
carryforwards........................ 18,800 18,800 18,800
-------- -------- --------
27,155 24,881 23,485
Deferred tax liabilities:
Accelerated tax depreciation.......... 1,305 1,285 1,157
Other................................. 500 550 550
-------- -------- --------
Net deferred tax asset.................. 25,350 23,046 21,778
Valuation allowance..................... (25,350) (23,046) (21,778)
-------- -------- --------
Deferred tax asset...................... $ -- $ -- $ --
======== ======== ========
</TABLE>
The Company has recorded a valuation allowance with respect to the
alternative minimum tax and net operating loss carryforwards reflected as
deferred tax assets due to the uncertainty of their ultimate realization.
The Company had net operating loss carryforwards of approximately $11.7
million at September 30, 1996. Net operating loss carryforwards expire through
2010. The Company also had approximately $18.8 million in alternative minimum
tax credit carryforwards at September 30, 1996, which are available
indefinitely.
(9) STOCK OPTION PLAN:
The Company adopted the 1992 Stock Option Plan (the Plan), which provides
for the grant of non-qualified options to purchase shares of the nonvoting
common stock subject to certain limitations. Non-qualified stock options are
issuable only to eligible officers and employees of the Company. The Company
has reserved 1,249 shares of its nonvoting common stock for issuance under the
Plan.
The per share exercise price of a stock option may not be less than 75% of
the fair market value of the nonvoting common stock, as determined by the
board of directors, on the date the option is granted. Such options may be
exercised only if the option holder remains continuously associated with the
Company from the date of grant to a date not less than three months prior to
the date of exercise. The exercise date of an option granted under the plan
cannot be later than ten years from the date of the grant. Any options that
expire unexercised or that terminate upon an optionee's ceasing to be employed
by the Company become available once again for issuance.
The following summarizes the stock option activity under the Plan:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
NINE MONTH
PERIOD ENDED
SEPTEMBER 30,
1993 1994 1995 1996
---- ---- ---- -------------
<S> <C> <C> <C> <C>
Options outstanding at beginning of period......... 294 752 738 710
Granted.......................................... 495 -- -- --
Exercised........................................ -- -- -- --
Cancelled........................................ (37) (14) (28) (10)
--- --- --- ---
Options outstanding at end of period............... 752 738 710 700
=== === === ===
Options available for grant........................ 497 511 539 549
=== === === ===
Exercisable at end of period....................... 51 196 327 362
=== === === ===
</TABLE>
F-16
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
The exercise price for all options granted to date is $3,350 per share,
which was the fair market value as determined by the board of directors on the
grant dates.
(10) EMPLOYEE BENEFIT PLAN:
The Company sponsors a 401(k) savings and profit-sharing plan, which covers
all employees who have had at least 1,000 hours of service during any year.
The Company will match employee contributions up to 2.8% of an employee's
annual salary. The Company may also, at the discretion of the board of
directors, elect to make a profit-sharing contribution. There have been no
profit-sharing contributions for the three years in the period ended December
31, 1995, or for the nine months ended September 30, 1996. Employer matching
contributions to the plan amounted to approximately $269,000, $111,000,
$99,000 and $318,000 for the years ended December 31, 1993, 1994 and 1995 and
the nine months ended September 30, 1996.
(11) SUBSEQUENT EVENTS:
Senior Note Offering
On December 5, 1996, the Company completed a $100.0 million senior note
offering. Net proceeds to the Company from the offering were used to (i) repay
existing indebtedness, including amounts outstanding under the Term Note,
Revolver, the various subordinated notes and the mortgage note payable, (ii)
acquire James River's interest in the Joint Venture, (iii) redeem the
outstanding redeemable convertible preferred stock and warrants, (iv) finance
the StyroChem Acquisition (discussed below) and (v) provide working capital.
It is expected that $6.0 million of the subordinated notes payable will be
redeemed at 75% of their face value and the accrued interest on the notes will
be forgiven as they will be redeemed within certain timeframes as specified in
the Agreement. In addition, it is expected that James River's interest in the
Joint Venture will be acquired for $16.6 million. The difference between the
actual price paid to acquire James River's interest and the $17.7 million
currently recorded in the financial statements will reduce the value of the
original purchase price allocated to property, plant and equipment.
StyroChem Acquisition
On December 5, 1996, the Company acquired all of the issued and outstanding
capital stock of and other equity interests in SP Acquisition Co. (StyroChem),
a Delaware corporation, for an aggregate cash purchase price of approximately
$29.0 million plus $2.0 million of assumed indebtedness and consulting
payments. Pursuant to the Stock Purchase Agreement (the Agreement), the
purchase price is subject to adjustment based on the change in StyroChem's net
working capital, as defined in the Agreement, between August 3, 1996, and the
closing date. StyroChem is a manufacturer of EPS, which is the primary raw
material used in the production of foam cups and containers.
(12) UNAUDITED PRO FORMA FINANCIAL INFORMATION:
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the acquisition of J. R. Cup had
occurred at the beginning of each respective period, with adjustments to give
effect to amortization of financing fees, interest expense on acquisition debt
and certain other adjustments. The pro forma financial information is not
necessarily indicative of the results of operations as they would have been
had the transactions been effected on the assumed date.
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Net sales...................................... $184,919 $132,534
Income from operations......................... 5,451 7,972
Income from continuing operations.............. 2,328 4,491
</TABLE>
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To James River Paper Company, Inc.
and Radnor Holdings Corporation:
We have audited the accompanying balance sheets of J. R. CUP FOAM CONTAINER
OPERATIONS OF JAMES RIVER PAPER COMPANY, INC. (a Virginia corporation)
(formerly Handi-Kup Foam Container Operations of James River Paper Company,
Inc.), as of December 25, 1994 and December 31, 1995, and the related
statements of operations, changes in owner's investment and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the J. R. Cup Foam
Container Operations of James River Paper Company, Inc. as of December 25,
1994 and December 31, 1995, and the results of its operations for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
October 14, 1996
F-18
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
BALANCE SHEETS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
ASSETS 1994 1995
------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Accounts receivable................................. $ 5,309 $ 4,901
Inventories, net.................................... 7,591 7,543
Prepaid expenses and other.......................... 221 224
-------- --------
Total current assets.............................. 13,121 12,668
PROPERTY, PLANT AND EQUIPMENT (Note 2):
Land and improvements............................... 1,196 1,064
Buildings and improvements.......................... 8,758 7,943
Machinery and equipment............................. 37,870 37,316
Supplies and spare mold parts....................... 1,609 1,376
-------- --------
49,433 47,699
Less accumulated depreciation....................... (30,011) (30,717)
-------- --------
19,422 16,982
OTHER ASSETS.......................................... 123 70
-------- --------
$ 32,666 $ 29,720
======== ========
<CAPTION>
LIABILITIES AND OWNER'S INVESTMENT
----------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.................................... $ 4,477 $ 5,571
Accrued liabilities (Note 2)........................ 5,182 6,194
-------- --------
9,659 11,765
OTHER LONG-TERM LIABILITIES........................... 716 781
COMMITMENTS AND CONTINGENCIES (Note 3)
OWNER'S INVESTMENT.................................... 22,291 17,174
-------- --------
$ 32,666 $ 29,720
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF OPERATIONS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES................................ $90,819 $94,644 $98,680
COST OF GOODS SOLD....................... 69,246 76,053 80,359
------- ------- -------
GROSS PROFIT............................. 21,573 18,591 18,321
OPERATING EXPENSES:
Distribution........................... 8,336 9,812 8,354
Selling, general and administrative.... 4,164 4,061 3,672
Allocation from James River (Note 1)... 3,880 4,725 10,101
------- ------- -------
INCOME (LOSS) FROM OPERATIONS............ 5,193 (7) (3,806)
------- ------- -------
OTHER (INCOME) EXPENSE .................. 144 253 (225)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES........ 5,049 (260) (3,581)
PROVISION FOR INCOME TAXES (Note 5)...... -- -- --
------- ------- -------
NET INCOME (LOSS)........................ $ 5,049 $ (260) $(3,581)
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF CHANGES IN OWNER'S INVESTMENT
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<S> <C>
BALANCE, January 1, 1993............................................... $25,086
Net income........................................................... 5,049
Net payments to James River.......................................... (6,373)
-------
BALANCE, December 26, 1993............................................. 23,762
Net loss............................................................. (260)
Net payments to James River.......................................... (1,211)
-------
BALANCE, December 25, 1994............................................. 22,291
Net loss............................................................. (3,581)
Net payments to James River.......................................... (1,536)
-------
BALANCE, December 31, 1995............................................. $17,174
=======
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF CASH FLOWS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................... $ 5,049 $ (260) $(3,581)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation........................ 2,434 2,478 2,580
Changes in operating assets and
liabilities--
Accounts receivable............... 866 503 408
Inventories, net.................. 20 551 48
Prepaid expenses and other........ (21) (64) (3)
Accounts payable.................. 559 (411) 1,094
Accrued liabilities............... (1,061) 387 1,012
Other assets...................... 202 16 53
Other long-term liabilities....... -- 6 65
------- ------- -------
Net cash provided by operating
activities..................... 8,048 3,206 1,676
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property, plant and
equipment............................ (1,675) (1,995) (140)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments to James River........... (6,373) (1,211) (1,536)
------- ------- -------
CASH, beginning of period (Note 2)...... -- -- --
------- ------- -------
CASH, end of period (Note 2)............ $ -- $ -- $ --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Company
As of the dates and for the periods presented, J. R. Cup Foam Container
Operations (the Company) (formerly Handi-Kup Foam Container Operations of
James River Paper Company, Inc.) was an operating unit of James River Paper
Company, Inc. (James River). The Company manufactures and distributes foam
cups, containers and thermoformed lids primarily to national, institutional
and retail customers throughout the U.S.
Basis of Presentation
On January 20, 1996, James River entered into a Joint Venture with WinCup
Holdings, Inc. (WinCup), another foam cup manufacturer, whereby both parties
contributed their fixed assets, leasehold improvements, technology, patents,
trademarks, real property and other noncurrent assets associated with their
foam cup and container and thermoformed lid manufacturing operations and all
inventory, spare parts and other current assets, excluding cash and accounts
receivable, to the Joint Venture.
The Joint Venture is structured as a Delaware limited partnership with
WinCup as the sole general partner and James River as the sole limited
partner. Ownership interests are allocated 55% to WinCup and 45% to James
River.
The financial statements include certain amounts that have been allocated to
the Company by James River. Specifically, these allocations include general
and administrative expenses and accruals for advertising, market survey,
promotion, legal fees and customer performance allowances. Management believes
that the allocation methodologies used to allocate these corporate centrally
managed costs to the Company represent a reasonable basis for allocation.
Included in selling, general and administrative expenses are $3.0 million,
$2.6 million and $2.7 million in customer performance allowances allocated to
the Company by James River for the periods ended December 26, 1993, December
25, 1994 and December 31, 1995, respectively. All other expenses allocated
from James River are included in allocation from James River in the
accompanying statements of operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year
The Company's fiscal year includes the 52 or 53 weeks ending on the last
Sunday in December. The year ended December 31, 1995 included 53 weeks while
the years ended December 25, 1994 and December 26, 1993 each included 52
weeks.
Cash
Prior to the date of its acquisition by WinCup, the Company was a
participant in the cash pool of James River. All of the cash of the James
River subsidiaries was deposited into a single account. All cash requirements
of James River and its subsidiaries were then funded out of this cash pool. As
a result, the Company had no cash balances recorded on its books prior to its
acquisition by WinCup.
F-23
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Inventories, Net
Inventories are stated at the lower of cost (first-in, first-out) or market
and include the cost of materials, labor and manufacturing overhead.
Inventories consist of the following at December 25, 1994 and December 31,
1995:
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Raw materials............................................... $ 897 $1,035
Finished goods.............................................. 6,908 6,508
------ ------
$7,805 $7,543
====== ======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements which increase the values or
extend the useful life are capitalized and maintenance repair costs are
expensed as incurred. For financial reporting purposes, depreciation is
computed using the straight-line method over the useful lives of the
respective assets, which range from 20 to 45 years for buildings and 5 to 20
years for machinery and equipment. Leasehold improvements are amortized over
the lesser of their estimated useful lives or the term of the lease using the
straight-line method.
Supplies and Spare Mold Parts
Supplies and spare mold parts include maintenance parts maintained in a
central stores location. When parts are needed at the various manufacturing
facilities, the parts are shipped and expensed in that period.
Accrued Liabilities
The components of accrued liabilities are as follows at December 25, 1994
and December 31, 1995:
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Worker's compensation reserves............................. $1,630 $2,257
Payroll and employee related items......................... 1,443 1,431
Sales rebates.............................................. 700 890
Accrued utilities.......................................... 458 320
Other accrued liabilities.................................. 951 1,296
------ ------
$5,182 $6,194
====== ======
</TABLE>
Pension Assets and Post Retirement Benefits Other than Pensions
James River sponsors various contributory and noncontributory pension plans.
Benefits under the plans are primarily based on years of service and
compensation. An allocation of the total James River net pension asset
exclusive of the net minimum liabilities of $123,000 and $70,000 at December
25, 1994 and December 31, 1995, respectively, has been included in other
assets in the accompanying financial statements of the Company.
James River provides certain medical and life insurance benefits to eligible
employees upon retirement. An allocation of the amounts attributable to the
Company's employees of $716,000 and
F-24
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
$781,000 at December 25, 1994 and December 31, 1995, respectively, has been
included in other long-term liabilities in the accompanying financial
statements.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded net of
expected cash discounts.
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
disclosure 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.
Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined by the
Company using the available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the
estimates may not be indicative of the amounts the Company could realize in a
current market exchange.
The carrying values of accounts receivable, accounts payable and accrued
liabilities approximate fair values due to the short-term maturities of these
financial instruments.
(3) COMMITMENTS AND CONTINGENCIES:
The Company leases certain facilities, vehicles and equipment over varying
periods. None of the agreements contain unusual renewal or purchase options.
As of December 31, 1995, future minimum rental payments under noncancelable
operating leases were as follows (in thousands):
<TABLE>
<S> <C>
1996............................................................... $1,537
1997............................................................... 1,374
1998............................................................... 845
1999............................................................... 338
------
$4,094
======
</TABLE>
Rent expense totaled $2.2 million, $2.4 million and $2.4 million in 1993,
1994 and 1995, respectively.
Litigation
The Company is involved in various legal actions arising in the normal
course of business. After taking into consideration legal counsel's evaluation
of such actions, management believes that these actions will not have a
significant effect on the Company's financial position or results of
operations.
In July 1996, StyroChem, the Company's primary supplier of expandable
polystyrene beads (EPS) filed suit in the United States District Court for the
Northern District of Texas against James River for breach of a supply contract
between StyroChem and James River. The contract in question required James
F-25
<PAGE>
J. R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
River to purchase from StyroChem all of the EPS requirements for its foam
operations through February 1999, provided that the material satisfied certain
product specifications. Because the product supplied by StyroChem did not meet
such specifications, James River ceased purchasing EPS from StyroChem and did
not assign the contract to the Joint Venture in connection with its formation.
The Joint Venture agreed to indemnify James River for certain liabilities
relating to the failure of James River to assign the contract in question to
the Joint Venture and the Joint Venture has assumed the defense of such
litigation, subject to certain reservations of rights. The lawsuit has been
stayed pending the outcome of a proposed acquisition of StyroChem by WinCup,
and management expects the lawsuit will be dismissed with prejudice following
the consummation of the acquisition. Management does not believe the ultimate
outcome of the lawsuit will have a material effect on the Company's financial
position or results of operations.
(4) RELATED PARTY TRANSACTIONS:
Transactions with other James River locations are reflected as though they
were settled immediately as an addition to or a reduction of James River's
investment and there are no amounts due to or from James River at the end of
any period.
(5) INCOME TAXES:
The Company has historically been included in the consolidated federal
income tax return and combined/unitary state income tax returns of James
River. No provision for income taxes has been reflected in the accompanying
financial statements as the Company has historically generated tax losses on a
standalone basis. Deferred income tax assets and liabilities have been
determined at the corporate level and have not been allocated on a standalone
basis. Because the Company is included in the James River consolidated federal
income tax return, net operating loss carryforwards, investment and other tax
credit carryforwards, if any, were utilized by James River. Accordingly, the
Company has no reportable net operating loss or tax credit carryforwards on a
standalone basis.
F-26
<PAGE>
INDEPENDENT AUDITORS' REPORT
SP Acquisition Co.
Fort Worth, Texas
We have audited the accompanying consolidated balance sheets of SP
Acquisition Co. and subsidiaries (the Company), as of April 1, 1995 and March
30, 1996 and the related consolidated statements of income, stockholders'
equity and cash flows for the years then ended. The consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the 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, such consolidated financial statements present fairly, in
all material respects, the financial position of SP Acquisition Co. and
subsidiaries as of April 1, 1995 and March 30, 1996 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
On October 30, 1996, as discussed in Note 16, the Company's shareholders
entered into a definitive agreement with Radnor Holdings Corporation (Radnor)
whereby Radnor agreed to acquire all the issued and outstanding capital stock
of and equity interests in the Company, subject to certain conditions.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
October 18, 1996
(October 30, 1996 as to Note 16)
F-27
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995, MARCH 30, 1996 AND UNAUDITED SEPTEMBER 28, 1996
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
ASSETS 1995 1996 1996
------ ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............ $ 117,696 $ 73,342 $ 27,608
Accounts receivable.................. 15,933,813 11,697,236 12,687,047
Refundable income taxes.............. -- 391,340 --
Inventory............................ 7,839,053 6,794,310 7,521,240
Prepaid expenses..................... 313,636 436,823 228,052
Deferred income taxes................ 923,687 858,920 1,223,080
----------- ----------- -----------
Total current assets............... 25,127,885 20,251,971 21,687,027
PROPERTY, PLANT AND EQUIPMENT, NET..... 3,878,920 7,391,878 7,327,017
PROPERTY HELD FOR SALE................. 1,600,000 1,771,176 1,733,366
DEFERRED INCOME TAXES.................. 1,990,557 1,380,264 1,133,547
OTHER ASSETS........................... 253,113 171,248 64,464
----------- ----------- -----------
TOTAL.................................. $32,850,475 $30,966,537 $31,945,421
=========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable........................ $ 1,609,954 $ 1,832,581 $ 1,199,102
Accounts payable..................... 17,131,719 14,464,013 13,724,421
Accrued liabilities.................. 1,509,801 1,207,789 2,353,923
Income taxes payable................. 683,908 252,963 915,827
Current portion of long-term debt.... 1,219,135 1,242,556 1,079,244
----------- ----------- -----------
Total current liabilities.......... 22,154,517 18,999,902 19,272,517
----------- ----------- -----------
LONG-TERM DEBT......................... 6,235,010 6,318,873 4,981,782
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
100,000 shares authorized; 22,315
shares issued and outstanding
(liquidation preference of $500,000)
.................................... 223 223 223
Common stock, $.01 par value, 400,000
shares authorized; 65,184 shares
issued and outstanding.............. 652 652 652
Additional paid-in capital........... 999,125 999,125 999,125
Retained earnings.................... 3,492,533 4,723,461 6,786,809
Cumulative translation adjustments... (31,585) (75,699) (95,687)
----------- ----------- -----------
Total stockholders' equity......... 4,460,948 5,647,762 7,691,122
----------- ----------- -----------
TOTAL.................................. $32,850,475 $30,966,537 $31,945,421
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND UNAUDITED SIX MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
<TABLE>
<CAPTION>
SIX MONTH
YEAR ENDED PERIOD ENDED
--------------------------- ---------------------------
APRIL 1, SEPTEMBER 30, SEPTEMBER 28,
1995 MARCH 30, 1996 1995 1996
----------- -------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES............... $72,106,153 $76,221,366 $41,218,856 $37,357,553
COST OF GOODS SOLD...... 61,472,165 68,121,794 37,086,892 30,605,998
----------- ----------- ----------- -----------
GROSS PROFIT............ 10,633,988 8,099,572 4,131,964 6,751,555
DISTRIBUTION EXPENSE.... 2,011,000 2,604,026 1,428,634 1,661,253
SELLING, GENERAL AND AD-
MINISTRATIVE EXPENSE... 3,015,451 3,101,417 1,569,292 1,786,970
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS.. 5,607,537 2,394,129 1,134,038 3,303,332
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense...... (889,325) (798,928) (473,932) (361,384)
Other income, net..... 254,996 589,820 380,071 80,400
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EX-
PENSE)................. (634,329) (209,108) (93,861) (280,984)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES.................. 4,973,208 2,185,021 1,040,177 3,022,348
INCOME TAXES............ 1,845,675 954,093 356,000 959,000
----------- ----------- ----------- -----------
NET INCOME.............. $ 3,127,533 $ 1,230,928 $ 684,177 $ 2,063,348
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-29
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND UNAUDITED SIX MONTH
PERIOD ENDED SEPTEMBER 28, 1996
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN RETAINED TRANSLATION
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS
--------- ------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, APRIL 3, 1994...... $223 $652 $999,125 $ 365,000 $ --
Net income................ 3,127,533
Translation adjustments... (31,585)
---- ---- -------- ---------- --------
BALANCE, APRIL 1, 1995...... 223 652 999,125 3,492,533 (31,585)
Net income................ 1,230,928
Translation adjustments... (44,114)
---- ---- -------- ---------- --------
BALANCE, MARCH 30, 1996..... 223 652 999,125 4,723,461 (75,699)
Net income (unaudited).... 2,063,348
Translation adjustments
(unaudited).............. (19,988)
---- ---- -------- ---------- --------
BALANCE, SEPTEMBER 28, 1996
(unaudited)................ $223 $652 $999,125 $6,786,809 $(95,687)
==== ==== ======== ========== ========
</TABLE>
See notes to consolidated financial statements.
F-30
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND UNAUDITED SIX MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
<TABLE>
<CAPTION>
SIX MONTH
YEAR ENDED PERIOD ENDED
------------------------ ---------------------------
APRIL 1, MARCH 30, SEPTEMBER 30, SEPTEMBER 28,
1995 1996 1995 1996
----------- ----------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income............. $ 3,127,533 $ 1,230,928 $ 684,177 $2,063,348
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and am-
ortization.......... 357,984 490,759 316,569 821,683
Deferred income tax-
es.................. 245,756 675,060 310,000 (117,443)
Changes in operating
assets and liabili-
ties:
Accounts receiv-
able.............. (2,833,745) 4,236,577 (339,402) (989,811)
Inventory.......... (3,497,510) 1,044,743 (1,348,764) (726,930)
Prepaid expenses
and other assets.. (300,042) (117,473) 71,642 315,555
Accounts payable... 6,919,397 (2,667,706) 4,406,197 (739,592)
Accrued liabili-
ties.............. 60,096 (302,012) 685,132 1,146,134
Income taxes
refundable and
payable........... 583,861 (822,285) (804,000) 1,054,204
----------- ----------- ----------- ----------
Net cash provided
by operating
activities...... 4,663,330 3,768,591 3,981,551 2,827,148
----------- ----------- ----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property
and equipment......... (3,241,588) (3,916,806) (2,974,500) (739,000)
Additions to property
held for sale......... (226,049) (196,203) --
----------- ----------- ----------- ----------
Net cash used in
investing
activities...... (3,241,588) (4,142,855) (3,170,703) (739,000)
----------- ----------- ----------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of debt...... (858,877) (1,035,507) (206,301) (1,500,403)
Net borrowings
(repayment) on line of
credit and other...... (392,519) 1,365,417 (163,117) (633,479)
Payment of financing
costs................. (160,192)
----------- ----------- ----------- ----------
Net cash provided
by (used in)
financing
activities...... (1,411,588) 329,910 (369,418) (2,133,882)
----------- ----------- ----------- ----------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............. 10,154 (44,354) 441,430 (45,734)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR.... 107,542 117,696 117,696 73,342
----------- ----------- ----------- ----------
CASH AND CASH EQUIVALENTS
AT END OF YEAR.......... $ 117,696 $ 73,342 $ 559,126 $ 27,608
=========== =========== =========== ==========
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid during the
year for:
Interest............. $ 800,745 $ 794,009 $ 332,559 $ 310,408
Income taxes......... 1,111,521 1,116,000 1,050,000 201,000
Noncash financing ac-
tivities:
Note payable for in-
surance policy...... $ 188,393 $ 203,462 $ 188,393 $ --
</TABLE>
See notes to consolidated financial statements.
F-31
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business--SP Acquisition Co. (SPAC) and subsidiaries develop, manufacture
and market a broad line of crystal polystyrene and expandable polystyrene for
sale to manufacturers of foam cups and containers and insulation and packaging
products.
Basis of Consolidation--The accompanying consolidated financial statements
include the accounts of SP Acquisition Co. and its wholly-owned subsidiaries,
StyroChem International, Inc. and StyroChem International, Ltd. (collectively,
the Company). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Acquisition--SP Acquisition Co. was incorporated on January 18, 1994 for the
sole purpose of acquiring certain operations of Kimberly-Clark Tissue Company,
formerly known as Scott Paper Company (KCTC). On February 25, 1994, SPAC
acquired all of the outstanding shares of common stock of StyroChem
International, Inc. and StyroChem International, Ltd. from KCTC for an
aggregate cash purchase price, including costs and expenses of approximately
$14.5 million, subject to adjustment for certain contingent consideration. The
acquisition was funded by the proceeds from the issuance of common and
preferred stock of SPAC, along with borrowings under term loans by SPAC and
each of the Company's subsidiaries.
The acquisition was accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and liabilities assumed based on their relative fair market values. As of the
acquisition date, assets acquired and liabilities assumed were as follows (in
thousands):
<TABLE>
<S> <C>
Purchase price................................................. $ 14,456
Fair values of net assets acquired:
Fair value of assets acquired................................ 34,473
Liabilities assumed.......................................... (10,307)
--------
24,166
--------
Excess fair value.............................................. $ (9,710)
========
</TABLE>
The excess of the fair value of the net assets acquired was accounted for as
a reduction in the fair value allocated to property and equipment.
Fiscal Year--The Company's fiscal year ends on the Saturday nearest March 31
of each year.
Unaudited Interim Financial Statements--The Company's consolidated balance
sheet as of September 28, 1996, and the consolidated statements of income and
cash flows for the six month periods ended September 30, 1995 and September
28, 1996 have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal, recurring adjustments)
necessary to present fairly the balance sheet of the Company at September 28,
1996 and the results of operations and cash flows of the Company for the six
month periods ended September 30, 1995 and September 28, 1996 have been made.
The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year.
F-32
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
In addition, summary operating results of the Company for the unaudited
three month period ended March 30, 1996 are as follows:
<TABLE>
<S> <C>
Net sales..................................................... $16,991,252
===========
Gross profit.................................................. $ 1,834,560
===========
Income from operations........................................ $ 268,083
===========
Net income.................................................... $ 88,535
===========
Total depreciation, amortization, interest and income taxes... $ 617,075
===========
</TABLE>
Cash and Cash Equivalents--For the purposes of reporting cash flows, cash
and cash equivalents includes investments readily convertible to cash with
remaining maturities at date of purchase of three months or less.
Financial Instruments--The Company's financial instruments under Statement
of Financial Accounting Standards No. 107, "Disclosure About Fair Value of
Financial Instruments," include cash and cash equivalents, accounts
receivable, accounts payable and long-term debt. The Company believes that the
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and long-term debt to banks are a reasonable estimate of their fair
value because of the short-term maturities of such instruments or, in the case
of long-term debt to banks, because of the floating interest rates on such
long-term debt. The fair value and carrying value of notes payable to
stockholders were $1.5 million and $1.0 million, respectively, at March 30,
1996.
Inventories--Inventories are valued at the lower of cost or market with cost
determined using the average cost method. Inventories consist of finished
goods, work-in-process and raw materials. Finished goods costs include raw
materials, direct labor and indirect production and overhead costs. The
Company provides an allowance for obsolescence based on management's
evaluation of future usefulness and salability of inventory.
Property, Plant and Equipment--Property, plant and equipment are recorded at
cost. Depreciation is recorded using the straight-line method over the
estimated useful lives of the assets, as follows:
<TABLE>
<CAPTION>
NUMBER OF YEARS
---------------
<S> <C>
Building and improvements................................. 20
Machinery and equipment................................... 3-10
Furniture and fixtures.................................... 5-10
</TABLE>
Expenditures that result in the enhancement of the assets involved are
capitalized and maintenance and repair costs are expensed when incurred. Upon
sale or other disposition, any gain or loss is included in income.
Property Held for Sale--Land and structures currently being offered for sale
are classified separately from property and equipment. These properties are
currently carried at fair value, which is lower than cost.
Income Taxes--Federal income taxes have been computed in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires income taxes to be accounted for under the liability
method. Income taxes are provided for the tax effects of transactions
F-33
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
reported in the financial statements and consist of taxes currently due plus
deferred income taxes related primarily to differences between the basis of
property, plant and equipment due to depreciation differences and to the
application of the purchase method of accounting for financial statement
purposes but not for tax purposes, and nondeductible asset and liability
reserves for tax purposes. The deferred tax assets and liabilities represent
the future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or
settled. Deferred tax assets are evaluated based on the guidelines for
realization and may be reduced by a valuation allowance.
Foreign Currency Translation--The assets and liabilities of the Company's
Canadian subsidiary, StyroChem International, Ltd., whose functional currency
is other than the U.S. dollar are translated at year-end exchange rates.
Revenue and expense accounts are translated using the weighted average
exchange rate during the periods. Translation gains and loses are not included
in determining net income but are accumulated in a separate component of
stockholders' equity, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
Research and Development--Research and development expenses are charged to
income as incurred. Total research and development expenses were approximately
$1.3 million and $1.6 million for the years ended April 1, 1995 and March 30,
1996, respectively, and approximately $1.3 million and $1.0 million for the
unaudited six month periods ended September 30, 1995 and September 28, 1996,
respectively.
Accounting 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 disclosure 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.
Recently Issued Accounting Pronouncements--Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Impairment is evaluated by
comparing future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition to
the carrying amount of the asset. This new accounting principle is effective
for the Company's fiscal year ending March 29, 1997. The Company believes that
this new accounting principle will not have a material impact on its
consolidated financial position or results of operations.
2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Trade accounts receivable......... $15,964,399 $11,680,811 $12,784,764
Other receivables................. 54,414 125,425 158,283
----------- ----------- -----------
16,018,813 11,806,236 12,943,047
Allowance for doubtful accounts... (85,000) (109,000) (256,000)
----------- ----------- -----------
$15,933,813 $11,697,236 $12,687,047
=========== =========== ===========
</TABLE>
F-34
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
3. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Finished goods...................... $3,921,857 $3,149,525 $5,883,195
Work-in-process..................... 897,126 1,076,670 328,129
Raw materials....................... 3,384,070 3,067,115 1,584,916
---------- ---------- ----------
8,203,053 7,293,310 7,796,240
Allowance for obsolescence.......... (364,000) (499,000) (275,000)
---------- ---------- ----------
$7,839,053 $6,794,310 $7,521,240
========== ========== ==========
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Land................................ $ 138,964 $ 138,964 $ 138,964
Building and improvements........... 118,029 201,761 201,761
Machinery and equipment............. 3,666,995 5,881,326 6,639,617
Furniture and fixtures.............. 111,028 152,448 152,448
Construction in progress............ 167,180 1,744,503 1,726,212
---------- ---------- ----------
4,202,196 8,119,002 8,859,002
Accumulated depreciation............ (323,276) (727,124) (1,531,985)
---------- ---------- ----------
$3,878,920 $7,391,878 $7,327,017
========== ========== ==========
</TABLE>
5. PROPERTY HELD FOR SALE
The Company has property held for sale, which includes land and a building
and related improvements. During 1996, the Company made net improvements of
$171,176 to this property, which were capitalized.
The Company has currently leased this property to a third party. Rental
income related to this property was approximately $148,200 and $141,300 for
the years ended April 1, 1995 and March 30, 1996, respectively, and
approximately $68,900 and $111,727 for the unaudited six month periods ended
September 30, 1995 and September 28, 1996, respectively. Future minimum
rentals for fiscal year 1997 are $244,000.
6. OTHER ASSETS
Other assets include primarily loan origination costs associated with long-
term debt which are being amortized over the term of the related debt.
Accumulated amortization was $34,708 and $66,746 as of April 1, 1995 and March
30, 1996, respectively, and $160,792 as of September 28, 1996 (unaudited).
F-35
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
7. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable represent advances from a Canadian bank under a $2.5 million
operating line of credit for the Company's Canadian subsidiary, which is
payable on demand and bears interest at a rate of Canadian prime (6.75% at
September 28, 1996) plus 1.25%. The advances under the line of credit are
secured by substantially all of the assets of the Company's Canadian
subsidiary.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Bank term note, with interest at
prime (8.25% at September 28,
1996) plus 1.25%, collateralized
by all assets and outstanding
common stock of the Company, pay-
able in monthly principal pay-
ments of $66,667 plus interest,
with the final payment due Febru-
ary 1999......................... $ 3,200,000 $ 2,400,000 $ 3,933,333
Note payable to bank under a $6
million line of credit which ex-
pires on September 1, 1998, with
interest at prime plus 1%, col-
lateralized by all assets and
outstanding common stock of the
Company. Interest is due and pay-
able quarterly along with commit-
ment fees of 0.5% on the unused
balance.......................... 2,200,011 3,300,000 550,000
Term loan payable to Canadian
bank, with interest at Canadian
prime plus 1.50%, collateralized
by substantially all assets of
the Canadian subsidiary, payable
in quarterly principal payments
of $59,773 plus interest, with
the final payment due November
1998............................. 865,282 657,508 536,382
Notes payable to stockholders,
with interest at 17.5% payable
quarterly, due February 28, 1999,
subject to prepayment penalties.. 1,000,459 1,000,459 1,000,459
Other............................. 188,393 203,462 40,852
----------- ----------- -----------
7,454,145 7,561,429 6,061,026
Less current maturities........... (1,219,135) (1,242,556) (1,079,244)
----------- ----------- -----------
$ 6,235,010 $ 6,318,873 $ 4,981,782
=========== =========== ===========
</TABLE>
The Company's notes payable and long-term debt agreements contain certain
restrictive covenants. These covenants require that the Company meet certain
requirements such as a minimum current ratio, a minimum trailing twelve-months
operating cash flow, a minimum tangible net worth, a minimum fixed charge
coverage ratio, a maximum ratio of indebtedness to tangible net worth and
maximum dividend distributions. The Company was not in compliance with certain
of these covenants at April 1, 1995 and March 30, 1996, but subsequently
obtained a waiver or an amendment for these instances of noncompliance.
Effective August 31, 1996, the bank term note and line of credit agreement
was amended to revise certain covenants and to extend the final maturities to
September 1, 1998. Under the terms of the loan
F-36
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
agreements, the Company has the option to designate the interest rate for
borrowings under the loan agreements using either a prime plus or London
Interbank Offering Rate (LIBOR) option. The interest rate for domestically
designated borrowings under the bank term note and the line of credit was
adjusted to prime plus 0.25% and prime, respectively. LIBOR designated
borrowings under the bank term note and line of credit agreement bear interest
at LIBOR plus 2% and LIBOR plus 1.75%, respectively. In addition, effective
November 1996, the commitment fee will be reduced to 0.25% of the unused
balance of the line of credit which is payable quarterly.
The following represents the future annual maturities for the Company's long-
term debt obligations:
<TABLE>
<CAPTION>
MARCH 30, SEPTEMBER 28,
1996 1996
---------- -------------
(UNAUDITED)
<S> <C> <C>
1997................................................... $1,242,556 $ 560,400
1998................................................... 1,039,096 1,039,096
1999................................................... 5,279,777 4,461,530
---------- ----------
$7,561,429 $6,061,026
========== ==========
</TABLE>
8. INCOME TAXES
Income tax expense included in the consolidated statements of income is as
follows:
<TABLE>
<CAPTION>
SIX MONTH
YEAR ENDED PERIOD ENDED
-------------------- ---------------------------
APRIL 1, MARCH 30, SEPTEMBER 30, SEPTEMBER 28,
1995 1996 1995 1996
---------- --------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current income tax expense:
Federal.................... $1,362,656 $209,727 $ 40,480 $ 947,270
State...................... 237,263 69,306 5,520 129,173
---------- -------- -------- ---------
1,599,919 279,033 46,000 1,076,443
---------- -------- -------- ---------
Deferred income tax expense
(benefit):
Federal.................... 215,817 592,920 272,800 (103,350)
State...................... 29,939 82,140 37,200 (14,093)
---------- -------- -------- ---------
245,756 675,060 310,000 (117,443)
---------- -------- -------- ---------
Income tax expense .......... $1,845,675 $954,093 $356,000 $ 959,000
========== ======== ======== =========
</TABLE>
A reconciliation of the Company's effective income tax rate is as follows:
<TABLE>
<CAPTION>
SIX MONTH
YEAR ENDED PERIOD ENDED
------------------ ---------------------------
APRIL 1, MARCH 30, SEPTEMBER 30, SEPTEMBER 28,
1995 1996 1995 1996
-------- --------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Federal income taxes computed at
the statutory rate............. 34.0% 34.0% 34.0% 34.0%
State income taxes, net of fed-
eral income tax benefit........ 3.1 2.0 0.6 4.3
Net operating (income) loss of
Canadian subsidiary............ -- 4.4 -- (4.8)
Other........................... -- 3.3 (0.4) (1.8)
---- ---- ---- ----
37.1% 43.7% 34.2% 31.7%
==== ==== ==== ====
</TABLE>
F-37
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
The tax effect of the Company's temporary differences giving rise to the net
deferred income tax assets is as follows:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred income tax assets:
Current:
Inventory............................. $ 285,213 $ 408,331 $ 237,962
Accrued liabilities and reserves...... 607,031 411,771 890,526
Allowance for doubtful accounts....... 31,443 38,818 94,592
---------- ---------- ----------
923,687 858,920 1,223,080
---------- ---------- ----------
Noncurrent:
Property and equipment................ 2,585,104 2,095,410 1,776,997
Valuation allowance................... (594,547) (715,146) (643,450)
---------- ---------- ----------
1,990,557 1,380,264 1,133,547
---------- ---------- ----------
Net deferred income tax assets.......... $2,914,244 $2,239,184 $2,356,627
========== ========== ==========
</TABLE>
The Company has established a valuation allowance for deferred tax assets of
the Company's Canadian subsidiary. The deferred tax assets represent primarily
the excess of the tax over the book basis of property, plant and equipment.
Because of the operating losses of this subsidiary, the Company has been
unable to determine that it is more likely than not that the net deferred tax
assets of this subsidiary will be realized. Should the Canadian subsidiary
become profitable in future periods, this valuation allowance may be reduced
or eliminated. The Company will continue to review this valuation allowance on
a quarterly basis and make adjustments as appropriate.
9. MAJOR SUPPLIER
The Company has agreed to purchase a minimum of 67% of its styrene monomer
used in production from one supplier. The agreement, which is for a five year
period ending February 1999, and is renewable for successive annual terms,
provides for purchases at prevailing market-related prices and for favorable
payment terms.
In connection with this agreement, the Company's majority shareholder
granted this supplier an option to purchase 51,000 shares of common stock held
by the shareholder at the fair market value, as defined, of such shares at the
date of exercise. This option, which is exercisable between March 1, 1997 and
February 28, 1999, also requires this supplier to offer to purchase all the
outstanding shares of the Company's common stock at date of exercise.
During the years ended April 1, 1995 and March 30, 1996, the Company's
purchases from this supplier amounted to approximately $41.0 million and $42.8
million, respectively, and the balance payable to this supplier by the Company
as of April 1, 1995 and March 30, 1996 amounted to approximately $8.6 million
and $8.2 million, respectively. During the unaudited six month periods ended
September 30, 1995 and September 28, 1996, the Company's purchases from this
supplier amounted to approximately $21.4 million and $20.0 million,
respectively. As of September 28, 1996 (unaudited), the balance payable to
this supplier was approximately $11.8 million.
F-38
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
10. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of accounts receivable. Generally, the
Company does not require collateral to support customer receivables. The
Company follows established credit inquiry and investigation procedures in an
attempt to minimize credit risk associated with customer receivables. The
Company has one related party customer, WinCup Holdings, L.P., a subsidiary of
Radnor Holdings Corporation, which accounted for more than 10% of sales in
both 1995 and 1996. Sales to this customer were approximately $24.0 million
and $23.0 million for the years ended April 1, 1995 and March 30, 1996,
respectively, and approximately $13.1 million and $9.6 million for the
unaudited six month periods ended September 30, 1995 and September 28, 1996,
respectively. As of April 1, 1995, March 30, 1996 and September 28, 1996
(unaudited), outstanding accounts receivable from this customer were
approximately $6.5 million, $4.2 million and $3.8 million, respectively.
11. EMPLOYEE BENEFIT PLAN
The Company sponsors a tax-qualified defined contribution plan under Section
401(a) of the Internal Revenue Code covering all full-time employees in the
U.S. who have completed one year of service. This plan includes a 401(k)
arrangement pursuant to which participants may contribute, subject to certain
limitations, a percentage of their salary on a pretax basis. The Company
contributes a matching contribution with respect to the contributions made by
participants at a rate determined by the Board of Directors of the Company
each year. The Company's 401(k) matching contributions were $62,763 and
$64,674 for the years ended April 1, 1995 and March 30, 1996, respectively,
and $43,209 and $48,977 for the unaudited six month periods ended September
30, 1995 and September 28, 1996, respectively.
12. RELATED PARTY TRANSACTIONS
Grupo Industrial Hermes and James River Paper Company, Inc. (James River)
are shareholders of the Company. Sales by the Company for the years ended
April 1, 1995 and March 30, 1996 and for the unaudited six month periods ended
September 30, 1995 and September 28, 1996 to Convermex, a subsidiary of Grupo
Industrial Hermes, and to James River are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD ENDED
---------------------- ---------------------------
APRIL 1, MARCH 30, SEPTEMBER 30, SEPTEMBER 28,
1995 1996 1995 1996
----------- ---------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Convermex............... $ 1,262,144 $1,218,230 $ 710,640 $ 576,762
James River............. 12,072,402 4,635,959 5,873,533 2,350,236
</TABLE>
Receivables from the above related parties are as follows:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, SEPTEMBER 28,
1995 1996 1996
--- ---------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Convermex........................... $ 138,600 $201,600 $ --
James River......................... 1,396,305 76,698 206,232
</TABLE>
Effective January 1, 1996, James River, one of the Company's shareholders,
acquired a 45% joint venture interest in the Company's largest customer,
WinCup Holdings, L.P., a subsidiary of Radnor Holdings Corporation.
F-39
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
13. GEOGRAPHIC INFORMATION
Information about the Company's operations in different geographic areas for
the years ended April 1, 1995 and March 30, 1996 and for the unaudited six
month periods ended September 30, 1995 and September 28, 1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD ENDED
----------------------- ---------------------------
APRIL 1, MARCH 30, SEPTEMBER 30, SEPTEMBER 28,
1995 1996 1995 1996
----------- ----------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales:
United States.......... $57,764,433 $61,357,065 $33,581,944 $28,048,825
Canada................. 14,341,720 14,864,301 7,636,912 9,308,728
----------- ----------- ----------- -----------
Total................ $72,106,153 $76,221,366 $41,218,856 $37,357,553
=========== =========== =========== ===========
Operating income (loss):
United States.......... $ 5,096,319 $ 2,639,092 $ 1,307,153 $ 2,604,909
Canada................. 511,218 (244,963) (173,115) 698,423
----------- ----------- ----------- -----------
Total................ $ 5,607,537 $ 2,394,129 $ 1,134,038 $ 3,303,332
=========== =========== =========== ===========
Identifiable assets (at
end of period):
United States.......... $25,709,341 $24,150,958 $24,462,627
Canada................. 7,141,134 6,815,579 7,482,794
----------- ----------- -----------
Total................ $32,850,475 $30,966,537 $31,945,421
=========== =========== ===========
</TABLE>
14. STOCKHOLDERS' EQUITY
On February 25, 1994, the Company issued to its preferred stockholders
warrants to allow for the purchase of 25,313 shares (the "Warrant Shares") of
the Company's common stock at an exercise price of $.01 per share. The
warrants are not exercisable until the notes to stockholders (the Notes) are
repaid; however, they become immediately exercisable in full on the Company's
capital reorganization, merger or acquisition of the Company. The Warrant
Shares are subject to adjustment or cancellation upon the occurrence of
certain events; including the repayment of the Notes in advance of their
scheduled maturity. In addition, the terms of the warrants provide for
adjustments to the exercise price as a result of stock splits, dividends or
issuances. During 1995, warrants for 12,500 shares of common stock were
canceled as a result of early repayments or payments of certain of the Notes.
At April 1, 1995, March 30, 1996 and September 28, 1996 (unaudited), warrants
for 12,813 shares were outstanding, which expire at March 31, 1999.
15. COMMITMENTS AND CONTINGENCIES
Supply Agreement--The Company is committed under a supply agreement to sell
to WinCup Holdings, L.P. all of WinCup's requirements for expandable
polystyrene for certain of its plants at sales prices based on prevailing
market prices for up to 40 million pounds annually, and no less than 75% of
the requirements for those plants in excess of 40 million pounds annually. The
agreement is for an eight-year period ending February 2000, with options for
annual extensions thereafter.
F-40
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
UNAUDITED SIX MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 28, 1996
Operating Leases--The Company leases certain buildings and equipment under
operating leases for periods ranging from one to five years. These leases
generally contain optional renewal provisions for one or more periods. Future
annual minimum lease payments as of March 30, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $175,000
1998............................................................. 69,000
1999............................................................. 24,000
2000............................................................. 6,000
--------
Total............................................................ $274,000
========
</TABLE>
Rental expense under operating leases for the years ended April 1, 1995 and
March 30, 1996 was approximately $170,000 and $329,000, respectively, and
approximately $215,000 and $158,000 for the unaudited six month periods ended
September 30, 1995 and September 28, 1996, respectively.
Other--The Company is involved in various legal proceedings arising in the
normal course of business. Management believes the outcome of these matters
will not materially affect the consolidated financial position or results of
operations of the Company.
Like other chemical manufacturers, the Company's operations are subject to
extensive and rapidly changing federal and state environmental regulations,
including original and renewal permit application proceedings in connection
with its business operations. These environmental laws and regulations may
require the Company to take action in the future to correct the effects of
prior environmental issues at the Company's facilities, if any. In connection
with the Company's acquisition of its business operations from KCTC on
February 25, 1994, as discussed on Note 1, the Company was indemnified by KCTC
as to environmental matters existing prior to the acquisition date. The extent
of loss related to environmental matters depends on a number of factors,
including technological developments and changes in environmental laws, among
other. Based on currently known facts, management believes that any
environmental costs the Company may incur would not have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
The Company participates in a self-insurance program that provides for the
payment of employee health claims. The program provides for specific excess
loss reinsurance for aggregate claims greater than a specified amount for any
one claimant. The Company accrues the estimated liabilities for the ultimate
costs of both reported claims and incurred but not reported claims.
16. SUBSEQUENT EVENT
On October 30, 1996, the Company's shareholders entered into a definitive
agreement with Radnor Holdings Corporation (Radnor) whereby Radnor agreed to
acquire all the issued and outstanding shares of capital stock of and other
equity interests in the Company for an aggregate purchase price of $31.0
million, subject to satisfactory resolution of environmental matters and
financing.
F-41
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 10
The Company................................................................ 16
Capitalization............................................................. 18
Pro Forma Consolidated Financial Data...................................... 19
Selected Consolidated Financial Data....................................... 25
Management's Discussion and Analysis of
Financial Condition and Results of Operations............................. 27
Business................................................................... 34
Management................................................................. 45
Security Ownership by Certain Beneficial Owners and Management............. 49
Description of the Company's Credit Facilities............................. 50
The Exchange Offer......................................................... 52
Description of the Notes................................................... 59
Registration Rights........................................................ 85
Certain U.S. Federal Income Tax Considerations............................. 86
Plan of Distribution....................................................... 89
Legal Matters.............................................................. 90
Experts.................................................................... 90
Additional Information..................................................... 91
Index to Financial Statements.............................................. F-1
</TABLE>
------------
UNTIL , 1997 (40 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF RADNOR HOLDINGS CORPORATION APPEARS HERE]
OFFER FOR ALL OUTSTANDING 10% SENIOR NOTES DUE 2003 IN EXCHANGE FOR 10% SENIOR
NOTES DUE 2003, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED
------------
PROSPECTUS
------------
The Exchange Agent for the Exchange Offer is:
FIRST UNION NATIONAL BANK
By Facsimile: (215) 985-3428
Confirmation by Telephone: (215) 985-7207
By Mail/Hand/Overnight Courier
FIRST UNION NATIONAL BANK
123 SOUTH BROAD STREET
12TH FLOOR, PA 1249
CORPORATE TRUST ADMINISTRATION PHILADELPHIA, PA 19109
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Radnor Holdings Corporation (the "Company"), WinCup Holdings, Inc., SP
Acquisition Co. and Radnor Management, Inc. are Delaware corporations.
Subsection (b)(7) of Section 102 of the Delaware General Corporation Law (the
"DGCL"), enables a corporation in its original certificate of incorporation or
an amendment thereto to eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
violations of the director's fiduciary duty, except (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) pursuant to Section 174 of the DGCL
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from
which a director derived an improper personal benefit. Article Sixth of the
Company's Restated Certificate of Incorporation, Article Seventh of the
Certificate of Incorporation of WinCup Holdings, Inc., Article VII of the
Certificate of Incorporation of SP Acquisition Co., and Article Seventh of the
Certificate of Incorporation of Radnor Management, Inc. have eliminated the
personal liability of directors to the fullest extent permitted by Subsection
(b)(7) of Section 102 of the DGCL.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit or proceeding
provided that such director or officer acted in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, provided
further that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (8) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action or suit provided that such director or officer acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification may be made
in respect of any claim, issue or matter as to which such director or officer
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all of the circumstances of the case,
such director or officer is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall deem
proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification and advancement of expenses
provided for, by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and empowers the
II-1
<PAGE>
corporation to purchase and maintain insurance on behalf of any person who is
or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liabilities under Section
145.
Article 6 of the By-Laws of the Company, WinCup Holdings, Inc. and Radnor
Management, Inc. and Article VI of the Bylaws of SP Acquisition Co. state that
the corporations shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, by reason of the fact that he is or was a director,
officer or employee of the corporation, or is or was serving at the request of
the corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to the best interests of, the corporation.
WinCup Holdings, L.P. is a Delaware limited partnership. Section 17-109 of
Delaware Revised Limited Partnership Act provides authority for limited
partnerships to indemnify, subject to such standards and restrictions as are
set forth in the partnership agreement, any partner or other person from and
against any and all claims and demands. Section 3.3.2 of the Amended and
Restated Partnership Agreement of WinCup Holdings, L.P. provides that the
partnership shall indemnify each partner, its shareholders, employees, agents
and affiliates with respect to claims or proceedings arising from or relating
to the partnership, provided that the same were not the result of actions by
the party seeking indemnification taken in bad faith and/or in violation of
the partnership agreement.
Styrochem International, Inc. is a Texas corporation. Article 2.02-1 of the
Texas Business Corporation Act, as amended (the "TBCA"), empowers a Texas
corporation to indemnify its directors, officers, employees and agents in a
variety of circumstances and to purchase and maintain liability insurance for
those persons. Article 2.02-1.B. generally provides a corporation may
indemnify a person who was or is a director if it is determined that the
person (i) conducted himself in good faith, (ii) reasonably believed his
conduct was in the corporation's best interests for actions in his official
capacity or reasonably believed his conduct was at least not opposed to the
corporation's best interests for all other cases, and (iii) in the case of a
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. A person may be entitled to indemnification against judgments,
penalties (including excise and similar taxes), fines, settlements, and
reasonable expenses actually incurred by the person in connection with a
threatened, pending or completed civil or criminal proceeding or inquiry. A
director may not be indemnified in respect of any proceeding in which he is
found liable on the basis that a personal benefit was improperly received by
him or in which he is found liable to the corporation. Any indemnification or
advance of expenses to a director in accordance with Article 2.02-1 must be
reported to the shareholders with or before the notice of waiver of notice of
the next shareholders' meeting or with or before the next submission of a
consent without a meeting and, in any case, within twelve months following the
date of the indemnification or advance.
A determination whether indemnification is permissible under Article 2.02-
1.B. must be made by a majority vote of a quorum consisting of directors who,
at the time of the vote, are not named defendants or respondents in the
proceeding. If such a quorum cannot be obtained, the determination may be made
by a majority vote of a committee of the board of directors designated to act
so long as the members of the committee are not named defendants or
respondents, by a special legal counsel selected by the directors, or by a
shareholders' vote that excludes the shares held by directors who are named
defendants or respondents. Article 2.02-I.H. provides that a corporation shall
indemnify a director against reasonable expenses incurred in connection with a
proceeding in which he is a named defendant or respondent
II-2
<PAGE>
because he is or was a director if he has been wholly successful, on the
merits or otherwise, in the proceeding.
An officer of a Texas corporation is also entitled to seek indemnification
from the corporation to the same extent as a director and shall receive
indemnification for reasonable expenses incurred in connection with a
proceeding in which he is a named defendant or respondent because he is or was
an officer if he has been wholly successful in the proceeding. Article 2.02-1
also permits a Texas corporation to indemnify and advance expenses to
employees or agents, or to persons who are not or were not officers, employees
or agents of the corporation but who are or were serving as a functionary of
another enterprise at the request of the corporation, to the same extent that
it may indemnify and advance expenses to directors.
Although Article 2.02-1.U. generally permits a Texas corporation's articles
of incorporation to contain provisions restricting the circumstances under
which the corporation is required or permitted to indemnify a person,
Styrochem International, Inc.'s Articles of Incorporation do not contain such
a restriction.
StyroChem International, Ltd. is subject to the Quebec Companies Act (the
"QCA"). Section 123.87 of the QCA provides that a corporation shall assume the
defense of any officer, director, employee or agent of the corporation in any
proceeding brought against such person in connection with any act done by such
person in the exercise of his or her duties for the corporation, and shall pay
damages, if any, resulting from such act, unless such person has committed a
grievous offense or a personal offense separable from the exercise of his or
her duties; provided however, that in a penal or criminal proceeding the
corporation shall assume the expenses of such person only if he or she had
reasonable grounds to believe that his or her conduct was in conformity with
the law, or if he or she is freed or acquitted.
Article 20 of StyroChem International, Ltd.'s by-laws states that: "Every
director and officer of StyroChem International, Ltd. shall be deemed to have
assumed office on the express understanding and agreement and condition that
he and his heirs, executors and administrators and estate and effects
respectively shall from time to time and at all times be indemnified and saved
harmless out of the funds of StyroChem International, Ltd. from and against
all costs, charges and expenses whatsoever which such director or officer
sustains or incurs in or about any action, suit or proceeding which is
brought, commenced or prosecuted against him or them for or in respect of any
act, deed, matter or thing whatsoever made, done or permitted by him in or
about the execution of the duties of his office, and also from and against all
other costs, charges and expenses which he sustains or incurs in or about or
in relation to the affairs thereof, except such costs, charges or expenses as
are occasioned by his own willful neglect or default."
Article 20 of StyroChem International, Ltd.'s by-laws further states that:
"The directors of StyroChem International, Ltd. may cause the company to give
indemnities to any director or other person who has undertaken or is about to
undertake on behalf of the company or any corporation controlled by it and to
secure such director or other person against loss by mortgage and charge upon
the whole or any part of the real and personal property of the company by way
of security, and any action taken by the directors under this paragraph shall
not require approval or confirmation by the shareholders."
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.1 Restated Certificate of Incorporation of Radnor Holdings Corporation
3.2 Bylaws of Radnor Holdings Corporation
3.3 Certificate of Incorporation of WinCup Holdings, Inc.
3.4 Bylaws of WinCup Holdings, Inc.
3.5 Certificate of Incorporation of Radnor Management, Inc.
3.6 Bylaws of Radnor Management, Inc.
3.7 Certificate of Limited Partnership of WinCup Holdings, L.P.
3.8 Amended and Restated Limited Partnership Agreement of WinCup Holdings,
L.P. by and between WinCup Holdings, Inc. and Radnor Holdings
Corporation, dated January 1, 1997
3.9 Certificate of Incorporation of SP Acquisition Co.
3.10 Bylaws of SP Acquisition Co.
3.11 Articles of Incorporation of StyroChem International, Inc.
3.12 Bylaws of StyroChem International, Inc.
3.13 Certificate of Incorporation of StyroChem International, Ltd.
3.14 Bylaws of StyroChem International, Ltd.
4.1 Indenture, dated as of December 5, 1996, among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P., SP
Acquisition Co., StyroChem International, Inc., StyroChem
International, Ltd., Radnor Management, Inc., and First Union
National Bank, as amended by a First Supplemental Indenture dated as
of December 17, 1996, including form of Notes and Guarantees
4.2 Exchange and Registration Rights Agreement, dated as of December 5,
1996, among Radnor Holdings Corporation, WinCup Holdings, Inc.,
WinCup Holdings, L.P., SP Acquisition Co., StyroChem International,
Inc., StyroChem International, Ltd., Alex. Brown & Sons Incorporated
and NatWest Capital Markets Limited
4.3 Purchase Agreement, dated December 2, 1996, among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P., SP
Acquisition Co., StyroChem International, Inc., StyroChem
International, Ltd., Alex. Brown & Sons Incorporated and NatWest
Capital Markets Limited
4.4 Form of Letter of Transmittal
4.5 Form of Notice of Guaranteed Delivery
4.6 Form of Letter to Noteholders
4.7 Form of Letter to Record Holders
*5.1 Opinion of Duane, Morris & Heckscher regarding the legality of the
securities registered
*8.1 Opinion of Duane, Morris & Heckscher regarding certain tax matters
10.1 Stock Purchase Agreement among Radnor Holdings Corporation, Richard
Davidovich, the Davidovich Charitable Trust, James River Paper
Company, Inc., Grupo Industrial Hermes, S.A. de C.V., and the
Rosenthal Group, dated October 30, 1996
*10.2 Asset Purchase Agreement among Benchmark Holdings, Inc., WinCup
Holdings, Inc. and James River Paper Company, Inc., dated October 31,
1995
10.3 JR Capital Contribution Agreement by and between James River Paper
Company, Inc. and WinCup Holdings, L.P., dated January 20, 1996
10.4 WinCup Capital Contribution Agreement by and between WinCup Holdings,
Inc. and WinCup Holdings, L.P., dated January 20, 1996
10.5 Working Capital Escrow Agreement, dated as of December 5, 1996, among
Radnor Holdings Corporation, Richard Davidovich and Duane, Morris &
Heckscher
10.6 Environmental Escrow Agreement, dated as of December 5, 1996, among
Radnor Holdings Corporation, Richard Davidovich and Duane, Morris &
Heckscher
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
*10.7 Sales Agent Agreement, dated January 20, 1996, between James River
Paper Company, Inc. and WinCup Holdings, L.P., as amended by a Sales
Agent Extension and Modification Agreement dated December 5, 1996
*10.8 Equipment Use Agreement, dated January 20, 1996, as amended by an
Equipment Use Extension and Modification Agreement dated December 5,
1996
*10.9 License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, L.P., as amended by a License Extension and Modification
Agreement dated December 5, 1996
*10.10 Patent License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, L.P., as amended by an Amendment to Patent License
Agreement dated December 5, 1996
*10.11 Contract of Sale, dated as of December 5, 1996, among Chevron Chemical
Company, SP Acquisition Co., StyroChem International, Inc. and
StyroChem International, Ltd.
*10.12 Contract between ARCO Chemical Company (now Nova Chemicals, Inc.) and
WinCup Holdings, L.P., dated April 1, 1996, as amended on September ,
1996
*10.13 Product Sales Agreement by and between Huntsman Chemical Corporation
and WinCup Holdings, Inc., dated January 1, 1996
*10.14 Agreement between BASF Corporation and WinCup Holdings, L.P., dated
March 27, 1996, as supplemented by letter agreement dated April 25,
1996
*10.15 Sales Agreement between Fina Oil and Chemical Company and WinCup
Holdings, L.P., dated May 21, 1996
*10.16 Contract of Sale between Scott Polymers, Inc. (now StyroChem
International, Inc.) and WinCup Holdings, Inc., dated February 28,
1992, as amended on February 25, 1994, assigned to WinCup Holdings,
L.P. on January 20, 1996
*10.17 Supply Agreement by and between SP Acquisition Co. and James River
Canada, Inc., dated March, 1996
10.18 Noncompetition Agreement by and between Radnor Holdings Corporation
and Richard Davidovich, dated December 5, 1996
10.19 Consulting Agreement by and between Radnor Holdings Corporation and
Richard Davidovich, dated December 5, 1996
10.20 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (240 Tamal Vista Boulevard,
Corte Madera, California)
10.21 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (205 Tamal Vista Boulevard,
Corte Madera, California)
10.22 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (201 Tamal Vista Boulevard,
Corte Madera, California)
10.23 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (195 Tamal Vista Boulevard,
Corte Madera, California)
10.24 Letter Agreement, dated December 5, 1996, between WinCup Holdings,
L.P. and James River Paper Company, Inc., regarding Corte Madera
subleases
*10.25 Warehouse Lease, dated October 27, 1992, between Safeway Inc. and
James River Paper Company, Inc., as amended, assigned to WinCup
Holdings, L.P. on January 20, 1996
*10.26 Amended Lease between Patricia M. Dunnell and James River Paper
Company, Inc., dated September 29, 1989, as amended in September,
1994, assigned to WinCup Holdings, L.P. on January 20, 1996
*10.27 Warehouse Lease between Etzioni Partners and James River Corporation,
dated February 13, 1992, as amended on April 13, 1992 and on December
9, 1992, assigned to WinCup Holdings, L.P. on January 20, 1996
*10.28 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation, dated October 15, 1984, as amended on
September 20, 1989 and on February 28, 1994, assigned to WinCup
Holdings, L.P. on January 20, 1996
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
*10.29 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation dated June 16, 1977, as amended on August 7,
1984, and on October 15, 1984, and on February 25, 1994, assigned to
WinCup Holdings, L.P. on January 20, 1996
*10.30 Lease between Stone Mountain Industrial Park, Inc. and Scott Container
Group, Inc., dated December 16, 1991, as amended on February 28,
1994, assigned to WinCup Holdings on January 20, 1996
*10.31 Operating Lease by and between R-K Ventures Unit I Limited Partnership
and WMF Container Corporation, dated August 20, 1987, as amended on
November 30, 1990, assigned to WinCup Holdings, L.P. on January 20,
1996
*10.32 Standard Form Multi-Tenancy Industrial Lease between WinCup Holdings,
Inc. and CK Airpark Associates, dated June 1, 1994, assigned to
WinCup Holdings, L.P. on January 20, 1996
*10.33 Lease between James River Paper Company, Inc. and Central Ink Company,
dated February 17, 1993, as amended, assigned to WinCup Holdings,
L.P. on January 20, 1996
*10.34 Radnor Corporate Center Office Lease by and between Radnor Center
Associates and WinCup Holdings, L.P., dated May 31, 1996
*10.35 Standard Commercial Lease by and between Bradford Management Company
of Dallas, Inc. and Scott Polymers, Inc. (now StyroChem
International, Inc.), dated June 22, 1994, as amended on April 5,
1996, and as renewed on October 22, 1996
*10.36 Sublease between Cargologan Inc. and StyroChem International, Ltd.,
dated August 2, 1996
10.37 Employment Agreement by and between WinCup Holdings, L.P. and Michael
T. Kennedy, dated January 20, 1996
10.38 Executive Employment Agreement by and between Benchmark Corporation of
Delaware and Richard Hunsinger, dated May 1, 1993, as amended in
October, 1995
*10.39 Benchmark Corporation of Delaware Equity Incentive Plan, dated April
24, 1992, as amended on November 1, 1993
*10.40 Benchmark Corporation of Delaware Management Equity Participation
Plan, dated March 10, 1993, as amended on November 1, 1993
*10.41 Amended and Restated Revolving Credit and Security Agreement, dated
December 5, 1996, among The Bank of New York Commercial Corporation,
NationsBank, N.A., WinCup Holdings, L.P., Radnor Holdings
Corporation, WinCup Holdings, Inc., SP Acquisition Co., and StyroChem
International, Inc.
*10.42 Amended and Restated Revolving Credit Note, dated December 5, 1996,
made by WinCup Holdings, L.P., Radnor Holdings Corporation, WinCup
Holdings, Inc., SP Acquisition Co., and StyroChem International, Inc.
in favor of The Bank of New York Commercial Corporation
*10.43 Amended and Restated Revolving Credit Note, dated December 5, 1996,
made by WinCup Holdings, L.P., Radnor Holdings Corporation, WinCup
Holdings, Inc., SP Acquisition Co., and StyroChem International, Inc.
in favor of NationsBank, N.A.
*10.44 Trademark Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation
*10.45 Trademark Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
*10.46 Trademark Collateral Security Agreement, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York Commercial
Corporation
*10.47 Trademark Assignment of Security, dated December 5, 1996, between
WinCup Holdings, Inc. and The Bank of New York Commercial Corporation
*10.48 Patent Collateral Security Agreement, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
*10.49 Patent Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
*10.50 Collateral Assignment, dated as of December 5, 1996, among Radnor
Holdings Corporation and The Bank of New York Commercial Corporation
10.51 Junior Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, Inc. in favor of WinCup Holdings, L.P. ($1.1 million)
10.52 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($300,000)
10.53 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of Scott Paper Company ($2.7 million)
10.54 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($5.7
million)
10.55 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of Scott Paper Company ($300,000)
10.56 Senior Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of James River Paper Company, Inc.
($4.4 million)
10.57 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of WinCup Holdings, Inc. ($1.8 million)
10.58 Senior Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($7
million)
10.59 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc.
10.60 Partnership Interest Purchase Agreement, dated December 5, 1996, among
Radnor Holdings Corporation, WinCup Holdings, Inc., WinCup Holdings,
L.P. and James River Paper Company, Inc.
10.61 Redemption and Release Agreement by and among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P. and
Kimberly-Clark Tissue Company, dated December 5, 1996
10.62 Assumption and Modification Agreement, dated as of January 20, 1996,
among Scott Paper Company, WinCup Holdings, Inc. and WinCup Holdings,
L.P.
*10.63 Agreement Respecting a Term Loan and Other Credit Facilities, dated
February 25, 1994, between Bank of Montreal and StyroChem
International, Ltd., as amended
10.64 Letter of Undertaking, dated December 5, 1996, made by StyroChem
International, Ltd. and Radnor Holdings Corporation in favor of Bank
of Montreal
*10.65 Guaranty, dated February 25, 1994, made by SP Acquisition Co. in favor
of Bank of Montreal
10.66 Employment Agreement, dated April 5, 1996, between WinCup Holdings,
Inc. and R. Radcliffe Hastings
12.1 Computation of ratios
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Deloitte & Touche LLP
*23.3 Consent of Duane, Morris & Heckscher (to be included in Exhibits 5.1
and 8.1 to this Registration Statement)
24.1 Power of Attorney (see pages II-9 to II-15)
25.1 Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as a Trustee on Form
T-1 of First Union National Bank
27.1 Financial Data Schedule (Radnor Holdings Corporation)
27.2 Financial Data Schedule (J.R. Cup Foam Container Operations of James
River Paper Company, Inc.)
27.3 Financial Data Schedule (SP Acquisition Co. and Subsidiaries)
</TABLE>
- --------
* To be filed by an amendment to this Registration Statement.
II-7
<PAGE>
No financial statement schedules are required as all material required
information is disclosed in the notes to the respective financial statements.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(b) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RADNOR HOLDINGS
CORPORATION HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR, PENNSYLVANIA,
ON JANUARY 8, 1997.
Radnor Holdings Corporation
/s/ Michael T. Kennedy
By: _________________________________
MICHAEL T. KENNEDY CHIEF EXECUTIVE
OFFICER AND PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy Chief Executive January 8, 1997
- ------------------------------------- Officer, President
MICHAEL T. KENNEDY and Sole Director
(principal
executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President-Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-9
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, WINCUP HOLDINGS,
INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR, PENNSYLVANIA, ON JANUARY
8, 1997.
WinCup Holdings, Inc.
/s/ Michael T. Kennedy
By: _________________________________
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director (principal
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President--Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-10
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, WINCUP HOLDINGS,
L.P. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR, PENNSYLVANIA, ON JANUARY
8, 1997.
WinCup Holdings, L.P. By: WinCup
Holdings, Inc., its general partner
By: /s/ Michael T. Kennedy
-------------------------------
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director of General
MICHAEL T. KENNEDY Partner (principal
executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President--Finance
MICHAEL V. VALENZA of General Partner
(principal
financial and
accounting officer)
II-11
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SP ACQUISITION
CO. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR, PENNSYLVANIA, ON JANUARY
8, 1997.
SP Acquisition Co.
By: /s/ Michael T. Kennedy
-------------------------------
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director (principal
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President-- Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-12
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, STYROCHEM
INTERNATIONAL, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR,
PENNSYLVANIA, ON JANUARY 8, 1997.
StyroChem International, Inc.
By: /s/ Michael T. Kennedy
-------------------------------
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director (principal
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President-- Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-13
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, STYROCHEM
INTERNATIONAL, LTD. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR,
PENNSYLVANIA, ON JANUARY 8, 1997.
StyroChem International, Ltd.
By: /s/ Michael T. Kennedy
-------------------------------
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/s/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director (principal
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President-- Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-14
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RADNOR
MANAGEMENT, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN RADNOR,
PENNSYLVANIA, ON JANUARY 8, 1997.
Radnor Management, Inc.
/s/ Michael T. Kennedy
By: _________________________________
MICHAEL T. KENNEDY PRESIDENT
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES
MICHAEL T. KENNEDY AND MICHAEL V. VALENZA AND EACH OF THEM SINGLY, SUCH
PERSON'S TRUE AND LAWFUL ATTORNEYS, EACH WITH FULL POWER OF SUBSTITUTION TO
SIGN FOR SUCH PERSON AND IN SUCH PERSON'S NAME AND CAPACITY INDICATED BELOW,
ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING
SUCH PERSON'S SIGNATURE AS IT MAY BE SIGNED BY SAID ATTORNEYS TO ANY AND ALL
AMENDMENTS.
/S/ Michael T. Kennedy President and Sole January 8, 1997
- ------------------------------------- Director (principal
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice January 8, 1997
- ------------------------------------- President--Finance
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-15
<PAGE>
EXHIBIT INDEX
(PURSUANT TO ITEM 601 OF REGULATION S-K)
<TABLE>
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NO. EXHIBIT
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3.1 Restated Certificate of Incorporation of Radnor Holdings Corporation
3.2 Bylaws of Radnor Holdings Corporation
3.3 Certificate of Incorporation of WinCup Holdings, Inc.
3.4 Bylaws of WinCup Holdings, Inc.
3.5 Certificate of Incorporation of Radnor Management, Inc.
3.6 Bylaws of Radnor Management, Inc.
3.7 Certificate of Limited Partnership of WinCup Holdings, L.P.
3.8 Amended and Restated Limited Partnership Agreement of WinCup Holdings,
L.P. by and between WinCup Holdings, Inc. and Radnor Holdings
Corporation, dated January 1, 1997
3.9 Certificate of Incorporation of SP Acquisition Co.
3.10 Bylaws of SP Acquisition Co.
3.11 Articles of Incorporation of StyroChem International, Inc.
3.12 Bylaws of StyroChem International, Inc.
3.13 Certificate of Incorporation of StyroChem International, Ltd.
3.14 Bylaws of StyroChem International, Ltd.
4.1 Indenture, dated as of December 5, 1996, among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P., SP
Acquisition Co., StyroChem International, Inc., StyroChem
International, Ltd., Radnor Management, Inc., and First Union
National Bank, as amended by a First Supplemental Indenture dated as
of December 17, 1996, including form of Notes and Guarantees
4.2 Exchange and Registration Rights Agreement, dated as of December 5,
1996, among Radnor Holdings Corporation, WinCup Holdings, Inc.,
WinCup Holdings, L.P., SP Acquisition Co., StyroChem International,
Inc., StyroChem International, Ltd., Alex. Brown & Sons Incorporated
and NatWest Capital Markets Limited
4.3 Purchase Agreement, dated December 2, 1996, among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P., SP
Acquisition Co., StyroChem International, Inc., StyroChem
International, Ltd., Alex. Brown & Sons Incorporated and NatWest
Capital Markets Limited
4.4 Form of Letter of Transmittal
4.5 Form of Notice of Guaranteed Delivery
4.6 Form of Letter to Noteholders
4.7 Form of Letter to Record Holders
*5.1 Opinion of Duane, Morris & Heckscher regarding the legality of the
securities registered
*8.1 Opinion of Duane, Morris & Heckscher regarding certain tax matters
10.1 Stock Purchase Agreement among Radnor Holdings Corporation, Richard
Davidovich, the Davidovich Charitable Trust, James River Paper
Company, Inc., Grupo Industrial Hermes, S.A. de C.V., and the
Rosenthal Group, dated October 30, 1996
*10.2 Asset Purchase Agreement among Benchmark Holdings, Inc., WinCup
Holdings, Inc. and James River Paper Company, Inc., dated October 31,
1995
10.3 JR Capital Contribution Agreement by and between James River Paper
Company, Inc. and WinCup Holdings, L.P., dated January 20, 1996
10.4 WinCup Capital Contribution Agreement by and between WinCup Holdings,
Inc. and WinCup Holdings, L.P., dated January 20, 1996
10.5 Working Capital Escrow Agreement, dated as of December 5, 1996, among
Radnor Holdings Corporation, Richard Davidovich and Duane, Morris &
Heckscher
10.6 Environmental Escrow Agreement, dated as of December 5, 1996, among
Radnor Holdings Corporation, Richard Davidovich and Duane, Morris &
Heckscher
</TABLE>
1
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<TABLE>
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<C> <S>
*10.7 Sales Agent Agreement, dated January 20, 1996, between James River
Paper Company, Inc. and WinCup Holdings, L.P., as amended by a Sales
Agent Extension and Modification Agreement dated December 5, 1996
*10.8 Equipment Use Agreement, dated January 20, 1996, as amended by an
Equipment Use Extension and Modification Agreement dated December 5,
1996
*10.9 License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, L.P., as amended by a License Extension and Modification
Agreement dated December 5, 1996
*10.10 Patent License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, L.P., as amended by an Amendment to Patent License
Agreement dated December 5, 1996
*10.11 Contract of Sale, dated as of December 5, 1996, among Chevron Chemical
Company, SP Acquisition Co., StyroChem International, Inc. and
StyroChem International, Ltd.
*10.12 Contract between ARCO Chemical Company (now Nova Chemicals, Inc.) and
WinCup Holdings, L.P., dated April 1, 1996, as amended on September ,
1996
*10.13 Product Sales Agreement by and between Huntsman Chemical Corporation
and WinCup Holdings, Inc., dated January 1, 1996
*10.14 Agreement between BASF Corporation and WinCup Holdings, L.P., dated
March 27, 1996, as supplemented by letter agreement dated April 25,
1996
*10.15 Sales Agreement between Fina Oil and Chemical Company and WinCup
Holdings, L.P., dated May 21, 1996
*10.16 Contract of Sale between Scott Polymers, Inc. (now StyroChem
International, Inc.) and WinCup Holdings, Inc., dated February 28,
1992, as amended on February 25, 1994, assigned to WinCup Holdings,
L.P. on January 20, 1996
*10.17 Supply Agreement by and between SP Acquisition Co. and James River
Canada, Inc., dated March, 1996
10.18 Noncompetition Agreement by and between Radnor Holdings Corporation
and Richard Davidovich, dated December 5, 1996
10.19 Consulting Agreement by and between Radnor Holdings Corporation and
Richard Davidovich, dated December 5, 1996
10.20 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (240 Tamal Vista Boulevard,
Corte Madera, California)
10.21 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (205 Tamal Vista Boulevard,
Corte Madera, California)
10.22 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (201 Tamal Vista Boulevard,
Corte Madera, California)
10.23 Sublease Agreement, dated January 20, 1996, between James River Paper
Company, Inc. and WinCup Holdings, L.P. (195 Tamal Vista Boulevard,
Corte Madera, California)
10.24 Letter Agreement, dated December 5, 1996, between WinCup Holdings,
L.P. and James River Paper Company, Inc., regarding Corte Madera
subleases
*10.25 Warehouse Lease, dated October 27, 1992, between Safeway Inc. and
James River Paper Company, Inc., as amended, assigned to WinCup
Holdings, L.P. on January 20, 1996
*10.26 Amended Lease between Patricia M. Dunnell and James River Paper
Company, Inc., dated September 29, 1989, as amended in September,
1994, assigned to WinCup Holdings, L.P. on January 20, 1996
*10.27 Warehouse Lease between Etzioni Partners and James River Corporation,
dated February 13, 1992, as amended on April 13, 1992 and on December
9, 1992, assigned to WinCup Holdings, L.P. on January 20, 1996
*10.28 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation, dated October 15, 1984, as amended on
September 20, 1989 and on February 28, 1994, assigned to WinCup
Holdings, L.P. on January 20, 1996
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
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<C> <S>
*10.29 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation dated June 16, 1977, as amended on August 7,
1984, and on October 15, 1984, and on February 25, 1994, assigned to
WinCup Holdings, L.P. on January 20, 1996
*10.30 Lease between Stone Mountain Industrial Park, Inc. and Scott Container
Group, Inc., dated December 16, 1991, as amended on February 28,
1994, assigned to WinCup Holdings on January 20, 1996
*10.31 Operating Lease by and between R-K Ventures Unit I Limited Partnership
and WMF Container Corporation, dated August 20, 1987, as amended on
November 30, 1990, assigned to WinCup Holdings, L.P. on January 20,
1996
*10.32 Standard Form Multi-Tenancy Industrial Lease between WinCup Holdings,
Inc. and CK Airpark Associates, dated June 1, 1994, assigned to
WinCup Holdings, L.P. on January 20, 1996
*10.33 Lease between James River Paper Company, Inc. and Central Ink Company,
dated February 17, 1993, as amended, assigned to WinCup Holdings,
L.P. on January 20, 1996
*10.34 Radnor Corporate Center Office Lease by and between Radnor Center
Associates and WinCup Holdings, L.P., dated May 31, 1996
*10.35 Standard Commercial Lease by and between Bradford Management Company
of Dallas, Inc. and Scott Polymers, Inc. (now StyroChem
International, Inc.), dated June 22, 1994, as amended on April 5,
1996, and as renewed on October 22, 1996
*10.36 Sublease between Cargologan Inc. and StyroChem International, Ltd.,
dated August 2, 1996
10.37 Employment Agreement by and between WinCup Holdings, L.P. and Michael
T. Kennedy, dated January 20, 1996
10.38 Executive Employment Agreement by and between Benchmark Corporation of
Delaware and Richard Hunsinger, dated May 1, 1993, as amended in
October, 1995
*10.39 Benchmark Corporation of Delaware Equity Incentive Plan, dated April
24, 1992, as amended on November 1, 1993
*10.40 Benchmark Corporation of Delaware Management Equity Participation
Plan, dated March 10, 1993, as amended on November 1, 1993
*10.41 Amended and Restated Revolving Credit and Security Agreement, dated
December 5, 1996, among The Bank of New York Commercial Corporation,
NationsBank, N.A., WinCup Holdings, L.P., Radnor Holdings
Corporation, WinCup Holdings, Inc., SP Acquisition Co., and StyroChem
International, Inc.
*10.42 Amended and Restated Revolving Credit Note, dated December 5, 1996,
made by WinCup Holdings, L.P., Radnor Holdings Corporation, WinCup
Holdings, Inc., SP Acquisition Co., and StyroChem International, Inc.
in favor of The Bank of New York Commercial Corporation
*10.43 Amended and Restated Revolving Credit Note, dated December 5, 1996,
made by WinCup Holdings, L.P., Radnor Holdings Corporation, WinCup
Holdings, Inc., SP Acquisition Co., and StyroChem International, Inc.
in favor of NationsBank, N.A.
*10.44 Trademark Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation
*10.45 Trademark Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
*10.46 Trademark Collateral Security Agreement, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York Commercial
Corporation
*10.47 Trademark Assignment of Security, dated December 5, 1996, between
WinCup Holdings, Inc. and The Bank of New York Commercial Corporation
*10.48 Patent Collateral Security Agreement, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
*10.49 Patent Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York Commercial
Corporation
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
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NO.
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<C> <S>
*10.50 Collateral Assignment, dated as of December 5, 1996, among Radnor
Holdings Corporation and The Bank of New York Commercial Corporation
10.51 Junior Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, Inc. in favor of WinCup Holdings, L.P. ($1.1 million)
10.52 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($300,000)
10.53 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of Scott Paper Company ($2.7 million)
10.54 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($5.7
million)
10.55 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of Scott Paper Company ($300,000)
10.56 Senior Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of James River Paper Company, Inc.
($4.4 million)
10.57 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of WinCup Holdings, Inc. ($1.8 million)
10.58 Senior Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc. ($7
million)
10.59 Subordinated Promissory Note, dated January 20, 1996, made by WinCup
Holdings, L.P. in favor of James River Paper Company, Inc.
10.60 Partnership Interest Purchase Agreement, dated December 5, 1996, among
Radnor Holdings Corporation, WinCup Holdings, Inc., WinCup Holdings,
L.P. and James River Paper Company, Inc.
10.61 Redemption and Release Agreement by and among Radnor Holdings
Corporation, WinCup Holdings, Inc., WinCup Holdings, L.P. and
Kimberly-Clark Tissue Company, dated December 5, 1996
10.62 Assumption and Modification Agreement, dated as of January 20, 1996,
among Scott Paper Company, WinCup Holdings, Inc. and WinCup Holdings,
L.P.
*10.63 Agreement Respecting a Term Loan and Other Credit Facilities, dated
February 25, 1994, between Bank of Montreal and StyroChem
International, Ltd., as amended
10.64 Letter of Undertaking, dated December 5, 1996, made by StyroChem
International, Ltd. and Radnor Holdings Corporation in favor of Bank
of Montreal
*10.65 Guaranty, dated February 25, 1994, made by SP Acquisition Co. in favor
of Bank of Montreal
10.66 Employment Agreement, dated April 5, 1996, between WinCup Holdings,
Inc. and R. Radcliffe Hastings
12.1 Computation of ratios
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Deloitte & Touche LLP
*23.3 Consent of Duane, Morris & Heckscher (to be included in Exhibits 5.1
and 8.1 to this Registration Statement)
24.1 Power of Attorney (see pages II-9 to II-15)
25.1 Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939 of a Corporation Designated to Act as a Trustee on Form
T-1 of First Union National Bank
27.1 Financial Data Schedule (Radnor Holdings Corporation)
27.2 Financial Data Schedule (J.R. Cup Foam Container Operations of James
River Paper Company, Inc.)
27.3 Financial Data Schedule (SP Acquisition Co. and Subsidiaries)
</TABLE>
- --------
* To be filed by an amendment to this Registration Statement.
4
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
RADNOR HOLDINGS CORPORATION
The Restated Certificate of Incorporation of Radnor Holdings Corporation
(the "Corporation") was duly adopted by the Board of Directors of the
Corporation in accordance with Section 245 of the General Corporation Law of the
State of Delaware. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as heretofore amended or supplemented, and there is
no discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.
FIRST. - The name of the Corporation is Radnor Holdings Corporation.
SECOND. - The registered office of the Corporation is to be located at 1209
Orange Street, Wilmington, Delaware, 19801, in the County of New Castle. The
registered agent at this address is The Corporation Trust Company.
THIRD. - The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. - The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 24,700 shares, consisting of 2,000
shares of Series Preferred Stock, $.10 par value (the "Series Preferred Stock"),
11,650 shares of Voting Common Stock, $.10 par value (the "Voting Common
Stock"), 5,650 shares of Nonvoting Common Stock, $.10 par value (the "Nonvoting
Common Stock"), and 5,400 shares of Class B Nonvoting Common Stock, $.01 par
value (the "Class B Nonvoting Common Stock") (the Voting Common Stock, the
Nonvoting Common Stock and the Class B Nonvoting Common Stock are hereinafter
sometimes referred to as the "Common Stock").
<PAGE>
A. Series Preferred Stock
The Series Preferred Stock may be issued from time to time in one or
more series with such distinctive designations as may be stated in the
resolution or resolutions providing for the issuance of such stock from time to
time adopted by the board of directors. The resolution or resolutions providing
for the issue of shares of a particular series shall fix, subject to applicable
laws and the provisions of this Article Fourth, the designations, rights,
preferences and limitations of the shares of each such series. The authority of
the board of directors in respect to each series shall include, but not be
limited to, determination of the following:
I. the consideration for which such Series Preferred Stock shall be
issued;
II. the number of shares constituting such series, including the
authority to increase or decrease such number, and the distinctive designation
of such series;
III. the dividend rate of the shares of such series, if any, whether
the dividends shall be cumulative and, if so, the date from which they shall be
cumulative, and the relative rights of priority, if any, of payment of dividends
on shares of such series;
IV. the right, if any, of the Corporation to redeem shares of such
series and the terms and conditions of such redemption;
V. the rights of the shares in case of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative
rights of priority, if any, of payment of shares of such series;
VI. the obligation, if any, of the Corporation to retire shares of
such series pursuant to retirement or sinking fund or funds of a similar nature
or otherwise and the terms and conditions of such obligation;
<PAGE>
VII. the terms and conditions, if any, upon which shares of such
series shall be convertible into or exchangeable for shares of stock of any
other class or classes, including the price or prices or the rate or rates of
conversion or exchange and the terms of adjustment, if any;
VIII. the voting rights and requirements, if any, of the shares of
such series, in addition to any voting rights required by law; and
IX. any other rights, preferences or limitations of shares of such
series.
Except to the extent otherwise expressly provided the Delaware General
Corporation Law, as amended or as may be specified by the board of directors of
the Corporation in the resolution authorizing the issue of any series of Series
Preferred Stock or otherwise, for the issuance for such stock or by the holders
of shares of any Series Preferred Stock shall not have any right to vote on any
matter submitted to the stockholders of the Corporation for a vote.
B. Common Stock
Except as set forth below, each share of Common Stock issued and
outstanding shall be identical in all respects one with the other. Except for
and subject to any rights which may be granted to the holders of the Series
Preferred Stock or as may be provided by the laws of the State of Delaware, the
holders of Common Stock shall have exclusively all other rights of stockholders
including, but not by way of limitation, (i) the rights to receive dividends,
when and as declared by the board of directors out of assets lawfully available
therefor, and (ii) in the event of any distribution of assets upon liquidation,
dissolution or winding up of the Corporation or otherwise, the right to receive
ratably and equally all assets and funds of the Corporation remaining after the
payment of or provision for all obligations of the Corporation and the payment,
if any, to the holders of Series Preferred Stock of the specific amounts which
they are entitled to receive upon such liquidation, dissolution or winding up of
the Corporation as herein provided. With respect to the declaration or payment
of any dividends with
<PAGE>
respect to the Common Stock (whether in cash, stock, including Common Stock, or
other property), any distribution of assets to holders of the Corporation's
Common Stock upon any liquidation, dissolution or winding up of the Corporation
or any consolidation, subdivision or other reclassification of any shares of the
Corporation's Common Stock or any other matter (other than voting or conversion
rights), the Corporation shall not differentiate in any respect among the
outstanding shares of Voting Common Stock, Nonvoting Common Stock and Class B
Nonvoting Common Stock.
Except to the extent otherwise expressly provided by the Delaware
General Corporation Law, as amended, the holders of shares of Nonvoting Common
Stock and Class B Nonvoting Common Stock shall not be entitled to vote on any
matter submitted to the stockholders of the Corporation for a vote.
At the option of the holder thereof, each share of Nonvoting Common
Stock shall be convertible into one share of Voting Common Stock upon the
earliest to occur of: (i) the date on which the Corporation gives notice as
required pursuant to Section 5(A)(i) of that certain Registration Rights
Agreement between the Corporation and Scott Paper Company (the "Rights
Agreement") to be executed pursuant to the terms of the Stock Purchase Agreement
dated February 14, 1992 between WinCup Holdings, Inc. and Scott Paper Company;
(ii) the expiration of the 30-day period specified in Section 4(A)(iii) of the
Rights Agreement and (iii) the date on which there is an event or series of
events as a result of which neither Michael T. Kennedy nor any entity or person
as to which Michael T. Kennedy has the then-existing right or power to elect or
otherwise designate a majority of the board of directors (or similar governing
body), directly or indirectly, has the then-existing right or power to elect or
otherwise designate a majority of the board of directors of the Corporation.
The Corporation shall reserve and keep available out of its authorized
but unissued Voting Common Stock such number of shares of Voting Common Stock as
shall from time to time be sufficient to effect conversions of the shares of
Nonvoting Common Stock which may be issued from time to time."
<PAGE>
FIFTH. - The Corporation shall have perpetual existence.
SIXTH. - The Corporation shall indemnify directors and officers of the
Corporation to the fullest extent permitted by law.
SEVENTH. - A director of the Corporation shall not be personally liable to
the Corporation or to its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; or (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; or (iii)
under Section 174 of the General Corporation Law of the State of Delaware; or
(iv) for any transaction from which the director derived an improper personal
benefit. In discharging the duties of their respective positions, the directors
and individual officer may, in considering the best interests of the
Corporation, consider the effects of any action upon employees, suppliers and
customers of the Corporation, communities in which offices or other
establishments of the Corporation are located, and all other pertinent factors.
EIGHTH. - The directors of the Corporation shall have the power to make and
to alter or amend the Bylaws; to fix the amount to be reserved as working
capital; and to authorize and cause to be executed, mortgages and liens, without
limit as to the amount, upon the property and franchise of the Corporation.
NINTH. - The stockholders and directors shall have the power to hold
meetings and keep the books, documents and papers of the Corporation outside the
State of Delaware, at such places as may be from time to time designated by the
Bylaws of the Corporation or by resolution of the directors, except as otherwise
required by the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said Radnor Holdings Corporation has caused this
restated Certificate of Incorporation to be signed by Michael T. Kennedy, its
President, and attested by Michael V. Valenza, its Assistant Secretary, this
8th day of January, 1997.
(SEAL) RADNOR HOLDINGS CORPORATION
Attest:
/s/ Michael V. Valenza By: /s/ Michael T. Kennedy
- ------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
<PAGE>
BYLAWS
OF
BENCHMARK CORPORATION OF DELAWARE
ARTICLE 1 OFFICES
-------
Section 1.1 The registered office of BENCHMARK CORPORATION OF DELAWARE
("the Corporation") shall be at The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801.
Section 1.2 The Corporation may also have offices at such other places as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE 2 STOCKHOLDERS
------------
Section 2.1 All meetings of the stockholders shall be held at such place,
either within or without the State of Delaware, and at such date and time as may
be designated by the Board of Directors and as shall be specified in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2.2 An annual meeting of the stockholders, for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting, shall be held at such place, date and time as the
Board of Directors may designate and as shall be specified in the notice of the
meeting or in a duly executed waiver of notice thereof; provided,
-1-
<PAGE>
however, that the date for such meeting as may be designated by the Board of
Directors must be within 13 months from the later of the date on which the
Corporation has been organized or the date on which the last annual meeting of
stockholders was held. In the absence of such a designation by the Board of
Directors, the Annual Meeting of Stockholders shall be held on the 15th day of
January in each year, unless such date is a legal holiday under the laws of the
state in which said meeting is to be held, in which case said meeting shall be
held on the next succeeding day not a legal holiday under the laws of said
state.
Section 2.3 Special meetings of the stockholders, for any purpose or
purposes, may be called by the President and shall be called by him or the
Secretary at the request in writing of a majority of the members of the Board of
Directors then in office. Such request shall state the purpose or purposes of
the proposed meeting. Business transacted at all special meetings shall be
confined to the objects stated in the notice thereof.
Section 2.4 Written notice of any annual or special meeting of stockholders
shall be mailed to each stockholder entitled to vote thereat at his address as
it appears on the records of the Corporation, not less than 10 nor more than 60
days before the date of such meeting. Such notice shall be deemed to be given
when deposited in the United States mail, postage prepaid, directed to each
stockholder at his address as it last appears on the records of the Corporation.
Such notice shall state the place, date and hour of the meeting, and, in the
-2-
<PAGE>
case of a special meeting, shall state the purpose or purposes for which the
meeting is called.
Section 2.5 At any meeting of the stockholders, the holders of a majority
of all of the issued and outstanding shares of stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, except to the extent that the presence of a larger number of
stockholders may be required by law, by the Certificate of Incorporation of the
Corporation or by these Bylaws. If a quorum shall fail to be present or
represented at any meeting, the chairman of the meeting or the holders of a
majority of the shares of the stock entitled to vote who are present, in person
or by proxy, may adjourn the meeting to another place, date or time. When a
meeting is so adjourned, written notice need not be given of the adjourned
meeting if the place, date and time thereof are announced at the meeting at
which the adjournment is taken; provided, however, that if the date of any
adjourned meeting is more than 30 days after the date for which the meeting was
originally noticed, or if a new record date is fixed for the adjourned meeting,
written notice of the place, date, and time of the adjourned meeting shall be
given in conformity herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original meeting.
Section 2.6 At any meeting of the stockholders, every stockholder entitled
to vote may vote in person or by proxy authorized by an instrument in writing
executed by such
-3-
<PAGE>
stockholder and submitted to the Secretary at or before such meeting, but no
proxy shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period. Each stockholder shall have 1 vote for each share
of stock entitled to vote which is registered in his name on the record date for
the meeting, except as otherwise provided herein or required by law. All
elections of directors by the stockholders shall be by written ballot, and shall
be determined by a plurality of votes cast. All other voting need not be by
written ballot, except upon demand therefor by the Board of Directors or the
officer of the Corporation presiding at the meeting of stockholders where the
vote is to be taken. When a quorum exists at any meeting, the vote of a majority
of the stock having voting power present in person or represented by proxy shall
decide any question brought before such meeting, unless the question is one for
which, by express provision of law or of the Certificate of Incorporation or of
these Bylaws, a different vote is required.
Section 2.7 At least 10 days before every meeting of stockholders, the
officer who has charge of the stock ledger of the Corporation shall prepare a
complete list of the stockholders entitled to vote at such meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours
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for a period of at least 10 days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present. The stock ledger of the
Corporation shall be the only evidence as to the identities of the stockholders
entitled to examine the list of stockholders required by this Section 2.7 or to
vote in person or by proxy at any meeting of stockholders.
Section 2.8 The Board of Directors may appoint either one or three Judges
of Election to act at any meeting of the stockholders or any adjournment
thereof. Judges of Election need not be stockholders, and no person who is a
candidate for corporate office shall act as a Judge of Election. If three Judges
of Election are appointed, such Judges of Election shall act by majority vote.
Judges of Election shall do all acts as are necessary and proper to conduct the
election or vote and all such other acts as may be prescribed by law with
fairness to all stockholders. If requested to do so by the Board of Directors or
the chairman of the meeting at which Judges of Election act, such Judges of
Election shall make a written report of any matter determined by them and shall
execute a certificate as to any fact found by them.
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Section 2.9 The chairman of any meeting of the stockholders shall determine
the order of business and the procedure to be followed at such meeting,
including such regulation of the manner of voting and the conduct of discussion
as he shall deem to be fair and equitable.
Section 2.10 The stockholders may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
Section 2.11 Unless otherwise required by the Certificate of Incorporation
of the Corporation, any action required or permitted to be taken at any meeting
of the stockholders may be taken without a meeting, without prior notice and
without a vote, if a written consent setting forth the action so taken shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any corporate action without a meeting by less
than unanimous written consent shall be given in conformity herewith to those
stockholders who have not consented thereto in writing.
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ARTICLE 3 BOARD OF DIRECTORS
------------------
Section 3.1 The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. In addition to the powers
expressly conferred upon the Board of Directors by these Bylaws, the Board of
Directors may exercise all powers of the Corporation and perform all lawful acts
as are not required to be exercised or performed by the stockholders pursuant to
law, the Certificate of Incorporation of the Corporation or these Bylaws.
Section 3.2 Directors shall be natural persons who need not be
stockholders of the Corporation. The specific number of directors shall be
designated from time to time exclusively by the Board of Directors. In the
absence of any such designation, the Board of Directors shall be composed of not
less than one and not more than five directors. Each director shall be elected
for a term of one year and until his successor is duly elected and qualified,
subject, however, to such director's prior death, resignation, retirement,
disqualification or removal from office. Whenever the authorized number of
directors is increased between annual meetings of the stockholders, a majority
of the directors then in office shall have the power to elect such new directors
who shall serve until the next annual meeting of stockholders and until their
successors are duly elected and qualified. Any decrease in the authorized number
of directors shall not become effective until the expiration of the term of the
directors then in office unless, at the time of such decrease, there shall be
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vacancies on the Board of Directors which are being eliminated by such decrease.
Section 3.3 Any vacancy on the Board of Directors occurring by reason of
death, resignation, disqualification, removal or other cause may be filled by a
majority of the directors then in office, although less than a quorum, and each
director elected to fill a vacancy shall serve for the unexpired term of his
predecessor and until his successor is duly elected and qualified.
Section 3.4 The organizational meeting of each newly elected Board of
Directors may be held immediately following the stockholders' meeting at which
such directors were duly elected without the necessity of notice to such
directors or at such time and place as may be fixed by notice or a duly executed
waiver of notice thereof.
Section 3.5 Regular meetings of the Board of Directors shall be held
without call or notice at such time and place as shall from time to time be
fixed by the Board of Directors.
Section 3.6 Special meetings of the Board of Directors may be called by
the President or the Secretary on the written request of a majority of the
directors then in office, and shall be held at such place, on such date and at
such time as they or he shall designate. Notice of the place, time and date of
each such special meeting shall be given to each director by whom it is not
waived by mailing written notice to each director not less than 2 days before
the meeting or by telegram or telephone not
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less than 48 hours before the meeting. Notice of special meetings of the Board
of Directors need not state the purpose thereof, except as otherwise expressly
provided by law, by the Certificate of Incorporation of the Corporation, or by
these Bylaws. Any and all business may be transacted at a special meeting,
unless otherwise indicated in the notice thereof or provided by law, by the
Certificate of Incorporation of the Corporation or by these Bylaws.
Section 3.7 Members of the Board of Directors or any committee thereof may
participate in any meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
Section 3.8 At any meeting of the Board of Directors, the presence of a
majority of the total number of directors shall constitute a quorum for the
transaction of business, and the vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless otherwise provided by law, by the Certificate of
Incorporation of the Corporation or by these Bylaws. If a quorum shall not be
present at any meeting of the Board of Directors, a majority of the directors
present may adjourn the meeting to any place, date or time, without notice other
than announcement at the meeting, until a quorum shall be present.
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Section 3.9 Unless otherwise provided by law, by the Certificate of
Incorporation of the Corporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing and such
consent is filed with the minutes of proceedings of the Board of Directors or
committee thereof.
Section 3.10 Directors, in addition to expenses of attendance, shall
be allowed such compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of Directors,
as may be fixed from time to time by the Board of Directors; provided, that
nothing contained in these Bylaws shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
Section 3.11 A member of the Board of Directors or of any committee
thereof shall, in the performance of his duties, be fully protected in relying
in good faith upon the books of account or reports made to the Corporation by
any of its officers, or by an independent certified public accountant, or by an
appraiser selected with reasonable care by the Board of Directors or by any
committee thereof, or in relying in good faith upon other records of the
Corporation.
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ARTICLE 4 COMMITTEES
----------
Section 4.1 The Board of Directors, by a vote of a majority of the whole
Board of Directors, may from time to time designate committees of the Board of
Directors, with such lawfully delegable powers and duties as it thereby confers,
to serve at the pleasure of the Board of Directors and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as a member or members and designate, if it desires, one or more directors
as alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power and
authority of the Board of Directors to declare a dividend or to authorize the
issuance of stock if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee 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. The Board
of Directors may, from time to time, suspend, alter, continue or terminate any
committee or the powers and functions thereof.
Section 4.2 Subject to the approval of the Board of Directors, the
President may appoint, or may provide for the
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appointment of, committees consisting of officers or other persons, with
chairmanships, vice-chairmanships and secretaryships and such duties and powers
as the President may, from time to time, designate and prescribe. The Board of
Directors may, from time to time, suspend, alter, continue or terminate any of
such committees or the powers and functions thereof.
Section 4.3 One-third of the members of any committee shall
constitute a quorum unless the committee shall consist of one or two members,
in which case one member shall constitute a quorum. All matters properly brought
before the committee shall be determined by a majority vote of the members
present.
Section 4.4 Any action that may be taken by a committee at a meeting
may be taken without a meeting if all members thereof consent thereto in
writing, and such writing is filed with the minutes of the proceeding of such
committee.
Section 4.5 Each committee may determine the procedural rules for
meeting and conducting its business and shall act in accordance therewith,
except as otherwise provided by law, by the Certificate of Incorporation of the
Corporation or by these Bylaws. Adequate provision shall be made for notice to
all members of any committee of all meetings of that committee.
ARTICLE 5 OFFICERS
--------
Section 5.1 The officers of the Corporation shall consist of a
President, a Secretary, one or more Assistant
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Secretaries and a Treasurer and may have such other officers and assistant
officers as the Board of Directors may authorize from time to time. Officers
shall be elected by the Board of Directors at its first meeting after every
annual meeting of stockholders. No officer except the President need be a member
of the Board of Directors. Any number of offices may be held by the same
person.
Section 5.2 The Board of Directors may appoint such other officers, and
agents as it shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 5.3 The salary of the President shall be fixed by the Board of
Directors. The salaries of all other officers of the Corporation may be fixed by
the Board of Directors, or the Board of Directors may authorize the
President to fix such salaries and report thereon to the Board of Directors.
Section 5.4 Each officer shall hold office until his successor is duly
elected and qualified or until his earlier death, resignation, retirement or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors without prejudice to his contract
rights. If the office of any officer becomes vacant for any reason, such vacancy
shall be filled by the Board of Directors. Any officer elected to fill such a
vacancy shall hold office for the unexpired term of his predecessor and until
his successor is
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duly elected and qualified or until his earlier death, resignation, retirement
or removal.
Section 5.5 The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or agents, notwithstanding
any provision of these Bylaws.
Section 5.6 The President shall be a director of the Corporation. The
President shall preside at all meetings of the stockholders and of the Board of
Directors. The President shall be the chief executive officer of the Corporation
and, subject to the provisions of these Bylaws and to the direction of the Board
of Directors, he shall have responsibility for the general management and
control of the business and affairs of the Corporation.
Unless otherwise directed by the Board of Directors, the President shall
have the power to vote and otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which the Corporation may hold
securities and otherwise to exercise any and all rights and powers which the
Corporation may possess by reason of its ownership of securities in such other
corporation.
Section 5.7 The Secretary shall attend all meetings of the Board of
Directors and of the stockholders and shall record all votes and the minutes of
all proceedings at such meetings in a book to be kept for that purpose, and
shall perform such other
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duties as the Board of Directors may from time to time prescribe. The Secretary
shall perform the preceding duties for any committee of the Board of Directors
when required. The Secretary shall give or cause to be given notice of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the seal of the Corporation, and, where required, shall have the
authority to affix such seal to any instrument. In the absence or disability of
the Secretary, any Assistant Secretary shall perform the duties and exercise the
powers of the Secretary.
Section 5.8 The Treasurer shall have the custody of the Corporation's
funds and securities and shall deposit all monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors. The Treasurer shall make such
disbursements of the Corporation's funds as are authorized by the Board of
Directors or by the President, taking proper vouchers for such disbursements,
and shall render to the Board of Directors an account of all such transactions
and of the financial condition of the Corporation, at such times as the Board of
Directors may require. The Treasurer shall also perform such other duties as the
Board of Directors may from time to time prescribe. In the absence or disability
of the Treasurer, any Assistant Treasurer shall perform the duties and exercise
the powers of the Treasurer.
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ARTICLE 6 INDEMNIFICATION
---------------
Section 6.1 Subject to Section 6.3 hereof, the Corporation shall indemnify
any person who was or is a party or has threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---- ----------
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
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Section 6.2 Subject to Section 6.3 hereof, the Corporation shall idemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, or employee of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 6.3 Any indemnification under this Article 6 (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer or employee
is proper in
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the circumstances because he has met the applicable standard of conduct set
forth in Section 6.1 or Section 6.2 of this Article 6, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who are not parties to such action, suit or
proceeding, (ii) if such a quorum is not attainable, or, even if attainable, if
a majority vote of a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (iii) by the stockholders. To
the extent, however, that a director, officer or employee of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
Section 6.4 For purposes of any determination under Section 6.3 of
this Article 6, a person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, or, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe his conduct was unlawful, if his action is
based on the records or books of account of the Corporation or another
enterprise (provided that such records or books of account have in each case
been prepared by persons whom the person relying thereon reasonably believes to
be
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professionally or expertly competent to prepare such records or books of
account), or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 6.4 shall mean any other corporation or any
partnership, joint venture, trust or other entity of which such person is or was
serving at the request of the Corporation as a director, officer or employee.
The provisions of this Section 6.4 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have met
the applicable standard of conduct set forth in Section 6.1 or 6.2 of this
Article 6, as the case may be.
Section 6.5 Notwithstanding any contrary determination in the specific
case under Section 6.3 of this Article 6, and notwithstanding the absence of any
determination thereunder, any director, officer or employee may apply to any
court of competent jurisdiction in the State of Delaware for indemnification to
the extent otherwise permissible under Sections 6.1 and 6.2 of this Article 6.
The basis of such indemnification by a court shall be a determination by such
court that indemnification of the director, officer or employee is proper in the
circumstances
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because he has met the applicable standards of conduct set forth in Section 6.1
or 6.2 of this Article 6, as the case may be. Notice of any application for
indemnification pursuant to this Section 6.5 shall be given to the Corporation
promptly upon the filing of such application.
Section 6.6 Expenses incurred in defending or investigating a
threatened or pending action, suit or proceeding may be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an undertaking by or on
behalf of the director, officer or employee to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article 6.
Section 6.7 The indemnification and advancement of expenses provided
by, or granted pursuant to, the other sections of this Article 6 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, contract,
vote of stockholders or disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Section 6.1 and 6.2
of this Article 6 shall be made
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to the fullest extent permitted by law. To this end, the provisions of this
Article 6 shall be deemed to have been amended for the benefit of such persons
effective immediately upon any modification of the General Corporation Law of
the State of Delaware which expands or enlarges the power or obligation of
corporations organized under such law to indemnify, or advance expenses to, such
persons. The provisions of this Article 6 shall not be deemed to preclude the
indemnification of, or advancement of expenses to, any person who is not
specified in Section 6.1 or 6.2 of this Article 6 but whom the Corporation has
the power or obligation to indemnify, or to advance expenses for, under the
provisions of the General Corporation Law of the State of Delaware or otherwise.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article 6 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer or employee and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Section 6.8 The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the
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power or the obligation to indemnify him against such liability under the
provisions of this Article 6.
Section 6.9 For purposes of this Article 6, references to the "Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article 6 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE 7 STOCK
-----
Section 7.1 The certificates representing shares of stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each stockholder shall be entitled to a
certificate exhibiting such stockholder's name and the number of shares held by
such stockholder, which certificate shall be signed by the President or any
Vice-President, and by the Treasurer or the Secretary or any Assistant
Secretary. Any or all of the signatures on such
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certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
Section 7.2 Transfers of stock shall be made only upon the transfer
books of the Corporation maintained in an office of the Corporation or by
transfer agents designated to transfer shares of the stock of the Corporation,
and only by the person named in the certificate or by his attorney, lawfully
constituted in writing, and upon surrender of the certificate therefor.
Section 7.3 In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60 nor less than 10 days before the date of such
meeting nor more that 60 days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
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meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7.4 The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
Section 7.5 The Board of Directors may authorize the issuance of a new
certificate representing shares of stock in place of any certificate previously
issued by the Corporation and alleged to have been lost, stolen or destroyed,
pursuant to such regulations as the Board of Directors may establish concerning
proof or advertisement of such alleged loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate.
Section 7.6 The issue, transfer, conversion and registration of
certificates of stock of the Corporation shall be governed by such other
regulations as the Board of Directors may from time to time establish.
ARTICLE 8 NOTICES
-------
Section 8.1 Whenever notice is required to be given to any director,
committee member, officer, stockholder, employee or
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agent, whether pursuant to law, the Certificate of Incorporation of the
Corporation or these Bylaws, it shall not be construed to mean personal notice,
but such notice may be given, in the case of stockholders, in writing, by
depositing the same in the mail, postage prepaid, addressed to such stockholder
at his last known address as the same appears on the books of the Corporation,
and, in the case of directors, committee members, officers, employees and
agents, by telephone, or by mail, postage prepaid, or by prepaid telegram at his
last known address as the same appears on the books of the Corporation. All
notices shall be deemed to be given when mailed, telegraphed or telephoned.
Section 8.2 Whenever notice is required to be given to any
stockholder, director, committee member, officer, employee or agent, whether
pursuant to law, the Certificate of Incorporation of the Corporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except as otherwise provided by law. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation of the Corporation or by these Bylaws.
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ARTICLE 9 DIVIDENDS
---------
Section 9.1 Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law, and subject to the provisions of the Certificate of Incorporation of the
Corporation. Dividends may be paid in cash, in property or in shares of the
capital stock of the Corporation.
Section 9.2 Before payment of any dividend, the Board of Directors may
set aside, out of any funds of the Corporation available for dividends, such
sums as the Board of Directors may deem proper as a reserve fund to meet
contingencies, to equalize dividends, to repair or maintain any property of the
Corporation, or for such other purposes as the Board of Directors may deem to be
in the best interests of the Corporation, and the Board of Directors may reduce
or abolish any such reserve in the manner in which it was created.
ARTICLE 10 MISCELLANEOUS
-------------
Section 10.1 Any officer of the Corporation shall, if required by the
Board of Directors, give the Corporation a bond for the faithful performance of
the duties of his office, and for the restoration to the Corporation of all
corporate books, papers, vouchers, money and property of whatever kind in his
possession or under his control. Such bond shall be for a sum and with such
surety or sureties as the Board of Directors may require.
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Section 10.2 The corporate seal shall be in the charge of the Secretary
and shall have inscribed thereon the name of the Corporation, and the words
"Incorporated May 7, 1991 Delaware." If and when so directed by the Board of
Directors or a committee thereof, the Secretary may have duplicates of such seal
made and deposited for use with other officers of the Corporation. It shall not
be necessary to the validity of any instrument executed by any authorized
officer or officers of the Corporation that the execution of such instrument be
evidenced by the corporate seal.
Section 10.3 The fiscal year of the Corporation shall be as determined by
the Board of Directors.
Section 10.4 All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
Section 10.5 The Board of Directors shall determine from time to time
whether, when and under what conditions and regulations, the books and records
of the Corporation (except such as may by statute be specifically open to
inspection) shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
Section 10.6 At each annual meeting of the stockholders of the
Corporation, the Board of Directors shall present a full and clear statement of
the business and affairs of the Corporation for the preceding year.
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<PAGE>
Section 10.7 Facsimile signatures of any officer of the Corporation may
be used at such time and in such manner as authorized by the Board of Directors
or a committee thereof.
ARTICLE 11 AMENDMENT
---------
Section 11.1 These Bylaws may be amended, suspended or repealed and new
Bylaws may be adopted in a manner consistent with law: (a) if authorized by the
Certificate of Incorporation of the Corporation, by the affirmative vote of a
majority of the Board of Directors then in office, at any meeting of the Board
of Directors, or (b) by the affirmative vote of the stockholders at any
stockholders' meeting called and maintained in accordance with Article 2 of
these Bylaws; provided, however, that a brief description of such proposed
amendment, suspension or repeal and/or adoption of new Bylaws is contained in
the notice of such meeting of the Board of Directors or of such annual or
special stockholders' meeting.
.SM6
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
WINCUP HOLDINGS, INC.
FIRST. - The name of the corporation is Wincup Holdings, Inc. (the
"Corporation").
SECOND. - The registered office of the Corporation is to be located at
1209 Orange Street, Wilmington, Delaware, 19801, in the County of New Castle.
The registered agent at this address is The Corporation Trust Company.
THIRD. - The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. - The total number of shares of stock which the Corporation shall
have authority to issue is 100 shares of common stock, par value $.001 per
share.
FIFTH. - The name and mailing address of the incorporator is Melissa A.
McKee, Esquire, Duane, Morris & Heckscher, 4200 One Liberty Place, Philadelphia,
PA 19103.
SIXTH. - The Corporation shall have perpetual existence.
SEVENTH. - The Corporation shall indemnify directors and officers of the
Corporation to the fullest extent permitted by law.
EIGHTH. - A director of the Corporation shall not be personally liable to
the Corporation or to its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; or (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; or (iii)
under Section 174 of the General Corporation Law of the State of Delaware; or
(iv) for any transaction from which the director derived an improper personal
benefit. In discharging the duties of their respective positions, the directors
and individual officers may, in considering the best interests of the
Corporation, consider the effects of any action upon employees, suppliers and
customers of the Corporation, communities in which offices or other
establishments of the Corporation are located, and all other pertinent factors.
<PAGE>
NINTH. - The directors of the Corporation shall have the power to make
and to alter or amend the Bylaws; to fix the amount to be reserved as working
capital; and to authorize and cause to be executed, mortgages and liens, without
limit as to the amount, upon the property and franchise of the Corporation.
TENTH. - The stockholders and directors shall have the power to hold
meetings and keep the books, documents and papers of the Corporation outside the
State of Delaware, at such places as may be from time to time designated by the
Bylaws of the Corporation or by resolution of the directors, except as otherwise
required by the laws of the State of Delaware.
THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, does make, file and record this Certificate, and does
certify that the facts herein stated are true; and accordingly does set forth
her hand.
Dated: 11/6/91 /s/ Melissa A. McKee
------------------- ---------------------------------
Melissa A. McKee, Incorporator
<PAGE>
BYLAWS
OF
WINCUP HOLDINGS, INC.
ARTICLE 1 OFFICES
-------
Section 1.1 The registered office of WINCUP HOLDINGS, INC. ("the
Corporation") shall be at The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801.
Section 1.2 The Corporation may also have offices at such other places as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE 2 STOCKHOLDERS
------------
Section 2.1 All meetings of the stockholders shall be held at such place,
either within or without the State of Delaware, and at such date and time as may
be designated by the Board of Directors and as shall be specified in the notice
of the meeting or in duly executed waiver of notice thereof.
Section 2.2 An annual meeting of the stockholders, for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting, shall be held at such place, date and time as the
Board of Directors may designate and as shall be specified in the notice of the
meeting or in a duly executed waiver of notice thereof; provided,
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<PAGE>
however, that the date for such meeting as may be designated by the Board
of Directors must be within 13 months from the later of the date on which the
Corporation has been organized or the date on which the last annual meeting of
stockholders was held. In the absence of such a designation by the Board of
Directors, the Annual Meeting of Stockholders shall be held on the 15th day of
January in each year, unless such date is a legal holiday under the laws of the
state in which said meeting is to be held, in which case said meeting shall be
held on the next succeeding day not a legal holiday under the laws of said
state.
Section 2.3 Special meetings of the stockholders, for any purpose or
purposes, may be called by the President and shall be called by him or the
Secretary at the request in writing of a majority of the members of the Board
of Directors then in office. Such request shall state the purpose or purposes of
the proposed meeting. Business transacted at all special meetings shall be
confined to the objects stated in the notice thereof.
Section 2.4 Written notice of any annual or special meeting of
stockholders shall be mailed to each stockholder entitled to vote thereat at his
address as it appears on the records of the Corporation, not less than 10 nor
more than 60 days before the date of such meeting. Such notice shall be deemed
to be given when deposited in the United States mail, postage prepaid, directed
to each stockholder at his address as it last appears on the records of the
Corporation. Such notice shall state the place, date and hour of the meeting,
and, in the
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<PAGE>
case of a special meeting, shall state the purpose or purposes for which the
meeting is called.
Section 2.5 At any meeting of the stockholders, the holders of a
majority of all of the issued and outstanding shares of stock entitled to vote
at the meeting, present in person or by proxy, shall constitute a quorum for
all purposes, except to the extent that the presence of a larger number of
stockholders may be required by law, by the Certificate of Incorporation of the
Corporation or by these Bylaws. If a quorum shall fail to be present or
represented at any meeting, the chairman of the meeting or the holders of a
majority of the shares of the stock entitled to vote who are present, in person
or by proxy, may adjourn the meeting to another place, date or time. When a
meeting is so adjourned, written notice need not be given of the adjourned
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than 30 days after the date for which the
meeting was originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date, and time of the adjourned
meeting shall be given in conformity herewith. At any adjourned meeting, any
business may be transacted which might have been transacted at the original
meeting.
Section 2.6 At any meeting of the stockholders, every stockholder
entitled to vote may vote in person or by proxy authorized by an instrument in
writing executed by such
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<PAGE>
stockholder and submitted to the Secretary at or before such meeting, but no
proxy shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period. Each stockholder shall have 1 vote for each share
of stock entitled to vote which is registered in his name on the record date for
the meeting, except as otherwise provided herein or required by law. All
elections of directors by the stockholders shall be by written ballot, and shall
be determined by a plurality of the votes cast. All other voting need not be by
written ballot, except upon demand therefor by the Board of Directors or the
officer of the Corporation presiding at the meeting of stockholders where the
vote is to be taken. When a quorum exists at any meeting, the vote of a majority
of the stock having voting power present in person or represented by proxy shall
decide any question bought before such meeting, unless the question is one for
which, by express provision of law or of the Certificate of Incorporation of the
Corporation or of these Bylaws, a different vote is required.
Section 2.7 At least 10 days before every meeting of stockholders,
the officer who has charge of the stock ledger of the Corporation shall prepare
a complete list of the stockholders entitled to vote at such meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours
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<PAGE>
for a period of at least 10 days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present. The stock ledger of the
Corporation shall be the only evidence as to the identities of the stockholders
entitled to examine the list of stockholders required by this Section 2.7 or to
vote in person or by proxy at any meeting of stockholders.
Section 2.8 The Board of Directors may appoint either one or three Judges
of Election to act at any meeting of the stockholders or any adjournment
thereof. Judges of Election need not be stockholders, and no person who is a
candidate for corporate office shall act as Judge of Election. If three Judges
of Election are appointed, such Judges of Election shall act by majority vote.
Judges of Election shall do all acts as are necessary and proper to conduct the
election or vote and all such other acts as may be prescribed by law with
fairness to all stockholders. If requested to do so by the Board of Directors or
the chairman of the meeting at which Judges of Election act, such Judges of
Election shall make a written report of any matter determined by them and shall
execute a certificate as to any fact found by them.
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<PAGE>
Section 2.9 The chairman of any meeting of the stockholders shall
determine the order of business and the procedure to be followed at such
meeting, including such regulation of the manner of voting and the conduct of
discussion as he shall deem to be fair and equitable.
Section 2.10 The stockholders may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
Section 2.11 Unless otherwise required by the Certificate of Incorporation
of the Corporation, any action required or permitted to be taken at any meeting
of the stockholders may be taken without a meeting, without prior notice and
without a vote, if a written consent setting forth the action so taken shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any corporate action without a meeting by less
than unanimous written consent shall be given in conformity herewith to those
stockholders who have not consented thereto in writing.
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<PAGE>
ARTICLE 3 BOARD OF DIRECTORS
------------------
Section 3.1 The business and affairs of the Corporation shall be managed by
or under the direction of a Board of Directors. In addition to the powers
expressly conferred upon the Board of Directors by these Bylaws, the Board of
Directors may exercise all powers of the Corporation and perform all lawful acts
as are not required to be exercised or performed by the stockholders pursuant to
law, the Certificate of Incorporation of the Corporation or these Bylaws.
Section 3.2 Directors shall be natural persons who need not be stockholders
of the Corporation. The specific number of directors shall be designated from
time to time exclusively by the Board of Directors. In the absence of any such
designation, the Board of Directors shall be composed of not less than one and
not more than five directors. Each director shall be elected for a term of one
year and until his successor is duly elected and qualified, subject, however, to
such director's prior death, resignation, retirement, disqualification or
removal from office. Whenever the authorized number of directors is increased
between annual meetings of the stockholders, a majority of the directors then in
office shall have the power to elect such new directors who shall serve until
the next annual meeting of stockholders and until their successors are duly
elected and qualified. Any decrease in the authorized number of directors shall
not become effective until the expiration of the term of the directors then in
office unless, at the time of such decrease, there shall be
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<PAGE>
vacancies on the Board of Directors which are being eliminated by such decrease.
Section 3.3 Any vacancy on the Board of Directors occurring by reason of
death, resignation, disqualification, removal or other cause may be filled by a
majority of the directors then in office, although less than a quorum, and each
director elected to fill a vacancy shall serve for the unexpired term of his
predecessor and until his successor is duly elected and qualified.
Section 3.4 The organizational meeting of each newly elected Board of
Directors may be held immediately following the stockholders' meeting at which
such directors were duly elected without the necessity of notice to such
directors or at such time and place as may be fixed by notice or a duly executed
waiver of notice thereof.
Section 3.5 Regular meetings of the Board of Directors shall be held
without call or notice at such time and place as shall from time to time be
fixed by the Board of Directors.
Section 3.6 Special meetings of the Board of Directors may be called by
the President or the Secretary on the written request of a majority of the
directors then in office, and shall be held at such place, on such date and at
such time as they or he shall designate. Notice of the place, time and date of
each such special meeting shall be given to each director by whom it is not
waived by mailing written notice to each director not less than 2 days before
the meeting or by telegram or telephone not
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<PAGE>
less than 48 hours before the meeting. Notice of special meetings of the Board
of Directors need not state the purpose thereof, except as otherwise expressly
provided by law, by the Certificate of Incorporation of the Corporation, or by
these Bylaws. Any and all business may be transacted at a special meeting,
unless otherwise indicated in the notice thereof or provided by law, by the
Certificate of Incorporation of the Corporation or by these Bylaws.
Section 3.7 Members of the Board of Directors or any committee thereof may
participate in any meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.
Section 3.8 At any meeting of the Board of Directors, the presence of a
majority of the total number of directors shall constitute a quorum for the
transaction of business, and the vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless otherwise provided by law, by the Certificate of Incorporation
of the Corporation or by these Bylaws. If a quorum shall not be present at any
meeting of the Board of Directors, a majority of the directors present may
adjourn the meeting to any place, date or time, without notice other than
announcement at the meeting, until a quorum shall be present.
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<PAGE>
Section 3.9 Unless otherwise provided by law, by the Certificate of
Incorporation of the Corporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing and such
consent is filed with the minutes of proceedings of the Board of Directors or
committee thereof.
Section 3.10 Directors, in addition to expenses of attendance, shall be
allowed such compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of Directors,
as may be fixed from time to time by the Board of Directors; provided, that
nothing contained in these Bylaws shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
Section 3.11 A member of the Board of Directors or of any committee thereof
shall, in the performance of his duties, be fully protected in relying in good
faith upon the books of account or reports made to the Corporation by any of its
officers, or by an independent certified public accountant, or by an appraiser
selected with reasonable care by the Board of Directors or by any committee
thereof, or in relying in good faith upon other records of the Corporation.
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<PAGE>
ARTICLE 4 COMMITTEES
----------
Section 4.1 The Board of Directors, by a vote of a majority of the whole
Board of Directors, may from time to time designate committees of the Board of
Directors, with such lawfully delegable powers and duties as it thereby confers,
to serve at the pleasure of the Board of Directors and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as a member or members and designate, if it desires, one or more directors
as alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power and
authority of the Board of Directors to declare a dividend or to authorize the
issuance of stock if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee 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. The Board
of Directors may, from time to time, suspend, alter, continue or terminate any
committee or the powers and functions thereof.
Section 4.2 Subject to the approval of the Board of Directors, the
President may appoint, or may provide for the
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<PAGE>
appointment of, committees consisting of officers or other persons, with
chairmanships, vice-chairmanships and secretaryships and such duties and powers
as the President may, from time to time, designate and prescribe. The Board of
Directors may, from time to time, suspend, alter, continue or terminate any of
such committees or the powers and functions thereof.
Section 4.3 One-third of the members of any committee shall constitute a
quorum unless the committee shall consist of one or two members, in which case
one member shall constitute a quorum. All matters properly brought before the
committee shall be determined by a majority vote of the members present.
Section 4.4 Any action that may be taken by a committee at a meeting may
be taken without a meeting if all members thereof consent thereto in writing,
and such writing is filed with the minutes of the proceedings of such committee.
Section 4.5 Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided by law, by the Certificate of Incorporation of the
Corporation or by these Bylaws. Adequate provision shall be made for notice to
all members of any committee of all meetings of that committee.
ARTICLE 5 OFFICERS
--------
Section 5.1 The officers of the Corporation shall consist of a President,
a Secretary, one or more Assistant
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<PAGE>
Secretaries and a Treasurer and may have such other officers and assistant
officers as the Board of Directors may authorize from time to time. Officers
shall be elected by the Board of Directors at its first meeting after every
annual meeting of stockholders. No officer except the President need be a member
of the Board of Directors. Any number of offices may be held by the same person.
Section 5.2 The Board of Directors may appoint such other officers, and
agents as it shall deem necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 5.3 The salary of the President shall be fixed by the Board of
Directors. The salaries of all other officers of the Corporation may be fixed by
the Board of Directors, or the Board of Directors may authorize the President to
fix such salaries and report thereon to the Board of Directors.
Section 5.4 Each officer shall hold office until his successor is duly
elected and qualified or until his earlier death, resignation, retirement or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors without prejudice to his contract
rights. If the office of any officer becomes vacant for any reason,such vacancy
shall be filled by the Board of Directors. Any officer elected to fill such a
vacancy shall hold office for the unexpired term of his predecessor and until
his successor is
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<PAGE>
duly elected and qualified or until his earlier death, resignation, retirement
or removal.
Section 5.5 The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or agents, notwithstanding
any provision of these Bylaws.
Section 5.6 The President shall be a director of the Corporation. The
President shall preside at all meetings of the stockholders and of the Board of
Directors. The President shall be the chief executive officer of the Corporation
and, subject to the provisions of these Bylaws and to the direction of the Board
of Directors, he shall have responsibility for the general management and
control of the business and affairs of the Corporation.
Unless otherwise directed by the Board of Directors, the President shall
have the power to vote and otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which the Corporation may hold
securities and otherwise to exercise any and all rights and powers which the
corporation may possess by reason of its ownership of securities in such other
corporation.
Section 5.7 The Secretary shall attend all meetings of the Board of
Directors and of the stockholders and shall record all votes and the minutes of
all proceedings at such meetings in a book to be kept for that purpose, and
shall perform such other
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<PAGE>
duties as the Board of Directors may from time to time prescribe. The Secretary
shall perform the preceding duties for any committee of the Board of Directors
when required. The Secretary shall give or cause to be given notice of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the seal of the Corporation, and, where required, shall have the
authority to affix such seal to any instrument. In the absence or disability of
the Secretary, any Assistant Secretary shall perform the duties and exercise the
powers of the Secretary.
Section 5.8 The Treasurer shall have the custody of the Corporation's
funds and securities and shall deposit all monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors. The Treasurer shall make such
disbursements of the Corporation's funds as are authorized by the Board of
Directors or by the President, taking proper vouchers for such disbursements,
and shall render to the Board of Directors an account of all such transactions
and of the financial condition of the Corporation, at such times as the Board of
Directors may require. The Treasurer shall also perform such other duties as the
Board of Directors may from time to time prescribe. In the absence or disability
of the Treasurer, any Assistant Treasurer shall perform the duties and exercise
the powers of the Treasurer.
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<PAGE>
ARTICLE 6 INDEMNIFICATION
---------------
Section 6.1 Subject to Section 6.3 hereof, the Corporation shall indemnify
any person who was or is a party or has threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---- ----------
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
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<PAGE>
Section 6.2 Subject to Section 6.3 hereof, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, or employee of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 6.3 Any indemnification under this Article 6 (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer or employee
is proper in
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<PAGE>
the circumstances because he has met the applicable standard of conduct set
forth in Section 6.1 or Section 6.2 of this Article 6, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who are not parties to such action, suit or
proceeding, (ii) if such a quorum is not attainable, or, even if attainable, if
a majority vote of a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (iii) by the stockholders. To
the extent, however, that a director, officer or employee of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
Section 6.4 For purposes of any determination under Section 6.3 of this
Article 6, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Corporation or another enterprise
(provided that such records or books of account have in each case been prepared
by persons whom the person relying thereon reasonably believes to be
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<PAGE>
professionally or expertly competent to prepare such records or books of
account), or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 6.4 shall mean any other corporation or any
partnership, joint venture, trust or other entity of which such person is or was
serving at the request of the Corporation as a director, officer or employee.
The provisions of this Section 6.4 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have met
the applicable standard of conduct set forth in Section 6.1 or 6.2 of this
Article 6, as the case may be.
Section 6.5 Notwithstanding any contrary determination in the specific
case under Section 6.3 of this Article 6, and notwithstanding the absence of any
determination thereunder, any director, officer or employee may apply to any
court of competent jurisdiction in the state of Delaware for indemnification to
the extent otherwise permissible under Sections 6.1 and 6.2 of this Article 6.
The basis of such indemnification by a court shall be a determination by such
court that indemnification of the director, officer or employee is proper in the
circumstances
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<PAGE>
because he has met the applicable standards of conduct set forth in Section 6.1
or 6.2 of this Article 6, as the case may be. Notice of any application for
indemnification pursuant to this Section 6.5 shall be given to the Corporation
promptly upon filing of such application.
Section 6.6 Expenses incurred in defending or investigating a threatened or
pending action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article 6.
Section 6.7 The indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, contract,
vote of stockholders or disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Section 6.1 and 6.2
of this Article 6 shall be made
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<PAGE>
to the fullest extent permitted by law. To this end, the provisions of this
Article 6 shall be deemed to have been amended for the benefit of such persons
effective immediately upon any modification of the General Corporation Law of
the State of Delaware which expands or enlarges the power or obligation of
corporations organized under such law to indemnify, or advance expenses to, such
persons. The provisions of this Article 6 shall not be deemed to preclude the
indemnification of, or advancement of expenses to, any person who is not
specified in Section 6.1 or 6.2 of this Article 6 but whom the Corporation has
the power or obligation to indemnify, or to advance expenses for, under the
provisions of the General Corporation Law of the State of Delaware or otherwise.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article 6 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer or employee and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Section 6.8 The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer or employee of the Corporation,
or is or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the
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<PAGE>
power or the obligation to indemnify him against such liability under the
provisions of this Article 6.
Section 6.9 For purposes of this Article 6, references to the
"Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article 6 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE 7 STOCK
-----
Section 7.1 The certificates representing shares of stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each stockholder shall be entitled to a
certificate exhibiting such stockholder's name and the number of shares held by
such stockholder, which certificate shall be signed by the President or any
Vice-President, and by the Treasurer or th[Be Secretary or any Assistant
Secretary. Any or all of the signatures on such
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<PAGE>
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
Section 7.2 Transfers of stock shall be made only upon the transfer books
of the Corporation maintained in an office of the Corporation or by transfer
agents designated to transfer shares of the stock of the Corporation, and only
by the person named in the certificate or by his attorney, lawfully constituted
in writing, and upon surrender of the certificate therefor.
Section 7.3 In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60 nor less than 10 days before the date of such
meeting nor more than 60 days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
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<PAGE>
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 7.4 The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided by the
laws of the State of Delaware.
Section 7.5 The Board of Directors may authorize the issuance of a new
certificate representing shares of stock in place of any certificate previously
issued by the Corporation and alleged to have been lost, stolen or destroyed,
pursuant to such regulations as the Board of Directors may establish concerning
proof or advertisement of such alleged loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate.
Section 7.6 The issue, transfer, conversion and registration of
certificates of stock of the Corporation shall be governed by such other
regulations as the Board of Directors may from time to time establish.
ARTICLE 8 NOTICES
-------
Section 8.1 Whenever notice is required to be given to any director,
committee member, officer, stockholder, employee or
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<PAGE>
agent, whether pursuant to law, the Certificate of Incorporation of the
Corporation or these Bylaws, it shall not be construed to mean personal notice,
but such notice may be given, in the case of stockholders, in writing, by
depositing the same in the mail, postage prepaid, addressed to such stockholder
at his last known address as the same appears on the books of the Corporation,
and, in the case of directors, committee members, officers, employees and
agents, by telephone, or by mail, postage prepaid, or by prepaid telegram at his
last known address as the same appears on the books of the Corporation. All
notices shall be deemed to be given when mailed, telegraphed or telephoned.
Section 8.2 Whenever notice is required to be given to any stockholder,
director, committee member, officer, employee or agent, whether pursuant to law,
the Certificate of Incorporation of the Corporation or these Bylaws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
as otherwise provided by law. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
members of a committee of directors need be specified in any written waiver of
notice unless so required by the Certificate of Incorporation of the Corporation
or by these Bylaws.
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<PAGE>
ARTICLE 9 DIVIDENDS
---------
Section 9.1 Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law, and subject to the provisions of the Certificate of Incorporation of the
Corporation. Dividends may be paid in cash, in property or in shares of the
capital stock of the Corporation.
Section 9.2 Before payment of any dividend, the Board of Directors may set
aside, out of any funds of the Corporation available for dividends, such sums as
the Board of Directors may deem proper as a reserve fund to meet contingencies,
to equalize dividends, to repair or maintain any property of the Corporation, or
for such other purposes as the Board of Directors may deem to be in the best
interests of the Corporation, and the Board of Directors may reduce or abolish
any such reserve in the manner in which it was created.
ARTICLE 10 MISCELLANEOUS
-------------
Section 10.1 Any officer of the Corporation shall, if required by the Board
of Directors, give the Corporation a bond for the faithful performance of the
duties of his office, and for the restoration to the Corporation of all
corporate books, papers, vouchers, money and property of whatever kind in his
possession or under his control. Such bond shall be for a sum and with such
surety or sureties as the Board of Directors may require.
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<PAGE>
Section 10.2 The corporate seal shall be in the charge of the Secretary
and shall have inscribed thereon the name of the Corporation, and the words
"Incorporated May 7, 1991 Delaware." If and when so directed by the Board of
Directors or a committee thereof, the Secretary may have duplicates of such seal
made and deposited for use with other officers of the Corporation. It shall not
be necessary to the validity of any instrument executed by any authorized
officer or officers of the Corporation that the execution of such instrument be
evidenced by the corporate seal.
Section 10.3 The fiscal year of the Corporation shall be as determined by
the Board of Directors.
Section 10.4 All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
Section 10.5 The Board of Directors shall determine from time to time
whether, when and under what conditions and regulations, the books and records
of the Corporation (except such as may by statute be specifically open to
inspection) shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
Section 10.6 At each annual meeting of the stockholders of the
Corporation, the Board of Directors shall present a full and clear statement of
the business and affairs of the Corporation for the preceding year.
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<PAGE>
Section 10.7 Facsimile signatures of any officer of the Corporation may be
used at such time and in such manner as authorized by the Board of Directors or
a committee thereof.
ARTICLE 11 AMENDMENT
---------
Section 11.1 These Bylaws may be amended, suspended or repealed and new
Bylaws may be adopted in a manner consistent with law: (a) if authorized by the
Certificate of Incorporation of the Corporation, by the affirmative vote of a
majority of the Board of Directors then in office, at any meeting of the Board
of Directors, or (b) by the affirmative vote of the stockholders at any
stockholders' meeting called and maintained in accordance with Article 2 of
these Bylaws; provided, however, that a brief description of such proposed
amendment, suspension or repeal and/or adoption of new Bylaws is contained in
the notice of such meeting of the Board of Directors or of such annual or
special stockholders' meeting.
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<PAGE>
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
RADNOR MANAGEMENT, INC.
FIRST. - The name of the corporation is RADNOR MANAGEMENT, INC. (the
"Corporation").
SECOND. - The registered office of the Corporation in the State of
Delaware is to be located at 314 South State Street, Dover, Delaware 19901, in
the County of Kent. The registered agent at this address is Capitol Corporate
Services, Inc.
THIRD. - The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. - The aggregate number of shares of stock which the
Corporation shall have the authority to issue is One Thousand (1,000) shares of
common stock, par value $.001 per share.
FIFTH. - The name and mailing address of the incorporator is
Elizabeth A. Payne, One Liberty Place, Philadelphia, Pennsylvania 19103-7396.
SIXTH. - The Corporation shall have perpetual existence.
SEVENTH. - A director of the Corporation shall not be personally
liable to the Corporation or to its stockholders for monetary damages for breach
of fiduciary duty as a director except for liability to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; or (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a
<PAGE>
knowing violation of law; or (iii) under Section 174 of the General Corporation
Law of the State of Delaware; or (iv) for any transaction from which the
director derived an improper personal benefit. In discharging the duties of
their respective positions, the Board of Directors, committees of the Board,
individual directors and individual officers may, in considering the best
interests of the Corporation, consider the effects of any action upon employees,
suppliers and customers of the Corporation, communities in which offices or
other establishments of the Corporation are located, and all other pertinent
factors.
EIGHTH. - The directors of the Corporation shall have the power to
make and to alter or amend the By-Laws; to fix the amount to be reserved as
working capital; and to authorize and cause to be executed, mortgages and liens,
without limit as to the amount, upon the property and franchise of the
Corporation.
NINTH. - The stockholders and directors shall have the power to hold
meetings and keep the books, documents and papers of the Corporation outside the
State of Delaware, at such places as may be from time to time designated by the
By-Laws of the Corporation or by resolution of the directors, except as
otherwise required by the laws of the State of Delaware.
THE UNDERSIGNED, for the purpose of forming a corporation under the
laws of the State of Delaware, does make, file and record this Certificate, and
does certify that the facts herein stated are true; and accordingly does set
forth her hand.
Dated: December 9, 1996 /s/ Elizabeth A. Payne
--------------------------------
Elizabeth A. Payne, Incorporator
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<PAGE>
EXHIBIT 3.6
BY-LAWS
OF
RADNOR MANAGEMENT, INC.
ARTICLE 1 OFFICES
SECTION 1.1 The Corporation shall have and maintain in the State of
Delaware a registered office which may, but need not be, the same as its place
of business.
SECTION 1.2 The Corporation may also have offices at such other places as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE 2 STOCKHOLDERS
SECTION 2.1 All meetings of the stockholders shall be held at such place,
either within or without the State of Delaware, and at such date and time as may
be designated by the Board of Directors and as shall be specified in the notice
of the meeting or in a duly executed waiver of notice thereof.
SECTION 2.2 An annual meeting of the stockholders, for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting, shall be held at such place, date and time as the
Board of Directors may designate and as shall be specified in the notice of
the meeting or in a duly executed waiver of notice thereof. In the absence of
such a designation by the Board of Directors, the Annual Meeting of Stockholders
shall be held during the month of
<PAGE>
May each year on a date to be determined from year to year by the Board of
Directors.
SECTION 2.3 Special meetings of the stockholders, for any purpose or
purposes, may be called by the Board of Directors or the President and shall be
called by the President or the Secretary at the request in writing of a majority
of the members of the Board of Directors then in office. Such request shall
state the purpose or purposes of the proposed meeting. Business transacted at
all special meetings shall be confined to the objects stated in the notice
thereof.
SECTION 2.4 Written notice of any annual or special meeting of
stockholders shall be mailed to each stockholder entitled to vote thereat at his
address as it appears on the records of the Corporation, not fewer than ten nor
more than sixty days before the date of such meeting. Such notice shall be
deemed to be given when deposited in the United States mail, postage prepaid,
directed to each stockholder at his address as it last appears on the records of
the Corporation. Such notice shall state the place, date and hour of the
meeting, and, in the case of a special meeting, shall state the purpose or
purposes for which the meeting is called.
SECTION 2.5 At any meeting of the stockholders, the holders of a majority
of all of the issued and outstanding shares of stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, except to the extent that the presence of a larger number of
stockholders may be required by law, by the Certificate of Incorporation of the
Corporation or by these By-laws. If a quorum shall fail to be present or
represented at any meeting, the chairman of the meeting or the holders of a
majority of the shares of the stock entitled to vote who are present, in person
or by proxy, may adjourn the meeting to another place, date
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<PAGE>
or time. When a meeting is so adjourned, written notice need not be given of the
adjourned meeting if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than thirty days after the date for which the
meeting was originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date, and time of the adjourned
meeting shall be given in confor mity herewith. At any adjourned meeting, any
business may be transacted that might have been transacted at the original
meeting.
SECTION 2.6 At any meeting of the stockholders, every stockholder
entitled to vote may vote in person or by proxy authorized by an instrument in
writing or any complete and reliable copy, facsimile telecommunication or other
reproduction of the writing executed by such stockholder or by an authorized
officer, director, employee or agent of such stockholder, to the extent
permitted by law, and submitted to the Secretary at or before such meeting, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Each stockholder shall have one vote
for each share of stock entitled to vote that is registered in his name on the
record date for the meeting, except as otherwise provided herein or required by
law. All elections of directors by the stockholders shall be by written ballot
and shall be determined by a plurality of the votes cast. All other voting need
not be by written ballot, except upon demand therefor by the Board of Directors
or the officer of the Corporation presiding at the meeting of stockholders where
the vote is to be taken. When a quorum exists at any meeting, the vote of a
majority of the stock having voting power present in person or represented by
proxy shall decide any
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<PAGE>
question brought before such meeting, unless the question is one for which, by
express provision of law or of the Certificate of Incorporation of the
Corporation or of these By-laws, a different vote is required.
SECTION 2.7 At least ten days before every meeting of stockholders, the
officer who has charge of the stock ledger of the Corporation shall prepare a
complete list of the stockholders entitled to vote at such meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder of the Corporation who is
present. The stock ledger of the Corporation shall be the only evidence as to
the identities of the stockholders entitled to examine the list of stockholders
required by this Section 2.7 or to vote in person or by proxy at any meeting of
stockholders.
SECTION 2.8 The Board of Directors shall appoint either one or three
inspectors of election, in advance of any meeting of stockholders, to act at
such meeting of the stockholders or any adjournment thereof. Inspectors of
election need not be stockholders, and no person who is a candidate for
corporate office shall act as an inspector of election. If three inspectors of
election are appointed, such inspectors of election shall act by majority vote.
Each inspector of election shall sign an oath faithfully to
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<PAGE>
execute the duties of inspector with strict impartiality and to the best of the
inspector's ability and shall do all acts as are necessary and proper to
conduct the election or vote and all such other acts as may be prescribed by law
with fairness to all stockholders. Such inspectors of election shall make a
written report of any matter determined by them and shall execute a certificate
as to any fact found by them.
SECTION 2.9 The chairman of any meeting of the stockholders shall
determine the order of business and the procedure to be followed at such
meeting, including such regulation of the manner of voting and the conduct of
discussion as he shall deem to be fair and equitable.
SECTION 2.10 The stockholders may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear one another, and such
participation shall constitute presence in person at such meeting.
SECTION 2.11 Unless otherwise required by the Certificate of
Incorporation of the Corporation, any action required or permitted to be taken
at any meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote, if a written consent setting forth the action so
taken shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of any corporate action without a
meeting by less than unanimous written consent shall be given in conformity
herewith to those stockholders who have not consented thereto in writing.
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<PAGE>
ARTICLE 3 BOARD OF DIRECTORS
SECTION 3.1 The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors. In addition to the powers
expressly conferred upon the Board of Directors by these By-laws, the Board of
Directors may exercise all powers of the Corporation and perform all lawful acts
as are not required to be exercised or performed by the stockholders pursuant to
law, the Certificate of Incorporation of the Corporation or these By-laws.
SECTION 3.2 Directors shall be natural persons who need not be
stockholders of the Corporation. The specific number of directors shall be
designated from time to time exclusively by the Board of Directors. In the
absence of any such designation, the Board of Directors shall be composed of one
director. Each director shall be elected for a term of one year and until his
successor is duly elected and qualified, subject, however, to such director's
prior death, resignation, retirement, disqualifica tion or removal from office.
Whenever the authorized number of directors is increased between annual meetings
of the stockholders, a majority of the directors then in office shall have the
power to elect such new directors who shall serve until the next annual meeting
of stockholders and until their successors are duly elected and qualified. Any
decrease in the authorized number of directors shall not become effective until
the expiration of the term of the directors then in office unless, at the time
of such decrease, there shall be vacancies on the Board of Directors that are
being eliminated by such decrease.
SECTION 3.3 Any vacancy on the Board of Directors occurring by reason of
death, resignation, disqualification, removal or other cause may be filled by a
majority
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<PAGE>
of the directors then in office, although less than a quorum, and each director
elected to fill a vacancy shall serve for the unexpired term of his predecessor
and until his successor is duly elected and qualified.
SECTION 3.4 The organizational meeting of each newly elected Board of
Directors may be held immediately following the stockholders' meeting at which
such directors were duly elected without the necessity of notice to such
directors or at such time and place as may be fixed by notice or a duly executed
waiver of notice thereof.
SECTION 3.5 Regular meetings of the Board of Directors shall be held
without call or notice at such time and place as shall from time to time be
fixed by the Board of Directors.
SECTION 3.6 Special meetings of the Board of Directors may be called by
the Chairman of the Board, by the President or by the Secretary upon his own
initiative or upon the written request of a majority of directors then in
office. Notice of the place, time and date of each such special meeting shall be
given to each director by whom it is not waived by mailing written notice to
each director not less than two days before the meeting or by giving notice in
person or by telephone, telegram or facsimile transmission not less than twenty-
four hours before the meeting. Notice of special meetings of the Board of
Directors need not state the purpose thereof, except as otherwise expressly
provided by law, by the Certificate of Incorporation of the Corporation, or by
these By-laws. Any and all business may be transacted at a special meeting,
unless otherwise indicated in the notice thereof or provided by law, by the
Certificate of Incorporation of the Corporation or by these By-laws.
SECTION 3.7 Members of the Board of Directors or any committee thereof
may
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<PAGE>
participate in any meeting of the Board of Directors or such committee, as the
case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
one another, and such participation shall constitute presence in person at such
meeting.
SECTION 3.8 At any meeting of the Board of Directors, the presence of a
majority of the total number of directors shall constitute a quorum for the
transaction of business, and the vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless otherwise provided by law, by the Certificate of Incorporation
of the Corporation or by these By-laws. If a quorum shall not be present at any
meeting of the Board of Directors, a majority of the directors present may
adjourn the meeting to any place, date or time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3.9 Unless otherwise provided by law, by the Certificate of
Incorporation of the Corporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing and
such consent is filed with the minutes of proceedings of the Board of Directors
or committee thereof.
SECTION 3.10 Directors, in addition to expenses of attendance, shall be
allowed such compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of Directors,
as may be fixed from time to time by the Board of Directors; provided, that
nothing contained in these By-
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<PAGE>
laws shall be construed to preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor.
SECTION 3.11 A member of the Board of Directors or of any committee
thereof shall, in the performance of his duties, be fully protected in relying
in good faith upon the books of account or reports made to the Corporation by
any of its officers, or by an independent certified public accountant, or by an
appraiser selected with reasonable care by the Board of Directors or by any
committee thereof, or in relying in good faith upon other records of the
Corporation.
ARTICLE 4 COMMITTEES
SECTION 4.1 The Board of Directors, by a vote of a majority of the whole
Board of Directors, may from time to time designate committees of the Board of
Directors, with such lawfully delegable powers and duties as it thereby confers,
to serve at the pleasure of the Board of Directors and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as a member or members and designate, if it desires, one or more directors
as alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power
and authority of the Board of Directors to declare a dividend or to authorize
the issuance of stock if the resolution that designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at any
meeting and not disqualified from voting, whether or not he or they
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<PAGE>
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. The Board of Directors may, from time to time, suspend, alter, continue
or terminate any committee or the powers and functions thereof.
SECTION 4.2 The Board of Directors may appoint committees consisting of
officers or other persons, with chairmanships, vice chairmanships and
secretaryships and such duties and powers as the Board of Directors may from
time to time designate and prescribe. The Board of Directors may from time to
time suspend, alter, continue or terminate any of such committees or the powers
and functions thereof.
SECTION 4.3 One-third of the members of any committee shall constitute a
quorum unless the committee shall consist of one or two members, in which case
one member shall constitute a quorum. All matters properly brought before any
committee shall be determined by a majority vote of the members present.
SECTION 4.4 Any action that may be taken by a committee at a meeting may
be taken without a meeting if all members thereof consent thereto in writing and
such writing is filed with the minutes of the proceedings of such committee.
SECTION 4.5 Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided by law, by the Certificate of Incorporation of the
Corporation or by these By-laws. Adequate provision shall be made for notice to
all members of any committee of all meetings of that committee.
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<PAGE>
ARTICLE 5 OFFICERS
SECTION 5.1 The officers of the Corporation shall consist of a Chairman
of the Board, a President, one or more Vice Presidents, a Secretary and a
Treasurer. Officers shall be appointed from time to time by the Board of
Directors. No officer except the Chairman of the Board need be a member of the
Board of Directors. Any number of offices may be held by the same person.
SECTION 5.2 The Board of Directors may appoint such other officers,
including assistant officers, and agents as it shall deem necessary, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of Directors.
SECTION 5.3 Each officer shall hold office until his successor is duly
elected and qualified or until his earlier death, resignation, retirement or
removal. Any officer appointed by the Board of Directors may be removed at any
time by the Board of Directors without prejudice to his contract rights. If the
office of any officer becomes vacant for any reason, such vacancy shall be
filled by the Board of Directors. Any officer appointed to fill such a vacancy
shall hold office until his successor is duly elected and qualified or until his
earlier death, resignation, retirement or removal.
SECTION 5.4 The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or agents, notwithstanding
any provision of these By-laws.
SECTION 5.5 The Chairman of the Board shall be a director of the
Corporation. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors and shall perform such duties and
have such powers as may
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<PAGE>
from time to time be assigned to him by the Board of Directors.
SECTION 5.6 The President shall be the chief executive officer of the
Corporation and, subject to the provisions of these By-laws and to the
direction of the Board of Directors, he shall have responsibility for the
general management and control of the business and affairs of the Corporation.
Unless otherwise directed by the Board of Directors from time to time, the
President shall have the power to vote and other wise act on behalf of the
Corporation, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which the
Corporation may hold securities and otherwise to exercise any and all rights and
powers which the Corporation may possess by reason of its ownership of
securities in such other corporation. The President shall perform the duties
and exercise the powers of the Chairman of the Board in the absence or
disability of the Chairman.
SECTION 5.7 Each Vice President shall have such powers and perform such
duties as may be delegated to him by the Board of Directors or by the President.
In the absence or disability of the Chairman of the Board and the President, any
Vice President who is also a director of the Corporation may preside at meetings
of the stockholders and the Board of Directors to the extent and in the manner
authorized by a resolution of the Board of Directors.
SECTION 5.8 The Secretary shall attend all meetings of the Board of
Directors and of the stockholders and shall record all votes and the minutes of
all proceedings at such meetings in a book to be kept for that purpose and shall
perform such other duties as the Board of Directors may from time to time
prescribe. The Secretary shall
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<PAGE>
perform the preceding duties for any committee of the Board of Directors upon
the request of the Board of Directors or such committee. The Secretary shall
give or cause to be given notice of all meetings of the stockholders and the
Board of Directors. The Secretary shall have charge of the seal of the
Corporation, and, where required, shall have the authority to affix such seal to
any instrument. In the absence or disability of the Secretary, any Assistant
Secretary shall perform the duties and exercise the powers of the Secretary.
SECTION 5.9 The Treasurer shall have the custody of the Corporation's
funds and securities and shall deposit all monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors. The Treasurer shall make such
disbursements of the Corporation's funds as are authorized by the Board of
Directors or by the President, taking proper vouchers for such disbursements,
and shall render to the Board of Directors an account of all such transactions
and of the financial condition of the Corporation, at such times as the Board of
Directors may require. The Treasurer shall also perform such other duties as the
Board of Directors may from time to time prescribe. In the absence or disability
of the Treasurer, any Assistant Treasurer shall perform the duties and exercise
the powers of the Treasurer.
ARTICLE 6 INDEMNIFICATION
SECTION 6.1 Subject to Section 6.3 hereof, the Corporation shall
indemnify any person who was or is a party or has threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal,
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administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner that he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reason able cause to believe that his conduct
was unlawful.
SECTION 6.2 Subject to Section 6.3 hereof, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, or employee of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement
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<PAGE>
of such action or suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Corporation;
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 6.3 Any indemnification under this Article 6 (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer or employee
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 6.1 or Section 6.2 of this Article 6, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who are not parties to such
action, suit or proceeding, (ii) if such a quorum is not attainable, or, even if
attainable, if a majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (iii) by the
stockholders. To the extent, however, that a director, officer or employee of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith, without
the necessity of authori-
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<PAGE>
zation in the specific case.
SECTION 6.4 For purposes of any determination under Section 6.3 of this
Article 6, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Corporation or another enterprise
(provided that such records or books of account have in each case been prepared
by persons whom the person relying thereon reasonably believes to be
professionally or expertly competent to prepare such records or books of
account), or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 6.4 shall mean any other corporation or any
partnership, joint venture, trust or other entity of which such person is or was
serving at the request of the Corporation as a director, officer or employee.
The provisions of this Section 6.4 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have met
the applicable standard of conduct set forth in Section 6.1 or 6.2 of this
Article 6, as the case may be.
SECTION 6.5 Notwithstanding any contrary determination in the specific
case under Section 6.3 of this Article 6, and notwithstanding the absence of any
determina-
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tion thereunder, any director, officer or employee may apply to any court of
competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under Sections 6.1 and 6.2 of this Article 6. The
basis of such indemnification by a court shall be a determination by such court
that indemnification of the director, officer or employee is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Section 6.1 or 6.2 of this Article 6, as the case may be. Notice of any
application for indemnification pursuant to this Section 6.5 shall be given to
the Corporation promptly upon the filing of such application.
SECTION 6.6 Expenses incurred in defending or investigating a threatened
or pending action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article 6.
SECTION 6.7 The indemnification and advancement of expenses provided by,
or granted pursuant to, the other sections of this Article 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, contract,
vote of stockholders or disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Sections 6.1 and
6.2 of this Article 6 shall be made to the fullest
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extent permitted by law. To this end, the provisions of this Article 6 shall be
deemed to have been amended for the benefit of such persons effective
immediately upon any modification of the General Corporation Law of the State of
Delaware which expands or enlarges the power or obligation of corporations
organized under such law to indemnify, or advance expenses to, such persons. The
provisions of this Article 6 shall not be deemed to preclude the indemnification
of, or advancement of expenses to, any person who is not specified in Section
6.1 or 6.2 of this Article 6 but whom the Corporation has the power or
obligation to indemnify, or to advance expenses for, under the provisions of the
General Corporation Law of the State of Delaware or otherwise. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article 6 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer or employee and
shall inure to the benefit of the heirs, executors and administrators of such
person.
SECTION 6.8 The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer or employee of the Corporation,
or is or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article 6.
SECTION 6.9 For purposes of this Article 6, references to the
"Corporation"
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shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article 6 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE 7 STOCK
SECTION 7.1 The certificates representing shares of stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each stockholder shall be entitled to a
certificate exhibiting such stockholder's name and the number of shares held by
such stockholder, which certificate shall be signed by the Chairman of the Board
or the President or any Vice President, and by the Treasurer or the Secretary or
any Assistant Secretary. Any or all of the signatures on such certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
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<PAGE>
SECTION 7.2 Transfers of stock shall be made only upon the transfer books
of the Corporation maintained in an office of the Corporation or by transfer
agents designated to transfer shares of the stock of the Corporation, and only
by the person named in the certificate or by his attorney, lawfully constituted
in writing, and upon surrender of the certificate therefor.
SECTION 7.3 In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 7.4 The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided by the
laws of the State of Delaware.
SECTION 7.5 The Board of Directors may authorize the issuance of a new
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certificate representing shares of stock in place of any certificate previously
issued by the Corporation and alleged to have been lost, stolen or destroyed,
pursuant to such regulations as the Board of Directors may establish concerning
proof or advertisement of such alleged loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate.
SECTION 7.6 The issue, transfer, conversion and registration of
certificates of stock of the Corporation shall be governed by such other
regulations as the Board of Directors may from time to time establish.
ARTICLE 8 NOTICES
SECTION 8.1 Whenever notice is required to be given to any director,
committee member, officer, stockholder, employee or agent, whether pursuant to
law, the Certificate of Incorporation of the Corporation or these By-laws, it
shall not be construed to mean personal notice, but such notice may be given, in
the case of stockholders, in writing, by depositing the same in the mail,
postage prepaid, or by overnight carrier addressed to such stockholder at his
last known address as the same appears on the books of the Corporation, and, in
the case of directors, committee members, officers, employees and agents, by
telephone, or by mail, postage prepaid, or by prepaid telegram at his last known
address as the same appears on the books of the Corporation. All notices shall
be deemed to be given when mailed, telegraphed or telephoned.
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SECTION 8.2 Whenever notice is required to be given to any stockholder,
director, committee member, officer, employee or agent, whether pursuant to law,
the Certificate of Incorporation of the Corporation or these By-laws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
as otherwise provided by law. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
members of a committee of directors need be specified in any written waiver of
notice unless so required by the Certificate of Incorporation of the Corporation
or by these By-laws.
ARTICLE 9 MISCELLANEOUS
SECTION 9.1 Any officer of the Corporation shall, if required by the
Board of Directors, give the Corporation a bond for the faithful performance of
the duties of his office, and for the restoration to the Corporation of all
corporate books, papers, vouchers, money and property of whatever kind in his
possession or under his control. Such bond shall be for a sum and with such
surety or sureties as the Board of Directors may require.
SECTION 9.2 The corporate seal shall be in the charge of the Secretary
and shall have inscribed thereon the name of the Corporation and the words
"Incorporated 1996 Delaware." If and when so directed by the Board of Directors
or a committee thereof, the Secretary may have duplicates of such seal made and
deposited for use with other officers of the Corporation. It shall not be
necessary to the validity of any
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instrument executed by any authorized officer or officers of the Corporation
that the execution of such instrument be evidenced by the corporate seal.
SECTION 9.3 The fiscal year of the Corporation shall be as determined by
the Board of Directors.
SECTION 9.4 All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
SECTION 9.5 The Board of Directors shall determine from time to time
whether, when and under what conditions and regulations, the books and records
of the Corporation (except such as may by statute be specifically open to
inspection) shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
SECTION 9.6 Facsimile signatures of any officer of the Corporation may be
used at such time and in such manner as authorized by the Board of Directors or
a committee thereof.
ARTICLE 10 AMENDMENT
SECTION 10.1 These By-laws may be amended, suspended or repealed and new
By-laws may be adopted in a manner consistent with law: (a) if authorized by the
Certificate of Incorporation of the Corporation, by the affirmative vote of a
majority of the Directors then in office, at any meeting of the Board of
Directors, or (b) by the affirmative vote of the stockholders at any
stockholders' meeting called and maintained in accordance with Article 2 of
these By-laws; provided, however, that a brief
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description of such proposed amendment, suspension or repeal and/or adoption of
new By-laws is contained in the notice of such meeting of the Board of Directors
or of such annual or special stockholders' meeting.
Adopted as of December 10, 1996.
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<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
WINCUP HOLDINGS, L.P.
THIS CERTIFICATE OF LIMITED PARTNERSHIP of Wincup Holdings, L.P. (the
"Partnership"), dated October 20, 1995 (the "Certificate"), is made and filed by
WinCup Holdings, Inc., as general partner, (hereinafter sometimes referred to as
the "General Partner"), on behalf of the Partnership.
This Certificate is duly executed and is being filed in accordance with the
provisions of 6 Del. Section 17-201.
1. NAME. The name of the Partnership is WinCup Holdings, L.P.
2. ADDRESS OF THE REGISTERED OFFICE AND NAME AND ADDRESS OR REGISTERED
AGENT FOR SERVICE OF PROCESS. The address of the Partnership in the State of
Delaware is 314 South State Street, Dover, Delaware 19901, and the name of the
registered agent for services of process at such address is Capitol Corporate
Services, Inc.
3. NAME AND BUSINESS ADDRESS OF THE GENERAL PARTNER. The General Partner
of the Partnership is WinCup Holdings, Inc. The business address of the
General Partner is 7980 West Buckeys Road, Phoenix, Arizona 85043.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership this 20th day of October 1995.
GENERAL PARTNER:
WINCUP HOLDINGS, INC.
By:/s/ Michael T. Kennedy
----------------------------------
Michael T. Kennedy
President
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<PAGE>
EXHIBIT 3.8
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
WINCUP HOLDINGS, L.P.
DATED AS OF
January 1, 1997
<PAGE>
I N D E X
- - - - -
Page
ARTICLE I DEFINED TERMS................................................ 1
1.1 "Act"........................................................ 1
1.2 "Adjusted Capital Account"................................... 1
1.3 "Affiliate".................................................. 2
1.4 "Bankruptcy"................................................. 2
1.5 "Capital Account"............................................ 2
1.6 "Business"................................................... 3
1.7 "Capital Contribution"....................................... 3
1.8 "Capital Gain"............................................... 3
1.9 "Capital Loss"............................................... 3
1.10 "Cash Flow".................................................. 3
1.11 "Code"....................................................... 3
1.12 "Depreciation"............................................... 3
1.13 "Dissolution Event".......................................... 4
1.14 "Dissolution"................................................ 4
1.15 "Economic Risk of Loss"...................................... 4
1.16 "Exempt Income".............................................. 4
1.17 "Fiscal Year"................................................ 4
1.18 "GAAP"....................................................... 4
1.19 "Gross Asset Value".......................................... 4
1.20 "Interest"................................................... 5
1.21 "Minimum Gain Attributable to a Partner Nonrecourse Debt".... 5
1.22 "Net Proceeds of a Sale or Refinance Transaction"............ 5
1.23 "Nondeductible Expenditure".................................. 6
1.24 "Nonrecourse Deductions"..................................... 6
1.25 "Partner".................................................... 6
1.26 "Partner Nonrecourse Debt"................................... 6
1.27 "Partnership"................................................ 6
1.28 "Partnership Accountants".................................... 6
1.29 "Partnership Agreement"...................................... 6
1.30 "Partnership Minimum Gain"................................... 6
1.31 "Partnership Nonrecourse Liability".......................... 6
1.32 "Profits and Losses"......................................... 6
1.33 "Regulations"................................................ 7
1.34 "State"...................................................... 7
1.35 "WinCup Capital Contribution Agreement"...................... 7
ARTICLE II THE PARTNERSHIP.............................................. 7
2.1 Name and Continuation........................................ 7
i
<PAGE>
2.2 Registered Office............................................ 7
2.3 Purpose...................................................... 7
2.4 Other Business............................................... 7
2.5 Statutory Compliance......................................... 8
2.6 Term......................................................... 8
ARTICLE III CONTROL AND MANAGEMENT....................................... 8
3.1 Management and Operation..................................... 8
3.2 Tax Matters Partner.......................................... 10
3.3 Limitation on Liability of Partners; Indemnification......... 10
3.4 Employment Agreement......................................... 11
3.5 Limited Liability of Limited Partner......................... 11
ARTICLE IV ACCOUNTING RECORDS........................................... 11
4.1 Tax Elections................................................ 11
4.2 Tax Returns.................................................. 11
4.3 Books........................................................ 12
4.4 Fiscal Year.................................................. 12
4.5 Reports...................................................... 12
4.6 Partnership Funds............................................ 12
4.7 Inspections.................................................. 12
4.8 Financial Information........................................ 13
ARTICLE V INTERESTS; CAPITAL ACCOUNT................................... 13
5.1 Interests.................................................... 13
5.2 Capital Accounts; Loans...................................... 13
ARTICLE VI ALLOCATIONS.................................................. 13
6.1 Profits...................................................... 13
6.2 Allocation of Capital Gain and Capital Loss.................. 14
6.3 Losses....................................................... 14
6.4 Special Allocations.......................................... 14
ARTICLE VII CASH DISTRIBUTIONS........................................... 16
7.1 Distribution of Cash Flow.................................... 16
7.2 Distributions of Net Proceeds of a Sale Transaction.......... 17
7.3 Tax Payment Loans............................................ 17
ARTICLE VIII TRANSFER OF PARTNERSHIP INTERESTS............................ 17
8.1 Restrictions on Transfer..................................... 17
8.2 Survival of Restrictions on Transfer......................... 17
8.3 Admission of Substitute Partners............................. 18
ii
<PAGE>
ARTICLE IX DISSOLUTION AND LIQUIDATION.................................. 18
9.1 Dissolution Events........................................... 18
9.2 Liquidation.................................................. 19
ARTICLE X BUY-SELL PROVISIONS.......................................... 19
10.1 Tag-Along Right.............................................. 19
10.2 Take-Along Right............................................. 20
ARTICLE XI MISCELLANEOUS................................................ 21
11.1 Notices...................................................... 21
11.2 Successors and Assigns....................................... 21
11.3 Waiver of Partition.......................................... 21
11.4 No Oral Modifications; Amendments............................ 21
11.5 Captions; References......................................... 22
11.6 Terms........................................................ 22
11.7 Invalidity................................................... 22
11.8 Counterparts................................................. 22
11.9 Further Assurances........................................... 22
11.10 Complete Agreement........................................... 22
11.11 Governing Law................................................ 22
iii
<PAGE>
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
--------------------------------------------------
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT ("Agreement") is
entered into as of this 1st day of January, 1997, by and between WINCUP
HOLDINGS, INC., a Delaware corporation (the "General Partner") and RADNOR
HOLDINGS CORPORATION, a Delaware corporation (the "Limited Partner")
(individually, a "Partner" and collectively, the "Partners").
W I T N E S E T H:
WHEREAS, WinCup Holdings, L.P. (the "Partnership") was formed as a
limited partnership as of January 20, 1996 under the Delaware Revised Uniform
Limited Partnership Act and has operated under the Limited Partnership Agreement
dated as of January 20, 1996 by and between the General Partner and James River
Paper Company, Inc. ("James River") as limited partner (the "Original Limited
Partnership Agreement").
WHEREAS, the Limited Partner has purchased the limited partnership
interest of James River (the "JR Partnership Interest") pursuant to a
Partnership Interest Purchase Agreement (the "Purchase Agreement"), dated as of
December 5, 1996 by and among the Partnership, the General Partner, James River
and the Limited Partner; and
WHEREAS, the parties hereto desire to amend and restate in its entirety
the Original Limited Partnership Agreement of the Partnership with WinCup
Holdings, Inc. as General Partner and Radnor Holdings Corporation as Limited
Partner.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree to amend and restate the Original Limited Partnership Agreement in its
entirety as follows:
ARTICLE I
DEFINED TERMS
-------------
The capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified below:
1.1 "Act" means the Delaware Revised Uniform Limited Partnership Act, as
from time to time amended.
1.2 "Adjusted Capital Account" means, with respect to a Partner, such
Partner's Capital Account as of the end of the relevant Fiscal Year, after
giving effect to the following adjustments:
1
<PAGE>
(a) Credit to such Capital Account any amounts which such Partner
is obligated, or is treated as obligated, to restore with respect to any deficit
balance in its Capital Account by reason of Regulations Section 1.704-
1(b)(2)(ii)(b)(3) and Section 1.704-1(b)(2)(ii)(c)(3) or is deemed to be
obligated to restore to its Capital Account pursuant to the penultimate sentence
of Regulations Section 1.704-2(g)(1) and Section 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.3 "Affiliate" means:
(a) any person directly or indirectly controlling, controlled by
or under common control with, another person, and
(b) any person owning or controlling 50% or more of the
outstanding voting securities of another person. The term "person" means an
individual, corporation, partnership, association, joint stock company, trust or
unincorporated organization.
1.4 "Bankruptcy" means with respect to any Partner:
(a) the filing by the Partner in any court, pursuant to any
statute of the United States or of any state, of a petition in bankruptcy or
insolvency, or its filing for reorganization or for the appointment of a
receiver or trustee of all (or a material portion of) the Partner's property;
(b) an assignment for the benefit of creditors;
(c) an admission by the Partner in writing of its inability to
pay its debts as they fall due or consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of any material portion of its
property;
(d) a filing against the Partner in any court, pursuant to any
statute of the United States or of any state, of a petition in bankruptcy,
insolvency, reorganization, or for the appointment of a receiver or a trustee of
all (or a material portion of) the Partner's property, and within ninety (90)
days after the commencement of any such proceeding against the Partner such
petition shall not have been dismissed (or satisfactory evidence that such
Partner is diligently contesting such petition shall not have been received by
the other Partner). In addition, if the whole or any portion of the Interest of
any Partner is subject to levy or attachment, and such levy or attachment is not
released or discharged within sixty (60) days, such Partner shall be deemed
"bankrupt" for purposes of this Agreement.
1.5 "Capital Account" means the Capital Account of each of the Partners
determined and adjusted from time to time in accordance with the rules of
Regulations Section 1.704-1(b)(2)(iv), as the same may be amended or revised.
In the event that the treatment called
2
<PAGE>
for in such Regulations is inconsistent with the provisions of this Agreement,
then the provisions of the Regulations shall control.
1.6 "Business" means the one piece foam container business conducted
by the Partnership.
1.7 "Capital Contribution" means any cash or any other assets
contributed to the Partnership by a Partner. The value of any non-cash Capital
Contribution shall be its agreed upon fair market value, net of any liabilities
to which it is subject.
1.8 "Capital Gain" means any and all gain realized from a sale or
other disposition of any asset of the Partnership, other than the sale of
inventory in the ordinary course of business.
1.9 "Capital Loss" means any loss realized from a sale or other
disposition of any asset of the Partnership, other than the sale of inventory in
the ordinary course of business.
1.10 "Cash Flow" means, with respect to any Partnership fiscal year, or
portion thereof, the total annual cash gross receipts of the Partnership,
excluding Net Proceeds of a Sale or Refinance Transaction, minus all cash
expenditures of the Partnership including, without limitation, all amounts owed
to a Partner or an Affiliate of a Partner and all amounts which are required to
be paid to lenders to the Partnership in full or partial satisfaction of the
outstanding principal amount of indebtedness of the Partnership under any
applicable note, outside legal and accounting costs, expenditures for
advertising and promotion, salaries, accounting, duplicating or bookkeeping
services, computing or accounting equipment use, travel expenses properly
chargeable to the Partnership, telephone and other expenses incurred by the
Partnership, and minus any cash set aside by the General Partner to provide
reasonable reserves for working capital or capital expenditures. No item set
forth herein shall be accounted for more than once.
1.11 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.12 "Depreciation" means for each fiscal year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes, except that if the Gross Asset Value of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of such
year or other period, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Partners.
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1.13 "Dissolution Event" means the happening of any of the following
events which shall cause a dissolution of the Partnership:
(a) The expiration of the term of the Partnership under Section
2.7 hereof;
(b) The Bankruptcy or the Dissolution of a Partner or its parent
corporation, unless, within sixty (60) days after such event, the other Partner
elects in writing to continue the business of the Partnership, in which event
the Partnership shall be continued.
(c) The sale or other disposition, not including an exchange, of
all or substantially all of the assets of the Partnership;
(d) The bankruptcy of the Partnership (applying the same
definition as the Bankruptcy of a Partner); or
(e) A determination by the Partners that the Partnership should
be dissolved.
1.14 "Dissolution" means:
(a) In the case of a corporate Partner, the earlier of the
adoption of a plan of liquidation by such Partner or the effective date of
dissolution in accordance with applicable statutory law; and
(b) In the case of a partnership Partner, the earlier of the date
of dissolution and termination of such partnership in accordance with the
provisions of the governing partnership agreement or applicable statutory law,
or the date on which such partnership disposes of all or substantially all of
its assets.
1.15 "Economic Risk of Loss" means economic risk of loss within the
meaning of Regulations Section 1.752-2.
1.16 "Exempt Income" means any income and gain of the Partnership that
is exempt from federal income tax.
1.17 "Fiscal Year" means the fiscal year of the Partnership which shall
be the calendar year.
1.18 "GAAP" means United States generally accepted accounting
principles consistently applied.
1.19 "Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
4
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(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset on
the date of contribution, as determined by the contributing Partner and the
Board;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking Code Section
7701(g) into account), as determined in good faith by the Partners as of the
following times:
(i) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution;
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of assets as consideration for an Interest in the
Partnership; and
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g).
(c) the Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value (taking Code Section 7701(g)
into account) of such asset on the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m). If the Gross
Asset Value of an asset has been determined or adjusted pursuant to (a), (b) or
(d) hereof, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
1.20 "Interest" means the percent ownership interest of each Partner
in the Partnership, including the rights granted to each Partner under this
Agreement, subject to the responsibilities of each Partner imposed under this
Agreement.
1.21 "Minimum Gain Attributable to a Partner Nonrecourse Debt" means
minimum gain attributable to such Partner Nonrecourse Debt within the meaning of
Regulations Section 1.704-2(i)(3).
1.22 "Net Proceeds of a Sale or Refinance Transaction" means the
proceeds to the Partnership from: (i) the sale, exchange, condemnation (or
similar eminent domain taking), receipt of casualty insurance proceeds
(excluding any business interruption insurance proceeds), or any disposition of
any of the assets of the Partnership (other than the sale of inventory in the
ordinary course of business); or (ii) any financing, refinancing or other
borrowing which provides proceeds in excess of the amounts required to be paid
in respect of existing Partnership indebtedness, minus all cash expenditures of
the Partnership incurred in connection with such
5
<PAGE>
disposition or borrowings. "Net Proceeds of a Sale or Refinance Transaction"
shall not include proceeds distributed pursuant to Section 9.2 hereof.
1.23 "Nondeductible Expenditure" means an expenditure described in
Code Section 705(a)(2)(B) or treated as such an expenditure under Regulations
Section 1.704-1(b)(2)(iv)(i).
1.24 "Nonrecourse Deductions" means the nonrecourse deductions
within the meaning of Regulations Section 1.704-2(c).
1.25 "Partner" means each of the Partners, and such successors,
assigns or additional partners as may be admitted, from time to time, pursuant
to the terms of this Agreement.
1.26 "Partner Nonrecourse Debt" means any nonrecourse debt (within
the meaning of Regulations Section 1.704-2(i)(1) for which any Partner bears the
Economic Risk of Loss.
1.27 "Partnership" means the Partnership formed by and governed
pursuant to this Agreement as such Partnership may from time to time be
constituted and amended.
1.28 "Partnership Accountants" means Arthur Andersen & Company,
independent certified public accountants, or such other independent certified
accounting firm as may be selected by the General Partner.
1.29 "Partnership Agreement" means this Amended and Restated Limited
Partnership Agreement as it may be amended from time to time.
1.30 "Partnership Minimum Gain" means partnership minimum gain
within the meaning of Regulations Section 1.704-2(d).
1.31 "Partnership Nonrecourse Liability" means any Partnership
liability (or portion thereof) for which no Partner bears the Economic Risk of
Loss.
1.32 "Profits and Losses" means, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined under the accrual method of accounting and in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
any adjustments required under Regulations Section 1.704-1(b), excluding any and
all Capital Gain and Capital Loss from a sale or disposition of any assets of
the Partnership, other than the sale of inventory in the ordinary course of
business.
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1.33 "Regulations" means the Income Tax Regulations promulgated
under the Code, as such Regulations may be amended from time to time, including
corresponding provisions of succeeding regulations.
1.34 "State" means the State of Delaware.
1.35 "WinCup Capital Contribution Agreement" means the Capital
Contribution Agreement entered into as of January 20, 1996 between the General
Partner and the Partnership.
ARTICLE II
THE PARTNERSHIP
---------------
2.1 Name and Continuation. The parties hereby continue the
---------------------
Partnership under the name "WinCup Holdings, L.P."
2.2 Registered Office. The registered office of the Partnership shall
-----------------
be maintained at Dover and Capitol Corporate Services, Inc., P.O. Box 741,
Dover, DE 19903 or at such other place as may be designated from time to time
by the Partners.
2.3 Purpose.
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2.3.1 Statement. The purpose of the Partnership is to own and
operate the Business and to engage in any other activities incidental or related
thereto.
2.3.2 No Other Purposes. The Partnership shall be a partnership
only for the purposes specified hereinabove, and this Agreement shall not be
deemed to create a partnership between the Partners with respect to any
activities whatsoever other than the activities within the purposes specified
immediately above.
2.3.3 No Partner Benefit. The credit and assets of the
Partnership shall be used solely for the benefit of the Partnership and shall
not be used to further the personal gain of any Partner. No asset of the
Partnership shall be transferred or encumbered for or in payment of any
individual obligation of a Partner.
2.4 Other Business. Nothing in this Agreement shall be deemed to
--------------
restrict in any way the rights of any Partner, or any of its shareholders,
partners or affiliates to conduct any business or activity whatsoever without
any accountability to the Partnership or to any other Partner even if such
business or activity competes with the business of the Partnership, it being
understood by each Partner that any other Partner or its shareholders, partners
or affiliates may be interested, directly or indirectly, in various other
businesses and undertakings not included in the Partnership.
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2.5 Statutory Compliance.
--------------------
2.5.1 The Partnership shall exist under, be governed by and this
Agreement shall be construed in accordance with the applicable laws of the
State, including the Act. The Partnership shall make all filings and disclosures
required by, and shall otherwise comply with, all such laws. All real, personal
and intangible property owned by the Partnership shall be deemed owned by the
Partnership as an entity, in its name, and no Partner shall have any ownership
interest in such property in its individual name or right.
2.5.2 The Partners shall execute and file in the appropriate
records any assumed or fictitious name certificate or certificate required by
law to be filed in connection with the formation of the Partnership, and shall
execute and file such other documents and instruments as may be necessary or
appropriate with respect to the formation of, and conduct of business by, the
Partnership.
2.6 Term. The Partnership shall continue until December 31, 2035,
----
unless sooner terminated pursuant to statute or any provision of this Agreement.
ARTICLE III
CONTROL AND MANAGEMENT
----------------------
3.1 Management and Operation.
------------------------
3.1.1 Partner Powers. Except as otherwise restricted in this
--------------
Agreement, the management and control of the Partnership's business shall be
exercised by the General Partner. The General Partner shall devote such time to
the affairs of the Partnership as is reasonably necessary to manage its affairs.
Except as provided in Section 3.4 hereof, the General Partner and its Affiliates
shall receive no compensation for its services and for performing its duties as
General Partner of the Partnership. Subject to the limitations otherwise
provided in this Agreement, the General Partner shall have all of the rights and
powers of a general partner provided for by the Act, including the power on
behalf and in the name of the Partnership to carry out, exercise and implement
any and all of the purposes and powers of the Partnership set forth in Section
2.3 hereof. Without limiting the generality of the foregoing, the General
Partner shall have the power to:
(a) open, maintain and close bank accounts and draw
checks or other orders for the payment of moneys;
(b) receive, dispose of and deal in all checks,
moneys and other personal property of the Partnership;
(c) employ employees, attorneys, accountants,
engineers, consultants and agents and terminate such employment;
8
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(d) expend the capital and revenues of the
Partnership in furtherance of the Partnership's purposes and business;
(e) enter into agreements and contracts with third
parties, terminate such agreements and institute, defend and settle litigation
arising therefrom, and give receipts, releases and discharges with respect to
all of the foregoing and any matters incident thereto;
(f) sell, lease, trade, exchange or otherwise
dispose of all or any portion of the assets of the Partnership;
(g) employ, on behalf of the Partnership, such
firms, persons or corporations as it, in its sole judgment, deems necessary or
advisable for the operation of the Partnership's business on such terms and for
such compensation as it shall determine;
(h) maintain at the expense of the Partnership such
insurance coverage for workers' compensation, comprehensive general liability,
product liability, and property liability and any and all other insurance
necessary or appropriate to the business of the Partnership, in such amounts and
of such types as it shall determine from time to time;
(i) borrow money and issue evidences of indebtedness
necessary, convenient or incidental to the accomplishment of the purposes of the
Partnership, secured by a mortgage, pledge or other lien on any of the
Partnership's properties or assets;
(j) execute, in furtherance of any purpose of the
Partnership, any deed, lease, mortgage, deed of trust, mortgage note, promissory
note, bill of sale, contract or other instrument purporting to convey or
encumber the real or personal property of the Partnership and amendments
thereof;
(k) determine the accounting methods and conventions
to be used in the preparation of the Partnership's financial statements and tax
returns and make any and all elections under the tax laws of the United States,
the several states and other relevant jurisdictions as to the treatment of items
of income, gain, loss, deduction and credit of the Partnership, or any other
method or procedure related to the preparation of the Partnership's financial
statements and tax returns; and
(l) engage in any kind of activity and perform and
carry out contracts of any kind necessary to, or in connection with, or
convenient or incidental to the accomplishment of the purpose of, the
Partnership, as may be lawfully carried on or performed by a partnership under
the laws of the State.
3.1.2 Limitations on Powers. The General Partner shall not take
---------------------
any action on behalf of or in the name of the Partnership, or enter into any
commitment or other obligation binding upon the Partnership, except for (a)
actions expressly provided for in this Agreement and (b) actions by the General
Partner within the scope of its authority granted in this Agreement.
9
<PAGE>
Notwithstanding the powers set forth in Section 3.1.1 hereof, the General
Partner shall not be permitted to make any decision to or take any steps toward
effecting the following major actions of the Partnership without the prior
consent of the Limited Partner:
(a) admit a new Partner to the Partnership;
(b) amend the Partnership Agreement;
(c) dissolve the Partnership except in accordance with this Agreement;
(d) commit any act in violation of the terms of the Partnership
Agreement;
(e) possess Partnership Property other than for a Partnership purpose;
(f) engage in any act that would make it impossible for Partnership to
continue to carry on its business;
(g) permit a judgment to be confessed against the Partnership.
3.2 Tax Matters Partner. The General Partner shall serve as the "tax
-------------------
matters partner" within the meaning of Section 6231(a)(7) of the Code. The tax
matters partner shall serve as the liaison between the Partnership and the
Internal Revenue Service in the event of an audit of the Partnership, and as the
primary coordinator of Partnership actions in connection with such audit. The
tax matters partner shall provide to the other Partner copies of all notices
sent to the Partnership by the Internal Revenue Service or sent by the
Partnership to the Internal Revenue Service and shall keep the other Partner
informed of the progress of the tax audit. The "tax matters partner" shall have
similar responsibilities and obligations with respect to any state and/or local
tax audits.
3.3 Limitation on Liability of Partners; Indemnification.
----------------------------------------------------
3.3.1 No Partner, its shareholders, employees, agents or
affiliates shall have any liability to the Partnership or to any other Partner
for any loss, cost or expense suffered or incurred by the Partnership or its
Partners which arises out of or relates to any action or inaction of any of such
persons unless such action or omission to act was undertaken in bad faith, or
constituted gross negligence or willful misconduct.
3.3.2 Each Partner, its shareholders, employees, agents and
affiliates shall be indemnified by the Partnership against any losses,
judgments, liabilities, expenses incurred in settling any claim or incurred in
any finally adjudicated legal proceeding, including reasonable attorneys' fees
and costs of removing any liens affecting property of the indemnitee, and/or
amounts paid in settlement of any claims sustained by it arising from or
relating to the Partnership, provided that the same were not the result of
actions by such Partner, its shareholders, employees, agents or affiliates taken
in bad faith and/or in violation of this Agreement.
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<PAGE>
3.3.3 The indemnification provided in Section 3.3.2 shall be made
solely from assets of the Partnership and no Partner shall be personally liable
to any indemnitee.
3.3.4 This Section 3.3 shall inure to the benefit of the
Partners, their shareholders, employees, agents and affiliates, and their
respective heirs, executors, administrators and successors and assigns.
3.4 Employment Agreement. The Partnership has entered into an
--------------------
EMployment Agreement (the "Kennedy Employment Agreement") dated as of January
20, 1996 with Michael T. Kennedy, an Affiliate of the General Partner, in the
form attached as Exhibit A. The Limited Partner and the General Partner hereby
ratify and accept the terms of the Employment Agreement.
3.5 Limited Liability of Limited Partner. No Limited Partner shall be
------------------------------------
liable for any debts, liabilities, contracts or obligations of the Partnership,
except as provided by law. The Limited Partner shall be liable only to make
payments of its Capital Contributions as and when due under this Agreement.
ARTICLE IV
ACCOUNTING RECORDS
------------------
4.1 Tax Elections. Except as provided in the second sentence of this
-------------
Section 4.1, all Partnership tax elections shall be made by the General Partner
in its sole discretion. Upon the request of the Limited Partner made not later
than fifteen (15) days after the close of a Fiscal Year in which the Limited
Partner sells or exchanges all or part of its Interest, the General Partner
shall cause the Partnership to make the election pursuant to Section 754 of the
Code, to adjust the basis of the Partnership's property as required under
Sections 734 and 743 of the Code. Upon the request of the Limited Partner, and
subject to the Limited Partner providing reasonable guidance in such regard, the
Partnership shall maintain records reflecting the adjustments to basis resulting
from such election, and shall reflect such adjustments on its Form 1065 and
Schedules K-1.
4.2 Tax Returns. Each tax return and other statement to be filed by
-----------
the Partnership with the Internal Revenue Service or any other taxing authority,
shall be prepared by the Partnership Accountants at the direction of the General
Partner and at the expense of the Partnership and copies of each such return and
statement shall be distributed to all of the Partners by the General Partner.
All tax information required by the Partners for the preparation of their income
tax returns shall be delivered to them within ninety (90) days after the close
of each Fiscal Year.
4.3 Books. Proper books of account shall be kept for the Partnership
-----
by or under the supervision of the General Partner on an accrual basis in
accordance with GAAP for financial accounting purposes and in accordance with
the accrual method and this Agreement for book and tax capital accounting
purposes, and entries shall be made therein of all monies
11
<PAGE>
expended and received by the Partnership as well as all other matters relating
to the Partnership usually or properly entered in books of account. Such books
and all papers, correspondence and other instruments relating or belonging to
the Partnership, shall be kept at the principal office of the Partnership, and
each Partner shall have the right to examine and inspect the books, records,
accounts and other papers of the Partnership at all times during normal business
hours.
4.4 Fiscal Year. The Fiscal Year of the Partnership shall be the
-----------
calendar year. As used in this Agreement, a Fiscal Year shall include any
partial Fiscal Year at the beginning and ending of the Partnership.
4.5 Reports.
-------
4.5.1 Within one hundred twenty (120) days after the end of each
Fiscal Year of the Partnership, a general accounting and audit shall be
completed by the Partnership Accountants at the expense of the Partnership, in
accordance with generally accepted audit standards, covering the assets,
liabilities, cash distributions and net worth of the Partnership and also its
dealings, transactions and operations during such Fiscal Year, and all other
matters customarily included in such audit.
4.5.2 Each Partner shall be furnished with audited financial
statements which shall contain a balance sheet as of the end of the Fiscal Year,
statements of income and changes in Partners' Capital Accounts and a statement
of cash flow for the Fiscal Year then ended.
4.5.3 Each Partner shall be furnished each month with monthly
unaudited financial statements, including a balance sheet, income statement and
statement of cash flow in the same form as prepared for management of the
Partnership no later than seven (7) days after such financial statements are
completed.
4.6 Partnership Funds. All funds of the Partnership shall be kept in
-----------------
segregated accounts of investments in the name of the Partnership and shall not
be commingled with any other funds. To the extent practicable, all funds of the
Partnership shall be invested in short-term U.S. government securities or bank
certificates of deposit or shall be deposited in interest-bearing bank or money-
market accounts. Any remaining funds of the Partnership shall be kept in a
Partnership account or accounts in such bank or banks as the General Partner
shall select and shall be disbursed by the General Partner in accordance with
this Agreement.
4.7 Inspections. Each Partner shall be permitted to inspect any and
-----------
all of the facilities and operations of the Partnership during normal business
hours upon reasonable notice to management of the Partnership, provided that
such inspections are scheduled to minimize the disruption of the business of the
Partnership.
4.8 Financial Information. The Partnership shall provide to each
---------------------
Partner, within thirty (30) days after request, such financial information with
respect to the Partnership's business for the periods in which such Partner
initially contributed assets to the Partnership as the requesting Partner shall
need for the purposes of preparing its own financial statements.
12
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ARTICLE V
INTERESTS; CAPITAL ACCOUNT
--------------------------
5.1 Interests.
----------
5.1.1 Limited Partner. The Limited Partner has acquired its
---------------
Interest in exchange for the purchase of the JR Partnership Interest, pursuant
to the Purchase Agreement.
5.1.2 General Partner. The General Partner has acquired its
---------------
Interest in exchange for a Capital Contribution consisting of the Transferred
Assets subject to the Assumed Liabilities (each as defined in the WinCup
Contribution Agreement) in exchange for its Interest in the Partnership.
5.2 Capital Accounts; Loans.
-----------------------
5.2.1 Each Partner shall have a Capital Account.
5.2.2 Except as specifically provided herein, no Partner may
contribute capital to, or withdraw capital from, the Partnership.
5.2.3 Loans by any Partner to the Partnership shall not be
considered Capital Contributions, and shall not increase the Capital Account of
the lending Partner.
5.2.4 No interest shall be paid on any Capital Contribution or
Capital Account to the Partnership by any Partner.
ARTICLE VI
ALLOCATIONS
-----------
6.1 Profits. Profits for each Fiscal Year shall be allocated between
-------
the Partners as follows:
(i) First, to the Partners so that the cumulative allocation
of Profits pursuant to this Section 6.1(i) (over the life of the Partnership) is
equal to the cumulative Losses allocated to each Partner pursuant to Section 6.3
hereof (over the life of the Partnership);
(ii) Second, to each Partner in an amount so that the
cumulative allocation of Profits pursuant to this Section 6.1 (ii) (over the
life of the Partnership) will equal the cumulative Cash Flow distributed to such
Partner pursuant to Section 7.1(i) hereof (over the life of the Partnership);
and
(iii) Third, 55% to the General Partner and 45% to the Limited
Partner.
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6.2 Allocation of Capital Gain and Capital Loss. Capital Gain and
-------------------------------------------
Capital Loss shall be allocated between the Partners in order to create, as
nearly as possible, positive capital account balances for the Partners that will
result in distributions of liquidation proceeds pursuant to Section 9.2 hereof
between the Partners in accordance with the amounts and priorities set forth in
Section 7.2 hereof.
6.3 Losses. Losses of the Partnership for each Fiscal Year shall be
------
allocated between the Partners as follows:
(i) First, in proportion to, and to the extent of, the positive
Capital Account balances of the Partners;
(ii) Second, 55% to the General Partner and 45% to the Limited
Partner.
6.4 Special Allocations.
-------------------
6.4.1 Special Rules to Comply with Minimum Gain Chargeback
----------------------------------------------------
Requirement of Regulations Section 1.704-2(f). If there is a net decrease in
- ---------------------------------------------
Partnership Minimum Gain during a fiscal year of the Partnership, then, in
accordance with Regulations Section 1.704-2(f), each Partner shall be allocated
items of Partnership income and gain for such fiscal year (and, if necessary,
succeeding fiscal years) equal to such Partner's share of the net decrease in
Partnership Minimum Gain (such share being determined in the manner provided in
Regulations Section 1.704-2(g)(2)), except to the extent that the Partner's
share of the net decrease in Partnership Minimum Gain is caused by a guarantee,
refinancing, or other change in the debt instrument causing it to become
partially or wholly recourse debt or Partner Nonrecourse Debt, and such Partner
bears the economic risk of loss for the newly guaranteed, refinanced, or
otherwise changed liability, and except to the extent a Partner contributes
capital to the Partnership that is used to repay the Partnership Nonrecourse
Liability and such Partner's share of the net decrease in Partnership Minimum
Gain results from such repayment. Any amount allocated pursuant to this Section
6.4.1 shall be comprised of the items of gain and income specified in
Regulations Section 1.704-2(f)(6).
6.4.2 Special Rules to Comply with Chargeback of Minimum Gain
-------------------------------------------------------
Attributable to Partner Nonrecourse Debt under Regulations Section 1.704-
- ------------------------------------------------------------------------
2(i)(4). If there is a net decrease during a fiscal year of the Partnership in
- -------
the Minimum Gain Attributable to a Partner Nonrecourse Debt, then any Partner
with a share of the Minimum Gain Attributable to such Partner Nonrecourse Debt
at the beginning of such fiscal year (this share being determined in the manner
provided in Regulations Section 1.704-2(i)(5)) shall be allocated items of
Partnership income and gain for such fiscal year (and, if necessary, for
succeeding years) equal to that Partner's share of the net decrease in the
Minimum Gain Attributable to such Partner Nonrecourse Debt, except to the extent
the net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt arises
because the liability ceases to be Partner Nonrecourse Debt due to a conversion,
refinancing, or other change in the debt instrument that causes it to become
partially or wholly a Partnership Nonrecourse Liability. Any amount allocated
pursuant to this
14
<PAGE>
Section 6.4.2 shall be comprised of the items of gain and income specified in
Regulations Section 1.704-2(f)(6).
6.4.3 Qualified Income Offset. In the event any Partner
-----------------------
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be allocated to
that Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the deficit in that Partner's Adjusted Capital
Account as quickly as possible; provided, that an allocation pursuant to this
Section 6.4.3 shall be made only if and to the extent that such Partner would
have a deficit in its Adjusted Capital Account after all other allocations
provided for in this Article VI have been tentatively made as if this Section
6.4.3 were not in the Agreement.
6.4.4 Partner Nonrecourse Deductions. Any item of Partnership
------------------------------
loss, deduction or Nondeductible Expenditure that is attributable to a Partner
Nonrecourse Debt shall be allocated to the Partner that bears the Economic Risk
of Loss for such debt. If more than one Partner bears the Economic Risk of Loss
for a Partner Nonrecourse Debt, any such item attributable to such debt shall be
allocated among such Partners in accordance with the ratios in which the
Partners share the Economic Risk of Loss for such debt. The determination of
the items of Partnership loss, deduction and Nondeductible Expenditure that are
attributable to a Partner Nonrecourse Debt shall be made in accordance with
Regulations Section 1.704-2(i)(2).
6.4.5 Nonrecourse Deductions. Nonrecourse Deductions shall be
----------------------
allocated among the Partners 55% to the General Partner and 45% to the Limited
Partner.
6.4.6 Tax Allocations. A Partner's allocable share of the
---------------
Partnership's items of income, gain, deduction and loss for tax purposes shall
be determined under the foregoing provisions of this Article VI except as
provided in this Section 6.4.6.
6.4.6.1 Contributed Property. Income, gain, loss and
--------------------
deduction, as computed for the purpose of determining taxable income, with
respect to any property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to the Partnership
for federal income tax purposes and its initial Gross Asset Value in accordance
with Code Section 704(c) and the Regulations thereunder.
6.4.6.2 Other Property with Gross Asset Value Different
-----------------------------------------------
from Tax Basis. In the event that the Gross Asset Value of any Partnership asset
- --------------
is adjusted, subsequent allocations of income, gain, loss and deduction with
respect to such asset, as computed for the purpose of determining taxable
income, shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the manner
provided in Regulations Section 1.704-1(b)(4)(i).
6.4.6.3 Tax Elections; Effects on Capital Accounts. Any
------------------------------------------
elections or other decisions relating to the allocations addressed by this
Section 6.4.6 shall be made in a
15
<PAGE>
manner that reasonably reflects the purposes and intentions of this Agreement.
Allocations made pursuant to this Section 6.4.6 are solely for purposes of
federal, state and local taxes and shall not affect, or be taken into account in
computing, any Partner's Capital Account, share of Profits and Losses, or
distributions pursuant to any provision of this Agreement.
6.4.7 Compliance with Code and Regulations. The provisions of
------------------------------------
this Agreement that relate to the allocations for federal income tax purposes of
items of Partnership income (including Exempt Income), gain, loss, deduction and
Nondeductible Expenditure (including, without limitation, the allocation of such
items with respect to property having a Gross Asset Value different from
adjusted federal income tax basis), that relate to the determination and
maintenance of Capital Accounts, and that relate to the distribution of
Partnership property upon the liquidation of the Partnership or a Partner's
interest therein, are intended to comply with Regulations Section 1.704-1(b) (to
the extent not superseded by Regulations Section 1.704-2) and Regulations
Section 1.704-2, and with Code Section 704(c) and the Regulations promulgated
thereunder and, except as otherwise provided in the definition of a "Capital
Account" as set forth in Section 1.6 hereof, shall be interpreted and applied in
a manner consistent with such statutory and regulatory provisions, which
statutory and regulatory provisions are expressly incorporated into and made a
part of this Agreement. Should such statutory and regulatory provisions be
amended, the affected provisions of this Agreement shall be interpreted and
applied in accordance with such amended provisions.
6.4.8 Allocation in the Event of Transfer. If an Interest in
-----------------------------------
the Partnership is transferred in accordance with Article VIII hereof, there
shall be allocated to each Partner which held the transferred interest during
the Fiscal Year of transfer the product of (a) the Partnership's Profits and
Losses allocable to such transferred interest for such Fiscal Year, and (b) a
fraction the numerator of which is the number of days such Partner held the
transferred interest during such Fiscal Year and the denominator of which is the
total number of days in such Fiscal Year; provided however, that the transferor
and transferee may elect to allocate such Profit or Loss by closing the books of
the Partnership immediately after the transfer of an Interest. If an allocation
is made without a closing of the books of the Partnership, the allocation shall
be made without regard to the date, amount or recipient of any such
distributions which may have been made with respect to such transferred
interest.
ARTICLE VII
CASH DISTRIBUTIONS
------------------
7.1 Distribution of Cash Flow. Except as otherwise provided herein,
-------------------------
Cash Flow with respect to each Fiscal Year of the Partnership shall be
distributed between the Partners 55% to the General Partner and 45%to the
Limited Partner.
7.2 Distributions of Net Proceeds of a Sale Transaction. Except as
---------------------------------------------------
otherwise provided herein, Net Proceeds of a Sale or Refinance Transaction shall
be distributed between the Partners 55% to the General Partner and 45% to the
Limited Partner.
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<PAGE>
7.3 Tax Payment Loans. At the sole option of the General Partner,
------------------
the Partnership shall lend each year to the General Partner funds up to the
amount of money equal to the following (the "General Partner's Tax Liability"):
(i) the taxable income allocated to the General Partner for such Fiscal Year as
a result of the Profit allocation pursuant to Section 6.1 hereof multiplied by
(ii) the highest marginal effective Federal and Pennsylvania corporate income
tax rate applicable to the General Partner with respect to that Fiscal Year, as
and when the General Partner shall be obligated to make payments of estimated
tax with respect to the allocation of such Profits but in no event later than
sixty days after the close of the Fiscal Year of the Partnership with respect to
which the allocation of Profit is made. It shall be a condition to the making of
any loan under this Section 7.3 that there shall be sufficient Cash Flow (after
taking into account any loan under this Section 7.3) available for distribution
to the Limited Partner in accordance with Section 7.1 to equal the following
(the "Limited Partner's Tax Liability"): (i) the taxable income allocated to the
Limited Partner for the Fiscal Year as a result of the Profit allocation
pursuant to Section 6.1 hereof multiplied by (ii) the highest marginal statutory
Federal and Delaware corporate income tax rate with respect to that Fiscal Year
(taking into account the deductibility of the Delaware corporate income tax for
purposes of computing Federal taxable income). If there is insufficient Cash
Flow (before taking into account any loan under this Section 7.3) in any Fiscal
Year to equal the sum of the General Partner's Tax Liability and the Limited
Partner's Tax Liability, then the ratio of (i) the loan amount under this
Section 7.3 for the Fiscal Year, to (ii) the total distributions of Cash Flow to
the Limited Partner under Section 7.1 for such Fiscal Year, shall be, as nearly
as possible, the same as the ratio of (i) the General Partner's Tax Liability to
(ii) the Limited Partner's Tax Liability.
ARTICLE VIII
TRANSFER OF PARTNERSHIP INTERESTS
---------------------------------
8.1 Restrictions on Transfer. Except as provided in Article X
------------------------
hereof, no Partner may, without the prior written consent (which may be
arbitrarily withheld) of the other Partner, sell, convey, transfer, syndicate,
assign, mortgage, pledge, hypothecate or otherwise encumber in any way
(hereinafter referred to as a "transfer") all or any portion of its Interest in
the Partnership or in any property of the Partnership, or withdraw or retire
from the Partnership, and any such attempted transfer, withdrawal or retirement
not permitted hereunder shall be null and void. Notwithstanding the foregoing
sentence, a Partner shall be permitted to transfer its interest to its parent
corporation or to a wholly-owned subsidiary of such Partner or its parent
corporation; provided however, that such transfer will not cause a termination
of the Partnership for Federal income tax purposes, and, with respect to a
transfer of the General Partner's interest, the consent of the Limited Partner
is received, which consent may not be unreasonably withheld.
8.2 Survival of Restrictions on Transfer. In the event of any
------------------------------------
transfer pursuant to this Article VIII, the Interest so transferred shall remain
subject to all restrictions and rights contained in this Article VIII and the
transferee shall execute and deliver written instruments, in form and substance
satisfactory to the Partners, agreeing to be bound by all provisions of this
Agreement.
17
<PAGE>
8.3 Admission of Substitute Partners. No assignee of an interest as
--------------------------------
a Partner shall be admitted as a Partner in the Partnership unless the assignee
expressly agrees to be bound by the provisions of this Agreement and to assume
the obligations of its assignor under this Agreement and agrees to pay all
reasonable expenses and legal fees relating to the assignment and its admission
as a Partner in the Partnership. Upon the admission of a substituted Partner,
this Agreement shall be amended to reflect the name and address of the
substituted Partner and eliminate the name and address of the assignor and an
amendment to the certificate of limited partnership of the Partnership shall be
filed, if required by the Act. A Partner who assigns all of its Interest shall
cease to be a Partner and shall no longer have any rights or privileges of a
Partner except that unless and until its assignee is admitted to the Partnership
as a substituted Partner in accordance with this Article VIII, the assignor
Partner shall retain all rights and be subject to all obligations under this
Partnership Agreement and the Act.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
---------------------------
9.1 Dissolution Events.
------------------
9.1.1 Dissolution of the Partnership shall be effective the day
on which a Dissolution Event occurs, but the Partnership shall not terminate
until all of the Cash Flow and other available assets of the Partnership shall
have been distributed as provided in this Agreement. Notwithstanding the
dissolution of the Partnership prior to the termination of the Partnership, as
aforesaid, the business of the Partnership and the affairs of the Partners as
such shall continue to be governed by this Agreement.
9.1.2 Notwithstanding anything in this Agreement to the
contrary, upon a sale of all or substantially all of the assets of the
Partnership where all or any portion of the consideration payable to the
Partnership is to be received by the Partnership more than ninety (90) days
after the date on which such sale occurs, the Partnership shall continue solely
for purposes of collecting the deferred payments and making distributions to the
Partners. In such event (i) Profits and Losses recognized and Net Proceeds of a
Sale or Refinance Transaction distributed in any year as a result of such sale
shall be allocated and distributed among the Partners in the same proportion as
such Profits and Losses and Net Proceeds of a Sale or Refinance Transaction
would have been allocated and distributed were the entire gain resulting from
such sale required to be recognized for Federal income tax purposes in the year
in which such sale occurred; and (ii) income attributable to interest on any
deferred payments shall be allocated between, and such interest shall be
distributed to, the Partners as if the deferred payment obligations received by
the Partnership had been distributed in-kind to the Partners under Section 9.2
hereof in the proportions provided for in Section 7.2 hereof.
18
<PAGE>
9.2 Liquidation.
-----------
9.2.1 Upon the occurrence of a Dissolution Event, the Partners
shall liquidate the assets of the Partnership, apply and distribute the Cash
Flow thereof and all other available assets of the Partnership as contemplated
by this Agreement and in compliance with the timing requirements of Regulations
Section 1.704-1(b)(2)(ii)(b)(2). As soon as possible after the Dissolution
Event, a full account of the assets and liabilities of the Partnership shall be
taken, and a statement shall be prepared by the Partnership Accountants setting
forth the assets and liabilities of the Partnership. A copy of such statement
shall be furnished to each of the Partners within ninety (90) days after such
Dissolution Event. The assets of the Partnership shall be liquidated as
promptly as possible, the expenses of the liquidation and the debts of the
Partnership shall be paid, and the net proceeds thereof and the other available
assets of the Partnership shall be distributed in accordance with the positive
Capital Account balances of the Partners.
9.2.1.1 Any reserves shall be established or continued
which the General Partner deems reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership. Such reserves shall be
held by the Partnership for the payment of any of the aforementioned
contingencies, and at the expiration of such period as the General Partner shall
deem advisable, the Partnership shall distribute the balance thereafter
remaining to the Partners in accordance with Section 7.2 hereof.
9.2.2 Upon dissolution and liquidation of the Partnership, each
Partner shall look solely to the assets of the Partnership for the return of and
on its investment, and if the Partnership's assets remaining after payment and
discharge of debts and liabilities of the Partnership, including any debts and
liabilities owed to the Partners, is not sufficient to satisfy the rights of a
Partner, it shall have no recourse or further right or claim against the
Partnership, or any other Partner.
ARTICLE X
BUY-SELL PROVISIONS
-------------------
10.1 Tag-Along Right.
---------------
(a) If at any time the General Partner desires to sell more than
20% but less than all of its Interest to any proposed unaffiliated third party
transferee (the "Tag-Along Transferee"), the General Partner shall so notify
each Limited Partner in writing specifying in such notice the price and other
terms of such sale, and shall make effective arrangement (which shall be a
condition to any sale by the General Partner) so that each such Limited Partner
shall have the right to sell to the Tag-Along Transferee, at the same price and
other terms and conditions as involved in such sale by the General Partner, an
equivalent percentage of the Interest then owned by such Limited Partner.
19
<PAGE>
(b) If any Limited Partner desires to so participate in any sale under
this Section 10.1, it shall notify the General Partner in writing of such
intention as soon as practicable after such Limited Partner's receipt of the
notice of the General Partner's proposed sale of the portion of its Interest,
and in any event within thirty (30) days after the date the notice was given.
Such notification shall be delivered in person or mailed to the General Partner.
(c) If any Limited Partner so elects to participate in the sale, the
General Partner and such Limited Partner shall sell to the Tag-Along Transferee
all of the portion of the Interest to be sold by them in accordance with this
Section 10.1 at the price and upon the other terms and conditions specified in
the notice described herein at the closing with the Tag-Along Transferee, which
shall be held on a date selected by the General Partner and the Tag-Along
Transferee.
10.2 Take-Along Right.
----------------
(a) If at any time the General Partner wishes to sell all of the
Interest then owned by it to an unaffiliated third party, in one transaction or
a series of related transactions, it may require each Limited Partner to sell
all (but not less than all) of the Interest held by each such Limited Partner to
such third party in accordance with this Section 10.2, provided that such
Limited Partner shall only be required to sell his or her shares at the same
price and other terms on which the Interest of the General Partner is proposed
to be sold.
(b) If the General Partner elects to exercise its "take-along" right
(described in Section 10.2(a)) in connection with such a transaction, it shall
deliver a notice to each Limited Partner, setting forth the terms of the
transaction (including the proposed closing date for its consummation, which
shall not be less than thirty (30) days from the effective date of such notice)
and all documents required to be executed by each Limited Partner in order to
consummate such transaction. Each Limited Partner shall deliver to the General
Partner at least seven (7) days prior to the proposed closing date referred to
above all documents previously furnished to such Limited Partner for execution
in connection with such transaction. If any Limited Partner fails to deliver
such documents and such transaction is subsequently consummated, the Partnership
shall cause its books and records to show that the Interest owned by such
defaulting Limited Partner are bound by the provisions of this Section 10.2 and
that the Interest held by him shall be transferred only to the third party who
purchased the General Partner's Interest in connection with such transaction.
(c) The General Partner shall have one hundred twenty (120) days from
the date of its notice referred to in subsection (b) above to consummate any
such transaction and, promptly after such consummation, shall notify each
Limited Partner to that effect and shall furnish evidence of such sale,
including the time of sale and the terms thereof, as any Limited Partner may
reasonably request. The General Partner shall also cause to be remitted to each
Limited Partner the proceeds of such sale attributable to the sale of such
Limited Partner's Interest not later than the fifth business day following such
sale. If any such transaction is not consummated prior to the expiration of the
one hundred twenty (120) day period referred to in this Section, the General
Partner may not (without the consent of the Limited Partners) thereafter
20
<PAGE>
consummate such transaction and shall return to the Limited Partners all
documents previously delivered to the General Partner in connection with such
transaction.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Notices. Any notice which may or is required to be given
-------
hereunder shall be in writing and shall be deemed given when actually received.
Notice shall be addressed to the Partners at the addresses set forth after their
respective names below, or at such different addresses as to any Partner as it
shall have theretofore given notice hereunder.
General Partner:
WinCup Holdings, Inc.
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
Limited Partner:
Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
11.2 Successors and Assigns. Subject to the restrictions on
----------------------
transfer set forth herein, this Agreement shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
11.3 Waiver of Partition. Unless otherwise expressly authorized in
-------------------
this Agreement, no Partner shall, either directly or indirectly, take any action
to require partition or appraisement of the Partnership or of any of its assets
or properties or cause the sale of any Partnership property, and notwithstanding
any provisions of applicable law to the contrary, each Partner (and its legal
representative, successor or assign) hereby irrevocably waives any and all right
to maintain any action for partition or to compel any sale with respect to its
interest in, or with respect to any assets or properties of the Partnership,
except as expressly provided in this Agreement.
11.4 No Oral Modifications; Amendments. No oral amendment of this
---------------------------------
Agreement shall be binding on the Partners. This Agreement shall be amended
only with the consent of each of the Partners. Any modification or amendment of
this Agreement may be effectuated only by a writing signed by all the Partners.
21
<PAGE>
11.5 Captions; References. Any titles or captions contained in this
--------------------
Agreement and the table of contents are for convenience of reference only and
shall not be deemed a part of this Agreement. References in this Agreement to
any articles or sections shall be deemed to be references to articles or
sections of this Agreement unless otherwise indicated.
11.6 Terms. Common nouns and pronouns shall be deemed to refer to
-----
the masculine, feminine, neuter, singular and plural, as the identity of the
person or persons, firm or corporation may in the context require. Any
reference to the Code or other statutes or laws shall include all amendments,
modifications or replacements of the specific sections and provisions concerned.
11.7 Invalidity. If any provision of this Agreement shall be held
----------
invalid, the same shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.
11.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument, binding on the Partners, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
11.9 Further Assurances. The parties hereto agree that they will
------------------
cooperate with each other and will execute and deliver, or cause to be
delivered, all such other instruments, and will take all such other actions, as
any party hereto may reasonably request from time to time in order to effectuate
the provisions and purposes hereof.
11.10 Complete Agreement. This Agreement constitutes the complete
------------------
and exclusive statement of the agreement among the Partners with respect to this
Partnership. It supersedes all prior written and oral statements and no
representation, statement, condition or warranty not contained in this Agreement
shall be binding on the Partners or have any force or effect whatsoever.
11.11 Governing Law. This Agreement shall be construed and enforced
-------------
in accordance with the laws of Delaware.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WINCUP HOLDINGS, INC.
By: /s/ Michael T. Kennedy
-----------------------------------------
Michael T. Kennedy, Chairman
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
-----------------------------------------
Michael T. Kennedy, Chairman
23
<PAGE>
EXHIBIT A
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 20th day of January, 1996, by and
among WINCUP HOLDINGS, L.P., a Delaware limited partnership (the "Employer"),
and MICHAEL T. KENNEDY (the "Executive").
RECITAL
-------
The Employer a Delaware limited partnership which manufactures and
distributes foam cups, containers and lids and plastic cups and containers.
WinCup Holdings, Inc., a Delaware corporation ("WinCup"), is the sole general
partner of Employer and James River Paper Company, Inc., a Virginia corporation
("James River"), is the sole limited partner of Employer.
The Executive has extensive operating and financial experience in the
manufacturing and distribution businesses and has been chief executive officer
and president of WinCup since the date of its incorporation.
The parties hereto desire to enter into this Agreement to provide for
the employment of Executive by Employer and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment.
----------
<PAGE>
Employer hereby employs Executive and Executive hereby accepts
employment as President, Chief Executive Officer and Chairman of the Board of
Directors ("Board") of Employer in accordance with the terms and conditions
hereinafter set forth.
2. Term.
----
The term of this Agreement shall be five (5) years commencing on the
date hereof ("Initial Term"), unless earlier terminated pursuant to Paragraph 7
below; provided, however, that unless earlier terminated pursuant to Paragraph 7
below, the Initial Term of this Agreement shall thereafter be renewed from year
to year (each, a "Renewal Term") unless either party gives written notice of
termination to the other at least one hundred eighty (180) days prior to the
expiration of such Initial Term or Renewal Term, as the case may be. The
Initial Term and any Renewal Term(s) are hereinafter referred to, collectively,
as the "Term."
3. Duties.
------
Executive is engaged hereunder as President, Chief Executive Officer
and Chairman of the Board of Employer and agrees to perform such duties and
services as are customarily incident to such offices and such other duties and
services as may be assigned to him from time to time by the Board; provided,
however, that it is expressly understood that Executive will not be required to
relocate in order to perform his duties hereunder. During his employment
hereunder, Executive shall conduct himself at all times so as to advance the
best interests of Employer and shall not undertake or engage in any other
business activity which interferes with the performance of his duties hereunder
without the prior written consent of Employer. It is expressly understood that
nothing in this Agreement shall preclude Executive from owning not more than
five percent (5%) of the issued and outstanding shares of a class of securities
of a
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<PAGE>
corporation the securities of which are traded on a national security exchange
or in the over-the-counter market.
4. Compensation.
------------
For all services rendered by Executive under this Agreement, Employer
shall pay Executive a base salary of not less than Three Hundred Sixty Thousand
Dollars ($360,000) per annum, payable in equal semi-monthly installments,
together with such additional compensation, including bonus, if any, as the
Board may determine from time to time in its sole discretion (the "Salary").
The Salary shall be reviewed on or about August 1st of each year and may be
increased in the sole discretion of the Board based on corporate policy and
Executive's performance.
5. Expenses.
--------
Executive is authorized to incur reasonable expenses for promoting
Employer's business, including expenses for entertainment, travel, and similar
items. Employer will reimburse Executive for all such expenses provided such
expenses have been included in an operating plan for Employer which has been
approved by the unanimous consent of the Employer's Board ("Approved Operating
Plan") and provided further Executive shall have presented to Employer
appropriate vouchers itemizing such expenses in a form consistent with
Employer's policy. Notwithstanding the foregoing, Employer shall pay directly
all expenses, including but not limited to rent, staff salaries, utilities and
other reasonable expenses, incurred in the maintenance of Executive's main
office located in Northeastern Pennsylvania, provided such expenses have been
included in an Approved Operating Plan.
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<PAGE>
6. Fringe Benefits.
---------------
During the Term of this Agreement, Executive shall be entitled to such
benefits of employment with Employer as are now or may hereafter be in effect
for officers and employees of Employer including without limitation such
insurance, disability, medical, dental and other benefit plans or programs as
are now or hereafter established or maintained by Employer for its executive
officers. Executive shall be included in any profit-sharing, pension,
retirement or other employee benefit plan of Employer that may include as
beneficiaries executive officers of Employer, whether now in force or
subsequently implemented by Employer.
7. Termination of Employment. This Agreement may not be terminated
-------------------------
during the Term, other than as provided below:
(a) Death of Executive. In the event of the death of Executive during
------------------
the Term, this Agreement shall terminate and Employer shall have no further
obligation or liability hereunder except to pay to Executive's executor or
administrator, within sixty (60) days after the date of death, the portion, if
any, of Executive's Salary for the period through the date of Executive's death,
unless previously paid.
(b) Total Disability. In the event of a mental or physical condition
----------------
which in the reasonable opinion of the Board, based upon the independent medical
diagnosis of a physician engaged by Employer for that purpose, renders Executive
unable or incompetent to perform his duties hereunder ("Total Disability"),
which condition continues for a period of ninety (90) consecutive days during
the Term of this Agreement, Employer shall have the right to terminate
Executive's employment hereunder by giving Executive ten (10) days' written
notice thereof and, upon expiration of such ten-day period, Employer shall have
no further obligation or
A-4
<PAGE>
liability under this Agreement except to pay to Executive, within sixty (60)
days thereafter, the portion, if any, of Executive's Salary for the period
through the date of termination which is due and remains unpaid.
(c) Resignation. Executive may voluntarily terminate his employment
-----------
under this Agreement by giving Employer no less than one hundred eighty (180)
days written notice of his intention to do so including the date upon which such
termination shall become effective, which date shall not be sooner than one
hundred eighty (180) days from the date on which such notice is given.
Following the effective date of such resignation, Executive shall have no
further obligation or liability under this Agreement and Employer shall have no
further obligation or liability under this Agreement except to pay to Executive
the same amounts which are payable under Paragraph 7(a).
(d) Termination for Cause. The Employer may terminate this Agreement
---------------------
at any time for Cause (as hereinafter defined) upon written notice to Executive,
effective upon the date of such written notice. "Cause" shall be defined as (a)
conviction of the Executive for a felony or misdemeanor involving dishonesty,
fraud or moral turpitude under the laws of the United States or any state
thereof or other jurisdiction in which Executive performs services; (b) breach
of Section 9 hereof; or (c) removal of WinCup as General Partner of Employer
pursuant to Section 8.4 of that certain Limited Partnership Agreement, dated as
of the date hereof, between WinCup and James River. In the event of termination
for Cause, the Employer shall have no further obligations or liabilities to
Executive hereunder, except that Executive shall be entitled to receive any
accrued but unpaid Salary and expense reimbursement, and to retain all other
amounts received by Executive pursuant to this Agreement prior to such
termination for Cause.
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<PAGE>
8. Non-Disclosure of Trade Secrets and Other Information.
-----------------------------------------------------
Executive agrees that he will not, during the Term of this Agreement
or at any time thereafter, use for himself or divulge to others any secret or
confidential information, knowledge, or data of Employer, developed by him or
obtained by him as a result of his employment, unless authorized by Employer in
writing. It is understood that this applies to information of either a
technical or commercial nature, including secret processes, formulas, machinery,
utensils, manufacturing techniques and arts, customer lists, market information
and the like. The terms 'secret' and 'confidential' shall include all
unpublished information and all information and data known to some but not to
all members of the trade or industry to whom such information or data would be
in any manner useful.
All memoranda, notes, records, or other documents made or compiled by
Executive, or made available to Executive while employed by Employer, are
Employer's property and all copies thereof shall be delivered to Employer on
termination of Executive's employment or at any other time upon the request of
Employer.
9. Restrictive Covenant.
--------------------
(a) Non-Competition.
---------------
Executive agrees that, so long as he is employed by Employer
pursuant to this Agreement and for a period of five (5) years thereafter, he
will not, directly or indirectly, as a sole proprietor, member of a partnership,
stockholder, investor, officer or director of a corporation, or as an employee,
agent, associate or consultant of any person, partnership or corporation other
than Employer or in any other capacity:
(i) own, manage, operate, participate in, perform services for
or otherwise carry on a business which sells or manufactures one-piece foam cups
within the
A-6
<PAGE>
United States or Canada (the "Territory"); provided that ownership of not more
than five percent (5%) of the issued and outstanding shares of a class of
securities of a corporation the securities of which are traded on a national
security exchange or in the over-the-counter market shall not be deemed
ownership of the issuer of such shares for the purposes of this section;
(ii) induce or attempt to persuade any employee of Employer or
any of its affiliates to terminate such employment relationship in order to
enter into any such relationship with such person or to enter into any such
relationship on behalf of any other business organization which sells or
manufactures one-piece foam cups in the Territory;
(iii) solicit any business related to the manufacture or sale of
one-piece foam cups in the Territory from any clients, customers, or prospective
or former clients or customers of Employer or its affiliates; or
(iv) perform services of any nature for any entity which
manufactures or sells one-piece foam cups in the Territory.
(b) Injunctive Relief. Without limiting the right of Employer or any
-----------------
of its successors or permitted assigns to pursue all other legal and equitable
rights available to them for violation of the covenants set forth in
subparagraph 9(a) hereof, it is agreed that such other remedies cannot fully
compensate Employer and its successors and assigns for such a violation and that
Employer and its successors and assigns shall be entitled to injunctive relief
to prevent violation or continuing violation hereof. It is the intent and
understanding of each party hereto that if, in any action before any court or
agency legally empowered to enforce this covenant, any term, restriction,
covenant or promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such a court or
agency.
A-7
<PAGE>
10. Arbitration.
-----------
Except as provided in subparagraph 9(b) hereof, any controversy or
claim arising out of or relating to this Agreement or the breach thereof shall
be settled by arbitration in Wilmington, Delaware, in accordance with the rules
of the American Arbitration Association and any decision made in accordance with
such rules shall be binding on all parties in interest, and judgment upon any
award rendered may be entered in any court having jurisdiction thereof.
11. Waiver of Breach.
----------------
The waiver by Employer or Executive, as the case may be, of a
breach of any provision of this Agreement by Executive or Employer, as the case
may be, will not operate or be construed as a waiver of any subsequent breach by
Executive or Employer, as the case may be.
12. Entire Agreement.
----------------
This instrument contains the entire Agreement of the parties with
respect to the employment of Executive by Employer. It may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
13. Severability.
------------
If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated
A-8
<PAGE>
herein as so modified or restricted, or as if such provision had not been
originally incorporated herein, as the case may be.
14. Notices.
-------
All notices required or permitted to be given hereunder shall be
in writing and shall be deemed to have been given when actually received. If
such notice is mailed, it shall be deposited, registered or certified, return
receipt requested, in the United States mail, or by commercial overnight courier
such as Federal Express, addressed to the intended recipient as follows:
If to the Executive:
Mr. Michael T. Kennedy
770 Parkes Run Lane
Villanova, Pennsylvania 19085
If to the Employer:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Boulevard
Chesterbrook, Pennsylvania 19087-5638
Attention: Mr. Michael T. Kennedy, President
Any party hereto may from time to time change its address for the purpose of
notice to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
parties sought to be charged with its contents.
15. Bind and Inure.
--------------
This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors in interest.
A-9
<PAGE>
16. Governing Law.
-------------
This Agreement is made in and shall be construed in accordance
with and governed by the laws of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-10
<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement on the day and year first above written.
EMPLOYER:
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., its
general partner
By:/s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy
President
EXECUTIVE
/s/ Michael T. Kennedy
---------------------------------------
Michael T. Kennedy
A-11
<PAGE>
CERTIFICATE OF INCORPORATION
OF
SP ACQUISITION CO.
ARTICLE I
The name of the corporation is SP Acquisition Co.
ARTICLE II
The address of the initial registered office of the corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware. The name of the initial registered agent of the corporation at such
address is The Corporation Trust Company.
ARTICLE III
The purpose for which the corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
Section 1. The total number of shares of all classes of stock which
the corporation shall have authority to issue is Five Hundred Thousand (500,000)
consisting of (i) One Hundred Thousand (100,000) shares of Preferred Stock, par
value $0.01 ("Preferred Stock") and (ii) Four Hundred Thousand (400,000) shares
of Common Stock, par value $0.01 ("Common Stock").
Section 2. The Board of Directors is hereby expressly authorized,
by resolution or resolutions, to provide, out of the unissued shares of
Preferred Stock, for series of Preferred Stock. Before any shares of any such
series are issued, the Board of Directors shall fix, and hereby is expressly
empowered to fix, by resolution or resolutions, the following provisions of the
shares thereof:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from the
par value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights, which may be general or limited;
<PAGE>
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption by the
Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;
(f) whether the shares of such series shall be subject to the operation of
a retirement or sinking fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the purchase or redemption
of the shares of such series for retirement or other corporate purposes and the
terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of this
class or any other securities and, if so, the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the same,
and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restriction, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
- 2 -
<PAGE>
(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.
Without limiting the foregoing, the voting powers of any series of
Preferred Stock may include the right, in the circumstances specified in the
resolution or resolutions providing for the issuance of such stock, to elect one
or more directors who shall be in addition to the number of directors of the
Corporation fixed pursuant to Article V hereof and who shall serve for such term
and have such voting powers as shall be stated in the resolution or resolutions
providing for the issuance of such stock. The term of office and voting powers
of any director elected in the manner provided in the immediately preceding
sentence of this Section 2 may be greater than or less than those of any other
director or class of directors.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be cumulative.
Section 3. Each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held of record on all matters on which stockholders
generally are entitled to vote. Subject to the provisions of law and the rights
of the holders of any class or series of stock having a preference as to
dividends over the Common Stock then outstanding, dividends may be paid on the
Common Stock at such times and in such amounts as the Board of Directors shall
determine. Upon the dissolution, liquidation or winding up of the Corporation,
after any preferential amounts to be distributed to the holders of any class or
series of stock having a preference over the Common Stock then outstanding have
been paid or declared and set apart for payment, the holders of the Common Stock
shall be entitled to receive all the remaining assets of the Corporation
available for distribution to its stockholders ratably in proportion to the
number of shares held by them, respectively.
ARTICLE V
The number of directors constituting the initial Board of Directors of the
corporation is one (1). Subject to the provisions of law, the number of the
directors of the corporation may be increased or decreased from time to time
pursuant to the Bylaws of the corporation. No decrease in the number of
-3-
<PAGE>
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
ARTICLE VI
The Board of Directors of the corporation is expressly authorized and
empowered to make, alter or repeal Bylaws, subject to the power of the
stockholders to alter or repeal the bylaws made by the Board of Directors.
ARTICLE VII
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (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 General Corporation Law of the
State of Delaware, as the same exists or hereafter may be amended, or (iv) for
any transaction from which such director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after the
filing of this Certificate of Incorporation so as to authorize corporate actions
further eliminating or limiting personal liability of directors, then the
liability of each director of the corporation shall be eliminated or limited to
the fullest extent permitted by the law of the State of Delaware as the same
exists from time to time. Any repeal or modification of this paragraph by the
stockholders of the corporation shall be prospective only and shall not
adversely affect any limitation of the personal liability of a director of the
corporation existing at the time of such repeal or modification.
ARTICLE VIII
The name and address of the person who is to serve as the director until
the expiration of his initial term, as set forth in the Bylaws, and until his
successor is duly elected and qualified, is as follows:
Name Mailing Address
---- ---------------
Richard Davidovich 3607 N. Sylvania
Fort Worth, Texas 76102
ARTICLE IX
The name of the incorporator is Harold F. Kleinman and his mailing address
is 3300 First City Center, 1700 Pacific Avenue, Dallas, Texas 75201.
- 4 -
<PAGE>
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby declaring and certifying
that this is his act and deed and that the facts herein stated are true, and
accordingly has hereunto set his hand as of the 17th day of January, 1994.
/s/ Harold F. Kleinman
--------------------------------------
Harold F. Kleinman
<PAGE>
CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS,
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
WHICH HAVE NOT BEEN SET FORTH IN THE CERTIFICATE
OF INCORPORATION OR IN ANY AMENDMENT THERETO
CLASS A PREFERRED STOCK
(Par Value $0.01 Per Share)
OF
SP ACQUISITION CO.
-----------------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
-----------------------------
SP Acquisition Co., a Delaware corporation (the "Corporation"), certifies
that pursuant to the authority contained in Article IV of its Certificate of
Incorporation and in accordance with Section 151 of the General Corporation Law
of the State of Delaware, its Board of Directors has adopted the following
resolution creating a series of its Preferred Stock, par value $0.01 per share
("Preferred Stock"), designated as Class A Preferred Stock:
RESOLVED, that a series of the class of authorized Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount.
----------------------
The shares of such series shall be designated as "Class A Preferred Stock"
(the "Class A Preferred Stock") and the number of shares constituting such
series shall be Twenty-Two Thousand Three Hundred Fifteen (22,315), which
number may be decreased (but not increased) by the Board of Directors without a
vote of stockholders; provided, however, that such number may not be decreased
below the number of then outstanding shares of Class A Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
Each holder of the Class A Preferred Stock shall be entitled to receive
dividends on each share of Class A Preferred Stock on the same basis, and at the
same times and amounts, as the holder of one share of Common Stock.
<PAGE>
Section 3. Voting Rights.
-------------
The holders of shares of Class A Preferred Stock, voting in person or by
proxy, shall be entitled to vote upon all matters submitted to a vote of the
shareholders of the Corporation and shall be entitled to one vote for each share
of Class A Preferred Stock held. Except as otherwise provided by law, the
holders of Common Stock and the holders of the Class A Preferred Stock shall
vote together as one class.
Section 4. Shares Acquired or Converted.
----------------------------
Any shares of the Class A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever, or converted in accordance with
Section 6, shall be retired and cancelled promptly after the acquisition or
conversion thereof. Any such shares shall not upon their cancellation be
reissued, and upon compliance with the requirements of the General Corporation
Law of the State of Delaware any such shares may be eliminated as part of the
authorized capital stock of the Corporation.
Section 5. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, no distribution shall be made to the holders
of Common Stock or any other stock ranking junior (upon liquidation, dissolution
or winding up) to the Class A Preferred Stock unless, prior thereto, the holders
of the Class A Preferred Stock shall have received $22.406453 per share (rounded
to the nearest whole cent) or (B) to the holders of stock ranking on a parity
(upon liquidation, dissolution or winding up) with the Class A Preferred Stock,
except distributions made ratably on the Class A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. Upon
the completion of the distribution required by the immediately preceding
sentence, if assets remain in the Corporation, the holders of Class A Preferred
Stock shall be entitled to participate on the basis of the number of shares of
Common Stock into which a share of Class A Preferred Stock is convertible on the
record date of such action; and
(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other person or persons nor the sale of all of the
assets of the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation for purposes of this Section 5.
- 2 -
<PAGE>
Section 6. Conversion.
----------
(A) Each share of the Class A Preferred Stock shall be convertible at the
option of the holder thereof into one fully paid and nonassessable share of
Common Stock of the Corporation.
(B) The holder of any shares of Class A Preferred Stock may exercise his
right to convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Class A Preferred Stock to be converted
accompanied by a written notice stating that such holder elects to convert all
or a specified whole number of such shares in accordance with the provisions of
this Section 6 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In case
such notice shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other than such
taxes, the Corporation will pay any and all issue and other taxes (other than
taxes based on income) that may be payable in respect of any issue or delivery
of shares of Common Stock on conversion of Class A Preferred Stock pursuant
hereto. As promptly as practicable, and in any event within thirty business
days after the surrender of such certificate or certificates and the receipt of
such notice relating thereto and, if applicable, payment of all transfer taxes
(or the demonstration to the satisfaction of the Corporation that such taxes
have been paid), the Corporation shall deliver or cause to be delivered (i)
certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of shares of Class
A Preferred Stock so converted shall be entitled and (ii) if less than the full
number of shares evidenced by the surrendered certificate or certificates are
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates less
the number of shares converted. Such conversion shall be deemed to have been
made at the close of business on the date of giving of such notice and of such
surrender of the certificate or certificates representing the shares of Class A
Preferred Stock to be converted so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to receive shares of
Common Stock in accordance herewith, and the person entitled to receive the
shares of Common Stock shall be treated for all purposes as having become the
record holder of such shares of Common Stock at such time. The Corporation shall
not be required to convert, and no surrender of shares of Class A Preferred
Stock shall be effective for that purpose, while the transfer books of the
Corporation for the Common Stock are closed for any purpose (but not for any
period in excess of 15 days);
- 3 -
<PAGE>
but the surrender of shares of Class A Preferred Stock for conversion during any
period while such books are so closed shall become effective for conversion
immediately upon the reopening of such books, as if the conversion had been made
on the date such shares of Class A Preferred Stock were surrendered.
(C) Upon conversion of any shares of Class A Preferred Stock, the holder
thereof shall be entitled to receive any dividends on such shares of Class A
Preferred Stock declared prior to such conversion if such holder held such
shares on the record date fixed for the determination of holders of shares of
Class A Preferred Stock entitled to receive payment of such dividends.
(D) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Class A Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding shares of Class A Preferred Stock. The Corporation shall from
time to time, subject to and in accordance with the laws of Delaware (including
using its best efforts to obtain the requisite consent of the shareholders of
the Corporation), increase the authorized amount of Common Stock if at any time
the number of authorized shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion at such time of all then outstanding shares
of Class A Preferred Stock.
IN WITNESS WHEREOF, SP ACQUISITION CO. has caused this Certificate of
Designation to be duly executed by its President and attested to by its
Secretary and has caused its corporate seal to be affixed hereto, this 16th day
of February, 1994.
SP ACQUISITION CO.
By: /s/ Richard Davidovich
---------------------------
Name: Richard Davidovich
Title: President
(Corporate Seal)
ATTEST:
/s/ Stephen B. Norris
---------------------------
Name: Stephen B. Norris
---------------------
Title: Secretary
- 4 -
<PAGE>
BYLAWS
OF
SP ACQUISITION CO.
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of SP Acquisition
-----------------
Co. (hereinafter called the "Corporation") in the State of Delaware shall be in
the City of Wilmington, County of New Castle, and the registered agent in charge
thereof shall be The Corporation Trust Company.
Section 2. Other Offices. The Corporation may also have offices at
-------------
such other places, and keep the books and records of the Corporation, except
as otherwise may be required by law, at such other place or places, either
within or without the State of Delaware, as the Board of Directors may from time
to time determine or the business of the Corporation require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meeting. All meetings of stockholders shall be
----------------
held at the office of the Corporation or at such other places, within or without
the State of Delaware, as may from time to time be fixed by the Board of
Directors, the Chairman of the Board or the President.
Section 2. Annual Meetings. The annual meetings of stockholders for
---------------
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such time and on such date as
the Board of Directors shall designate in the notice of such meeting, if not a
legal holiday under the laws of the place where the meeting is to be held, and
if a legal holiday, then on the next succeeding day not a legal holiday under
the laws of such place.
Section 3. Special Meetings. Except as otherwise required by law and
----------------
subject to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, special
meetings of the stockholders for any purpose or purposes may be called only by
(i) the Chairman of the Board, (ii) the President, (iii) a majority of the
entire Board of Directors, or (iv) the holders of not less than one-tenth in
number of all the shares entitled to vote at the meetings. Only such business
as is specified in the notice of any special meeting of the stockholders shall
come before such meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law,
------------------
written notice of each meeting of the stockholders, whether annual or special,
shall be given, either by personal delivery or by mail, not less than 10 nor
more than 60 days before the date of the meeting to each stockholder of record
entitled to notice of the meeting. If mailed, such notice shall be deemed given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
Corporation. Each such notice shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who
<PAGE>
shall attend such meeting in person or by proxy without protesting, prior to or
at the commencement of the meeting, the lack of proper notice to such
stockholder, or who shall waive notice thereof as provided in Article X of these
Bylaws. Notice of adjournment of a meeting of stockholders need not be given if
the time and place to which it is adjourned are announced at such meeting,
unless the adjournment is for more than 30 days or, after adjournment, a new
record date is fixed for the adjourned meeting.
Section 5. Quorum. Except as otherwise provided by law or by the
------
Certificate of Incorporation of the Corporation, the holders of a majority of
the shares of stock entitled to be voted, which if any vote is to be taken by
classes shall mean the holders of a majority of the shares of each such class,
present in person or represented by proxy, shall constitute a quorum at any
meeting of the stockholders.
Section 6. Adjournments. In the absence of a quorum, the holders of a
------------
majority of the shares of stock entitled to be voted at the meeting, present in
person or represented by proxy, may adjourn the meeting from time to time. At
any such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called.
Section 7. Order of Business. At each meeting of the stockholders, the
-----------------
Chairman of the Board, or in the absence of the Chairman of the Board, the
President, shall act as chairman. The order of business at each such meeting
shall be as determined by the chairman of the meeting. The chairman of the
meeting shall have the right and authority to prescribe such rules, regulations
and procedures and to do all such acts and things as are necessary or desirable
for the proper conduct of the meeting, including, without limitation, the
establishment of procedures for the maintenance of order and safety, limitations
on the time allotted to questions or comments on the affairs of the Corporation,
restrictions on entry to such meeting after the time prescribed for the
commencement thereof, and the opening and closing of the voting polls.
Section 8. List of Stockholders. If shall be the duty of the Secretary
--------------------
or other officer of the Corporation who has charge of the stock ledger to
prepare and make, at least 10 days before each meeting of stockholders, a
complete list of stockholders entitled to vote thereat, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in such stockholder's name. Such list shall be produced and kept
available at the times and places required by law.
Section 9. Voting. Except as otherwise provided by law or by the
------
Certificate of Incorporation of the Corporation, each stockholder of record of
any class or series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation shall be entitled at each
meeting of the stockholders to such number of votes for each share of such stock
as may be fixed in the Certificate of Incorporation or in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of such
stock, and each stockholder of record of Common Stock shall be entitled at each
meeting of the stockholders to one vote for each share of such stock, in each
case, registered in such stockholder's name on the books of the Corporation:
(a) on the date fixed pursuant to Section 6 of Article VII of
these Bylaws as the record date for the determination of stockholders
entitled to notice of and to vote at such meeting; or
- 2 -
<PAGE>
(b) if no such record date shall have been so fixed, then at the close
of business on the day next preceding the date on which notice of such
meeting is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
Each stockholder entitled to vote at any meeting of stockholders may authorize
any person or persons to act for such stockholder by a proxy signed by such
stockholder or such stockholder's attorney-in-fact. Any such proxy shall be
delivered to the secretary of such meeting at or prior to the time designated
for holding such meeting but, in any event, not later than the time designated
in the order of business for so delivering such proxies. No such proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period.
At each meeting of the stockholders, all corporate actions, other than
the election of directors, to be taken by vote of the stockholders (except as
otherwise required by law and except as otherwise provided in the Certificate of
Incorporation) shall be authorized by a majority of the votes cast by the
stockholders entitled to vote thereon, present in person or represented by
proxy. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of the directors. Where a separate vote by a class or classes is
required, the affirmative vote of the majority of shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class.
Unless required by law or determined by the chairman of the meeting to
be advisable, the vote on any matter, including the election of directors, need
not be by written ballot. In the case of a vote by written ballot, each ballot
shall be signed by the stockholder voting, or by such stockholder's proxy, and
shall state the number of shares voted.
Section 10. Inspectors. Either the Board of Directors or, in the
----------
absence of a designation of inspectors by the Board, the chairman of any meeting
of stockholders may, in its or such person's discretion, appoint two or more
inspectors to act at any meeting of stockholders. Such inspectors shall perform
such duties as shall be specified by the Board or the chairman of the meeting.
Inspectors need not be stockholders. No director or nominee for the office of
director shall be appointed such an inspector.
Section 11. Action Without Meeting. Any action required to be taken at
----------------------
any annual or special meeting of the stockholders of the Corporation, or any
action which may be taken at any annual or special meeting of the stockholders
of the Corporation, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its principal
place of business or to the Secretary of the Corporation.
Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this Section 11 to
the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its principal place
of business or to the Secretary of the Corporation.
- 3 -
<PAGE>
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing to such action.
Section 12. Participation in Meeting by Means of Communication
--------------------------------------------------
Equipment. Any stockholder may participate in any meeting of the stockholders
- ---------
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. General Powers. The business of the Corporation shall be
--------------
managed by or under the direction of the Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation of the Corporation directed or
required to be exercised or done by the stockholders.
Section 2. Number, Qualification and Election. The number of directors
----------------------------------
which shall constitute the whole board shall be _________ (_), but, by vote of a
majority of the entire Board of Directors, the number thereof may be increased
or decreased by amendment to this Section 2.
Each director shall be at least 21 years of age. Directors need not be
stockholders of the Corporation.
In any election of directors, the persons receiving a plurality of the
votes cast, up to the number of directors to be elected in such election, shall
be deemed elected.
Section 3. Quorum and Manner of Acting. Except as otherwise provided
---------------------------
by law, the Certificate of Incorporation of the Corporation or these Bylaws, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business at any meeting of the Board, and, except as so provided,
the vote of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board. In the absence of a quorum, a majority
of the directors present may adjourn the meeting to another time and place. At
any adjourned meeting at which a quorum is present, any business that might have
been transacted at the meeting as originally called may be transacted.
Section 4. Place of Meeting. The Board of Directors of the Corporation
----------------
may hold its meetings at such place or places within or without the State of
Delaware as the Board may from time to time determine or as shall be specified
or fixed in the respective notices or waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held at such times and places as the Board shall from time to
time by resolution determine. If any day fixed for a regular meeting shall be
a legal holiday under the laws of the place where the meeting is to be held, the
meeting that would otherwise be held on that day shall be held at the same hour
on the next succeeding business day.
Section 6. Special Meetings. Special meetings of the Board of
----------------
Directors shall be held whenever called by the Chairman of the Board or the
President or by a majority of the directors.
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Section 7. Notice of Meetings. Notice of regular meetings of the Board
------------------
of Directors or of any adjourned meeting thereof need not be given. Notice of
each special meeting of the Board shall be mailed to each director, addressed to
such director at such director's residence or usual place of business, at least
two days before the day on which the meeting is to be held or shall be sent to
such director at such place by telegraph, or be given personally or by
telephone, not later than the day before the meeting is to be held, but notice
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of such notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to such
director. Every such notice shall state the time and place but need not state
the purpose of the meeting.
Section 8. Rules and Regulations. The Board of Directors may adopt
---------------------
such rules and regulations not inconsistent with the provisions of law, the
Certificate of Incorporation of the Corporation or these Bylaws for the conduct
of its meetings and management of the affairs of the Corporation as the Board
may deem proper.
Section 9. Participation in Meeting by Means of Communication
--------------------------------------------------
Equipment. Any one or more members of the Board of Directors or any committee
- ---------
thereof may participate in any meeting of the Board or of any such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
Section 10. Action Without Meeting. Any action required or permitted
----------------------
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or of any such
committee consent thereto in writing and the writing or writings are filed with
the minutes of proceedings of the Board or of such committee.
Section 11. Resignations. Any director of the Corporation may at any
------------
time resign by giving written notice to the Board of Directors, the Chairman of
the Board, the President or the Secretary of the Corporation. Such resignation
shall take effect at the time specified therein or, if the time be not
specified, upon receipt thereof; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 12. Vacancies. Subject to the rights of the holders of any
---------
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office
until the next annual meeting of stockholders and until their successors are
duly elected and qualify, unless sooner displaced. If there are no directors in
office then an election of directors may be held in the manner provided by
statute.
Section 13. Compensation. The Board of Directors shall have authority
------------
to determine, from time to time, the amount of compensation, if any, which shall
be paid to its members for their services as directors and as members of the
committees of the Board. In addition, the Board of Directors shall have
authority to determine, from time to time, the amount, if any, to be paid to its
members in reimbursement for the reasonable expenses incurred by such persons in
connection with the performance of their duties as directors or as members of
committees of the Board. Nothing contained in this Section 13 shall preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
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ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
------------------------------
Section 1. Executive Committee. The Board of Directors may, by resolution
-------------------
passed by a majority of the whole board, designate annually two or more of its
members to constitute members or alternate members of an Executive Committee,
which Committee shall have and may exercise, between meetings of the Board, all
the powers and authority of the Board in the management of the business affairs
of the Corporation, including, if such Committee is so empowered and authorized
by resolution adopted by a majority of the entire Board, the power and authority
to declare a dividend and to authorize the issuance of stock, and may authorize
the seal of the Corporation to be affixed to all papers that may require it,
except that the Executive Committee shall not have such power or authority in
reference to:
(a) amending the Certificate of Incorporation of the
Corporation;
(b) adopting an agreement of merger or consolidation involving
the Corporation;
(c) recommending to the stockholders the sale, lease or exchange
of all or substantially all of the property and assets of the Corporation;
(d) recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution;
(e) adopting, amending or repealing any bylaw of the
Corporation;
(f) filling vacancies on the Board or any committee of the
Board, including the Executive Committee; or
(g) amending or repealing any resolution of the Board which by
its terms may be amended or repealed only by the Board.
The Board shall have the power at any time to change the membership of the
Executive Committee, to fill all vacancies in it and to discharge it, either
with or without cause.
Section 2. Other Committees. The Board of Directors may, by resolution
----------------
adopted by a majority of the entire Board, designate from among its members one
or more committees, each of which shall, except as otherwise prescribed by law,
have such authority of the Board as may be specified in the resolution of the
Board designating such committee. A majority of all members of such committee
may determine its action and fix the time and place of its meetings, unless the
Board shall otherwise provide. The Board shall have the power at any time to
change the membership of, to fill all vacancies in and to discharge any such
committee, either with or without cause.
Section 3. Procedure, Meetings, Quorum. Regular meetings of the
---------------------------
Executive Committee or any other committee of the Board of Directors, of which
no notice shall be necessary, may be held at such times and places as shall be
fixed by resolution adopted by a majority of the members thereof. Special
meetings of the Executive Committee or any other committee of the Board shall be
called at
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<PAGE>
the request of any member thereof. Notice of each special meeting of the
Executive Committee or any other committee of the Board shall be sent by mail,
telegraph or telephone, or be delivered personally to each member thereof not
later than the day before the day on which the meeting is to be held, but notice
need not be given to any member who shall, either before or after the meeting,
submit a signed waiver of such notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to such member.
Any special meeting of the Executive Committee or any other committee of the
Board shall be a legal meeting without any notice thereof having been given if
all the members thereof shall be present thereat. Notice of any adjourned
meeting of the Executive Committee or any other committee of the Board need not
be given. The Executive Committee or any other committee of the Board may adopt
such rules and regulations not inconsistent with the provisions of law, the
Certificate of Incorporation of the Corporation or these Bylaws for the conduct
of its meetings as the Executive Committee or such other committee deems proper.
A majority of the Executive Committee or any other committee of the Board shall
constitute a quorum for the transaction of business at any meeting, and the vote
of a majority of the members thereof present at any meeting at which a quorum is
present shall be the act of such committee. The Executive Committee and any
other committee of the Board of Directors shall keep written minutes of its
proceedings and shall report on such proceedings to the Board.
ARTICLE V
OFFICERS
--------
Section 1. Number, Term of Office. The officers of the Corporation shall
----------------------
be elected by the Board of Directors and shall be a President, one or more Vice
Presidents, a Treasurer, a Secretary and such other officers or agents with such
titles and such duties as the Board of Directors may from time to time
determine, including without limitation a Chairman of the Board and a
Controller, each to have authority, functions or duties as in these Bylaws
provided or as the Board may from time to time determine, and each to hold
office for such term as may be prescribed by the Board and until such person's
successor shall have been elected and shall qualify, or until such person's
death or resignation, or until such person's removal in the manner hereinafter
provided. If one is to be elected, the Chairman of the Board shall be elected
from among the directors. One person may hold the offices and perform the duties
of any two or more of said officers; provided, however, that no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument is required by law, the Certificate of Incorporation of the
Corporation or these Bylaws to be executed, acknowledged or verified by two or
more officers. The Board may from time to time authorize any officer to appoint
and remove any such other officers and agents and to prescribe their powers and
duties. The Board may require any officer or agent to give security for the
faithful performance of such person's duties.
Section 2. Removal. Any officer may be removed, either with or without
-------
cause, by the Board of Directors at any meeting thereof called for that purpose,
or, except in the case of any officer elected by the Board, by any committee or
superior officer upon whom such power may be conferred by the Board.
Section 3. Resignation. Any officer may at any time resign by giving
-----------
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of receipt of
such notice or at any later date specified therein, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
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<PAGE>
Section 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal or any other cause may be filled for the unexpired portion
of the term in the manner prescribed in these Bylaws for election to such
office.
Section 5. President. The President shall be the chief executive
---------
officer of the Corporation and as such shall have general supervision and
direction of the business and affairs of the Corporation, subject to the control
of the Board of Directors. The President shall, if present and in the absence
of the Chairman of the Board (or if none is elected), preside at meetings of the
stockholders, meetings of the Board (if a member thereof) and meetings of the
Executive Committee (if a member thereof). The President shall perform such
other duties as the Board may from time to time determine. The President may
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other instruments authorized by the Board or any committee thereof
empowered to authorize the same.
Section 6. Chairman of the Board. If elected, the Chairman of the
---------------------
Board shall, if present, preside at meetings of the stockholders, meetings of
the Board and meetings of the Executive Committee (if a member thereof). The
Chairman of the Board shall counsel with and advise the President and perform
such other duties as the Board or the Executive Committee may from time to time
determine.
Section 7. Vice Presidents. Each Vice President shall have such powers
---------------
and duties as shall be prescribed by the President, the Chairman of the Board or
the Board of Directors. Any Vice President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board or any committee thereof empowered to authorize the
same.
Section 8. Treasurer. The Treasurer shall perform all duties incident
---------
to the office of Treasurer and such other duties as from time to time may be
assigned to the Treasurer by the President, the Chairman of the Board or the
Board of Directors.
Section 9. Secretary. It shall be the duty of the Secretary to act as
---------
secretary at all meetings of the Board of Directors, of the Executive Committee
and of the stockholders and to record the proceedings of such meetings in a book
or books kept for that purpose; the Secretary shall see that all notices
required to be given by the Corporation are duly given and served; the Secretary
shall be custodian of the seal of the Corporation (if one is adopted) and shall
affix the seal or cause it to be affixed to all certificates of stock of the
Corporation (unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and to all documents, the execution of which
on behalf of the Corporation under its seal is duly authorized in accordance
with the provisions of these Bylaws. The Secretary shall have charge of the
stock ledger books and also of the other books, records and papers of the
Corporation and shall see that the reports, statements and other documents
required by law are properly kept and filed; and the Secretary shall in general
perform all the duties incident to the office of Secretary and such other duties
as from time to time may be assigned to such person by the President, the
Chairman of the Board or the Board of Directors.
Section 10. Controller. If elected, the Controller shall perform all
----------
of the duties incident to the office of the Controller and such other duties as
from time to time may be assigned to such person by the President, the Chairman
of the Board or the Board of Directors.
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<PAGE>
Section 11. Assistant Treasurers, Secretaries and Controllers. If
-------------------------------------------------
elected, the Assistant Treasurers, the Assistant Secretaries and the Assistant
Controllers shall perform such duties as shall be assigned to them by the
Treasurer, Secretary or Controller respectively, or by the President, the
Chairman of the Board or the Board of Directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
------------------------------------------------------------
Section 1. Third Party Actions. The Corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
---- ----------
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any
------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of Delaware
or such other court shall deem proper.
Section 3. Determination of Indemnification. Any indemnification
--------------------------------
under Section 1 or 2 of this Article VI (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or 2 of this Article VI. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
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proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or (iii) by the stockholders.
Section 4. Right to Indemnification. Notwithstanding the other provisions
------------------------
of this Article VI, to the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 or 2 of this Article VI,
or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
Section 5. Advancement of Expenses. Expenses (including attorneys' fees)
-----------------------
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in this Article VI.
Section 6. Indemnification and Advancement of Expenses Not Exclusive. The
---------------------------------------------------------
indemnification and advancement of expenses provided by, or granted pursuant to
the other Sections of, this Article VI shall not be deemed exclusive of any
other rights to which any person seeking indemnification may be entitled under
any law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office. All rights to indemnification
under this Article VI shall be deemed to be provided by a contract between the
Corporation and the director, officer, employee or agent who served in such
capacity at any time while these Bylaws and other relevant provisions of the
Delaware General Corporation Law and other applicable law, if any, are in
effect. Any repeal or modification thereof shall not affect any rights or
obligations then existing.
Section 7. Insurance. The Corporation may purchase and maintain insurance
---------
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprisse against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the applicable provisions of
the General Corporation Law of the State of Delaware.
Section 8. Definitions of Certain Terms. For purposes of this Article VI,
----------------------------
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
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<PAGE>
For purposes of this Article VI, references to "other enterprise" shall
include employee benefit plans, references to "fines" shall include any excise
tax assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VI.
Section 9. Continuation and Successors. The indemnification and
---------------------------
advancement of expenses provided by, or granted pursuant to, this Article VI
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ARTICLE VII
CAPITAL STOCK
-------------
Section 1. Certificates for Shares. Certificates representing shares of
-----------------------
stock of each class of the Corporation, whenever authorized by the Board of
Directors, shall be in such form as shall be approved by the Board. The
certificates representing shares of stock of each class shall be signed by, or
in the name of, the Corporation by the Chairman of the Board or the President or
a Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer of the Corporation, and sealed with the seal of the
Corporation (if one has been adopted), which may be by a facsimile thereof. Any
or all such signatures may be facsimiles if countersigned by a transfer agent
or registrar. Although any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate ceases to be
such officer, transfer agent or registrar before such certificate is issued, it
may nevertheless be issued by the Corporation with the same effect as if such
officer, transfer agent or registrar were still such at the date of issue.
The stock ledger and blank share certificates shall be kept by the
Secretary or a transfer agent or by a registrar or by any other officer or agent
designated by the Board.
Section 2. Transfer of Shares. Transfer of shares of stock of each class
------------------
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by such holder's attorney thereunto authorized by a power of
attorney duly executed and filed with the Secretary of the Corporation or by a
transfer agent for such stock, if any, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. The person in whose
name shares stand on the books of the Corporation shall be deemed the owner
thereof for all purposes as regards the Corporation; provided, however, that
whenever any transfer of shares shall be made for collateral security and not
absolutely and the pledgor has not expressly empowered the pledgee to vote
thereon, and written notice thereof shall be given to the Secretary or to such
transfer agent, such fact shall be stated in the entry of the transfer. No
transfer of shares shall be valid as against the Corporation, its stockholders
and creditors for any purpose, except to render the transferee liable for the
debts of the Corporation to the extent provided by law, until it shall have been
entered in the stock records of the Corporation showing from and to whom
transferred.
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<PAGE>
Section 3. Address of Stockholders. Each stockholder shall designate to
-----------------------
the Secretary or transfer agent of the Corporation an address at which notices
of meetings and all other corporate notices may be served or mailed to such
person, and, if any stockholder shall fail to designate such address, corporate
notices may be served upon such person by mail directed to such person at such
person's post office address, if any, as the same appears on the share record
books of the Corporation or at such person's last known post office address.
Section 4. Lost, Destroyed and Mutilated Certificates. The holder of any
------------------------------------------
share of stock of the Corporation shall immediately notify the Corporation of
any loss, theft, destruction or mutilation of the certificate therefor; the
Corporation may issue to such holder a new certificate or certificates for
shares, upon the surrender of the mutilated certificate or, in the case of loss,
theft or destruction of the certificate, upon satisfactory proof of such loss,
theft or destruction; the Board of Directors, or a committee designated
thereby, may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such person's legal representative, to give the Corporation a
bond in such sum and with such surety or sureties as it may direct to indemnify
the Corporation and said transfer agents and registrars against any claim that
may be made on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 5. Regulations. The Board of Directors may make such additional
-----------
rules and regulations as it may deem expedient concerning the issue and transfer
of certificates representing shares of stock of each class of the Corporation
and may make such rules and take such action as it may deem expedient concerning
the issue of certificates in lieu of certificates claimed to have been lost,
destroyed, stolen or mutilated.
Section 6. Fixing Record Date for Determination of Stockholders of
--------------------------------------------------------
Record. In order that the Corporation may determine the stockholders entitled
- ------
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than 60 nor
less than 10 days before the date of such meeting, nor more than 60 days prior
to any other action. A determination of stockholders of record entitled to
notice of and to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 7. Registered Stockholders. The Corporation shall be entitled to
-----------------------
treat the holder of record of any shares of its stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
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ARTICLE VIII
SEAL
----
The Board of Directors may provide a corporate seal, which, if adopted,
shall be in the form of a circle and shall bear the full name of the Corporation
and such other words or figures as the Board of Directors may approve and adopt.
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or in any other manner reproduced.
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
WAIVER OF NOTICE
----------------
Whenever any notice whatsoever is required to be given by these Bylaws, by
the Certificate of Incorporation of the Corporation or by law, the person
entitled thereto may, either before or after the meeting or other matter in
respect of which such notice is to be given, waive such notice in writing, which
writing shall be filed with or entered upon the records of the meeting or the
records kept with respect to such other matter, as the case may be, and in such
event such notice need not be given to such person and such waiver shall be
deemed equivalent to notice.
ARTICLE XI
AMENDMENTS
----------
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the Board of Directors at any regular meeting
of the stockholders or of the Board of Directors or at any special meeting of
the stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting.
ARTICLE XII
MISCELLANEOUS
-------------
Section 1. Execution of Documents. The Board of Directors or any committee
-----------------------
thereof shall designate the officers, employees and agents of the Corporation
who shall have power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, notes, checks, drafts and other orders for the payment of money and
other documents for and in the name of the Corporation and may authorize such
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officers, employees and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of the
Corporation. Such delegation may be by resolution or otherwise and the
authority granted shall be general or confined to specific matters, all as the
Board or such committee may determine. In the absence of such designation
referred to in the first sentence of this Section 1, the officers of the
Corporation shall have such power so referred to, to the extent incident to the
normal performance of their duties.
Section 2. Deposits. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation or
otherwise as the Board of Directors or any committee thereof or any officer of
the Corporation to whom power in that respect shall have been delegated by the
Board or any such committee shall select.
Section 3. Checks. All checks, drafts, and other orders for the payment
------
of money out of the funds of the Corporation, and all notes or other evidence of
indebtedness of the Corporation, shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board
of Directors or of any committee thereof. In the absence of such resolution
referred to in the immediately preceding sentence, the officers of the
Corporation shall have such power so referred to, to the extent incident to the
normal performance of their duties.
Section 4. Proxies in Respect of Stock or Other Securities of Other
--------------------------------------------------------
Corporations. The Board of Directors or any committee thereof shall designate
- ------------
the officers of the Corporation who shall have authority from time to time to
appoint an agent or agents of the Corporation to exercise in the name and on
behalf of the Corporation the powers and rights that the Corporation may have as
the holder of stock or other securities in any other corporation, and to vote or
consent in respect of such stock or securities; such designated officers may
instruct the person or persons so appointed as to the manner of exercising such
powers and rights; and such designated officers may execute or cause to be
executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, such written proxies, powers of attorney or other
instruments as they may deem necessary or proper in order that the Corporation
may exercise its said powers and rights.
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ARTICLES OF INCORPORATION
OF
SCOTT TPI, Inc.
* * * * *
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the Texas Business Corporation
Act, does hereby adopt the following Articles of Incorporation for such
corporation:
ARTICLE ONE
The name of the corporation is
SCOTT TPI, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the corporation is organized are:
To engage in the transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have
authority to issue is One Hundred (100) of the par value of Ten Dollars ($10.00)
each.
ARTICLE FIVE
The corporation will not commence business until
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it has received for the issuance of its shares consideration of the value of One
Thousand Dollars ($1,000.00), consisting of money, labor done or property
actually received, which sum is not less than One Thousand Dollars ($1,000).
ARTICLE SIX
The street address of its initial registered office is 1601 Elm Street, c/o
C T Corporation System, Dallas, Texas 75201, and the name of its initial
registered agent at such address is C T CORPORATION SYSTEM.
ARTICLE SEVEN
The number of directors of the corporation may be fixed by the by-laws.
The number of directors constituting the initial board of directors in One
(1), and the name and address of each person who is to serve as director until
the first annual meeting of the shareholders or until a successor is elected and
qualified are:
NAME ADDRESS
---- -------
Ellis A. Horwitz c/o Scott Paper Company
Scott Plaza
Philadelphia, PA 19113
ARTICLE EIGHT
The name and address of the incorporator is:
NAME ADDRESS
---- -------
Delanie M. Lundgren 1212 Guadalupe, Suite 102
Austin, TX 78701
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IN WITNESS WHEREOF, I have hereunto set my hand, this 4th day of
October, 1988.
/s/ Delanie M. Lundgren
--------------------------------
DELANIE M. LUNDGREN
STATE OF Texas )
) ss:
COUNTY OF Travis )
I, Sheila Waller, a notary public, do hereby certify that on this 4th
day of October, 1988, personally appeared before me, Delanie M. Lundgren, who
being by me first duly sworn, severally declared that they are the person who
signed the foregoing document as incorporator, and that the statements therein
contained are true.
/s/ Sheila Waller
--------------------------------
Notary Public
(NOTARIAL SEAL) SHEILA WALLER
Notary Public for the State of Texas
My Commission expires 7-3-89
-------
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ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SCOTT TPI, INC.
Pursuant to the provisions of Art. 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is SCOTT TPI, INC.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on November 14, 1988.
Article One of the Articles of Incorporation is hereby amended so as to
read as follows:
"ARTICLE ONE
The name of the corporation is
Scott Polymers, Inc."
ARTICLE THREE. The number of shares of the corporation outstanding at
the time of such adoption was 100 Common Shares; and the number of shares
entitled to vote thereon was 100 Common Shares.
ARTICLE FOUR. The holders of all the shares outstanding and entitled to
vote on said amendment have signed a consent in writing adopting said amendment.
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ARTICLE FIVE. The manner of exchange, reclassification or cancellation
of issued shares is unaffected by the amendment.
ARTICLE SIX. The stated capital is unaffected by the amendment.
Dated: November 14, 1988.
--
SCOTT TPI, INC.
By [SIGNATURE APPEARS HERE]
-------------------------
Vice President
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To the Secretary of State
of the State of Texas:
C T Corporation System, as the registered agent for the domestic and
foreign corporations named on the attached list submits the following statement
for the purpose of changing the registered office for such corporations, in the
State of Texas:
1. The name of the corporation is See attached list
--------------------------------------------
2. The post office address of its present registered office is c/o C T
---------------
CORPORATION SYSTEM, 1601 ELM STREET, DALLAS, TEXAS 75201
---------------------------------------------------------------------------
3. The post office address to which its registered office is to be changed is
c/o C T CORPORATION SYSTEM, 350 N. ST. PAUL STREET, DALLAS, TEXAS 75201
---------------------------------------------------------------------------
4. The name of its present registered agent is C T CORPORATION SYSTEM
-------------------------------
5. The name of its successor registered agent is C T CORPORATION SYSTEM
-----------------------------
6. The post office address of its registered office and the post office
address of the business office of its registered agent, as changed, will be
identical.
7. Notice of this change of address has been given in writing to each
corporation named on the attached list 10 days prior to the date of filing
of this certificate.
Dated July 2, 1990.
-------
C T CORPORATION SYSTEM
----------------------------
By [SIGNATURE APPEARS HERE]
----------------------------
Its Vice President
------
<PAGE>
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
SCOTT POLYMERS, INC.
Pursuant to Article 4.04 of the Texas Business Corporation Act, the
undersigned corporation (the "corporation") hereby adopts the following Articles
of Amendment to its Articles of Incorporation:
ARTICLE ONE
-----------
The name of the corporation is Scott Polymers, Inc.
ARTICLE TWO
-----------
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the corporation on July 1, 1994. The name of the
corporation is hereby changed to "StyroChem International, Inc." by amending
Article One of the corporation's Articles of Incorporation to read in its
entirety as follows:
"The name of the corporation is StyroChem International, Inc."
ARTICLE THREE
-------------
The number of shares of the corporation outstanding and entitled to vote
at the time of adoption of the foregoing amendment was 100. The holders of all
of the shares outstanding and entitled to vote on said amendment have signed a
consent in writing pursuant to Article 9.10 adopting said amendment and any
written notice required by Article 9.10 has been given or waived.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of July 28, 1994.
SCOTT POLYMERS, INC.
By: /s/ Richard Davidovich
-------------------------------------
Richard Davidovich, President
<PAGE>
SCOTT POLYMERS, INC.
* * * * *
B Y - L A W S
* * * * *
(Effective as of August 23, 1991)
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Dallas, Texas.
Section 2. The corporation may also have offices at such other places
both within and without the State of Texas as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held in Philadelphia, State of Pennsylvania, at such place as may be
fixed from time to time by the board of directors. Said meetings may also be
held at such other place either within or without the State of Texas as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting.
Section 2. Annual meetings of shareholders, commencing with the year
1989, shall be held on the second Friday of May if not a legal holiday, and if a
legal
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holiday, then on the next secular day following, at 10:00 A.M., at which they
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the president, the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other than
the election of directors may be held at such time and place within or without
the State of Texas as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
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Section 3. Written or printed notice of a special meeting stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present
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or represented any business may be transacted which might have been transacted
at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be One (1). Directors need
not be residents of the State of Texas nor shareholders of the corporation. The
directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director
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elected shall serve until the next succeeding annual meeting and until his
successor shall have been elected and qualified. The first board of directors
shall hold office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the shareholders at an annual or a special meeting or by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired portion of the term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose. A director elected to fill a
newly created directorship shall serve until the next succeeding annual meeting
of shareholders and until his successor shall have been elected and qualified.
Any directorship to be filled by reason of an increase in the number of
directors may also be filled by the board of directors for a term of office
until the next election of directors by shareholders; provided no more than two
directorships may be so filled during a period between any two successive annual
meetings of shareholders.
Whenever the holders of any class or series of shares are entitled to
elect one or more directors by the
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provisions of the articles of incorporation, any vacancies in such directorships
and any newly created directorships of such class or series to be filled by
reason of an increase in the number of such directors may be filled by the
affirmative vote of a majority of the directors elected by such class or series
then in office or by a sole remaining director so elected, or by the vote of the
holders of the outstanding shares of such class or series, and such
directorships shall not in any case be filled by the vote of the remaining
directors or the holders of the outstanding shares as a whole unless otherwise
provided in the articles of incorporation.
Section 3. The business affairs of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the shareholders.
Section 4. The directors may keep the books of the corporation, except
such as are required by law to be kept within the state, outside of the State of
Texas, at such place or places as they may from time to time determine.
Section 5. The board of directors, by the affirmative vote of a majority
of the directors then in office, and irrespective of any personal interest of
any of its
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members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special, may be
held either within or without the State of Texas.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called by the
president on One (1) days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president
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or secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the board of
directors, unless the act of a greater number is required by statute or by the
articles of incorporation. If a quorum shall not be present at any meeting of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Unless otherwise restricted by the articles of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken
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without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing which shall set forth the action taken and be signed
by all members of the board of directors or of the committee as the case may be.
ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a majority
of the full board of directors, may designate from among its members an
executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in the resolution,
shall have and may exercise all of the authority of the board of directors,
except that no such committee shall have the authority of the board of directors
in reference to amending the articles of incorporation, approving a plan of
merger or consolidation, recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the bylaws of the
corporation or adopting new bylaws for the corporation, filling
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vacancies in the board of directors or any committee, filling any directorship
to be filled by reason of an increase in the number of directors, electing or
removing officers or members of any committee, fixing the compensation of any
member of a committee, or altering or repealing any resolution of the board of
directors which by its terms provides that it shall not be so amendable or
repealable; and, unless the resolution expressly so provides, no committee shall
have the power or authority to declare a dividend or to authorize the issuance
of shares of the corporation.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
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Section 2. Whenever any notice whatever is required to be given under
the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therin, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president and a secretary. The board of directors
may also elect or appoint such other officers, including assistant officers and
agents as may be deemed necessary.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president and a secretary neither
of whom need be a member of the board.
Section 3. The board of directors may also appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
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Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
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THE VICE-PRESIDENTS
Section 8. The vice-president, if there is one, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer
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to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, if there is one, or if there be
more than one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer, if there is one, shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
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Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, if there is one, or, if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president and secretary or such other officers as may
be elected or appointed, and may be sealed with the seal of the corporation or a
facsimile thereof.
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When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the board of directors to fix and
determine and relative rights and preferences of subsequent series. When the
corporation is authorized to issue shares of more than one class, every
certificate shall also set forth upon the face or the back of such certificate a
statement that there is set forth in the articles of incorporation on file in
the office of the Secretary of State a full statement of all the designations,
preferences, limitations and relative rights, including voting rights, of the
shares of each class authorized to be issued and the corporation will furnish a
copy of such statement to the record holder of the certificate without charge on
written request to the corporation at its principal place of business or
registered office. Every certificate shall have noted thereon any information
required to be set forth by
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the Texas Business Corporation Act and such information shall be set forth in
the manner provided in said Act.
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as
it deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
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TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and the old
certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty days. If the stock transfer books shall be closed
for the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not
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less than ten days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Texas.
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LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books for
shares shall make, at least ten days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original share ledger or transfer book, or a duplicate
thereof, shall be prima facie evidence as to who are the shareholders entitled
to examine such list or share ledger or transfer book or to vote at any meeting
of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of incorporation
relating thereto, if any, dividends may be declared by the board of directors at
any regular or special meeting, pursuant to law. Dividends may
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be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have
-21-
<PAGE>
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Texas". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board subject to repeal or
change at any regular or special meeting of shareholders at which a quorum is
present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed repeal or change be contained
in the notice of such meeting.
-22-
<PAGE>
[LETTERHEAD OF GOUVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE CONSTITUTION
Loi sur les compagnies
(L.R.Q., chap. C-38)
Partie IA
J'atteste par les presentes que la compagnie
2621-8529 QUEBEC INC.
a ete constituee, sous l'autorite de la partie IA
de la Loi sur les compagnies, tel qu'indique dans
les statuts de constitution ci-joints.
Le 1988 08 31
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions
financieres
[SEAL APPEARS HERE] 2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination sociale du numero matricule
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2 District judicaire du Quebec ou la 3 Nombre precis ou nombres minimal et 4 Date d'entree en vigueur si posterieure
compagnie etablit son siege social maximal des administrateurs a celle du depot
<S> <C> <C>
Montreal Pas moins de 1 et S/O
pas plus de 10.
</TABLE>
- --------------------------------------------------------------------------------
5 Description du capital-actions
Un nombre illimite d'actions ordinaires sans valeur nominale
- --------------------------------------------------------------------------------
6 Restrictions sur le transiert des actions, ie cas echeant
L'Annexe I ci-jointe fait partie integrante de cette formule
- --------------------------------------------------------------------------------
7 Limites imposees a son activite, le cas echeant
S/O
- --------------------------------------------------------------------------------
8 Autres dispositions
L'Annexe II ci-jointe fait partie integrante de cette formule
- --------------------------------------------------------------------------------
9 Fondateurs
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Adresse incluant le code postal Signature de chaque fondateur
Nom et prenom (sil s'agit dune corporation, indiquer Profession (sil s'agit dune corporation, signature
le siege social et la loi constitutive) de la personne autorisee)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Claire Tousignant 5210, Avenue Randall Adjointe /s/ Claire Tousignant
App. 14 juridique
Montreal (Quebec)
H4V 2V3
</TABLE>
- --------------------------------------------------------------------------------
Si l'espace est insufficiant, joindre une annexe
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
ANNEXE I
--------
Aucune action du capital-actions de la compagnie ne peut etre transferee
sans le consentement du conseil d'administration de la compagnie, donne par une
resolution adoptee par le conseil d'administration ou sans le consentement par
ecrit de tous les administrateurs de la compagnie.
<PAGE>
ANNEXE II
---------
1. Le nombre des actionnaires de la compagnie est limite a 50, non
comprises les personnes qui sont a l'emploi de la compagnie ou d'une
filiale, et les personnes qui, ayant ete dans le passe a l'emploi de la
compagnie ou d'une filiale, etaient pendant ce temps, et ont continue
apres l'expiration de leur emploi, a etre actionnaires de la compagnie,
2 ou plusieurs personnes detenant une action ou plusieurs actions
conjointement etant considerees comme un seul actionnaire.
2. Toute invitation au public pour la souscription de valeurs mobilieres
emises par la compagnie est interdite.
3. L'assemblee annuelle des actionnaires de la compagnia peut etre tenue a
tout endroit, dans la province de Quebec ou ailleurs, tel que les
administrateurs pouvent le determiner.
<PAGE>
[LETTERHEAD OF GOVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination sociale ou numero matricule
. 2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2 Avis est donne par less presentes que l'addrese du siege social de la
compagnie, dans les limites du district judiciaire indique dans les statuts,
est la suivante:
1170 rue Peel
----------------------------------------------------------------------
Numero civique Nom de la rue
Montreal
----------------------------------------------------------------------
Localite
Quebec H3B 4S8
----------------------------------------------------------------------
Province ou pays Code postal
- --------------------------------------------------------------------------------
La compagnie
Fonction du
per: /s/ Claire Tousignant signataire Fondatrice
-------------------------------- ---------------------------------
(signatare)
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination societe ou numero matricule
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
2 Les administrateurs de la compagnie sont:
- --------------------------------------------------------------------------------
Adrese residentiale complete
Nom et prenom (incluant le code postal) Profession
- --------------------------------------------------------------------------------
Claire Tousignant 5210, Avenue Randall Adjointe
App. 14 juridique
Montreal (Quebec)
H4V 2V3
- --------------------------------------------------------------------------------
Si l'espace est insuffisant, joindre une annexe en deux (2) exemplaires.
La compagnie
Fonction du
par: [SIGNATURE APPEARS HERE] signataire Fondatrice
----------------------------------- -----------------------------
(signature)
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
[LETTERHEAD OF GOVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE MODIFICATION
Loi sur les compagnies
(L.R.Q., chap. C-38)
Partie IA
J'atteste par les presentes que la compagnie
SCOTT STYRENE QUEBEC, INC.
a modifie ses statuts, sous l'autorite de
la partie IA de le Loi sur les compagnies,
tel qu'indique dans les statuts de modifi-
cation ci-joints.
Le 1988 10 14
[SEAL APPEARS HERE]
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions financieres
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1. Corporate name or designating number
SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
2. The company's articles are amended as follows
Paragraph 1 therof is replaced with the following:
SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
3 Effective date, if different 4 Corporate name or designating number
from date of filing (see prior to amendment (if different from
instructions). that mentioned in item 1)
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
Signature of
authorized Post occupied
director [SIGNATURE APPEARS HERE] by signatory President
---------------------------- ------------------------
- --------------------------------------------------------------------------------
For departmental use only
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Corporate name or designating number
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
2 The directors of the company are
- --------------------------------------------------------------------------------
Name and surname Full mailing address Profession
(including postal code)
- --------------------------------------------------------------------------------
Ellis A. Horwitz Scott Plaza 1 businessman
Philadelphia, PA 19113
U.S.A.
- --------------------------------------------------------------------------------
If space is insufficient, attach an appendix in two (2) copies
The Company
Post occupied
By /s/ Ellis A. Horwitz by signatory President*
------------------------------- ---------------------------
(Signature)
- --------------------------------------------------------------------------------
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE MODIFICATION
Loi sur les compagnies
(L.R.Q., chap. C-38)
Partie IA
J'atteste par les presentes que la compagnie
POLYMERES SCOTT, LTEE
ET SA VERSION
SCOTT POLYMERS, LTD.
a modifie ses statuts, sous l'autori'e de la partie IA
de la loi sur les compagnies, tel qu'indique dans les
statuts de modification ci-joints.
Le 1988 11 16
[SIGNATURE APPEARS HERE]
[SEAL APPEARS HERE] Inspecteur general des
institutions financieres
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Corporate name or designating number
POLYMERES SCOTT, LTEE -
SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
2 The company's articles are amended as follows
Paragraph 1 thereof is replaced with the following:
POLYMERES SCOTT, LTEE - SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
3 Effective date if different 4 Corporate name or designating number
from date of filing (see prior to amendment (if different from
instructions). that mentioned in item 1)
N/A SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
Signature of
authorized Post occupied
director [SIGNATURE APPEARS HERE] by signatory Director
---------------------------- ------------------------
- --------------------------------------------------------------------------------
For departmental use only
<PAGE>
[LOGO OF QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
CERTIFICAT DE MODIFICATION
Loi sur les compagnies, Partie IA
(L.R.Q., chap. C-38)
J'atteste par les presentes que la compagnie
STYROCHEM INTERNATIONAL, LTEE
et sa version
STYROCHEM INTERNATIONAL LTD.
a modifie ses statuts le 18 NOVEMBRE 1994, sous l'autorite de
la partie IA de la Loi sur les compagnies, tel qu'indique dans
les statuts de modification ci-joints.
Deposes au registre le 21 novembre 1994
sous le matricule 1141484460
[SEAL OF INSPECTEUR GENERAL DES INSTITUTIONS FINANCIERES APPEARS HERE]
T130L10164S43AA
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions financieres
<PAGE>
[LOGO OF GOVERNMENT QUEBEC APPEARS HERE]
Form 5
ARTICLES OF AMENDMENT
The Companies Act R.S.Q.c C-38
Part 1A
- --------------------------------------------------------------------------------
1 Corporate name
StyroChem International, Ltee/StyroChem International Ltd.
- --------------------------------------------------------------------------------
2 Present address of the company
- --------------------------------------------------------------------------------
19250 CLARK GRAHAM
-----------------------------------------------------------------------
No Street name
BAIE D'URFE
-----------------------------------------------------------------------
Municipality
QUEBEC M9X1A1
-----------------------------------------------------------------------
Province Postal code
- --------------------------------------------------------------------------------
3 [ ] Application presented in conformity with Section 123 140 and following
of the Companies Act
4 The company's articles are amended as follows
1. Article 1 of the Articles of Incorporation is modified by changing the
name of "POLYMERES SCOTT, LTEE,/SCOTT POLYMERS, ltd." to "StyroChem
International, Ltee/StyroChem International Ltd."
- --------------------------------------------------------------------------------
5 Effective date, if different from date of filing (see instructions)
6 Corporate name (or designating number), prior to amendment, if different
from that mentioned in item 1
POLYMERES SCOTT, LTEE/SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
If space is insufficient, attach an appendix in two (2) copies
Signature of
authorized director /s/Richard Davidovich
----------------------------------------------------------
RICHARD DAVIDOVICH
- --------------------------------------------------------------------------------
For department use only CA-215 (Rev 12-93)
[LOGO OF GOVERNMENT QUEBEC APPEARS HERE]
18 NOV, 1994
L'Inspecteur general des
Institutions financieres
<PAGE>
2621-8529 QUEBEC INC.
--------------------
GENERAL BY LAWS
---------------
SHAREHOLDERS
------------
1. Annual meeting. The annual meeting of the shareholders of the Company
--------------
shall be held on such date, not later than 4 months after the close of the
Company's preceding financial year, as the directors may from time to time
by resolution provide, for the election of directors and the transactions
of such other business as may properly come before the meeting.
The annual meeting shall be held at the head office of the Company, or
at such other place as may be fixed by the directors.
2. Special general meetings. Special general meetings of shareholders may be
------------------------
called at any time by order of the Chairman of the Board or the President
or any Vice-President of the Company or under authority of a resolution of
the board of directors or shall be called whenever the holders of not less
than one-tenth of the outstanding shares of the Company carrying voting
rights at such meeting shall, in writing, request the same. Any such
order, resolution or request shall specify the object for which the meeting
is to be called. The notice of a special general meeting shall state in
general terms the purpose or purposes of the meeting.
It shall be the duty of the President or, in his absence, of one of
the Vice-Presidents, upon adoption of such a resolution or on receipt of
such a request to cause the meeting to be called by the Secretary or other
officer of the Company in conformity with the terms of the resolution or
request. In default of his so doing, any director may call such meeting or
the same may be called by such shareholders themselves in accordance with
and
<PAGE>
subject to the provisions of the laws governing the Company.
Special general meetings of shareholders shall be held at the head
office of the Company or at any other place or places within or without
Canada previously approved by resolution of the directors or at any
other place where all the shareholders of the Company entitled to vote
thereat are present in person or represented by proxy or of which all
the shareholders of the Company approve.
3. Notice of meetings. Notice specifying the place, day and time of each
------------------
annual and of each special general meeting of shareholders shall be
given by sending the notice to each shareholder entitled to vote at the
meeting through the post, in a prepaid wrapper or letter not less than
14 days or more than 60 days before the date of the meeting, to his
latest address as shown on the books of the Company. Where required by
law, such notice shall be accompanied by a copy of the Company's
financial statements and a copy of the auditor's report.
Notice of the time and place for holding any meeting of
shareholders need not be given if all the shareholders of the Company
entitled to vote at the meeting waive notice of the meeting in writing.
Notices with respect to any shares registered in more than one name
shall be given to whichever of such persons is named first in the books
of the Company in respect of such joint holding and notice so given
shall be sufficient notice to all the holders of such shares.
Irregularities in the notice or in the giving thereof, as well as
the accidental omission to give notice of any meeting to, or the
non-receipt of any such notice by any of the shareholders, shall not
invalidate any proceedings at any such meeting. A certificate of the
Secretary or of any other duly authorized officer of the Company or of
any officer or any transfer agent or registrar of the Company with
respect to the mailing of any notice shall be conclusive evidence
thereof and shall be binding on every shareholder.
<PAGE>
4. Quorum, voting and adjournments. One or more persons, each of whom shall
-------------------------------
be entitled to vote thereat either personally or as proxy or as the
authorized representative of a corporation holding at least one share
carrying voting rights thereat, and representing in their own right or
by proxy or as such authorized representative or representatives not
less than 50% in number of the outstanding shares of the capital stock
of the Company carrying voting rights at such meeting, shall constitute
a quorum for an annual meeting and for a special general meeting,
provided, however that if, all the shares entitled to vote at a meeting
are held by one holder, the holder present, in person or by proxy
constitutes a meeting.
The act of the holders of a majority of the shares so represented
and carrying voting rights thereat shall be the act of the shareholders
except where the vote or consent of the holders of a greater number of
shares is required by the laws governing the Company, the Articles of
the Company or by the by-laws of the Company.
Should a quorum not be present at any meeting of shareholders,
those present in person and entitled to be counted for the purpose of
forming a quorum shall have power to adjourn the meeting from time to
time without notice other than announcement at the meeting until a
quorum shall be present. At any such adjourned meeting, provided a
quorum is present, any business may be transacted which might have been
transacted at the meeting adjourned.
5. Right to vote and proxies. At any meeting of shareholders, each
-------------------------
shareholder entitled to vote thereat, and each authorized representative
of a corporation holding at least one share carrying voting rights
thereat, who shall be present at such meeting, shall have on a show of
hands one vote, and upon a poll each shareholder present in person or
represented by proxy and the authorized representative of a corporation
present in person or represented by proxy shall be entitled to one vote
for each share carrying voting rights at such meeting registered in his
or its name on the books of the Company unless, under the terms of the
articles incorporating the Company or any articles thereto, some other
scale of voting is fixed, in
<PAGE>
which event such scale of voting shall be adopted. Any shareholder or
proxy or the authorized representative of a corporation entitled to vote
at any meeting of shareholders may demand a poll in respect of any
matter submitted to a vote. A poll need not be preceded by a show of
hands.
Shareholders (including corporations) entitled to vote may vote
upon a poll by proxy at any meeting of the shareholders, and the
representative of a corporation entitled to vote may likewise vote by
proxy if duly authorized in that behalf by such corporation. The holder
of any proxy need not himself be a shareholder entitled to vote at the
meeting.
The directors may by resolution fix a time not exceeding 48
hours, excluding Saturdays and holidays, preceding any meeting or
adjourned meeting of shareholders before which time proxies to be used
at that meeting must be deposited with the Company or an agent thereof,
and any period of time so fixed shall be specified in the notice calling
the meeting.
6. Joint shareholders. Where there are joint registered holders of any
------------------
share or shares any one of such persons may vote at any meeting either
personally or by proxy in respect of such share or shares as if he were
solely entitled thereto unless more than one of such joint holders be
present or represented by proxy at such meeting, in which event that one
of such joint holders so present or represented whose name stands first,
or before the other or others, on the books of the Company in respect of
such share or shares shall alone be entitled to vote in respect thereof.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this paragraph be deemed
joint holders thereof.
7. Procedure at meetings. The chairman of any meeting of shareholders
---------------------
shall conduct the procedure thereat in all respects and his decision on
all matters or things, including, but without in any way limiting the
generality of the foregoing, any question
<PAGE>
regarding the validity or invalidity of any instruments of proxy, shall be
conclusive and binding upon the shareholders.
A declaration by the chairman at any meeting that a resolution has
been carried or carried unanimously or carried by any particular majority
or lost or not carried by a particular majority shall be conclusive
evidence of the fact.
The chairman at any meeting of shareholders may vote as a shareholder
but shall not have a second or casting vote in case of an equality of
votes.
8. Scrutineers. The chairman at any meeting of shareholders may appoint one
-----------
or more persons (who may but need not be shareholders, directors, officers
or employees of the Company) to act as scrutineers at such meeting.
9. Resolutions. All motions or resolutions of shareholders shall be passed at
-----------
duly convened meetings. The signature of all the shareholders of the
Company entitled to vote thereon to any instrument (which may be signed in
counterparts) setting out a motion or resolution which might be passed by
the shareholders shall give to the motion or resolution the same force and
effect as if it had been unanimously passed by all the shareholders
entitled to vote at a meeting held to consider the same.
DIRECTORS
---------
10. Term of office. Each director shall (except as herein otherwise provided)
--------------
be elected at the annual meeting of shareholders by a majority of the votes
cast in respect of such election. It shall not be necessary that the voting
for the election of directors of the Company be conducted by poll, unless
voting by poll is demanded by someone present and entitled to vote at such
meeting. Each director so elected shall hold office until the election of
his successor unless he shall resign or his office become vacant by death,
removal or other cause.
<PAGE>
11. General powers of directors. The directors may administer the affairs of
---------------------------
the Company in all things and may make or cause to be made for the
Company, in its name, any contract which the Company may lawfully enter
into and generally may exercise all such other powers and do all such
other acts and things as the Company is by its charter or otherwise
entitled to exercise and do.
Without in any way derogating from the foregoing, the directors
are expressly empowered to purchase, lease or otherwise acquire,
alienate, sell, exchange or otherwise dispose of shares, stocks, rights,
warrants, options, bonds, debentures and other securities, lands,
buildings, patents and any and all other property, moveable or
immoveable, real or personal, or any right or interest therein, owned by
the Company, for such consideration and upon such terms and conditions
as they may deem advisable.
All acts done by any meeting of directors or by any person
acting as a director, so long as his successor shall not have been duly
elected or appointed, shall, notwithstanding that it be afterwards
discovered that there was some defect in the election of the directors
or the person acting as aforesaid or that they or any of them were
disqualified, be as valid as if the directors or such other person, as
the case may be, had been duly elected and were or was qualified to be
directors or a director of the Company.
12. Power to allot stock and grant options. The shares of the Company shall
--------------------------------------
be at all times under the control of the directors who may by resolution
accept subscriptions for, allot, issue, grant options in respect of and
otherwise dispose of the whole or any part of the unissued shares of the
Company to such directors, officers, employees, persons, firms,
companies or corporations on such terms and conditions, for such
consideration not contrary to law or to the charter of the Company and
at such times as the directors shall prescribe.
In respect of any shares issued otherwise than as fully paid,
and subject to the terms of issue thereof, the directors may make calls
upon the shareholders in respect of any moneys unpaid upon
<PAGE>
such shares. Each shareholder shall pay the amount so called on such
shares at the time or times and at the place fixed by the directors.
Interest shall run on the amount of each call at the rate of 6% per
annum from the date appointed for the payment of such call to the time
of actual payments.
13. Power to declare dividends. The directors may, as they deem advisable,
--------------------------
declare and pay dividends out of any funds available for dividends to
the shareholders according to their respective rights and interests
therein.
The dividends payable upon any share which is not fully paid
shall be reduced by a proportion equal to that proportion of the full
consideration for such share which has not been paid. No amount paid on
a share in advance of call shall, while carrying interest, be treated
for the purpose of this by-law as paid on the share.
The directors may, before declaring any dividend or making any
distribution of profits, set aside out of the profits of the Company
such sums as they think proper as a reserve or reserves which shall in
the absolute discretion of the directors be applicable for any purpose
which they shall think conducive to the best interest of the Company.
14. Time of meetings and notices. As soon as may be practicable after the
-----------------------------
annual meeting of shareholders in each year there shall be held, without
notice, a meeting of such of the newly elected directors as are then
present, provided they shall constitute a quorum, for the election or
appointment of officers of the Company and for the transaction of such
other business as may come before the meeting.
Regular meetings of the directors may be held at such place, at
such time and upon such notice, if any, as the directors may determine.
<PAGE>
Special meetings of the directors may be called at any time by
or by order of the Chairman of the Board, the President or any two
directors, and may be held at the head office of the Company, or at such
other place as the directors may determine. Notice specifying the
place, day and time of each such meeting shall be served upon each
director or left at his usual residence or usual place of business, or
shall be mailed, telegraphed or cabled prepaid, addressed to each
director at his address as it appears on the books of the Company at
least 48 hours prior to the time fixed for such meeting in the case of
notice served personally or telegraphed or cabled, and at least 72 hours
prior to the time fixed for such meeting in other cases.
No notice of any regular or special meeting of the directors
need specify the purposes for which it is called or the nature of the
business to be transacted.
A meeting of the directors may be held at any time and place and
for any purpose without notice when all the directors are present or
when all directors not present shall have, in writing or by telegram or
cable, waive notice of such meeting either before or after such meeting
is held.
The directors may participate in a meeting of the board of
directors by such means, particularly by telephone, as permit all
directors participating in the meeting to hear each other and a director
participating in such meeting by such means is deemed to be present at
such meeting.
15. Quorum and voting. The directors may from time to time fix the
-----------------
quorum for meetings of directors, but unless so fixed a majority of the
directors in office shall constitute a quorum.
Questions arising at any meeting of the directors shall be
decided by a majority of the votes of those present. The chairman of the
meeting may vote as a director but shall not have a second or casting
vote in respect of any matter submitted to the vote of the meeting.
<PAGE>
16. Vacation of office. The office of a director shall automatically be
------------------
vacated:
16.1 if he ceases to be qualified for such office;
16.2 if by notice in writing to the Company he resigns his office;
16.3 if he dies; or
16.4 if he is removed at any meeting of shareholders called for the
purpose.
17. Vacancies. In the case of a vacancy occurring in the number of directors
---------
as elected by the shareholders, the directors then in office, by the
affirmative vote of a majority thereof, whether or not such majority
constitutes a quorum, may elect any other duly qualified person as a
director and any director so elected shall hold office until the next
annual meeting of shareholders and shall then be eligible for
re-election.
18. Remuneration of directors. The directors shall have power to fix the
-------------------------
remuneration to be paid to directors for their services as such, which
remuneration shall be in addition to any salary a director may receive
as an officer or employee of the Company. The directors shall also be
entitled to be paid their travelling and other expenses properly
incurred by them in connection with the affairs of the Company, or to
receive a fixed allowance in respect thereof.
19. By-laws and resolutions. All by-laws and resolutions of directors shall
-----------------------
be enacted or adopted at duly convened meetings. Notwithstanding the
foregoing, the signature of all the directors of the Company to any
instrument (which may be signed in counterparts) setting out a by-law or
resolution which might be enacted or adopted by the directors shall give
to such by-law or resolution the same force and effect as if it had been
unanimously enacted or adopted, as the case may be, by vote of the
directors at a meeting duly convened and held.
<PAGE>
20. Indemnities of directors and others. Every director and officer of the
-----------------------------------
Company shall be deemed to have assumed office on the express
understanding and agreement and condition that he and his heirs, executors
and administrators and estate and effects respectively shall from time to
time and at all times be indemnified and saved harmless out of the funds
of the Company from and against all costs, charges and expenses whatsoever
which such director or officer sustains or incurs in or about any action,
suit or proceeding which is brought, commenced or prosecuted against him
or them for or in respect of any act, deed, matter or thing whatsoever
made, done or permitted by him in or about the execution of the duties of
his office, and also from and against all other costs, charges and
expenses which he sustains or incurs in or about or in relation to the
affairs thereof, except such costs, charges or expenses as are occasioned
by his own wilful neglect or default.
The directors of the Company may cause the Company to give
indemnities to any director or other person who has undertaken or is about
to undertake any liability on behalf of the Company or any corporation
controlled by it and to secure such director or other person against loss
by mortgage and charge upon the whole or any part of the real and personal
property of the Company by way of security, and any action taken by the
directors under this paragraph shall not require approval or confirmation
by the shareholders.
EXECUTIVE COMMITTEE
-------------------
21. Election and powers. The board of directors, whenever it consists of more
-------------------
than six, may elect from time to time from their number an executive
committee consisting of such number of members (not less than three) as
the board may by resolution from time to time determine. Each member of
the executive committee shall hold office during the pleasure of the
board.
The board may from time to time by resolution remove any member
without cause or add to or otherwise change the membership of the
executive
<PAGE>
committee and may adopt rules or regulations relating to the calling,
holding and quorum at meetings of the executive committee and the
procedure thereat.
The executive committee shall have and may exercise all the powers
of the board of directors; provided, however, that the executive
committee shall at no time have power to allot, or grant options with
respect to, shares of capital stock, remove or replace directors,
declare or authorize payment of dividends or enact, amend or repeal
by-laws.
OFFICERS
--------
22. Officers. The executive officers of the Company shall be the
--------
President, a Treasurer and a Secretary. The President, Treasurer and
Secretary shall be elected or appointed by the board of directors at its
first meeting after the first meeting of the shareholders and thereafter
at the first or any subsequent meeting of the board of directors held
after each annual meeting of shareholders. The board of directors may
also elect or appoint at any time and from time to time as officers or
executive officers a Chairman of the Board, one or more Vice-Presidents,
one or more Assistant-Secretaries, one or more Assistant-Treasurers, a
Comptroller, a General Manager or Managing Director and such other
officers or executive officers as the board of directors, from time to
time, deem expedient. All officers and executive officers of the Company
shall hold office until their successors are chosen and, when necessary,
qualified in their stead, subject always to removal as provided in the
by-laws of the Company. All officers and executive officers shall
respectively perform such duties, in addition to those specified in the
by-laws of the Company, as shall, from time to time, be prescribed by
the board of directors. The same person may hold more than one office,
provided, however, that the offices of President and Vice-President
shall not be held by the same person. None of such officers or executive
officers of the Company except the Chairman of the Board and the
President
<PAGE>
and the Managing Director need be a director of the Company.
23. Chairman of the Board. The Chairman of the Board shall be chosen from
---------------------
among the directors. He shall preside at all meetings of shareholders
and at all meetings of directors and he shall have such other powers and
duties as the board of directors may determine, from time to time, by
resolution.
24. President. The President shall be chosen from among the directors.
---------
In the absence of the Chairman of the Board, he shall preside at all
meetings of the shareholders and at all meetings of the board of
directors. He shall be the chief executive officer of the Company and,
if no General Manager or Managing Director is appointed, shall exercise
a general control of and supervision over its affairs. He shall have
such other powers and duties as the board of directors may determine,
from time to time, by resolution.
25. Vice-President or Vice-Presidents. The Vice-President or
---------------------------------
Vice-Presidents shall have such powers and duties as may be assigned to
him or them respectively by resolution of the board of directors. In
case of absence or disability of the Chairman of the Board and the
President, one of the Vice-Presidents may exercise the powers and
perform the duties of the Chairman of the Board and the President and,
if such Vice-President exercise any of the powers or perform any of the
duties of the Chairman of the Board and the President, the absence or
disability of the Chairman of the Board and the President shall be
presumed.
24. Treasurer and Assistant-Treasurers. The Treasurer shall have general
----------------------------------
charge of the finances of the Company. He shall deposit all moneys and
other valuable effects of the Company in the name and to the credit of
the Company in such banks or other depositaries as the board of
directors may from time to time designate by resolution, and shall
render to the board of directors, whenever directed by the board of
directors, an account of the financial condition of the Company and of
all his transactions as Treasurer, and as soon as possible after the
close of each financial year he shall make and submit to the board of
directors a like
<PAGE>
report for such financial year. He shall have charge and custody of and
be responsible for the keeping of the books of account required to be
kept pursuant to the laws governing the Company. He shall perform all
the acts incidental to the office of the Treasurer subject to the
control of the board of directors.
Assistant-Treasurers may perform any of the duties of the Treasurer
delegated to them, from time to time, by the board of directors or by
the Treasurer.
27. Secretary and Assistant-Secretaries. The Secretary shall attend to the
-----------------------------------
giving and service of all notices of the Company and shall keep the
minutes of all meetings of the shareholders and of the board of
directors in a book or books to be kept for that purpose. He shall keep
in safe custody the corporate seal of the Company. He shall have charge
of the records of the Company including books containing the names and
addresses of the shareholders and members of the board of directors of
the Company, together with copies of all reports made by the Company,
together with copies of all reports made by the Company, and such other
books and papers as the board of directors may direct. He shall be
responsible for the keeping and filing of all books, reports,
certificates and other documents required by law to be kept and filed by
the Company. He shall perform such other duties as appertain to his
office or as may be required by the board of directors.
Assistant-Secretaries may perform the duties of the Secretary
delegated to them, from time to time, by the board of directors or by
the Secretary.
28. General Manager or Managing Director. The directors may appoint, from
------------------------------------
time to time, a General Manager of the Company who may also be
designated the "Managing Director". He shall manage the affairs of the
Company under the supervision of the board of directors and shall
exercise such powers as may be prescribed, from time to time, by
resolution of the board of directors, and such authority may be either
general or specific.
<PAGE>
29. Removal. The board of directors, by an affirmative vote of the majority
-------
of the board, may remove and discharge any or all of the executive
officers or other officers or employees, either with or without cause,
at any meeting called for that purpose and may elect or appoint others
in their place or places. Any officer or employee of the Company, not
being an executive officer or a member of the board of directors, may
also be removed and discharged, either with or without cause, by the
President, any Vice-President or the Managing Director. If, however,
there be no cause for such removal or discharge and there be a special
contract derogating from the provisions of this by-law such removal or
discharge shall be subject to the provisions of such contract.
30. Remuneration. The remuneration of all executive officers and other
------------
officers of the Company shall be fixed, from time to time, by resolution
of the board of directors.
CORPORATE SEAL
--------------
31. The corporate seal of the Company shall be such as the directors may
from time to time approve.
CAPITAL STOCK
-------------
32. Share certificates. Certificates representing shares of each class of
------------------
the capital stock of the Company shall be in such form as shall be
approved by the directors. Such certificates shall bear the signature of
at least one officer or director of the Company, or by a transfer agent
or by a transfer clerk acting on behalf of the Company and by or on
behalf of a registrar, the signature of the officer or director may be
engraved, lithographed or otherwise mechanically
<PAGE>
reproduced on such certificates. Any certificate bearing the facsimile
reproductions of the signature of any such authorized officer or
director of the Company shall be deemed to have been manually signed by
them and shall be as valid to all intents and purposes as if it had been
manually signed, notwithstanding that any person whose signature is so
reproduced shall, at the time that the certificate is issued or on the
date of such certificate, have ceased to be such an authorized officer
or director of the Company.
33. Transfer of shares. In respect of the shares of each class of the
------------------
capital stock of the Company, a register of transfers shall be kept
either at the head office of the Company or at such other office or
place in Canada as may be appointed by the directors, and one or more
branch registers of transfers may be kept at such office or offices of
the Company or other place or places within Canada or elsewhere as may
be appointed by the directors. Each such register of transfers and
branch register of transfers shall be kept by the Secretary or by such
other officer or officers as may be specially charged with the duty or
by such agent or agents as may be appointed for the purpose by the
directors.
All transfers and transmissions of shares in the capital stock
of the Company shall be entered and particulars of all such transfers
and transmissions shall be recorded in the relevant register of
transfers or in a branch thereof. Entry of the transfer or transmission
of any shares in the capital stock of the Company in the relevant
register of transfers or in a branch thereof, whether kept at the head
office of the Company or elsewhere, shall be a complete and valid
transfer or transmission, as the case may be. Shares of the capital
stock of the Company shall be transferable or transmissible in the
relevant register of transfers or in any branch thereof, regardless of
where the certificate representing the shares to be transferred or
transmitted shall have been issued.
A book or books shall be kept at the head office of the Company
or at the place where each register of transfers is kept, in which shall
be
<PAGE>
recorded a copy of the particulars of every transfer and transmission
entered on every branch of such register.
Subject to the provisions of the laws governing the Company, no
transfer or transmission of shares of the capital stock of the Company
shall be valid nor shall the same be entered in any register or branch
register of transfers unless or until the certificate or certificates
representing the shares to be transferred or transmitted have been
surrendered and cancelled. No transfer of shares whereon the whole
amount has not been paid up shall be made without the consent of the
directors. In no case shall any shares be transferable until all calls
payable thereon have been fully paid.
34. Lost, defaced or destroyed certificates. In case of the loss, theft,
---------------------------------------
defacement or destruction of a certificate for shares held by any
shareholder, the fact of such loss, theft, defacement or destruction
shall be reported to the Company or to any transfer agent of the Company
in respect of such shares, with a statement verified by oath or
statutory declaration as to the loss, theft, defacement or destruction
and the circumstances concerning the same and with a request for the
issuance of a new certificate to replace the one so lost, stolen,
defaced or destroyed. Upon the giving to the Company, and to each
transfer agent and registrar as may be authorized or required to
countersign such new certificate or certificates, of a bond in such sum
and form as may be authorized by or under the authority of the directors
as indemnity against any claim that may be made against them or any of
them for or in respect of the shares represented by the certificate
alleged to have been lost, stolen, defaced or destroyed, a new
certificate may be issued in replacement of the one so alleged to have
been lost, stolen, defaced or destroyed if such issuance is authorized
by or under the authority of the directors.
35. Record date. The directors may fix in advance a date not exceeding 30
-----------
days preceding the date for the payment of any dividend or any allotment
of rights or when any change or conversion or exchange of share capital
shall go into effect as the record
<PAGE>
date for the determination of the shareholders entitled to receive payment
of any such dividend or to receive any such allotment of rights or to
exercise the rights in respect of any such change or conversion or exchange
of share capital, and only shareholders of record on the date so fixed
shall be entitled to receive payment of such dividend or allotment of
rights or to exercise such rights, as the case may be, notwithstanding any
transfer of shares on the books of the Company after such record date.
36. Transfer agents and registrars. The directors may appoint transfer agents
------------------------------
and/or registrars for any or all classes of shares in the capital stock of
the Company and remove the same, and may make regulations generally, or as
regards any class, with reference to the transfer and transmission of
shares in the capital stock of the Company. Upon any such appointment being
made as regards shares of any class thereafter issued shall be
countersigned by one of such transfer agents and/or one of such registrars
and shall not be valid unless so countersigned.
FINANCIAL YEAR
--------------
37. Financial Year. The directors may from time to time fix the financial year
--------------
end of the Company, but until so fixed the financial year of the Company
shall end on the last Saturday in December of each year.
CONTRACTS, CHEQUES, DRAFTS, NOTES
AND BORROWING
---------------------------------
38. Contracts. The Chairman of the Board, the President, a Vice-President or
---------
any director, acting with the Secretary, an Assistant-Secretary or any
other director, shall have authority to sign in the name and on behalf of
the Company any and all contracts, agreements, deeds of sale, transfers,
assignments, leases, mortgages, deeds of hypothec, servitudes and other
real rights, releases,
<PAGE>
acquittances, discharges, mainlevees and other instruments in writing,
the whole upon such terms and conditions and upon such consideration or
payment or without consideration or payment as they alone may decide,
and any such instrument so signed shall be binding upon the Company
without any further authorization or formality. The directors shall have
power to appoint any other officer or officers or any person or persons
on behalf of the Company either to sign instruments in writing generally
or to sign specific instruments in writing.
It shall be the duty of any director of the Company who is in any
way, whether directly or indirectly, interested in a contract or
proposed contract with the Company to declare his interest at a meeting
of the board of directors of the Company and, subject to the provisions
of the laws governing the Company, to refrain from voting in respect of
any contract or proposed contract in which such director is so
interested as aforesaid and otherwise to observe the provisions of said
laws.
39. Bank accounts. One or more bank accounts shall be kept in the name of
-------------
the Company at such bank or banks, trust company or trust companies,
whether within or without Canada, as may be selected by the directors.
40. Cheques, drafts and notes. All cheques, drafts, promissory notes,
-------------------------
negotiable instruments, warehouse receipts, waivers of protest and
generally all documents for the purpose of binding or obligating the
Company in any way or used in connection with banking transactions
generally, shall be made, drawn, accepted, endorsed or signed by such
officers of the Company or other persons as the directors may authorize
and appoint for that purpose.
All cheques, drafts, notes or orders for the payment of moneys for
deposit in any bank or trust company to the credit of the Company may be
endorsed by any officer or director of the Company or without such
signature by means of a rubber stamp or similar article bearing the
imprint of the Company's name.
<PAGE>
41. General borrowing powers. The directors may from time to time:
------------------------
41.1 borrow money upon the credit of the Company;
41.2 limit or increase the amount to be borrowed;
41.3 issue debentures or other securities of the Company;
41.4 pledge or sell such debentures or other securities for such
sums and at such prices as may be deemed expedient; and
41.5 secure any such debentures, or other securities, or any other
present or future borrowing or liability of the Company, by
mortgage, hypothec, charge or pledge of all or any currently
owned or subsequently acquired real and personal, moveable and
immoveable, property of the Company, and the undertaking and
rights of the Company.
The directors may delegate any or all of the foregoing powers to
such officers or directors of the Company, to such extent and in such
manner as the directors may determine.
Nothing herein contained shall limit or restrict the borrowing of
money by the Company on bills of exchange or promissory notes made,
drawn, accepted or endorsed by or on behalf of the Company.
COMPANY REPRESENTATION FOR
CERTAIN PURPOSES
--------------------------
42. Declarations. Any executive officer, or any other officer or person
------------
thereunto authorized by the directors, by any two executive officers or
by the Chairman of the Board or the President, is authorized and
empowered to appear and make answer for the Company to all writs, orders
and interrogatories upon articulated facts issued out
<PAGE>
of any court, and to declare for and on behalf of the Company any answer
to writs of attachment by way of garnishment in which the Company is
garnishee, and to make affidavits and sworn declarations in connection
therewith or in connection with any and all judicial proceedings to
which the Company is a party, and to make demands of abandonment or
petitions for winding-up or bankruptcy orders upon any debtor of the
Company, and to attend and vote at all meetings of creditors of the
Company's debtors and grant proxies in connection therewith.
43. Representation at meetings. The Chairman of the Board, the President,
--------------------------
any Vice-President, the Secretary and the Treasurer, or any one of them
or any other officer or person thereunto authorized by the directors may
represent the Company and attend and vote at any and all meetings of
shareholders or members of any firm, syndicate, company or corporation
in which the Company has shares or is otherwise interested, and any
action taken and vote cast by them or him at any such meeting shall be
deemed to be the act and/or vote of the Company.
The Chairman of the Board, the President, any Vice-President, the
Secretary and the Treasurer, or any two of them, may authorize any
person (whether an officer of the Company or not) to attend, vote and
otherwise act, for and on behalf and in the name of the Company, at any
and all meetings of shareholders or members of any firm, syndicate,
company or corporation in which the Company has shares or is otherwise
interested, and for such purpose may execute and deliver instruments of
proxy in such form and terms as the officers so executing and delivering
the same may see fit, including therein, but without in any way limiting
or restricting the generality of the foregoing, provision for the
appointment of substitute proxies and the revocation of all instruments
of proxy given by the Company prior thereto with respect to any such
meeting.
<PAGE>
ENACTMENT, REPEAL AND AMENDMENT
OF BY-LAWS
-------------------------------
44. The board of directors may, from time to time, enact or pass by-laws not
contrary to law or to the charter of the Company for the purposes
indicated in the laws governing the Company, and may repeal, amend or
re-enact by-laws of the Company, but every such by-law (excepting
by-laws made respecting agents, officers and servants of the Company)
and every repeal, amendment or re-enactment thereof, unless in the
meantime ratified at a special general meeting of the shareholders of
the Company duly called for that purpose, shall only have force until
the next annual meeting of the Company and, in default of confirmation
thereat, shall, at and from that time, cease to have force.
<PAGE>
[Execution Copy]
EXHIBIT 4.1
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
WINCUP HOLDINGS, L.P.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
STYROCHEM INTERNATIONAL, LTD.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
________________________
INDENTURE
Dated as of December 5, 1996
_______________________
$100,000,000
10% Senior Notes due 2003
<PAGE>
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TABLE OF CONTENTS
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PARTIES.............................................................. 1
RECITALS............................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 101. Definitions................................. 2
Acquisitions............................................... 2
Acquired Indebtedness...................................... 2
Affiliate.................................................. 2
Amended Credit Agreement................................... 3
Asset Sale................................................. 3
Attributable Indebtedness.................................. 3
Bankruptcy Law............................................. 4
Board of Directors......................................... 4
Board Resolution........................................... 4
Borrowing Base............................................. 4
Business Day............................................... 4
Canadian Credit Agreement.................................. 4
Capital Stock.............................................. 5
Capitalized Lease Obligation............................... 5
Cash Equivalents........................................... 5
Change of Control.......................................... 5
Code....................................................... 6
Commission................................................. 6
Company.................................................... 6
Company Request" or "Company Order......................... 7
Consolidated Indebtedness.................................. 7
Consolidated Interest Expense.............................. 7
Consolidated Net Income.................................... 7
Consolidated Net Worth..................................... 8
Corporate Trust Office..................................... 8
Credit Agreements.......................................... 8
Default.................................................... 8
Depositary................................................. 8
EBITDA..................................................... 8
Equity Interests........................................... 9
Event of Default........................................... 9
Exchange Act............................................... 9
Exchange Notes............................................. 9
Exchange Offer............................................. 9
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Exchange Offer Registration Statement..................... 9
Existing Indebtedness..................................... 9
Fair Market Value......................................... 9
GAAP...................................................... 9
Guarantee................................................. 10
Guarantor................................................. 10
Hedging Obligations....................................... 10
Holder.................................................... 10
incur..................................................... 10
Indebtedness.............................................. 10
Independent Director...................................... 12
Initial Securities........................................ 12
Institutional Accredited Investor......................... 12
Interest Coverage Ratio................................... 12
Interest Payment Date..................................... 13
Investment................................................ 13
Issue Date................................................ 14
Lien...................................................... 14
Maturity.................................................. 14
Moody's................................................... 14
Net Cash Proceeds......................................... 14
Net Income................................................ 14
Net Proceeds.............................................. 14
Officers' Certificate..................................... 15
Opinion of Counsel........................................ 15
Opinion of Independent Counsel............................ 15
Outstanding............................................... 15
Paying Agent.............................................. 16
Permitted Holders......................................... 16
Permitted Indebtedness.................................... 17
Permitted Investment...................................... 18
Permitted Liens........................................... 18
Person.................................................... 20
Predecessor Security...................................... 20
Preferred Stock........................................... 20
Private Placement Legend.................................. 20
Public Equity Offering.................................... 20
QIB....................................................... 20
Redeemable Stock.......................................... 20
Redemption Date........................................... 21
Redemption Price.......................................... 21
Registration Rights Agreement............................. 21
Registration Statement.................................... 21
Regular Record Date....................................... 21
Resale Restriction Termination Date....................... 21
Responsible Officer....................................... 21
Restricted Investment..................................... 21
Restricted Subsidiary..................................... 21
Rule 144A................................................. 22
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S&P....................................................... 22
Sale and Leaseback Transaction............................ 22
Securities................................................ 22
Securities Act............................................ 22
Security Register" and "Security Registrar................ 22
Senior Indebtedness....................................... 22
Shelf Registration Statement.............................. 22
Special Record Date....................................... 22
Stated Maturity........................................... 23
StyroChem Acquisition..................................... 23
Subordinated Indebtedness................................. 23
Subsidiary................................................ 23
Trust Indenture Act....................................... 23
Trustee................................................... 23
Unrestricted Subsidiary................................... 23
U.S. Government Obligations............................... 24
Voting Stock.............................................. 24
Section 102. Other Definitions............................... 24
Section 103. Compliance Certificates and Opinions............ 25
Section 104. Form of Documents Delivered to
Trustee......................................... 26
Section 105. Acts of Holders................................. 26
Section 106. Notices, etc., to Trustee, the Company
and any Subsidiary Guarantor.................... 28
Section 107. Notice to Holders; Waiver....................... 29
Section 108. Conflict with Trust Indenture Act............... 29
Section 109. Effect of Headings and Table of
Contents........................................ 29
Section 110. Successors and Assigns.......................... 30
Section 111. Separability Clause............................. 30
Section 112. Benefits of Indenture........................... 30
Section 113. Governing Law................................... 30
Section 114. Legal Holidays.................................. 30
Section 115. Schedules and Exhibits.......................... 30
Section 116. Counterparts.................................... 30
Section 117. Communication by Holders with Other
Holders......................................... 31
Section 118. No Recourse Against Others...................... 31
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally................................. 31
Section 202. Restrictive Legends............................. 32
Section 203. Form of Face of Securities...................... 33
Section 204. Form of Reverse of Securities................... 37
Section 205. Form of Trustee's Certificate of
Authentication.................................. 43
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Section 206. Form of Guarantee of Each of the
Guarantors...................................... 43
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms................................. 44
Section 302. Denominations................................... 46
Section 303. Execution, Authentication, Delivery and
Dating.......................................... 46
Section 304. Temporary Securities............................ 47
Section 305. Registration of Transfer and Exchange........... 48
Section 306. Book-Entry Provisions for U.S. Global
Security........................................ 50
Section 307. Special Transfer Provisions..................... 51
Section 308. Mutilated, Destroyed, Lost and Stolen
Securities...................................... 54
Section 309. Payment of Interest; Interest Rights
Preserved....................................... 55
Section 310. Persons Deemed Owners........................... 56
Section 311. Cancellation.................................... 57
Section 312. Computation of Interest......................... 57
Section 313. Deposit of Moneys............................... 57
Section 314. CUSIP Number.................................... 57
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance
or Covenant Defeasance.......................... 58
Section 402. Defeasance and Discharge........................ 58
Section 403. Covenant Defeasance............................. 58
Section 404. Conditions to Defeasance or Covenant
Defeasance...................................... 59
Section 405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions........................ 61
Section 406. Reinstatement................................... 62
Section 407. Repayment of the Company........................ 62
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ARTICLE FIVE
REMEDIES
Section 501. Events of Default............................... 63
Section 502. Acceleration.................................... 65
Section 503. Other Remedies.................................. 66
Section 504. Waiver of Past Defaults......................... 67
Section 505. Control by Majority............................. 67
Section 506. Limitation on Suits............................. 67
Section 507. Rights of Holders to Receive Payment............ 68
Section 508. Collection Suit by Trustee...................... 68
Section 509. Trustee May File Proofs of Claim................ 69
Section 510. Priorities...................................... 69
Section 511. Undertaking for Costs........................... 70
Section 512. Waiver of Stay, Extension or Usury
Laws............................................ 70
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.............................. 71
Section 602. Certain Rights of Trustee....................... 71
Section 603. Trustee Not Responsible for Recitals,
Dispositions of Securities or
Application of Proceeds Thereof................. 73
Section 604. Trustee and Agents May Hold Securities;
Collections; etc................................ 73
Section 605. Money Held in Trust............................. 73
Section 606. Compensation and Indemnification of
Trustee and Its Prior Claim..................... 74
Section 607. Conflicting Interests........................... 75
Section 608. Corporate Trustee Required;
Eligibility..................................... 75
Section 609. Resignation and Removal; Appointment of
Successor Trustee............................... 75
Section 610. Acceptance of Appointment by Successor.......... 77
Section 611. Merger, Conversion, Consolidation or
Succession to Business.......................... 78
Section 612. Preferential Collection of Claims
Against Company................................. 79
Section 613. Certain Duties and Responsibilities............. 79
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
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Section 701. Company to Furnish Trustee Names and
Addresses of Holders........................ 79
Section 702. Disclosure of Names and Addresses of
Holders..................................... 80
Section 703. Reports by Trustee.......................... 80
Section 704. Reports by Company and Guarantors........... 80
ARTICLE EIGHT
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801. When the Company May Merge, Etc............. 81
Section 802. Successor Substituted....................... 83
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements
without Consent of Holders...................... 84
Section 902. Supplemental Indentures and Agreements
with Consent of Holders......................... 85
Section 903. Execution of Supplemental Indentures
and Agreements................................... 86
Section 904. Revocation Effect of Supplemental
Indentures....................................... 86
Section 905. Conformity with Trust Indenture Act.............. 87
Section 906. Reference in Securities to Supplemental
Indentures....................................... 87
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal............................. 87
Section 1002. Maintenance of Office or Agency.................. 87
Section 1003. Compliance Certificate........................... 88
Section 1004. Taxes............................................ 89
Section 1005. Limitations on Investments....................... 89
Section 1006. Limitations on Restricted Payments............... 89
Section 1007. Limitations on Payment Restrictions
Affcting Restricted Subsidiaries................. 89
Section 1008. Limitations on Indebtedness...................... 92
Section 1009. Limitations on Asset Sales....................... 93
Section 1009. Limitations on Asset Sales....................... 93
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Section 1010. Limitations on Sale and Leaseback
Transactions..................................... 95
Section 1011. Limitations on Transactions With
Affiliates....................................... 95
Section 1012. Limitations on Liens............................. 97
Section 1013. Corporate Existence.............................. 98
Section 1014. Change of Control................................ 98
Section 1015. Maintenance of Properties........................ 101
Section 1016. Maintenance of Insurance......................... 102
Section 1017. [Intentionally omitted].......................... 102
Section 1018. Money for Security Payments to Be Held
in Trust......................................... 102
Section 1019. Subsidiary Guarantees............................ 103
Section 1020. Limitation on Issuances and Sales of
Capital Stock of Restricted
Subsidiaries..................................... 104
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption............................. 105
Section 1102. Applicability of Article......................... 105
Section 1103. Election to Redeem; Notice to Trustee............ 106
Section 1104. Selection by Trustee of Securities to
Be Redeemed...................................... 106
Section 1105. Notice of Redemption............................. 106
Section 1106. Deposit of Redemption Price...................... 107
Section 1107. Securities Payable on Redemption Date............ 108
Section 1108. Securities Redeemed or Purchased in
Part............................................. 108
Section 1109. Asset Sale Offers................................ 108
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.......... 111
Section 1202. Application of Trust Money....................... 113
ARTICLE THIRTEEN
GUARANTEE
Section 1301. Guarantors' Guarantee............................ 113
Section 1302. Continuing Guarantee; No Right of Set-
Off; Independent Obligation...................... 113
Section 1303. Guarantee Absolute............................... 114
</TABLE>
(vii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Sectiom 1304. Right to Demand Full Performance................. 117
Section 1305. Waivers.......................................... 117
Section 1306. The Guarantors Remain Obligated in
Event the Company Is No Longer
Obligated to Discharge Indenture
Obligations 118
Section 1307. Fraudulent Conveyance; Subrogation............... 118
Section 1308. Guarantee Is in Addition to Other
Security......................................... 118
Section 1309. Contribution..................................... 119
Section 1310. No Bar to Further Actions........................ 119
Section 1311. Failure to Exercise Rights Shall Not
Operate as a Waiver.............................. 119
Section 1312. Trustee's Duties; Notice to Trustee.............. 120
Section 1313. Successors and Assigns........................... 120
Section 1314. Release of Guarantee............................. 120
Section 1315. Execution of Guarantee........................... 121
Section 1316. Payment Permitted by Each of the
Subsidiary Guarantors if No Default.............. 121
Section 1317. Notice to Trustee by Each of the
Guarantors....................................... 121
Section 1318. Article Applicable to Paying Agents.............. 122
Section 1319. No Suspension of Remedies........................ 122
</TABLE>
EXHIBIT A Form of Certificate to be Delivered in Connection with Transfers
to Non-QIB Accredited Investors
SCHEDULE 1 Existing Indebtedness
(viii)
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of December 5, 1996
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ----------
<S> <C>
(S) 310(a) (1) ................ 608, 610, 611
(a) (2) ................ 608, 610, 611
(a) (3) ................ N.A.
(a) (4) ................ N.A.
(b) ................ 604, 607, 609
(c) ................ N.A.
(S) 311(a) ................ 604, 612
(b) ................ 604, 612
(c) ................ N.A.
(S) 312(a) ................ 701
(b) ................ 117
(c) ................ 117, 702
(S) 313(a) ................ 703
(b) ................ 703
(c) ................ 703
(d) ................ 703
(S) 314(a) ................ 704, 1003
(b) ................ N.A.
(c)(1) ................ 103
(c)(2) ................ 103
(c)(3) ................ N.A.
(d) ................ N.A.
(e) ................ 103
(f) ................ N.A.
(S) 315(a) ................ 602, 613, 903
(b) ................ 601, 602, 903
(c) ................ 602, 613, 903
(d) ................ 602, 903
(e) ................ 511
(S) 316(a)(last ................
sentence) ................ 101 ("Outstanding")
(a)(1)(A) ................ 502, 505
(a)(1)(B) ................ 504
(a)(2) ................ N.A.
(b) ................ 507
(c) ................ 105
(S) 317(a)(1) ................ 508
(a)(2) ................ 509
(b) ................ 1018
(S) 318(a) ................ 108
</TABLE>
N.A. means not applicable.
________________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of this Indenture.
<PAGE>
INDENTURE, dated as of December 5, 1996, among RADNOR HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a
Delaware corporation, WINCUP HOLDINGS, L.P., a Delaware limited partnership, SP
ACQUISITION CO., a Delaware corporation, STYROCHEM INTERNATIONAL, INC., a Texas
corporation and STYROCHEM INTERNATIONAL, LTD., a Canadian corporation
(collectively, the "Guarantors"), and FIRST UNION NATIONAL BANK, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 10% Senior
Notes due 2003 (the "Securities"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture and the Securities;
Each Guarantor has duly authorized the issuance of a guarantee (the
"Guarantees") of the Securities, of substantially the tenor hereinafter set
forth, and to provide therefor, each Guarantor has duly authorized the execution
and delivery of this Indenture and the Guarantee.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act that are required to be part of and to govern
indentures qualified under the Trust Indenture Act.
All things necessary have been done to make (i) the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, (ii) the
Guarantees, when executed by each of the Guarantors and authenticated and
delivered hereunder, the valid obligation of each of the Guarantors and (iii)
this Indenture a valid agreement of the Company and each of the Guarantors in
accordance with the terms of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is covenanted and agreed, for the benefit
of each other and for the equal and proportionate benefit of the Holders of the
Securities issued under this Indenture, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(e) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America.
"Acquisitions" means the StyroChem Acquisition and the J.R. Cup
Acquisition.
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person (the "Acquired Person") existing at the time
the Acquired Person merges with or into, or becomes a Subsidiary of, such
specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Subsidiary of, such specified Person.
"Affiliate" means, with respect to any party, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such party including any estate or trust under will of such party.
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, however, that beneficial ownership of 5%
-------- -------
- 2 -
<PAGE>
or more of the voting securities of a Person shall be deemed to be control.
"Amended Credit Agreement" means the Amended and Restated Credit
Agreement among the Company, WinCup Holdings, Inc., WinCup Holdings, L.P., SP
Acquisition Co., and StyroChem International, Inc., as borrowers and The Bank of
New York Commercial Corporation, as agent and lender, dated as of December 5,
1996, as amended from time to time.
"Asset Sale" means, with respect to the Company or any Restricted
Subsidiary, the sale, lease, conveyance or other disposition (including, without
limitation, by way of merger or consolidation, and whether by operation of law
or otherwise) to any Person other than the Company or a wholly-owned Restricted
Subsidiary of any of the Company's or such Restricted Subsidiary's assets
(including, without limitation, (x) any sale or other disposition of Equity
Interests of any Restricted Subsidiary and (y) any sale or other disposition of
any non-cash consideration received by the Company or such Restricted Subsidiary
from any prior transaction or series of related transactions that constituted an
Asset Sale pursuant to the provisions of Section 1009), whether owned on the
Issue Date or subsequently acquired, in one transaction or a series of related
transactions; provided, however, that the following shall not constitute Asset
-------- -------
Sales: (i) transactions (other than transactions described in clause (y) above)
in any calendar year with aggregate cash and/or Fair Market Value of any other
consideration received (including, without limitation, the unconditional
assumption of Indebtedness) of less than $500,000; (ii) a transaction or series
of related transactions that results in a Change in Control; (iii) any sale of
assets of the Company and the Restricted Subsidiaries or merger permitted under
Article Eight; (iv) any sale or other disposition of inventory, property
(whether real, personal or mixed) or equipment that has become worn out,
obsolete or damaged or otherwise unsuitable or no longer needed for use in
connection with the business of the Company or any Restricted Subsidiary, as the
case may be, in the good faith determination of the Board of Directors; and (v)
any sale of inventory to customers in the ordinary and customary course of
business.
"Attributable Indebtedness" means, with respect to any Sale and
Leaseback Transaction, as at the time of determination, the greater of (i) the
Fair Market Value of the property subject to such transaction and (ii) the
present value (discounted at a rate equivalent to the Company's then current
weighted average cost of funds for borrowed money, compounded on a semi-annual
basis) of the total net obligations of the lessee for rental payments during the
remaining term of the lease included in such arrangement (including any period
for which such lease has been extended). As used in the preceding sentence, the
"total net
- 3 -
<PAGE>
obligations of the lessee for rental payments" under any lease for any such
period means 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 also includes 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.
"Bankruptcy Law" means chapter 11 of Title 11 of the United States
Code, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" of any corporation means a copy of a resolution
certified by the Secretary or an Assistant Secretary of such corporation to have
been duly adopted by the board of directors of such entity and to be in full
force and effect on the date of such certification and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to the sum of
(a) 85% of the net book value of the accounts receivable of the Company and its
Restricted Subsidiaries as of such date, and (b) 60% of the net book value of
the inventory owned by the Company and its Restricted Subsidiaries as of such
date, all calculated on a consolidated basis and in accordance with GAAP. To
the extent that information is not available as to the amount of accounts
receivable or inventory as of a specific date, the Company may utilize the most
recent available quarterly or annual financial report for purposes of
calculating the Borrowing Base.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close.
"Canadian Credit Agreement" means the Agreement Respecting a Term Loan
and Other Credit Facilities between StyroChem International, Ltd. and the Bank
of Montreal, as amended on December 5, 1996 and as further amended from time to
time.
- 4 -
<PAGE>
"Capital Stock" means, with respect to any Person, any common stock,
preferred stock and any other capital stock of such Person and shares,
interests, participations or other ownership interest (however designated), of
any Person and any rights (other than debt securities convertible into, or
exchangeable for, capital stock), warrants or options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" mean (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) having maturities of not more
than 90 days from the date of acquisition, (ii) time deposits and certificates
of deposit with maturities of not more than 90 days from the date of
acquisition, of any commercial banking institution that is a member of the
Federal Reserve System having capital and surplus in excess of $500.0 million,
whose debt has a rating at the time of any such investment of at least "A-1" or
the equivalent thereof by Standard & Poor's Ratings Group or at least "P-1" or
the equivalent thereof by Moody's Investors Service, Inc., or any bank or
financial institution party to the Credit Agreements, (iii) fully secured
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) entered into with any bank or
financial institution meeting the qualifications specified in clause (ii) above,
(iv) commercial paper issued by the parent corporation of any commercial banking
institution that is a member of the Federal Reserve System having capital and
surplus in excess of $500.0 million and commercial paper or master notes of
issuers, rated at the time of any such investment at least "A-1" or the
equivalent thereof by Standard & Poor's Ratings Group or at least "P-1" or the
equivalent thereof by Moody's Investors Service, Inc., or any bank or financial
institution party to the Credit Agreements, and in each case maturing within 270
days after the date of acquisition, and (v) any shares in an open-end mutual
fund organized by a bank or financial institution having combined capital and
surplus of at least $500.0 million investing solely in investments permitted by
the foregoing clauses (i), (ii) and (iv).
A "Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms
- 5 -
<PAGE>
are used in Section 13(d) and 14(d) of the Exchange Act) other than Permitted
Holders (as defined below), is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person 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), directly or indirectly, of more than 50% of the voting power
of the total outstanding Voting Stock of the Company voting as one class; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with any
new directors whose election to such Board or whose nomination for election by
the stockholders 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 or nomination for election was previously so
approved) for any reason cease to constitute a majority of such Board of
Directors then in office; (iii) the Company consolidates with or merges with or
into any Person or conveys, transfers or leases all or substantially all of its
assets to any Person other than a wholly-owned Subsidiary (in one transaction or
a series of related transactions), or any corporation consolidates with or
merges into or with the Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is changed into or exchanged
for cash, securities or other property, and as a result of such transaction any
"person" or "group," other than Permitted Holders, is or becomes the "beneficial
owner" (as described in clause (i) above) immediately after such transaction,
directly or indirectly, of more than 50% of the voting power of the total
outstanding Voting Stock of the surviving corporation voting as one class; or
(iv) the Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution other than in a transaction that is permitted by Article Eight of
this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means Radnor Holdings Corporation, a corporation
incorporated under the laws of Delaware, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
- 6 -
<PAGE>
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any one of its Chairman of the Board of
Directors, its President or a Vice President (regardless of vice presidential
designation), and by any one of its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Indebtedness" means the Indebtedness of the Company and
its consolidated Restricted Subsidiaries determined on a consolidated basis in
conformity with GAAP.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
excluding amortization of any deferred financing fees, plus, to the extent not
included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) noncash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Restricted Subsidiary under any guarantee of Indebtedness or
other obligation of any other Person, (vii) net costs associated with Hedging
Obligations (including fees and amortization of discounts), (viii) Preferred
Stock dividends in respect of all Redeemable Stock of the Company held by
Persons other than the Company or a wholly-owned Restricted Subsidiary and (ix)
the cash contributions to any employee stock ownership plan or similar trust to
the extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than the Company) in connection with loans incurred by
such plan or trust to purchase newly issued or treasury shares of the Capital
Stock of the Company.
"Consolidated Net Income" means, for any period, and as to any Person,
the aggregate Net Income of such Person and its Subsidiaries (other than, in the
case of the Company, the Unrestricted Subsidiaries of the Company) for such
period determined on a consolidated basis in accordance with GAAP; provided that
(i) the Net Income of any Person which is not a Subsidiary of such Person but
which is consolidated with such Person or is accounted for by such Person by the
equity method of accounting shall be included only to the extent of the amount
of cash dividends or cash distributions actually paid to such Person or a
wholly-owned Subsidiary of such Person (other than, in the case of the Company,
the Unrestricted Subsidiaries of the Company), (ii) the Net Income of any Person
acquired by such Person or a Subsidiary of such Person in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iii) the Net Income of any Subsidiary of such Person that is subject
to restrictions, direct or indirect, on the payment of dividends or the making
of distributions to such
- 7 -
<PAGE>
Person shall be excluded to the extent of such restrictions, (iv) the Net Income
of (A) any Unrestricted Subsidiary and (B) any Subsidiary less than 80% of whose
securities having the right (apart from the right under special circumstances)
to vote in the election of directors are owned by the Company or its wholly-
owned Restricted Subsidiaries shall be included only to the extent of the amount
of cash dividends or cash distributions actually paid by such Subsidiary to the
Company or a wholly-owned Restricted Subsidiary of the Company, and (v) all
gains (but not losses) which are extraordinary or are either unusual or
nonrecurring (including any gain realized upon the termination of any employee
pension benefit plan and any gain from the sale or other disposition of assets
other than in the ordinary course of business or from the issuance or sale of
any Equity Interests) shall be excluded.
"Consolidated Net Worth" means, for any Person, the total of the
amounts shown on the balance sheet of such Person and its consolidated
Subsidiaries, determined on a consolidated basis without duplication in
accordance with GAAP, as of the end of the most recent fiscal quarter of such
Person ending at least 45 days prior to the taking of any action for the purpose
of which the determination is being made, as (i) the amount of Capital Stock
(other than Redeemable Stock) plus (ii) the amount of surplus and retained
earnings (or, in the case of a surplus or retained earnings deficit, minus the
amount of such deficit).
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at Broad &
Walnut Streets, PA1249, Philadelphia, PA 19109.
"Credit Agreements" means the Amended Credit Agreement and the
Canadian Credit Agreement.
"Default" means any event which is, or after notice or passage of any
time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"EBITDA" for any period means the Consolidated Net Income of the
Company and its Restricted Subsidiaries for such period, plus, without
duplication, the following to the extent included in calculating such
Consolidated Net Income: (i) Consolidated Interest Expense, (ii) consolidated
income tax expense and (iii) consolidated depreciation and amortization expense.
- 8 -
<PAGE>
"Equity Interests" means shares, interests, participations or other
equivalents (however designated) of Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning specified in Article Five of this
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means senior notes issued pursuant to any Exchange
Offer Registration Statement and guaranteed by the Guarantors.
"Exchange Offer" means the offer which may be made by the Company
pursuant to the Registration Rights Agreement to exchange the Initial Securities
for the Exchange Notes.
"Exchange Offer Registration Statement" means the registration
statement to be filed by the Company and the Guarantors with the Commission with
respect to an offer to exchange the Initial Securities for another series of
senior notes of the Company and guarantees by the Guarantors registered under
the Securities Act with substantially identical terms to the Initial Securities.
"Existing Indebtedness" means all Indebtedness (other than
Indebtedness outstanding pursuant to the Credit Agreements) of the Company or
any Restricted Subsidiary existing on the Issue Date and listed on "Schedule 1"
hereto.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair Market Value shall be
determined by a majority of the members of the Board of Directors, and a
majority of the disinterested members of such Board of Directors, if any, acting
in good faith and shall be evidenced by a duly and properly adopted resolution
of the Board of Directors.
"GAAP" means 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,
which are in effect from time to time.
- 9 -
<PAGE>
"Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations pursuant to a guarantee given in accordance with this
Indenture, including, without limitation, the Guarantees by the Guarantors
included in Article Thirteen of this Indenture and any Guarantee delivered
pursuant to Section 1019 hereof.
"Guarantor" means the Subsidiaries listed as Guarantors in this
Indenture or any other guarantor of the Indenture Obligations.
"Hedging Obligations" means the obligations of any Person or entity
pursuant to any swap or cap agreement, exchange agreement, collar agreement,
option, futures or forward hedging contract or other similar agreement or
arrangement designed to protect such Person or entity against fluctuations in
interest rates or foreign exchange rates or the price of raw materials and other
chemical products used or produced in the Company's business, as the case may
be.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"incur" has the meaning ascribed in Section 1008 hereof; provided that
(a) with respect to any Indebtedness of any Restricted Subsidiary of the Company
that is owing to the Company or another Restricted Subsidiary of the Company,
any disposition, pledge or transfer of such Indebtedness to any Person (other
than the Company or a wholly-owned Restricted Subsidiary) shall be deemed to be
an incurrence of such Indebtedness and (b) with respect to any Indebtedness of
the Company or a Restricted Subsidiary that is owing to another Restricted
Subsidiary, any transaction pursuant to which a wholly-owned Restricted
Subsidiary to which such Indebtedness is owing ceases to be a wholly-owned
Restricted Subsidiary shall be deemed to be an incurrence of such Indebtedness,
and provided, further that any Indebtedness of a Person existing at the time
-------- -------
such Person becomes a Restricted Subsidiary shall be deemed to be incurred by
such Restricted Subsidiary at the time it becomes a Restricted Subsidiary. The
term "incurrence" has a corresponding meaning.
"Indebtedness" of any Person means, without duplication, all
liabilities with respect to (i) indebtedness for money borrowed or which is
evidenced by a bond, debenture, note or other similar instrument or agreement,
but excluding trade accounts payable and other accrued liabilities arising in
the ordinary course of business; (ii) reimbursement obligations, letters of
credit and bankers' acceptances; (iii) indebtedness with respect to Hedging
Obligations; (iv) Capitalized Lease Obligations; (v) indebtedness, secured or
unsecured, created or arising in connection with the acquisition or improvement
of any property or asset or the acquisition of any business; (vi) all
- 10 -
<PAGE>
indebtedness secured by any Lien upon property owned by such Person and all
indebtedness secured in the manner specified in this clause even if such Person
has not assumed or become liable for the payment thereof; (vii) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person or
otherwise representing the deferred and unpaid balance of the purchase price of
any such property, including all indebtedness created or arising in the manner
specified in this clause even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property; (viii) guarantees, direct or indirect, of any
indebtedness of other Persons referred to in clauses (i) through (vii) above, or
of dividends or leases, taxes or other obligations of other Persons, excluding
any guarantee arising out of the endorsement of negotiable instruments for
collection in the ordinary course of business; (ix) contingent obligations in
respect of, or to purchase or otherwise acquire or be responsible or liable for,
through the purchase of products or services, irrespective of whether such
products are delivered or such services are rendered, or otherwise, any such
indebtedness referred to in clauses (i) through (vii) above, (x) any obligation,
contingent or otherwise, arising under any surety, performance or maintenance
bond; and (xi) Redeemable Stock of the Company valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends; which indebtedness, Capitalized Lease Obligation, guarantee or
contingent or other obligation such Person has directly or indirectly created,
incurred, assumed, guaranteed or otherwise become liable or responsible for,
whether then outstanding or thereafter created in the case of (i) through (x)
above, to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability on the balance sheet
of such Person in accordance with GAAP. For purposes of the foregoing
definition, the "maximum fixed repurchase price" of any Redeemable Stock which
does not have a fixed repurchase price will be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were purchased on any
date or which Indebtedness is required to be determined pursuant to the
Indenture. As used herein, Indebtedness with respect to any Hedging Obligation
means, with respect to any specified Person on any date, the net amount (if any)
that would be payable by such specified Person upon the liquidation, close-out
or early termination on such date of such Hedging Obligation. For purposes of
the foregoing, any settlement amount payable upon the liquidation, close-out or
early termination of a Hedging Obligation will be calculated by the Company in
good faith and in a commercially reasonable manner on the basis that such
liquidation, close-out or early termination results from an event of default or
other similar event with respect to such specified Person. Any reference in this
definition to
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<PAGE>
indebtedness will be deemed to include any renewals, extensions and refundings
of any such indebtedness or any indebtedness issued in exchange for such
indebtedness.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, including any
Guarantor, to pay principal, premium, if any, and interest when due and payable,
and all other amounts due or to become due under or in connection with this
Indenture (including, without limitation, all sums due to the Trustee pursuant
to Section 606 hereof), the Securities and the performance of all other
obligations to the Trustee and the Holders under this Indenture and the
Securities, according to the terms hereof and thereof.
"Independent Director" means a director of the Company other than a
director (i) who (apart from being a director of the Company or any of its
Subsidiaries) is an employee, insider, associate or Affiliate of the Company or
any of its Subsidiaries or has held any such position during the previous year
or (ii) who is a director, an employee, insider, associate or Affiliate of
another party to the transaction in question.
"Initial Securities" means the Securities issued on the Issue Date and
guaranteed by the Guarantors.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which internal financial statements are
available prior to the date of such determination to (ii) Consolidated Interest
Expense for such four fiscal quarters of the Company and its Restricted
Subsidiaries; provided, however, that (A) if the Company or any Restricted
-------- -------
Subsidiary has incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Interest Coverage Ratio is an incurrence of Indebtedness, or both, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such Indebtedness
had been issued on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary has made any Asset Sale, EBITDA for such period shall be
reduced by an amount equal to EBITDA (if positive), directly
- 12 -
<PAGE>
attributable to the assets which are the subject of such Asset Sale for such
period, or increased by an amount equal to EBITDA (if negative), directly
attributable thereto for such period and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with any
such sale or other disposition for such period (or, if the Capital Stock of any
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (C) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) has made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a calculation to be
made under the Indenture, which constitutes all or substantially all of an
operating unit of a business, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
incurrence of any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period and (D) in making such computation, Consolidated
Interest Expense attributable to any Indebtedness incurred under any revolving
credit facility shall be computed based on the average daily balance of such
Indebtedness during such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto, and the amount of Consolidated Interest Expense
associated with any Indebtedness incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Investment" means any direct or indirect advance, loan, other
extension of credit or capital contribution (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others) to, purchase or acquisition of Equity Interests, bonds, notes,
debentures or other securities of, or purchase or other acquisition of all or a
substantial part of the business, Equity
- 13 -
<PAGE>
Interests or other evidence of beneficial ownership of, or any other investment
in or guarantee of any Indebtedness (other than guarantees of Indebtedness of
the Company or any Restricted Subsidiary permitted by Section 1008 hereof, any
Person or any other item that would be classified as an investment on a balance
sheet prepared in accordance with GAAP. Investments do not include advances to
customers and suppliers in the ordinary and customary course of business and on
commercially reasonable terms.
"Issue Date" means the date of first issuance of the Initial
Securities under this Indenture.
"Lien" means any mortgage, pledge, lien, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein provided
or as provided in this Indenture, whether at Stated Maturity, the Asset Sale
Purchase Date, the Change of Control Payment Date, or the Redemption Date and
whether by declaration of acceleration, Change of Control, call for redemption
or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor
rating agency.
"Net Cash Proceeds" means, with respect to any issuance or sale of
Equity Interests or debt securities that have been converted into or exchanged
for Equity Interests, as referred to under Section 1006 hereof, the proceeds of
such issuance or sale in the form of cash or cash equivalents, net of attorneys'
fees, accountants' fees and brokerage, consultation, underwriting and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Net Income" of any Person, for any period, means the net income
(loss) of such Person and its Subsidiaries (other than, in the case of the
Company, its Unrestricted Subsidiaries) determined in accordance with GAAP.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, the proceeds of insurance paid on account of the
loss of or damage to any property, or compensation or other proceeds for any
property taken by condemnation, eminent domain or similar proceedings, and any
non-cash consideration received by the Company or any Restricted Subsidiary from
any Asset Sale that is converted into
- 14 -
<PAGE>
or sold or otherwise disposed of for cash within 90 days after the relevant
Asset Sale), net of (i) the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), (ii) any taxes paid or payable as a result thereof, (iii) all
amounts required to be applied to the repayment of, or representing the amount
of permanent reductions in the commitments relating to, Indebtedness secured by
a Lien on the asset or assets the subject of such Asset Sale which Lien is
permitted pursuant to the terms of the Indenture, (iv) any reserve for
adjustment in respect of the sale price of such asset or assets required by
GAAP, and (v) all distributions and other payments required to be made
(including any amounts held pending distribution) to minority interest holders
in Subsidiaries or joint ventures as a result of such Asset Sale. The amount of
any Net Proceeds other than cash shall be the Fair Market Value thereof as
determined in good faith by the Board of Directors of the Company. The amount
of any taxes required to be accrued as a liability under GAAP as a consequence
of an Asset Sale shall be the amount thereof as determined in good faith by the
Board of Directors of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, Vice Chairman, the President or a Vice President (regardless of vice
presidential designation), and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company or any Guarantor, as the
case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, any of the Guarantors or the Trustee, unless an Opinion
of Independent Counsel is required pursuant to the terms of this Indenture, and
who shall be reasonably acceptable to the Trustee.
"Opinion of Independent Counsel" means a written opinion of counsel
issued by someone who is not an employee or consultant of the Company or any
Guarantor and who shall be reasonably acceptable to the Trustee.
"Outstanding" when used with respect to Securities means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and
- 15 -
<PAGE>
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders; provided that if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee has
been made;
(c) Securities, except to the extent provided in Sections 402 and 403
hereof, with respect to which the Company has effected defeasance or
covenant defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have been
presented to the Trustee proof reasonably satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor, or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company,
any Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor.
"Paying Agent" means any person authorized by the Company to pay the
principal of, premium, if any, or interest on any Securities on behalf of the
Company.
"Permitted Holders" means (i) Michael T. Kennedy; (ii) the spouse and
children or grandchildren (including children or grandchildren by adoption) of
Michael T. Kennedy; (iii) any controlled Affiliate of any of the foregoing; (iv)
in the event of the incompetence or death of any of the Persons described in
clause (i) and (ii), such Person's estate, executor, administrator, committee or
other personal representative, in each case who at any particular date shall
beneficially own or have the right to acquire, directly or indirectly, Capital
Stock of the Company; or (v) any trusts created for the benefit of the
- 16 -
<PAGE>
Persons described in clause (i), (ii), or (iv) or any trust for the benefit of
any such trust.
"Permitted Indebtedness" means, collectively, the following:
(a) Indebtedness of the Company evidenced by the Securities and
Indebtedness of any Guarantor evidenced by the Guarantees;
(b) Indebtedness of the Company evidenced by the Exchange Notes and
Indebtedness of any Guarantor evidenced by the guarantees with respect to
the Exchange Notes;
(c) Indebtedness of the Company or any Restricted Subsidiary
constituting Existing Indebtedness and any extension, deferral, renewal,
refinancing or refunding thereof;
(d) Indebtedness of the Company or any Restricted Subsidiary incurred
under the Credit Agreements in an aggregate principal amount at any one
time outstanding not to exceed the greater of (x) $30.0 million or (y) the
Borrowing Base at the time such Indebtedness was incurred, or any
refinancing, refunding, deferral, renewal or extension thereof not in
excess of such amount;
(e) Capitalized Lease Obligations of the Company or any Restricted
Subsidiary and Indebtedness of the Company or any Restricted Subsidiary
secured by Liens that secure the payment of all or part of the purchase
price of assets or property acquired or constructed in the ordinary course
of business after the Issue Date; provided, however, that the aggregate
-------- -------
principal amount of such Capitalized Lease Obligations plus such
Indebtedness of the Company and all of the Restricted Subsidiaries does not
exceed $3.0 million outstanding at any time;
(f) Indebtedness of the Company to any Restricted Subsidiary or of
any Restricted Subsidiary to the Company or another Restricted Subsidiary
(but only so long as such Indebtedness is held by the Company or a
Restricted Subsidiary);
(g) Indebtedness in respect of Hedging Obligations; provided,
--------
however, that the notional principal amount of any such Hedging Obligation
-------
does not exceed the principal amount of the Indebtedness to which such
Hedging Obligation relates;
(h) Indebtedness represented by performance, completion, guarantee,
surety and similar bonds provided by
- 17 -
<PAGE>
the Company or any Restricted Subsidiary in the ordinary course of business
consistent with past practice;
(i) In addition to any Indebtedness otherwise permitted to be
incurred under the provisions of this Indenture, up to $10.0 million
aggregate principal amount of Indebtedness at any one time outstanding; and
(j) Any refinancing, refunding, deferral, renewal or extension (each,
a "Refinancing") of any Indebtedness of the Company or any Restricted
Subsidiary permitted by the initial paragraph of this covenant (the
"Refinancing Indebtedness"); provided, however, that (x) such Refinancing
-------- -------
does not increase the total Consolidated Indebtedness of the Company and
its Restricted Subsidiaries outstanding at the time of such Refinancing,
(y) the Refinancing Indebtedness does not provide for any mandatory
redemption, amortization or sinking fund requirement in an amount greater
than or at a time prior to the amounts and times specified in the
Indebtedness being refinanced, refunded, deferred, renewed or extended and
(z) if the Indebtedness being refinanced, refunded, deferred, renewed or
extended is subordinated to the Securities, the Refinancing Indebtedness
incurred to refinance, refund, defer, renew or extend such Indebtedness is
subordinated in right of payment to the Securities on terms at least as
favorable to the Holders as those contained in the documentation governing
the Indebtedness being so refinanced, refunded, deferred, renewed or
extended.
"Permitted Investment" means (i) any Investment in Cash Equivalents,
(ii) any Investment in the Company, (iii) Investments in existence on the Issue
Date, (iv) intercompany notes permitted under clause (f) of the definition of
"Permitted Indebtedness" in Section 101, (v) Investments in any wholly-owned
Restricted Subsidiary, or any Person which, as a result of such Investment,
becomes a wholly-owned Subsidiary, and (vi) Investments that do not at one time
outstanding exceed $3.0 million in joint ventures, corporations, limited
liability companies, partnerships or Unrestricted Subsidiaries.
"Permitted Liens" means as of any particular time, any one or more of
the following:
(a) Liens for taxes, rates and assessments not yet past due or, if
past due, the validity of which is being contested in good faith by the
Company or any Restricted Subsidiary by appropriate proceedings promptly
instituted and diligently conducted and against which the Company has
established appropriate reserves in accordance with GAAP;
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<PAGE>
(b) the Lien of any judgment rendered which is being contested in
good faith by the Company or any of its Restricted Subsidiaries by
appropriate proceedings promptly instituted and diligently conducted and
against which the Company has established appropriate reserves in
accordance with GAAP and which does not have a material adverse effect on
the ability of the Company and its Restricted Subsidiaries to operate their
business or operations;
(c) other than in connection with Indebtedness, any Lien arising in
the ordinary course of business (i) to secure payments of workers'
compensation, unemployment insurance, pension or other social security or
retirement benefits, or to secure the performance of bids, tenders, leases,
progress payments, contracts (other than for the payment of money) or to
secure public or statutory obligations of the Company, or any Restricted
Subsidiary, or to secure surety or appeal bonds to which the Company or any
Restricted Subsidiary is a party, (ii) imposed by law dealing with
materialmen's, mechanics', workmen's repairmen's, warehousemen's,
landlords', vendors' or carriers' Liens created by law, or deposits or
pledges which are not yet due or, if due, the validity of which is being
contested in good faith by the Company or any Restricted Subsidiaries by
appropriate proceedings promptly instituted and diligently conducted and
against which the Company has established appropriate reserves in
accordance with GAAP and (ii) rights of financial institutions to setoff
and chargeback arising by operation of law; and (iv) similar Liens;
(d) servitudes, licenses, easements, encumbrances, restrictions,
rights-of-way and rights in the nature of easements or similar charges
which shall not in the aggregate materially adversely impair the use of the
subject property by the Company or a Restricted Subsidiary;
(e) zoning and building by-laws and ordinances, municipal bylaws and
regulations, and restrictive covenants, which do not materially interfere
with the use of the subject property by the Company or a Restricted
Subsidiary as such property is used as of the Issue Date; and
(f) any extension, renewal, substitution or replacement (or successive
extensions, renewals, substitutions or replacements), as a whole or in
part, of any of the Liens referred to in clauses (a) through (e) of this
definition or the Indebtedness secured thereby; provided that (i) such
extension, renewal, substitution or replacement Lien is limited to that
portion of the property or assets, now owned or hereafter acquired, that
secured the Lien prior to such extension, renewal, substitution or
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<PAGE>
replacement Lien and (ii) the Indebtedness secured by such Lien (assuming
all available amounts were borrowed) at such time is not increased.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 308 hereof in exchange for a mutilated
Security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock," as applied to the Equity Interests of any
corporation, means stock of any class or classes (however designated) which is
preferred over shares of stock of any other class of such corporation as to the
distribution of assets on any voluntary or involuntary liquidation or
dissolution of such corporation or as to dividends.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in the first paragraph of Section 202 hereof.
"Public Equity Offering" means an underwritten public offering of
newly issued shares of common stock of the Company pursuant to an effective
registration statement under the Securities Act, on a primary basis (whether
alone or in conjunction with any secondary public offering).
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Stock" means any Equity Interest that by its terms or
otherwise (i) is required to be redeemed prior to the maturity of the
Securities, (ii) matures or is redeemable, in whole or in part, at the option of
the Company, any Subsidiary or the holder thereof or pursuant to a mandatory
sinking fund at any time prior to the maturity of the Securities, or (iii) is
convertible into or exchangeable for debt securities which provide for any
scheduled payment of principal prior to the maturity of the Securities at the
option of the issuer at any time prior to the maturity of the Securities, until
the right to so convert or exchange is irrevocably relinquished.
- 20 -
<PAGE>
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the price at which it
is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated as of December 5, 1996, by and among the Company, the
Guarantors and Alex. Brown & Sons Incorporated and NatWest Capital Markets
Limited, as the same may be modified and supplemented and in effect from time to
time.
"Registration Statement" means a Registration Statement as defined and
described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the May 15 and November 15 (whether or not a Business Day) next
preceding such Interest Payment Date.
"Resale Restriction Termination Date" means the date which is three
years after the later of the date of original issue of the Securities and the
last date on which the Company or any Affiliate of the Company was the owner of
such Securities (or any predecessor thereto).
"Responsible Officer" when used with respect to the Trustee means any
officer assigned to the Corporate Trust Office or the agent of the Trustee
appointed hereunder, including any vice president, assistant vice president,
assistant secretary, or any other officer or assistant officer of the Trustee or
the agent of the Trustee appointed hereunder to whom any corporate trust matter
is referred because of his or her knowledge of and familiarity with the
particular subject.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means (i) any Guarantor, (ii) any Subsidiary
of the Company in existence on the date hereof to which any line of business or
division (and the assets associated therewith) of any Guarantor are transferred
after the Issue Date, (iii) any Subsidiary of the Company organized or acquired
after the Issue Date, unless such Subsidiary has been designated as an
Unrestricted Subsidiary by a resolution of the Board of Directors as provided in
the definition of "Unrestricted Subsidiary" and (iv) any Unrestricted Subsidiary
which is designated as a Restricted Subsidiary by the Board of Directors;
provided, that immediately after giving effect to any such
- 21 -
<PAGE>
designation (A) no Default of Event of Default has occurred and is continuing
and (B) in the case of any designation referred to in clause (iii) or (iv)
hereof, the Company could incur at least $1.00 of Indebtedness pursuant to the
covenant described in the initial paragraph under Section 1008 hereof, on a pro
forma basis taking into account such designation. The Company shall evidence
any such designation to the Trustee by promptly filing with the Trustee an
officer's certificate certifying that such designation has been made and
complies with the requirements of the immediately preceding sentence.
Notwithstanding any provision of this Indenture to the contrary, each Guarantor
shall be a Restricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Group or any successor rating
agency.
"Sale and Leaseback Transaction" with respect to any Person, means any
arrangement with another Person for the leasing of any real or tangible personal
property, which property has been or is to be sold or transferred by such Person
to such other Person in contemplation of such leasing.
"Securities" means any of the securities, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture. For all purposes of this Indenture, the term "Securities" shall
include any Exchange Notes to be issued and exchanged for any Initial Securities
pursuant to the Registration Rights Agreement and this Indenture and, for
purposes of this Indenture, all Initial Securities and Exchange Notes shall vote
together as one series of securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305 hereof.
"Senior Indebtedness" means Indebtedness of any Person which is not
Subordinated Indebtedness.
"Shelf Registration Statement" means any registration statement filed
by the Company and the Guarantors with the Commission pursuant to the
Registration Rights Agreement, other than an Exchange Offer Registration
Statement.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 309 hereof.
- 22 -
<PAGE>
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"StyroChem Acquisition" means the acquisition by the Company or an
affiliate of the Company of all of the outstanding capital stock of and other
equity interests in SP Acquisition Co. pursuant to a Stock Purchase Agreement
dated as of October 30, 1996 among the Company and the Sellers named therein.
"Subordinated Indebtedness" means Indebtedness of the Company, any
Guarantor or any other Person which expressly provides that such Indebtedness is
junior or subordinated in right of payment to the Securities or any Guarantee,
as the case may be.
"Subsidiary" means, with respect to the Company, (i) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors, under ordinary circumstances,
is at the time owned, directly or indirectly, by the Company, by the Company and
one or more of its Subsidiaries or by one or more of the Company's Subsidiaries
or (ii) any other Person or entity of which at least a majority of voting
interest, under ordinary circumstances, is at the time owned, directly or
indirectly, by the Company, by the Company and one or more of its Subsidiaries
or by one or more of the Company's Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means the Person named as the "trustee" in the first
paragraph of this instrument, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.
"Unrestricted Subsidiary" means, until such time as it may be
designated as a Restricted Subsidiary by the Board of Directors as provided in
and in compliance with the definition of "Restricted Subsidiary," (i) any
Subsidiary of the Company organized or acquired after the Issue Date designated
as an Unrestricted Subsidiary by the Board of Directors in which all investments
by the Company or any Restricted Subsidiary are made only from funds available
for the making of Restricted Payments as described under Section 1006 hereof and
(ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns
any Equity Interests of, or owns, or holds
- 23 -
<PAGE>
any Lien upon, any property of, any Subsidiary of the Company which is not a
Subsidiary of such Subsidiary to be so designated; provided that each Subsidiary
to be so designated and each of its Subsidiaries has not, at the time of
designation, and does not thereafter, directly or indirectly, incur any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Company shall evidence
any such designation by promptly filing with the Trustee an officers'
certificate certifying that such designation has been made and complies with the
requirements of the immediately preceding sentence.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clause (i) or (ii) above, are not callable or redeemable at the option of the
issuer thereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
Section 102. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
----- ----------
<S> <C>
"Act" 105
"Adjusted Net Assets" 1309
"Agent Members" 306
"Asset Sale Offer" 1009
"Asset Sale Offer Amount" 1109
"Asset Sale Offer Period" 1109
"Asset Sale Purchase Date" 1109
"Asset Sale Purchase Price" 1009
"Change of Control Date" 1014
"Change of Control Offer" 1014
"Change of Control Payment Date" 1014
"Change of Control Purchase Price" 1014
"Commencement Date" 1109
"Computation Date" 1006
"Computation Period" 1006
"covenant defeasance" 403
"Defaulted Interest" 309
"Defeasance" 402
"Defeasance Redemption Date" 404
"Defeased Securities" 401
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Defined in
Term Section
----- ----------
<S> <C>
"Excess Proceeds" 1009
"Funding Guarantor" 1309
"Physical Securities" 201
"Registration Default" 203
"Required Filing Date" 704
"Refinancing" 101*
"Refinancing Indebtedness" 101*
"Restricted Payment" 1006
"U.S. Global Security" 201
</TABLE>
___________________
* See "Permitted Indebtedness", paragraph (j).
Section 103. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company or any Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company,
any Guarantor and any other obligor on the Securities shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenants compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with, an Opinion of Counsel stating that in the opinion of such counsel
all such conditions precedent, if any, have been complied with, except that, in
the case of any such application or request as to which the furnishing of such
documents, certificates and/or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinion contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, such
individual 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 complied with; and
- 25 -
<PAGE>
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 104. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any Guarantor
or other obligor of the Securities may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company, any Guarantor or other obligor of the
Securities stating that the information with respect to such factual matters is
in the possession of the Company, any Guarantor or other obligor of the
Securities, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. Opinions of Counsel
required to be delivered to the Trustee may have qualifications customary for
opinions of the type required and counsel delivering such Opinions of Counsel
may rely on certificates of the Company or government or other officials
customary for opinions of the type required, including certificates certifying
as to matters of fact, including that various financial covenants have been
complied with.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 105. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly
- 26 -
<PAGE>
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture, if made in the manner provided in this Section. The
fact and date of the execution by any Person of any such instrument or writing
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient in accordance with such
reasonable rules as the Trustee may determine.
(b) The ownership of Securities shall be proved by the Register.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security or the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company or any Guarantor in reliance thereon, whether or not notation of
such action is made upon such Security.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding Trust Indenture Act
Section 316(c), any such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not more than 30 days
prior to the first solicitation of Holders generally in connection therewith and
no later than the date such solicitation is completed.
In the absence of any such record date fixed by the Company,
regardless as to whether a solicitation of the Holders is occurring on behalf of
the Company or any Holder, the Trustee may, at its option, fix in advance a
record date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Trustee shall have no obligation to do so. Any such record date shall be a date
not more than 30 days prior to the first solicitation of Holders generally in
connection
-27-
<PAGE>
therewith and no later than a date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for purposes of determining
whether Holders of the requisite proportion of Securities then outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the
Securities then Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
Section 106. Notices, etc., to Trustee, the Company and any
----------------------------------------------
Subsidiary Guarantor.
- --------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor or
any other obligor of the Securities shall be sufficient for every purpose
hereunder if in writing (including telecopy, with respect to the Company or
any Subsidiary Guarantor only) and mailed, first-class postage prepaid,
telecopied, hand delivered, or delivered by recognized overnight courier,
to or with the Trustee at First Union National Bank, Broad & Walnut
Streets, PA1249, Philadelphia, Pennsylvania, Attention: Corporate Trust
Administration or at any other address previously furnished in writing to
the Holders, the Company, any Guarantor or any other obligor of the
Securities by the Trustee; or
(b) the Company or any Guarantor shall be sufficient for every purpose
hereunder if in writing (including telecopy) and mailed, first-class
postage prepaid, telecopied, hand delivered, or delivered by recognized
overnight courier, to the Company or such Guarantor addressed to it at
Three Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor,
Pennsylvania, 19087, Attention: Treasurer, telecopy: (610) 995-2697 or at
any other address previously furnished in writing to the Trustee by the
Company or such Guarantor.
-28-
<PAGE>
Section 107. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be reasonably satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Section 108. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
- 29 -
<PAGE>
Section 110. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company and the
Guarantors shall bind their successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities or the Guarantees,
express or implied, shall give to any Person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 113. Governing Law.
-------------
This Indenture and the Securities and the Guarantees shall be governed
by, and construed in accordance with, the laws of the State of New York.
Section 114. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or premium, if any, need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, Redemption Date or at the Stated Maturity and no
interest shall accrue with respect to such payment for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to the next succeeding Business Day.
Section 115. Schedules and Exhibits.
----------------------
All schedules and exhibits attached hereto are by this reference made
a part hereof with the same effect as if herein set forth in full.
Section 116. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such
- 30 -
<PAGE>
counterparts shall together constitute but one and the same instrument.
Section 117. Communication by Holders with Other Holders.
-------------------------------------------
Holders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantors, the Trustee, the Registrar and anyone
else shall have the protection of Trust Indenture Act Section 312(c).
Section 118. No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or any of the Guarantors, shall not have any liability for any obligations of
the Company under the Securities or this Indenture, for any obligation of the
Guarantors under the Guarantees or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder shall waive and release all such liability. The waiver
and release shall be part of the consideration for the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
---------------
The Securities, the Guarantees and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by the Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global securities substantially
in the form set forth in this Article (the "U.S. Global Security") deposited
with the Trustee, as custodian for the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the U.S. Global Security may from
- 31 -
<PAGE>
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Securities offered and sold other than as described in the preceding
paragraph shall be issued in the form of permanent certificated Securities in
registered form in substantially the form set forth in this Article (the
"Physical Securities").
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Restrictive Legends.
-------------------
Each U.S. Global Security and Physical Security shall bear the
following legend on the face thereof until after the Resale Restriction
Termination Date, unless and until a Security is exchanged for an Exchange Note
in connection with an effective registration pursuant to the Registration Rights
Agreement or another effective registration and resale of the Securities occurs
pursuant to the Registration Rights Agreement:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD 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 INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT WILL NOT, WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS SECURITY OR THE LAST DATE ON WHICH THIS SECURITY WAS HELD BY AN AFFILIATE
OF THE COMPANY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, SUBJECT IN EACH OF THE
FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF SUCH HOLDER'S
PROPERTY OR THE PROPERTY OF SUCH ACCOUNT AT ALL TIMES BE WITHIN ITS
- 32 -
<PAGE>
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. IN CONNECTION WITH ANY
TRANSFER OF ANY CERTIFICATED SECURITY WITHIN THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE SECURITY OR THE LAST DATE ON WHICH SUCH CERTIFICATED
SECURITY WAS HELD BY AN AFFILIATE OF THE COMPANY, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE OF SUCH CERTIFICATED SECURITY RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT SUCH CERTIFICATED SECURITY TO THE
TRUSTEE. IF ANY PROPOSED TRANSFEREE IS AN 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 OR APPLICABLE STATE SECURITIES LAWS. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
Each U.S. Global Security, whether or not an Exchange Note, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS U.S. GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS U.S.
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 307 OF THE INDENTURE.
Section 203. Form of Face of Securities.
--------------------------
The form of the face of the Securities shall be substantially as
follows:
- 33 -
<PAGE>
RADNOR HOLDINGS CORPORATION
___________________
10% SENIOR NOTES DUE 2003
CUSIP No. __________ $___________
RADNOR HOLDINGS CORPORATION, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________ or registered assigns, the principal sum of __________ United States
dollars on December 1, 2003, at the office or agency of the Company referred to
below, and to pay interest thereon from the date of original issuance, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on June 1 and December 1 in each year, commencing
June 1, 1997 at the rate of 10% per annum (subject to adjustment as provided
below), in United States dollars, until the principal hereof is paid or duly
provided for.
[In the event that (i) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to the 60th day after the Issue Date
or declared effective on or prior to the 120th day after the Issue Date, (ii)
the Exchange Offer is not consummated on or prior to the 150th day following the
Issue Date, (iii) the Shelf Registration Statement is not filed or declared
effective within the required time periods or (iv) any of the Registration
Statements required by the Registration Rights Agreement is declared effective
but thereafter ceases to be effective (except as specifically permitted therein)
for a period of 15 consecutive days without being succeeded immediately by any
additional Registration Statement filed and declared effective (each such event,
a "Registration Default"), the interest rate borne by the Securities will be
increased by 25 basis points per annum for the 90-day period following such
Registration Default. Such interest rate shall increase by an additional 25
basis points per annum at the beginning of each subsequent 90-day period
following such Registration Default, up to a maximum aggregate increase of 100
basis points per annum and, accordingly, the maximum interest rate on the
Securities may not exceed 11%. Upon (x) the filing or the effectiveness of the
Exchange Offer Registration Statement, (y) the consummation of the Exchange
Offer or (z) the filing or the effectiveness of the Shelf Registration
Statement, as the case may be, the interest rate borne by the Securities shall
be reduced from and including the date on which any of the events specified in
clauses (x), (y) or (z) above occur by the amount of the related increase in the
interest rate.
- 34 -
<PAGE>
Notwithstanding the foregoing, the Issuers shall not be required to
pay such additional interest with respect to the Securities held by a Holder if
the applicable Registration Default arises from the failure of the Issuers to
file, or cause to become effective, a Shelf Registration Statement within the
specified time periods by reason of the failure of such Holder to provide such
information as (i) the Company may reasonably request, with reasonable prior
written notice, for use in the Shelf Registration Statement or any prospectus
included therein to the extent the Company reasonably determines that such
information is required to be included therein by applicable law, (ii) the
National Association of Securities Dealers, Inc. or the Commission may request
in connection with such Shelf Registration Statement or (iii) is required to
comply with the agreements of such Holder contained in the penultimate paragraph
of Section 5 of the Registration Rights Agreement to the extent compliance
thereof is necessary for the Shelf Registration Statement to be declared
effective.]/1/
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date shall, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 and November 15 next preceding such Interest
Payment Date. Any such interest not so punctually paid, or duly provided for,
and interest on such defaulted interest at the interest rate borne by the
Securities, to the extent lawful, shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on a Special Record Date for the payment of such defaulted interest
to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of, premium, if any, and interest on this
Security shall be made at the office or agency of the Company maintained for
that purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
- -------- -------
Company by check mailed to the address of the
_____________________
/1/ To be included in each Security prior to expiration of the obligations of
the Company and the Guarantors under the Registration Rights Agreement.
- 35 -
<PAGE>
Person entitled thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Security is entitled to the benefits of Guarantees by each of the
Guarantors of the punctual payment when due of the Indenture Obligations made in
favor of the Trustee for the benefit of the Holders. Such Guarantees shall be
senior unsecured obligations of each Guarantor, and will rank pari passu in
right of payment with all other existing and future Senior Indebtedness of such
Guarantor and senior to all Subordinated Indebtedness of such Guarantor. Such
Guarantees will be effectively subordinated in right of payment to all existing
and future secured indebtedness of the Guarantors. Reference is hereby made to
Article Thirteen of the Indenture for a statement of the respective rights,
limitations of rights, duties and obligations under the Guarantees of each of
the Guarantors.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature, this Security shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
- 36 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
Dated: RADNOR HOLDINGS CORPORATION
By _______________________
Attest:
_________________________
Secretary
Section 204. Form of Reverse of Securities.
-----------------------------
The form of the reverse of the Securities shall be substantially as
follows:
This Security is one of a duly authorized issue of Securities of the
Company designated as its 10% Senior Notes due 2003 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $100,000,000, which may be issued
under an indenture (herein called the "Indenture") dated as of December 5, 1996,
among the Company, the Guarantors and First Union National Bank, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Guarantors, the Trustee and the Holders of the Securities, and of the terms upon
which the Securities and the Guarantees are, and are to be, authenticated and
delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance or
noncompliance with certain conditions set forth therein.
The Securities shall be senior unsecured obligations of the Company,
and shall rank pari passu with all existing and future Senior Indebtedness of
the Company and senior to all Subordinated Indebtedness of the Company. The
Securities will be effectively subordinated in right of payment to all existing
and
- 37 -
<PAGE>
future secured indebtedness of the Company and the Company's subsidiaries.
The Securities shall not be redeemable at the option of the Company
prior to December 1, 2000. On or after that date, the Securities shall be
redeemable at the option of the Company, in whole or in part from time to time,
on not less than 30 nor more than 60 days' prior notice, mailed by first-class
mail to the Holders' registered addresses, in cash, in amounts of $1,000 or an
integral multiple of $1,000 at the following Redemption Prices (expressed as
percentages of the principal amount), if redeemed in the 12-month period
commencing December 1, of the years indicated below:
Year Redemption
---- ----------
2000 105.0000%
2001 102.5000%
2002 and thereafter 100.0000%
in each case together with accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on relevant record
dates to receive interest due on an Interest Payment Date). If less than all of
the Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata, by lot or by any other method the Trustee shall deem fair and
appropriate.
The Securities shall not be subject to, or entitled to the benefits
of, any sinking fund.
In addition, at any time on or prior to December 1, 1999, the Company,
at its option, may redeem up to $25,000,000 in aggregate principal amount of the
Securities at a redemption price of 110% of the principal amount thereof, plus
accrued interest, if any, to the Redemption Date, with the net proceeds of one
or more Public Equity Offerings by the Company; provided that at least
$75,000,000 aggregate principal amount of the Securities must remain outstanding
after such redemption. The Trustee shall select the Securities or portions
thereof to be redeemed pro rata, by lot or by any other method the Trustee shall
deem fair and appropriate.
Upon the occurrence of a Change of Control, each Holder may require
the Company to repurchase all or a portion of such Holder's Securities in an
amount of $1,000 or integral multiples of $1,000, at a purchase price in cash
equal to 101% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the Change of Control Payment Date.
Under certain circumstances, in the event the Net Proceeds received by
the Company from one or more Asset Sales, which proceeds are not applied within
180 days subsequent to the
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<PAGE>
consummation of the Asset Sale to repay permanently any Senior Indebtedness then
outstanding or to an investment in the Company or in one or more Restricted
Subsidiaries, equals or exceeds $5,000,000 the Company shall be required to
apply such proceeds to repurchase the Securities tendered to the Company for
purchase at a price equal to at least 100% of the principal amount thereof, plus
accrued interest, if any, to the date of purchase pursuant to an offer to
purchase made by the Company with respect to the Securities.
In the case of any redemption or repurchase of Securities, interest
installments whose Stated Maturity is on or prior to the Redemption or
Repurchase Date shall be payable to the Holders of such Securities of record as
of the close of business on the relevant record date referred to on the face
hereof. Securities (or portions thereof) for whose redemption or repurchase and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the date of redemption or repurchase.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders) as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders under the Indenture and
the Guarantees at any time by the Company, the Guarantors and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantors with certain
provisions of the Indenture and the Guarantees and certain past Defaults under
the Indenture and the Guarantees and their consequences. Any such consent or
waiver by or on behalf of the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Security.
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<PAGE>
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, any
Guarantor or any other obligor upon the Securities (in the event such other
obligor is obligated to make payments in respect of the Securities), which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange or redemption of the Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to and at the time of due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security is overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
[The Company and the Guarantors have entered into an Exchange and
Registration Rights Agreement dated as of December 5, 1996 (the "Registration
Rights Agreement") with the Initial Purchasers described therein. Pursuant to
the Registration Rights Agreement, the Company and the Guarantors have agreed,
among other things, for the benefit of the Holders that they shall, at their
expense, (i) file with the Commission on or prior to 60 days from the Issue Date
an Exchange Offer Registration Statement with the Commission with respect to a
registered offer to exchange this Security for an Exchange Note, (ii) use their
best efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act by the 120th day after the Issue Date and
(iii) cause the Exchange Offer to be consummated by the 150th day after the
Issue Date.
Reference is hereby made to the Registration Rights Agreement for a
statement of the respective rights, duties and
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<PAGE>
obligations thereunder of the Company, the Guarantors and the Holders of the
Securities.]/2/
All terms used in this Security which are defined in the Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
______________________________________________________________________________
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
______________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
______________________________________________________________________________
attorney to transfer said Security on the books of the Company with full power
of substitution in the premises.
In connection with any transfer of this Security occurring prior to
the date which is the earlier of the date of an effective Registration or the
date which is not prior to the date which is three years after the later of the
date of original issue of this Security and the last date on which the Company
or any affiliate of the Company was the Owner of this Security (or any
Predecessor thereto) the "Resale Restriction Termination Date", the undersigned
confirms that without utilizing any general solicitation or general advertising:
[Check One]
---------
[ ] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder, or
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents are being
_______________________
/2/ To be included in each Security prior to expiration of the obligations of
the Company and the Guarantors under the Registration Rights Agreement.
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<PAGE>
furnished which comply with the conditions of transfer set forth in
this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Security in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 307 of the Indenture shall have
been satisfied.
Date:_____________________
______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:________________ __________________________
NOTICE: To be executed by
an executive officer
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 1014 or 1109 of the Indenture, check the Box: [ ].
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<PAGE>
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 1014 or 1109 of the Indenture, state the amount (in
authorized denominations):
$__________.
Date: ______________
Your Signature: ______________
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee: ________________
Section 205. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The form of Trustee's Certificate of Authority shall be set forth on
the Securities substantially as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK
As Trustee
By_________________________________
Authorized Signatory
Section 206. Form of Guarantee of Each of the Guarantors.
-------------------------------------------
The form of Guarantee shall be set forth on the Securities
substantially as follows:
GUARANTEES
For value received, each of the undersigned hereby unconditionally
guarantees, jointly and severally, to the Holder of this Security the payment of
principal of, premium, if any, and interest on this Security in the amounts and
at the time when due and interest on the overdue principal and interest, if any,
of this Security, if lawful, and the payment or performance of all other
obligations of the Company under the Indenture or the Securities, to the Holder
of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security and Article Thirteen of the Indenture.
This Guarantee shall not become effective until the Trustee duly
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<PAGE>
manually executes the certificate of authentication on this Security.
WINCUP HOLDINGS, INC.
Attest_________________________ By____________________________
Name: Name:
Title: Title:
WINCUP HOLDINGS, L.P.
Attest_________________________ By____________________________
Name: Name:
Title: Title:
SP ACQUISITION CO.
Attest________________________ By____________________________
Name: Name:
Title: Title:
STYROCHEM INTERNATIONAL, INC.
Attest________________________ By____________________________
Name: Name:
Title: Title:
STYROCHEM INTERNATIONAL, LTD.
Attest________________________ By____________________________
Name: Name:
Title: Title:
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000 in
principal amount of Securities plus any Exchange Securities which may be issued
upon consummation of an Exchange Offer, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1009,
1014 or 1108 hereof.
The Securities shall be known and designated as the "10% Senior Notes
due 2003" of the Company. The Stated Maturity of the principal amount of the
Securities shall be December 1,
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<PAGE>
2003, and the Securities shall each bear interest at the rate of 10% from the
Issue Date or from the most recent Interest Payment Date to which interest has
been paid, as the case may be, payable on June 1, 1997 and semiannually
thereafter on May 15 and November 15, in each year, until the principal thereof
is paid or duly provided for. If a Registration Default shall occur, the
interest rate borne by the Securities shall be increased by 25 basis points per
annum at the beginning of each 90-day period commencing at the date of any such
Registration Default, up to a maximum aggregate increase of 100 basis points per
annum and, accordingly, the maximum interest rate on the Notes may not exceed
11%. Upon (x) the filing or the effectiveness of the Exchange Offer
Registration Statement, (y) the consummation of the Exchange Offer or (z) the
filing or the effectiveness of the Shelf Registration Statement, as the case may
be, the interest rate borne by the Securities shall be reduced from and
including the date on which any of the events specified in clauses (x), (y) or
(z) above occur by the amount of the related increase in the interest rate set
forth above. Notwithstanding the foregoing, the Issuers shall not be required
to pay such additional interest with respect to the Securities held by a Holder
if the applicable Registration Default arises from the failure of the Issuers to
file, or cause to become effective, a Shelf Registration Statement within the
specified time periods by reason of the failure of such Holder to provide such
information as (i) the Company may reasonably request, with reasonable prior
written notice, for use in the Shelf Registration Statement or any prospectus
included therein to the extent the Company reasonably determines that such
information is required to be included therein by applicable law, (ii) the
National Association of Securities Dealers, Inc. or the Commission may request
in connection with such Shelf Registration Statement or (iii) is required to
comply with the agreements of such Holder contained in the penultimate paragraph
of Section 5 of the Registration Rights Agreement to the extent compliance
thereof is necessary for the Shelf Registration Statement to be declared
effective.
The principal and interest on the U.S. Global Security shall be
payable to the Depositary or its nominee, as the case may be, as the sole
registered owner and the sole Holder of the U.S. Global Security represented
thereby. The principal of, premium, if any, and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose; provided, however, that at the option of the Company interest may be
-------- -------
paid by check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register.
The Securities shall be redeemable as provided in Article Eleven.
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<PAGE>
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Four.
Section 302. Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by one of
its Chairman of the Board, its President or one of its Vice Presidents under its
corporate seal reproduced thereon and attested by its Secretary or one of its
Assistant Secretaries.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Indenture and not otherwise.
Upon a Company Order, the Trustee shall authenticate and deliver an
additional series of notes in an aggregate principal amount not to exceed
$100,000,000 for issuance in exchange for all or a portion of the Initial
Securities previously issued and surrendered for cancellation pursuant to an
exchange offer registered under the Securities Act, in accordance with the
Registration Rights Agreement. The Exchange Notes may have such distinctive
series designation and such changes in the form thereof as are specified in the
Company Order referred to in the preceding sentence, and shall be guaranteed by
the Guarantors on substantially identical terms as the Initial Securities.
Each Security shall be dated the date of its authentication.
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<PAGE>
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
In case the Company or any Guarantor, pursuant to Article Eight, shall
be consolidated, merged with or into any other Person or shall sell, assign,
convey, transfer or lease substantially all of its properties and assets to any
Person, and the successor Person resulting from such consolidation, or surviving
such merger, or into which the Company or such Guarantor shall have been merged,
or the Person which shall have received a sale, assignment, conveyance, transfer
or lease as aforesaid, shall have executed an indenture supplemental hereto with
the Trustee pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, sale, assignment, conveyance,
transfer or lease may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Request of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any time
be authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of the Holders but without
expense to them, shall provide for the exchange of all Securities at the time
Outstanding for Securities authenticated and delivered in such new name.
The Trustee (at the expense of the Company) may appoint an
authenticating agent acceptable to the Company to authenticate Securities on
behalf of the Trustee. Unless limited by the terms of such 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
any Security Registrar or Paying Agent to deal with the Company and its
Affiliates.
Section 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed,
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<PAGE>
lithographed, typewritten or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.
After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company designated for such
purpose pursuant to Section 1002 hereof, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
Section 305. Registration of Transfer and Exchange.
-------------------------------------
All provisions of this Section 305 shall be subject to Section 307
hereof.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee, or such other office as the Trustee may designate, a register (the
register maintained in such office and in any other office or agency designated
pursuant to Section 1002 hereof being herein sometimes referred to as the
"Security Register") in which, subject to such reasonable regulations as the
Security Registrar may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee or an agent thereof
or of the Company shall initially be the "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 1002 hereof, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series of any authorized denomination or denominations, of a like
aggregate principal amount.
Any Holder of the U.S. Global Security shall, by acceptance of such
U.S. Global Security, agree that transfers of beneficial interests in such U.S.
Global Security may be effected only through a book-entry system maintained by
the Holder of such U.S. Global Security (or its agent), and that ownership of a
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<PAGE>
beneficial interest in the Security shall be required to be reflected in a book
entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations (including an
exchange of Initial Securities for Exchange Notes), of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities of the same series which the Holder making the exchange is entitled
to receive; provided that no exchanges of Initial Securities for Exchange Notes
shall occur until a Registration Statement shall have been declared effective by
the Commission and that any Initial Securities that are exchanged for Exchange
Notes shall be canceled by the Trustee.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer,
or for exchange or redemption shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges of Initial Securities for Exchange Notes and exchanges pursuant to
Section 303, 304, 305, 306, 307, 308, 906, 1009, 1014 or 1108 hereof not
involving any transfer.
The Company shall not be required (a) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
(i) 15 days before the date of selection of Securities for redemption under
Section 1104 hereof and ending at the close of business on the day of such
mailing or (ii) 15 days before an Interest Payment Date and ending on the close
of business on the Interest Payment Date, or (b) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of Securities being redeemed in part.
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<PAGE>
Section 306. Book-Entry Provisions for U.S. Global Security.
----------------------------------------------
All provisions of this Section 306 shall be subject to Section 307
hereof.
(a) The U.S. Global Security initially shall (i) be registered in the
name of the Depositary for such U.S. Global Security or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 202 hereof.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any U.S. Global Security
held on their behalf by the Depositary, or the Trustee as its custodian, or
under the U.S. Global Security, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of such U.S. Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of the U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of
beneficial owners in the U.S. Global Security may be transferred in accordance
with the rules and procedures of the Depositary and the provisions of Section
307 hereof. Beneficial owners may obtain Physical Securities in exchange for
their beneficial interests in the U.S. Global Security upon request in
accordance with the Depositary's and the Registrar's procedures. In addition,
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in the U.S. Global Security if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the U.S. Global Security or ceases to be a "clearing agency" registered
under the Exchange Act and a successor depositary is not appointed by the
Company within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Security Registrar, the Depositary and the Company
have, through Agent Members, received a request in writing from Holders of
beneficial interests in the U.S. Global Note with interests aggregating not less
than a majority that the continuation of a book-entry system through the
Depositary or its successors is no longer in their best interest.
- 50 -
<PAGE>
(c) In connection with any transfer of a portion of the beneficial
interest in the U.S. Global Security to beneficial owners pursuant to Subsection
(b) of this Section, the Security Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the beneficial interest
in the U.S. Global Security to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Physical Securities
of like tenor and amount.
(d) In connection with the transfer of the entire U.S. Global
Security to beneficial owners pursuant to Subsection (b) of this Section, the
U.S. Global Security shall be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Security, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest in
the U.S. Global Security pursuant to Subsection (b) or Subsection (c) of this
Section shall, except as otherwise provided by Subsection (a)(i)(x) and
Subsection (d) of Section 307 hereof, bear the applicable legend regarding
transfer restrictions applicable to the Physical Security set forth in Section
202 hereof.
(f) The registered Holder of the U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
Section 307. Special Transfer Provisions.
---------------------------
Unless and until an Initial Security is exchanged for an Exchange Note
in connection with an effective Exchange Offer Registration Statement or a Shelf
Registration Statement is declared effective with respect to such Initial
Securities and an Initial Security is sold pursuant to the plan of distribution
thereunder, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
-------------------------------------------------------
following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor
which is not a QIB:
(i) The Security Registrar shall register the transfer of any
Security, whether or not such Security
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<PAGE>
bears the Private Placement Legend, if (x) the requested transfer is
on or after the Resale Restriction Termination Date or (y) the
proposed transferee has delivered to the Security Registrar a letter
containing certain representations and agreements substantially in the
form of Exhibit A hereto.
---------
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by paragraph
(i) and (y) instructions given in accordance with the Depositary's and
the Security Registrar's procedures, the Security Registrar shall
reflect on its books and records the date and a decrease in the
principal amount of the U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global
Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical
Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Security to a
QIB:
(i) If the Security to be transferred consists of Physical
Securities, the Security Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Security stating, or has otherwise
advised the Company and the Security Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form
of Security stating, or has otherwise advised the Company and the
Security Registrar in writing, that it is purchasing the Security for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
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<PAGE>
(ii) If the proposed transferee is an Agent Member, and the
Security to be transferred consists of Physical Securities, upon
receipt by the Security Registrar of instructions given in accordance
with the Depositary's and the Security Registrar's procedures, the
Security Registrar shall reflect on its books and records the date and
an increase in the principal amount of the U.S. Global Security in an
amount equal to the principal amount of the Physical Securities to be
transferred, and the Trustee shall cancel the Physical Security so
transferred.
(c) Private Placement Legend. Any Security authenticated and issued
------------------------
hereunder shall not be required to bear the legend set forth in Section 202
hereof, if such Security shall be issued upon:
(i) the transfer or exchange of a Security and contemporaneously
therewith the Company shall have received an Opinion of Counsel, at
its expense, in form and substance reasonably satisfactory to the
Company, to the effect that such Security to be issued upon such
transfer or exchange may be so issued without such legend because (A)
such Security is being exchanged for an Exchange Note, (B) such
Security shall have been registered under the Securities Act, the
registration statement in connection therewith shall have been
declared effective and such Security shall have been disposed of
pursuant to such effective registration statement, or (C) the
circumstances contemplated by paragraph (a)(i)(x) of this Section 307
exist, and the Company shall have delivered to the Trustee and the
Security Registrar a copy of such Opinion of Counsel together with an
Officers' Certificate directing the Trustee and the Security Registrar
to deliver an unlegended Security in connection with such transfer or
exchange; such Officers' Certificate and Opinion of Counsel shall be
delivered by the Company as soon as practicable after its receipt of a
written request by a Holder for such a transfer or exchange; or
(ii) the transfer or exchange of a Security not bearing such
legend.
(d) General.
-------
(i) By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture
and in the Private Placement Legend and agrees that it shall
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transfer such Security only as provided in this Indenture.
(ii) Prior to any transfer or exchange of a legended Security
for another legended Security, the Company shall have received an
opinion of counsel of the Holder (which may include in-house counsel
of such Holder experienced in matters of Federal securities law), at
its expense, in form and substance reasonably satisfactory to the
Company to the effect that such transfer does not require registration
under the Securities Act and the Company shall have delivered to the
Trustee and the Security Registrar a copy of such opinion of counsel
of the Holder together with an Officers' Certificate directing the
Trustee and the Security Registrar to transfer or exchange the
legended Security for another legended Security.
The Trustee and the Security Registrar shall forward copies of all
letters, notices and other written communications received pursuant to Section
306 hereof or this Section 307 to the Company for approval prior to any transfer
or exchange.
Notwithstanding anything to the contrary set forth herein, the Trustee
and the Security Registrar shall have no duty to monitor compliance with any
Federal, state or other securities laws.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, each Guarantor and the Trustee, such security or indemnity, in each
case, as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, any Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a replacement Security of like tenor and principal amount,
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
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Upon the issuance of any replacement Securities under this Section,
the Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereof and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company and the Guarantors, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest 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 is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Securities,
to the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the Regular Record Date; and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in Subsection (a) or
(b) below:
(a) the Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the 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 (not less than 30 days after such
notice) of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory
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to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Subsection provided.
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 in writing of such
Special Record Date. In the name and at the expense of the Company, the
Trustee 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 so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities are registered on such
Special Record Date and shall no longer be payable pursuant to the
following Subsection (b).
(b) 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, and upon such
notice as may be required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment pursuant to this
Subsection, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security (including any Exchange Security issued in
exchange for an Initial Security) shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
Section 310. Persons Deemed Owners.
---------------------
The Company, any Guarantor, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is registered as
the owner of such Security for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 309 hereof) interest on such Security
and for all other purposes whatsoever, whether or not such Security is overdue,
and neither the Company, any Guarantor, the Trustee nor any agent of the
Company, any Guarantor or the Trustee shall be affected by notice to the
contrary.
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Section 311. Cancellation.
------------
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company. The Trustee shall provide the Company a
list of all Securities that have been canceled from time to time as requested by
the Company.
Section 312. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
Section 313. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and at Maturity, the Company shall have deposited with the Trustee or a Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or at Maturity, as the case may be, in a
timely manner which permits the Trustee or such Paying Agent to remit payment to
the Holders on such Interest Payment Date or at Maturity, as the case may be.
Section 314. CUSIP Number.
------------
The Company in issuing the Securities shall use a "CUSIP" number(s),
and, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a convenience to Holders, provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number(s) printed in the notice or on the Securities and that reliance may be
placed on the other identification numbers printed on the Securities.
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ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
-------------------------------------------------
Defeasance.
- ----------
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 402 or Section 403
hereof be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article Four.
Section 402. Defeasance and Discharge.
------------------------
Upon the Company's exercise under Section 401 hereof of the option
applicable to this Section 402, the Company, each of the Guarantors and any
other obligor upon the Securities, if any, shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on the
date the conditions set forth below are satisfied (hereinafter, "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 405 hereof and the other Section of this Indenture referred
to in (a) and (b) below, and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, and, upon written request, 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 Defeased Securities to receive, solely from the trust fund
described in Section 404 hereof and as more fully set forth in such Section,
payments in respect of the principal of, premium if any, and interest on such
Securities when such payments are due, (b) the Company's obligations with
respect to such Defeased Securities under Sections 304, 305, 308, 1002 and 1018
hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder including, without limitation, the Trustee's rights under Section 606
hereof and the Company's obligations in connection therewith, and (d) this
Article Four. Subject to compliance with this Article Four, the Company may
exercise its option under this Section 402 notwithstanding the prior exercise of
its option under Section 403 hereof with respect to the Securities.
Section 403. Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 401 hereof of the option
applicable to this Section 403, the Company and each
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Guarantor shall be released from its obligations under any covenant or provision
contained or referred to in Sections 1004, 1005, 1006, 1007, 1008, 1009, 1010,
1011, 1012, 1014, 1015, 1016, 1019 and 1020 hereof with respect to the Defeased
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Defeased Securities shall
thereafter be deemed to be 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 respect to the Defeased Securities, the Company and
each Guarantor may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section or Article,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or Article or by reason of any reference in any such Section or
Article to any other provision herein or in any other document and such omission
to comply shall not constitute a Default or an Event of Default under Section
501(3) or (4) hereof but, except as specified above, the remainder of this
Indenture and such Defeased Securities shall be unaffected thereby.
Section 404. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section
402 or Section 403 hereof to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 608 hereof who shall agree to comply with the provisions of this
Article Four 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, (a)
United States dollars in an amount, or (b) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms shall provide, not later than one
day before the due date of any payment, money in an amount, or (c) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants or a nationally recognized
investment banking firm 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, and interest on the Defeased Securities on
the Stated Maturity of such principal or installment of principal or
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interest (such date being referred to as the "Defeasance Redemption Date"),
if when exercising under Section 401 hereof either its option applicable to
Section 402 hereof or its option applicable to Section 403 hereof, the
Company shall have delivered to the Trustee an irrevocable notice to redeem
all of the Outstanding Securities on the Defeasance Redemption Date);
provided that the Trustee shall have been irrevocably instructed to apply
such United States dollars or the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities.
(2) In the case of an election under Section 402 hereof, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in
the United States of America stating that (A) the Company has received from
the Internal Revenue Service a ruling or (B) since the Issue Date, there
has been a change in the applicable federal income tax law, including by
means of a Revenue Ruling published by the Internal Revenue Service, in
either case to the effect that, and based thereon such Opinion of
Independent Counsel in the United States of America 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 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 defeasance
had not occurred.
(3) In the case of an election under Section 403 hereof, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in
the United States of America 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 on 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.
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Subsection 501(9) or
(10) hereof is concerned, at any time during the period ending on the 91st
day after the date of deposit.
(5) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any Guarantor is a party or by which it is bound.
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<PAGE>
(6) The Company shall have delivered to the Trustee an Opinion of
Independent Counsel to the effect that (A) the trust funds will not be
subject to any rights of holders of Senior Indebtedness of the Company or
of any Guarantor and (B) after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of the Securities or any Guarantee over
the other creditors of the Company or any Guarantor with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 402 hereof or the covenant defeasance under Section 403 hereof (as
the case may be) have been complied with as contemplated by this Section
404.
Opinions of Counsel or Opinions of Independent Counsel required to be delivered
under this Section may have qualifications customary for opinions of the type
required and counsel delivering such opinions may rely on certificates of the
Company or government or other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Section 405. Deposited Money and U.S. Government Obligations to Be
-----------------------------------------------------
Held in Trust; Other Miscellaneous Provisions.
- ---------------------------------------------
Subject to the provisions of the last paragraph of Section 1018
hereof, all United States dollars and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee--
collectively for purposes of this Section 405, the "Trustee") pursuant to
Section 404 hereof in respect of the Defeased 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
(including the Company acting as its own 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.
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<PAGE>
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 404 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Defeased Securities.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect defeasance or covenant
defeasance.
Section 406. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 402 or 403
hereof, 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 Company's and each Guarantor's obligations under this
Indenture and the Securities (including, without limitation, the provisions of
Article Thirteen hereof) shall be revived and reinstated as though no deposit
had occurred pursuant to Section 402 or 403 hereof, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403 hereof, as the case may be; provided, however, that if the Company makes any
-------- -------
payment to the Trustee or Paying Agent of principal of, premium, if any, or
interest on any Security following the reinstatement of its obligations, the
Trustee or Paying Agent shall promptly pay any such amount to the Holders of the
Securities and the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
Section 407. Repayment of the Company.
------------------------
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all
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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 thirty (30) days
from the date of such notification or publication, any unclaimed balance of such
money then remaining shall promptly be repaid to the Company.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
-----------------
An "Event of Default" shall occur if:
(1) there shall be a default in the payment of interest on any
Security when the same becomes due and payable and the Default continues
for a period of thirty (30) days;
(2) there shall be a default in the payment of the principal of, or
premium with respect to, any Security when the same becomes due and
payable, at maturity, upon redemption, in connection with a Change of
Control, an Asset Sale or otherwise;
(3) the Company or any Guarantor fails to observe or perform any
covenant, condition or agreement on the part of the Company or such
Guarantor to be observed or performed pursuant to Section 1006, 1008, 1009,
1010, 1012, 1014, 1019, 1020 or Article Eight hereof;
(4) the Company or any Guarantor fails to observe or perform any
other covenant, condition or agreement in this Indenture or the Securities
and such failure continues for the period and after the notice specified
below;
(5) the Company denies or disaffirms its obligations under this
Indenture or the Securities;
(6) a Guarantor denies or disaffirms its obligations under its
Guarantee, or any Guarantee for any reason ceases to be, or is asserted in
writing by any Guarantor or the Company not to be, in full force and effect
and enforceable in accordance with its terms, except to the extent
contemplated by this Indenture and any such Guarantee;
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(7) a default occurs under any Indebtedness of the Company or any of
its Subsidiaries (other than the Securities or the Guarantees), whether
such Indebtedness now exists or is created after the Closing Date if either
(A) such default results from the failure to pay the final scheduled
principal installment in respect of any such Indebtedness on the stated
maturity date thereof (after giving effect to any grace period) or (B) as a
result of such default, the maturity of such Indebtedness has been
accelerated prior to its express maturity and, in each case, the principal
amount of such Indebtedness, together with the principal amount of all
other Indebtedness with respect to which the principal amount remains
unpaid at its final maturity (after giving effect to any grace period in
respect of such final scheduled principal installment) or the maturity of
which has been so accelerated, aggregates $5,000,000 or more;
(8) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged, unbonded or unstayed for a period of sixty (60) days,
provided that the aggregate of all such judgments (other than any judgment
as to which and only to the extent, a reputable insurance company has
acknowledged coverage of such claim in writing) exceeds $5,000,000;
(9) the Company, any Guarantor or any other Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case in which it is a debtor,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) admits in writing its inability to pay debts as the same
become due; or
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(10) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company, any Guarantor or any other
Restricted Subsidiary in an involuntary case in which it is a debtor,
(b) appoints a Custodian of the Company, any Guarantor or any
other Restricted Subsidiary or for all or substantially all of their
property,
(c) orders the liquidation of the Company, any Guarantor or any
other Restricted Subsidiary,
and the order or decree remains unstayed and in effect for sixty (60) days.
The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the Securities then Outstanding notify the Company and the Trustee, of the
Default and the Company does not cure the Default within sixty (60) days after
receipt of such notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
The failure to make any payment on the Securities when due shall,
after the expiration date of any applicable grace period, constitute an Event of
Default under this Indenture.
Section 502. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
clauses (9) and (10) of Section 501 hereof) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the Securities then Outstanding by written notice to the Company and
the Trustee, may declare the unpaid principal of and any accrued interest on all
the Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default specified
in clause (9) or (10) of Section 501 hereof occurs, such an amount shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Holder. The Holders of a majority (or, in
the case of the failure to make a Change of Control Offer pursuant to Section
1014 hereof, two-thirds) in principal amount of Securities then Outstanding by
written notice to the Trustee may
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<PAGE>
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel,
(ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at a rate borne by the Securities,
and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
and
(b) all Events of Default, other than the non-payment of principal of
the Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 504 hereof.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon provided in Section 504 hereof.
Section 503. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy (under this Indenture or otherwise) to collect the
payment of principal, premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.
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
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<PAGE>
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 504. Waiver of Past Defaults.
-----------------------
Holders of a majority (or, in the case of the failure by the Company
to make a Change of Control Offer pursuant to Section 1014 hereof, two-thirds)
in aggregate principal amount of the Securities then Outstanding by notice to
the Trustee may waive an existing Default or Event of Default and its conse
quences, except a continuing Default or Event of Default in the payment of the
principal of or interest on any Security held by a non-consenting Holder. 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 any right consequent thereon.
Section 505. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
Outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
Section 506. Limitation on Suits.
-------------------
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in principal amount of the Securities
then Outstanding make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within sixty (60)
days after receipt of the request and the offer and, if requested, the
provision of the indemnity; and
(5) during such sixty (60) day period the Holders of a majority in
principal amount of the Securities then
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Outstanding do not give the Trustee a direction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 507. Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, but subject to
Article Thirteen the right of any Holder of a Security to receive payment of
principal, premium, if any, and interest on the Security, on or after the
respective due dates expressed in the Security (or, in the case of redemption or
repurchase, on the Redemption Date or repurchase date), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder, subject to Article
Thirteen.
Section 508. Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 501(1) or (2) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any Guarantor
for the whole amount of principal, premium, if any, and interest remaining
unpaid on the Securities and interest on overdue principal and, to the extent
lawful, premium and interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, subject to Article Thirteen.
If the Company or any Guarantor, as the case may be, fails to pay such
amounts forthwith upon such demand, the Trustee, in its own name and as trustee
of an express trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid and may prosecute such proceeding to judgment or
final decree, and may enforce the same against the Company or any Guarantor 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 Guarantor 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 under this Indenture or the Guarantees by such appropriate private or
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce such rights, including, seeking recourse against any Guarantor pursuant
to the terms of any Guarantee, whether for the specific
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enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy, including, without limitation, seeking recourse against any Guarantor
pursuant to the terms of a Guarantee, or to enforce any other proper remedy,
subject however to Section 505 hereof.
Section 509. Trustee May File Proofs of Claim.
--------------------------------
The Trustee is authorized to file such proofs of claim and 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, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company or any
Guarantor or any other obligor upon the Securities, their creditors or their
property and shall be entitled and empowered, subject to Article Thirteen, to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any Custodian in any such judicial proceeding
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 to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 606 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 606 hereof out of the estate in any such proceeding
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders of the Securities may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. 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 510. Priorities.
----------
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 606 hereof, including payment of all compensation, expenses and
liabilities incurred, and all
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advances made, by the Trustee and the costs and expenses of collection;
Second: subject to Article Thirteen, to Holders for amounts due and
unpaid on the Securities for principal, premium, if any, and interest
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, premium, if any,
and interest, respectively;
Third: subject to Article Thirteen, without duplication, to Holders
for any other Indenture Obligations owing to the Holders under this
Indenture or the Securities; and
Fourth: subject to Article Thirteen, to the Company or to such party
as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
Section 511. Undertaking for Costs.
---------------------
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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 507 hereof or a suit by Holders of more than 10% in
principal amount of the Securities then Outstanding or to any suit instituted by
any Holder for the enforcement of the payment of the principal of, premium, if
any, or interest on any Security on or after the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repurchase, on or
after the Redemption Date or repurchase date).
Section 512. Waiver of Stay, Extension or Usury Laws.
----------------------------------------
Each of the Company and any Guarantor covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated
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herein or in the Securities or which may affect the covenants or the performance
of this Indenture; and each of the Company and any Guarantor (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
------------------
Within ninety (90) days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, notice of such Default hereunder known to the
Trustee, unless such Default shall have been cured or waived; provided, however,
-------- -------
that, except in the case of a Default in the payment of the principal of,
premium, if any, or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
Section 602. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of Indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon in accordance
with such advice or Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred
therein or thereby in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than
any liabilities arising out of the gross negligence of the Trustee;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper
or document unless requested in writing to do so by the Holders of not less
than a majority in aggregate principal amount of the Securities then
Outstanding; provided that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such investigation shall be paid by the
Company or, if paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand; provided, further, that the Trustee in
-------- -------
its discretion may make such further inquiry or investigation into such
facts or matters as it may deem fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) 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
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duties hereunder, or in the exercise of any of its rights or powers.
Section 603. Trustee Not Responsible for Recitals, Dispositions of
-----------------------------------------------------
Securities or Application of Proceeds Thereof.
- ---------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility on Form T-1, if any, supplied to the Company
are true and accurate subject to the qualifications set forth therein. The
Trustee shall not be accountable for the use or application by the Company of
Securities or the proceeds thereof.
Section 604. Trustee and Agents May Hold Securities; Collections;
----------------------------------------------------
etc.
- ----
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, with the same rights it would have if it were not the
Trustee, Paying Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310 and 311, may otherwise deal with the Company
and receive, collect, hold and retain collections from the Company with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 605. Money Held in Trust.
-------------------
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Except for funds or securities deposited with the
Trustee pursuant to Article Four, the Trustee may invest all moneys received by
the Trustee, until used or applied as herein provided, in Cash Equivalents in
accordance with the written directions of the Company. The Trustee shall not be
liable for any losses incurred in connection with any investments made in
accordance with Section 605 hereof, unless the Trustee acted with gross
negligence or in bad faith. With respect to any losses on investments made
under this Section 605, the Company is liable for the full extent of any such
loss.
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<PAGE>
Section 606. Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim.
- -----------
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation for all
services rendered by it hereunder, subject to the terms of any written agreement
by the Trustee concerning the amount of its compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and the Company covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability, tax, assessment or
other governmental charge (other than taxes applicable to the Trustee's
compensation hereunder) or expense incurred without gross negligence or bad
faith on such Trustee's part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and such
Trustee's duties hereunder, including enforcement of this Section 606 and also
including any liability which the Trustee may incur as a result of failure to
withhold, pay or report any tax, assessment or other governmental charge, and
the costs and expenses of defending itself against or investigating any claim of
liability in the premises. The obligations of the Company under this Section to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, disbursements
and advances shall constitute an additional obligation hereunder and shall
survive the satisfaction and discharge of this Indenture, or the resignation or
removal of any Trustee.
To secure the Company's payment obligations in this Section 606, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(9) or 501(10) hereof the
expenses and the compensation for the services shall be preferred over the
status of Holders in any proceeding under any Bankruptcy Law and are intended to
constitute expenses of administration under any Bankruptcy Law.
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Section 607. Conflicting Interests.
---------------------
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a)(1) and which
shall have a combined capital and surplus of at least $50,000,000 or which shall
be a wholly owned subsidiary of a corporation that has a combined capital and
surplus of at least $50,000,000, to the extent there is an institution eligible
and willing to serve. If the Trustee does not have an office in The City of
Philadelphia, the Trustee may appoint an agent in The City of Philadelphia
reasonably acceptable to the Company to conduct any activities which the Trustee
may be required under this Indenture to conduct in The City of Philadelphia. If
the Trustee does not have an office in The City of Philadelphia or has not
appointed an agent in The City of Philadelphia, the Trustee shall be a
participant in the Depository Trust Company and FAST distribution systems. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article Six.
Section 609. Resignation and Removal; Appointment of Successor
-------------------------------------------------
Trustee.
- -------
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor trustee under Section 610 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice thereof to the Company. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of
Directors, a copy of which shall be delivered to the resigning Trustee and a
copy to the successor trustee. If an instrument of acceptance by a successor
trustee shall not have been delivered to the Trustee within thirty (30) days
after the giving of such notice of resignation, the resigning Trustee may, or
any Holder who has been a bona fide Holder of a Security for at least
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six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper,
appoint a successor trustee.
(c) The Trustee may be removed at any time by an Act of the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
Trust Indenture Act Section 310(b) after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 608
hereof and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security
for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 511 hereof, the Holder of any Security who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor trustee so
appointed shall, forthwith upon its
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acceptance of such appointment, become the successor trustee and supersede the
successor trustee appointed by the Company. If no successor trustee shall have
been so appointed by the Company or the Holders of the Securities and accepted
appointment in the manner hereinafter provided, the Holder of any Security who
has been a bona fide Holder for at least six months may, subject to Section 511
hereof, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor trustee and the address of its
Corporate Trust Office or agent hereunder.
Section 610. Acceptance of Appointment by Successor.
--------------------------------------
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee as if originally named as Trustee hereunder;
but, nevertheless, on the written request of the Company or the successor
trustee, upon payment of its charges then unpaid, such retiring Trustee shall,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by such Trustee or
such successor trustee to secure any amounts then due such Trustee pursuant to
the provisions of Section 606 hereof.
No successor trustee with respect to the Securities shall accept
appointment as provided in this Section 610 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $50,000,000 or which shall be a
wholly owned subsidiary of a company that has a combined capital and surplus of
at least $50,000,000 and have a Corporate Trust Office or an agent selected in
accordance with Section 608 hereof.
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<PAGE>
Upon acceptance of appointment by any successor trustee as provided in
this Section 610, the Company shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
609 hereof. If the Company fails to give such notice within ten (10) days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be given at the expense of the Company.
Section 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- --------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under Trust Indenture Act Section
310(a) and this Article Six and shall have a combined capital and surplus of at
least $50,000,000 or which shall be a wholly owned subsidiary of a company that
has a combined capital and surplus of at least $50,000,000 and have a Corporate
Trust Office or an agent selected in accordance with Section 608 hereof without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided that the right to adopt
the certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
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Section 612. Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company
(or other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). A Trustee who has resigned or been
removed shall be subject to Trust Indenture Act Section 311(a) to the extent
indicated therein.
Section 613. Certain Duties and Responsibilities.
-----------------------------------
(1) Except during the continuance of an Event of Default,
(a) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(b) 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, but 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
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture but shall not be required to
verify the contents thereof.
(2) In case an Event of Default 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
such person's own affairs.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
-------------------------------------------------
Holders.
- -------
The Company shall furnish or cause to be furnished to the Trustee
(a) semiannually, not more than ten (10) days after each Regular
Record Date, a list, in such form as the
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Trustee may reasonably require, of the names and addresses of the Holders
as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing, within
thirty (30) days after receipt by the Company of any such request, a list
of similar form and content as of a date not more than fifteen (15) days
prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
- -------- -------
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders in
accordance with Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
------------------
Within sixty (60) days after November 1 of each year commencing with
the first November 1 after the Issue Date, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, as
provided in Trust Indenture Act Section 313(c), a brief report dated as of such
November 1 in accordance with and to the extent required by Trust Indenture Act
Section 313(a). The Trustee shall also comply with Trust Indenture Act Section
313(b).
Commencing at the time this Indenture is qualified under the Trust
Indenture Act, a copy of each report at the time of its mailing to Holders shall
be filed with the Commission and each stock exchange on which the Securities are
listed of which the Company has notified the Trustee in writing. The Company
shall notify the Trustee when Securities are listed on any stock exchange.
Section 704. Reports by Company and Guarantors.
---------------------------------
(a) Whether or not the Company is subject to Section 13(a) or 15(d)
of the Exchange Act, the Company shall, to the extent permitted under the
Exchange Act, file with the Commission the annual reports, quarterly reports and
other documents which the Company would have been required to file with
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the Commission pursuant to such Section 13(a) or 15(d) if the Company were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required so to file such documents if the Company were so subject. The
Company shall also in any event (x) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders of Securities, as their names and addresses
appear in the security register, without cost to such Holders and (ii) file with
the Trustee copies of the annual reports, quarterly reports and other documents
which the Company would have been required to file with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act if the Company were subject to
such Sections and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder of Securities at the
Company's cost.
(b) For so long as any of the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company covenants and agrees that it shall, during any
period in which it is not subject to Section 13(a), 13(c) or 15(d) under the
Exchange Act, make available to any Holder of the Securities in connection with
any sale thereof and any prospective purchaser of the Securities from such
Holder, in each case upon request, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act.
(c) The Trustee has no duty to review any financial or other reports
for purposes of determining compliance with this or any other provisions of this
Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801. When the Company May Merge, Etc.
--------------------------------
(a) The Company shall not consolidate with or merge into, or sell,
assign, convey, lease or transfer all or substantially all of its assets and
those of its Subsidiaries taken as a whole to, any Person, unless
(i) the resulting, surviving or transferee Person expressly assumes
all the obligations of the Company under the Securities and this Indenture;
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(ii) such Person shall be organized and existing under the laws of the
United States of America, a state thereof or the District of Columbia;
(iii) at the time of the occurrence of such transaction and after
giving effect to such transaction on a pro forma basis, such Person could
incur $1.00 of additional Indebtedness pursuant to the covenant described
in the initial paragraph under Section 1008 (assuming a market rate of
interest with respect to such additional Indebtedness);
(iv) at the time of the occurrence of such transaction and after
giving effect to such transaction on a pro forma basis, the Consolidated
Net Worth of such Person shall be equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction;
(v) each Guarantor, to the extent applicable, shall by supplemental
indenture confirm that its Guarantee shall apply to such Person's
obligations under the Securities; and
(vi) immediately before and immediately after giving effect to such
transaction and treating any Indebtedness which becomes an obligation of
the Company or any of its Subsidiaries or of such Person as a result of
such transaction as having been incurred by the Company or such Subsidiary
or such Person, as the case may be, at the time of such transaction, no
Default or Event of Default shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, covering clauses (i), (ii), (v) and (vi) above, stating that
the proposed transaction and such supplemental indentures comply with this
Indenture and with Section 903 hereof. The Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and Opinion of Counsel which
opinion shall also comply with Section 903 hereof.
(b) No Guarantor shall, and the Company shall not permit a Guarantor
to, in a single transaction or series of related transactions merge or
consolidate with or into any other corporation (other than the Company or any
other Guarantor) or other entity, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets to
any entity (other than the Company or any other Guarantors) unless at the time
and giving effect thereto:
(i) either (1) such Guarantor shall be the continuing corporation or
(2) the entity (if other than such Guarantor) formed by such consolidation
or into which such Guarantor is
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merged or the entity which acquires by sale, assignment, conveyance,
transfer, lease or disposition the properties and assets of such Guarantor
shall be a corporation duly organized and validly existing under the laws
of the United States of America, any state thereof or the District of
Columbia and expressly assumes by a supplemental indenture, executed and
delivered to the Trustee, in a form reasonably satisfactory to the Trustee,
all the obligations of such Guarantor under the Securities and the
Indenture; and
(ii) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
Such Guarantor shall deliver to the Trustee prior to the consummation
of the proposed transaction, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, conveyance, transfer, lease
or disposition and such supplemental indenture, if required, comply with this
Indenture. The Trustee shall be entitled to conclusively rely upon such
Officers' Certificate and Opinion of Counsel, which opinion shall also comply
with Section 903 hereof.
The provisions of this Section 801(b) shall not apply to any
transaction (including any Asset Sale made in accordance with Section 1009
hereof) with respect to any Guarantor if the Guarantee of such Guarantor is
released in connection with such transaction in accordance with Section 1019(b)
hereof.
Section 802. Successor Substituted.
---------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer or disposition of all or substantially all of the properties and assets
of the Company or any Guarantor in accordance with Section 801 hereof, the
successor Person formed by such consolidation or into which the Company or such
Guarantor, as the case may be, is merged or the successor Person to which such
sale, assignment, conveyance, transfer, lease or disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, under this Indenture, the
Securities and/or such Guarantee, as the case may be, with the same effect as if
such successor had been named as the Company or such Guarantor, as the case may
be, herein, in the Securities and/or in such Guarantee, as the case may be.
When a successor assumes all the obligations of its predecessor under this
Indenture, the Securities or a Guarantee, as the case may be, the predecessor
shall be released from those obligations; provided that in the case of a
transfer by lease, the predecessor
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shall not be released from the payment of principal and interest on the
Securities or a Guarantee, as the case may be.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent
------------------------------------------------------
of Holders.
- ----------
Without the consent of any Holders, the Company and the Guarantors,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto or
agreements or other instruments with respect to any Guarantee, in form and
substance satisfactory to the Trustee, for any of the following purposes:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for the assumption pursuant to Article Eight of the
Company's or a Guarantor's obligations to the Holders in the case of a
merger, consolidation or sale of assets;
(iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(iv) to make any change that does not adversely affect the rights
hereunder or thereunder of any Holder;
(v) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act;
(vi) to add a Guarantor pursuant to the requirements of Section 1019
hereof;
(vii) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder;
(viii) to provide collateral for the Securities or the Guarantees, and
in connection therewith, to modify covenants, to provide additional
indemnity to the Trustee, and to modify other provisions of this Indenture,
the Securities or the Guarantees that relate to such collateral or that
will or may be impacted by the providing of such collateral, and to enter
into agreements, documents or other instruments to effect the foregoing;
(ix) to comply with any requirement of the Commission or applicable
law to effectuate the Exchange Offer; or
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(x) to add to the covenants of the Company, any Guarantor or any
other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power herein conferred upon the Company, any
Guarantor or any other obligor upon the Securities, as applicable, herein,
in the Securities or in any Guarantee.
Section 902. Supplemental Indentures and Agreements with Consent of
------------------------------------------------------
Holders.
- -------
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company, each Guarantor, and the Trustee, the Company, and each
Guarantor (if a party thereto) when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto or
agreements or other instruments with respect to any Guarantee in form and
substance satisfactory to the Trustee for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders under this
Indenture, the Securities or any Guarantee; provided, however, that no such
-------- -------
supplemental indenture, agreement or instrument shall, without the consent of
the Holder of each Outstanding Security affected thereby:
(i) reduce the principal amount of Securities whose Holders must
consent to an amendment or waiver;
(ii) reduce the rate of, or change the time for payment of, interest,
including default interest, on any Security;
(iii) reduce the principal of or change the fixed maturity of any
Security, or alter the optional redemption provisions, or alter the price
at which the Company shall offer to purchase such Securities pursuant to
Sections 1014 or 1109 hereof;
(iv) make any Security payable in money other than that stated in the
Security;
(v) make any change in Sections 504 or 507 hereof;
(vi) waive a Default or Event of Default in the payment of principal
of, premium, if any, or interest on the Securities, including any such
obligation arising under Sections 1009 and 1109 or Section 1014 hereof
(except a rescission of acceleration of the Securities pursuant to Section
502 hereof by the Holders of at least a majority (or in the case of the
failure to make a Change of Control Offer, two-thirds) in aggregate
principal amount of the
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Securities then Outstanding and a waiver of the payment default that
resulted from such acceleration);
(vii) waive a purchase payment required to be made under Section 1009
and 1109 or Section 1014 or a payment under Article Thirteen hereof with
respect to any Security; or
(viii) make any change in the provisions of this Section 902.
Upon the written request of the Company and each Guarantor,
accompanied by a copy of a Board Resolution authorizing the execution of any
such supplemental indenture or Guarantee, and upon the filing with the Trustee
of evidence of the consent of Holders as aforesaid, the Trustee shall, subject
to Section 903 hereof, join with the Company and each Guarantor in the execution
of such supplemental indenture or Guarantee.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture or Guarantee
or agreement or instrument relating to any Guarantee, but it shall be sufficient
if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
---------------------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement or instrument permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Trust Indenture Act Section 315(a)
through 315(d) and Section 602 hereof) shall be fully protected in relying upon,
an Opinion of Counsel and an Officers' Certificate stating that the execution of
such supplemental indenture, agreement or instrument is authorized or permitted
by this Indenture, that no consent is required or that all requisite consents
have been received and that such supplemental indenture constitutes the legal,
valid and binding obligation of the Company, such Guarantor or successor, as the
case may be, enforceable against such entity in accordance with its terms,
subject to customary exceptions. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture, agreement or instrument which
affects the Trustee's own rights, duties or immunities under this Indenture, any
Guarantee or otherwise.
Section 904. Revocation Effect of Supplemental Indentures.
--------------------------------------------
Until a supplemental indenture, amendment or waiver becomes effective,
a consent to it by a Holder of a Security is a
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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 consent is not made on any Security.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may bear a notation in form
satisfactory to the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities so modified as to
conform to any such supplemental indenture may be prepared and executed by the
Company and each Guarantor and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Company shall duly and punctually pay the principal of, premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain (or cause to be maintained) an office or
agency where Securities may be presented or surrendered for payment. The
Company also shall maintain (or cause to be maintained) in The City of
Philadelphia an office or agency where Securities may be surrendered for
registration or transfer, redemption or exchange and where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location and any change in the
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location of any such offices or agencies. If at any time the Company shall fail
to maintain (or cause to be maintained) any such required offices or agencies or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the office of the agent
of the Trustee described above and the Company hereby appoints such agent as its
agent to receive all such presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices
or agencies (in or outside of The City of Philadelphia) where the Securities may
be presented or surrendered for any or all such purposes, and may from time to
time rescind such designation. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.
Section 1003. Compliance Certificate.
----------------------
(i) The Company shall deliver to the Trustee, within one hundred and
twenty (120) days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether each has kept, observed,
performed and fulfilled its Indenture Obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge each has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
or thereof (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action each is taking or proposes to take with respect thereto).
(ii) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered to the Trustee pursuant to Section 704(a) shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
which would lead them to believe that the Company or any of its Subsidiaries has
violated any provisions of Article Eight or Sections 1006, 1008 and 1010 hereof
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or
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indirectly to any Person for any failure to obtain knowledge of any such
violation.
(iii) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default, Event of Default or other event of default and what action the Company
is taking or propose to take with respect thereto.
Section 1004. Taxes.
-----
The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all material taxes, assessments and governmental levies
except as are being contested in good faith and by appropriate proceedings
diligently conducted and in respect of which appropriate reserves (in the good
faith judgment of management of the Company) are being maintained in accordance
with GAAP.
Section 1005. Limitations on Investments.
--------------------------
The Company shall not, and shall not permit any Restricted
Subsidiaries, directly or indirectly, to make any Investment after the Issue
Date, other than (i) Permitted Investments; and (ii) Restricted Investments
permitted pursuant to Section 1006 hereof.
Section 1006. Limitations on Restricted Payments.
----------------------------------
Subject to the other provisions of this Section 1006, the Company
shall not, nor shall it cause, permit or suffer any Restricted Subsidiary to,
(i) declare or pay any dividends or make any other distributions (including
through mergers, liquidations or other transactions) on any class of Equity
Interests of the Company or such Restricted Subsidiary (other than dividends or
distributions payable by a wholly-owned Restricted Subsidiary on account of its
Equity Interests held by the Company or another Restricted Subsidiary or payable
in shares of Capital Stock of the Company other than Redeemable Stock), (ii)
make any payment on account of, or set apart money for a sinking or other
analogous fund for, the purchase, redemption or other retirement of such Equity
Interests, (iii) purchase, defease, redeem or otherwise retire any Indebtedness
issued by the Company or any Restricted Subsidiary that is Subordinated
Indebtedness to the Securities, or (iv) make any Restricted Investment, either
directly or indirectly, whether in cash or property or in obligations of the
Company (all of the foregoing being called "Restricted Payments"), unless (x) in
the case of a dividend, such dividend is payable not more than 60 days after the
date of declaration and (y) after giving effect to such proposed Restricted
Payment, all the conditions set forth in
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clauses (1) through (3) below are satisfied (A) at the date of declaration (in
the case of any dividend), (B) at the date of such setting apart (in the case of
any such fund) or (C) on the date of such other payment or distribution (in the
case of any other Restricted Payment) (each such date being referred to as a
"Computation Date"):
(1) no Default or Event of Default shall have occurred and be
continuing or would result from the making of such Restricted Payment;
(2) at the Computation Date for such Restricted Payment and after
giving effect to such Restricted Payment on a pro forma basis, the Company
or such Restricted Subsidiary could incur $1.00 of additional Indebtedness
pursuant to the covenant described in the initial paragraph under Section
1008 hereof; and
(3) the aggregate amount of Restricted Payments declared, paid or
distributed subsequent to the Issue Date (including the proposed Restricted
Payment) shall not exceed the sum of (i) 50% of the cumulative Consolidated
Net Income of the Company for the period (taken as one accounting period)
commencing on the first day of the first full quarter after the Issue Date
to and including the last day of the Company's last fiscal quarter ending
prior to the Computation Date (each such period to constitute a
"Computation Period") (or, in the event Consolidated Net Income of the
Company during the Computation Period is a deficit, then minus 100% of such
deficit), (ii) the aggregate Net Cash Proceeds of the issuance or sale or
the exercise (other than to a Subsidiary or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries
for the benefit of their employees) of the Company's Equity Interests
(other than Redeemable Stock) subsequent to the Issue Date, and (iii) $3.0
million.
If no Default or Event of Default has occurred and is continuing or
would occur as a result thereof, the prohibitions set forth above are subject to
the following exceptions: (a) Restricted Investments acquired by the Company in
connection with any Asset Sale consummated in accordance with Section 1009,
hereof, to the extent such Investments are permitted under such covenant,
provided, however, that such Restricted Investments shall be excluded in the
- -------- -------
calculation of the amount of Restricted Payments previously made for purposes of
clause (3) of the preceding paragraph; (b) any purchase or redemption of Equity
Interests or Subordinated Indebtedness made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Equity Interests of the
Company (other than Redeemable Stock and other than Equity Interests issued or
sold to a Subsidiary or an employee stock ownership plan), provided, however,
-------- -------
that (x) such
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purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments previously made for purposes of clause (3) of the preceding
paragraph and (y) the Net Cash Proceeds from such sale shall be excluded for
purposes of clause 3(ii) of the preceding paragraph to the extent utilized for
purposes of such purchase or redemption; (c) any purchase or redemption of
Subordinated Indebtedness of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Indebtedness of
the Company or any Restricted Subsidiary which is permitted to be issued
pursuant to the provisions of Section 1008 hereof, provided, however, that such
-------- -------
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments previously made for purposes of clause (3) of the preceding
paragraph; (d) the purchase of Capital Stock held by employees of the Company or
any Subsidiary pursuant to any employee stock ownership plan thereof upon the
termination, retirement or death of any such employee in accordance with the
provisions of any such plan in an amount not greater than $500,000 in any
calendar year, provided, however, that any such purchase shall be included in
-------- -------
the calculation of the amount of Restricted Payments previously made for
purposes of clause (3) of the preceding paragraph; and (e) Investments described
in clause (vi) of the definition of Permitted Investments, provided, however,
-------- -------
that such Investments shall be included in the calculation of the amount of
Restricted Payments previously made for purposes of clause (3) of the preceding
paragraph.
For purposes of this Section 1006, (a) the amount of any Restricted
Payment declared, paid or distributed in property of the Company or any
Restricted Subsidiary shall be deemed to be the net book value of any such
property that is intangible property and the Fair Market Value (as determined in
good faith by and set forth in a resolution of the Board of Directors) of any
such property that is tangible property at the Computation Date, in each case,
after deducting related reserves for depreciation, depletion and amortization;
(b) the amount of any Restricted Payment declared, paid or distributed in
obligations of the Company or any Restricted Subsidiary shall be deemed to be
the principal amount of such obligations as of the date of the adoption of a
resolution by the Board of Directors or such Restricted Subsidiary authorizing
such Restricted Payment; and (c) a distribution to holders of the Company's
Equity Interests of (i) shares of Capital Stock or other Equity Interests of any
Restricted Subsidiary of the Company or (ii) other assets of the Company,
without, in either case, the receipt of equivalent consideration therefor shall
be regarded as the equivalent of a cash dividend equal to the excess of the Fair
Market Value of the Equity Interests or other assets being so distributed at the
time of such distribution over the consideration, if any, received therefor.
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Section 1007. Limitations on Payment Restrictions Affecting
---------------------------------------------
Restricted Subsidiaries.
- -----------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distribution to the Company or its Restricted Subsidiaries on its Equity
Interests, (ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company or any
other Restricted Subsidiary, except (A) consensual encumbrances or restrictions
contained in or created pursuant to the Credit Agreements and Existing
Indebtedness listed on Schedule 1 hereto, (B) consensual encumbrances or
restrictions in the Securities and the Indenture, (C) any restriction, with
respect to a Restricted Subsidiary of the Company that is not a Subsidiary of
the Company on the Issue Date, in existence at the time such entity becomes a
Restricted Subsidiary of the Company and not created as a result of or in
anticipation of such entity becoming a Restricted Subsidiary of the Company;
provided that such encumbrance or restriction is not created in anticipation of
or in connection with such entity becoming a Subsidiary of the Company and is
not applicable to any Person or the properties or assets of any Person other
than a Person that becomes a Subsidiary, (D) any encumbrances or restrictions
pursuant to an agreement effecting a refinancing of Indebtedness referred to in
clauses (A) or (C) of this Section 1007 or contained in any amendment to any
agreement creating such Indebtedness, provided that the encumbrances and
restrictions contained in any such refinancing or amendment are not more
restrictive taken as a whole (as determined in good faith by the chief financial
officer of the Company) than those provided for in such Indebtedness being
refinanced or amended, (E) encumbrances or restrictions contained in any other
Indebtedness permitted to be incurred subsequent to the Issue Date pursuant to
Section 1008, provided that any such encumbrances or restrictions are not more
restrictive taken as a whole (as determined in good faith by the chief financial
officer of the Company) than the most restrictive of those provided for in the
Indebtedness referred to in clauses (A) or (C) of this Section 1007, (F) any
such encumbrance or restriction consisting of customary nonassignment provisions
in leases governing leasehold interests to the extent such provisions restrict
the transfer of the lease, (G) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary in compliance with the Indenture pending the closing of
such sale or disposition, provided that such restrictions apply solely to the
Capital Stock or assets of such Restricted Subsidiary which are
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being sold; or (H) any encumbrance or restriction due to applicable law.
Section 1008. Limitations on Indebtedness.
---------------------------
The Company shall not, and shall not permit its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become liable with respect to or become responsible for the payment
of, contingently or otherwise ("incur"), any Indebtedness (including any
Acquired Indebtedness); provided, however, that the Company, or a Restricted
-------- -------
Subsidiary of the Company, may incur Indebtedness if at the time of such
incurrence and after giving pro forma effect thereto, the Company's Interest
Coverage Ratio for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such Indebtedness is incurred, calculated on a pro forma basis as if such
Indebtedness was incurred on the first day of such four full fiscal quarter
period, would be at least 2.0 to 1.0.
Notwithstanding the foregoing, the limitations of this Section 1008
shall not apply to the incurrence of Permitted Indebtedness.
Section 1009. Limitations on Asset Sales.
--------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale (other than to the Company or another
Restricted Subsidiary) unless (i) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the assets sold or otherwise disposed of, and at least 85% of
the consideration received by the Company or such Restricted Subsidiary from
such Asset Sale is in the form of cash or Cash Equivalents and (ii) the Net
Proceeds received by the Company or such Restricted Subsidiary from such Asset
Sale are applied in accordance with the following paragraphs.
(b) (i) If all or a portion of the Net Proceeds of any Asset Sale
are not required to be applied to repay permanently any Senior Indebtedness
of the Company then outstanding as required by the terms thereof, or the
Company determines not to apply such Net Proceeds to the permanent
prepayment of any Senior Indebtedness outstanding or if no such Senior
Indebtedness is then outstanding, then the Company may within 180 days of
the Asset Sale, invest the Net Proceeds in the Company or one or more
Restricted Subsidiaries. The amount of such Net Proceeds neither used to
permanently repay or prepay Senior Indebtedness nor used or invested as set
forth in this paragraph constitutes "Excess Proceeds."
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<PAGE>
(ii) When the aggregate amount of Excess Proceeds from one or more
Asset Sales equals $5,000,000 or more, the Company shall apply 100% of such
Excess Proceeds within 180 days subsequent to the consummation of the Asset
Sale which resulted in the Excess Proceeds equalling $5,000,000 or more to
the purchase of Securities tendered to the Company for purchase at a price
(the "Asset Sale Purchase Price") equal to 100% of the principal amount
thereof, plus accrued interest, if any, to the date of purchase pursuant to
an offer to purchase made by the Company (an "Asset Sale Offer") with
respect to the Securities. Any Asset Sale Offer may include a pro rata
offer under similar circumstances to purchase other Senior Indebtedness
requiring a similar offer.
(c) Until such time as the Net Proceeds from any Asset Sale are
applied in accordance with this Section 1009, such Net Proceeds shall be
segregated from the other assets of the Company and the Subsidiaries and
invested in cash or Cash Equivalents, except that the Company or any Restricted
Subsidiary may use any Net Proceeds pending the utilization thereof in the
manner (and within the time period) described above, to repay revolving loans
(under the Credit Agreements or otherwise) without a permanent reduction of the
commitment thereunder.
(d) Any Asset Sale Offer shall be made substantially in accordance
with the procedures described under Section 1109 hereof. The Company shall
cause a notice of any Asset Sale Offer to be mailed to the Holders at their
registered addresses not less than 30 days nor more than 60 days before the
purchase date. Such notice shall contain all instructions and materials
necessary to enable Holders to tender their Securities to the Company. Upon
receiving notice of an Asset Sale Offer, Holders may elect to tender their
Securities in whole or in part in integral multiples of $1,000 in exchange for
cash. To the extent that Holders properly tender Securities in an amount
exceeding the Asset Sale Offer, Securities of tendering Holders shall be
repurchased on a pro rata basis (based on amounts tendered).
(e) In the event the Company is required to make an Asset Sale Offer
at a time when the Company is prohibited from making such Offer, the Company
shall, on or prior to the date that the Company is required to make an Asset
Sale Offer, to (i) seek the consent of its lenders to repurchase the Securities
pursuant to such Asset Sale Offer or (ii) refinance the Indebtedness that
prohibits such Asset Sale Offer; provided, however, that the failure to make or
-------- -------
consummate the Asset Sale Offer as provided herein shall constitute an Event of
Default.
(f) The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act, any other tender offer rules
under the Exchange Act
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<PAGE>
and other securities laws or regulations in connection with any offer to
repurchase and the repurchase of the Securities as described above.
(g) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual
restriction (other than restrictions not more restrictive taken as a whole (as
determined in good faith by the chief financial officer of the Company) than
those in effect under Existing Indebtedness, and Indebtedness under the Credit
Agreements) that would materially impair the ability of the Company to comply
with the provisions of this Section 1009.
Section 1010. Limitations on Sale and Leaseback Transactions.
----------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, enter into any Sale and Leaseback Transaction unless at the time of the
occurrence of such transaction and after giving effect to such transaction and
(x) in the case of a Sale and Leaseback Transaction which is a Capitalized Lease
Obligation, giving effect to the Indebtedness in respect thereof, and (y) in the
case of any other Sale and Leaseback Transaction, giving effect to the
Attributable Indebtedness in respect thereof, the Company or such Restricted
Subsidiary could incur $1.00 of additional Indebtedness pursuant to the covenant
described in the initial paragraph under Section 1008 hereof, (ii) at the time
of the occurrence of such transaction, the Company or such Restricted Subsidiary
could incur Indebtedness secured by a Lien on property in a principal amount
equal to or exceeding the Attributable Indebtedness in respect of such Sale and
Leaseback Transaction pursuant to Section 1012 hereof, and (iii) the transfer of
assets in such Sale and Leaseback Transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, Section 1009.
Section 1011. Limitations on Transactions With Affiliates.
-------------------------------------------
(a) The Company and its Restricted Subsidiaries shall not, directly
or indirectly, enter into any transaction or series of related transactions with
or for the benefit of any of their respective Affiliates other than with the
Company or any Restricted Subsidiaries, except on an arm's-length basis and if
(x)(i) in the case of any such transaction in which the aggregate remuneration,
rental value or other consideration (including the value of a loan), together
with the aggregate remuneration, rental value or other consideration (including
the value of a loan) of all such other transactions consummated in the year
during which such transaction is proposed to be consummated,
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<PAGE>
exceeds $500,000, the Company delivers board resolutions to the Trustee
evidencing that the Board of Directors and the Independent Directors that are
disinterested each have (by a majority vote) determined in good faith that such
transaction is in the best interests of the Company and that the aggregate
remuneration, rental value or other consideration (including the value of any
loan) inuring to the benefit of such affiliate from any such transaction is not
greater than that which would be charged to or extended by the Company or its
Subsidiaries, as the case may be, on an arm's-length basis for similar
properties, assets, rights, goods or services by or to a Person not affiliated
with the Company or its Subsidiaries, as the case may be, and (ii) in the case
of any such transaction in which the aggregate remuneration, rental value or
other consideration (including the value of any loan), together with the
aggregate remuneration, rental value or other consideration (including the value
of any loan) of all such other transactions consummated in the year during which
such transactions are proposed to be consummated, exceeds $2.5 million, in
addition to the requirements set forth in clause (x)(i) above, the Company
delivers to the Trustee an opinion evidencing that a nationally recognized
investment banking firm, unaffiliated with the Company and the Affiliate which
is party to such transaction, has determined that the aggregate remuneration,
rental value or other consideration (including the value of a loan) inuring to
the benefit of such Affiliate from any such transaction is not greater than that
which would be charged to or extended by the Company or its Subsidiaries, as the
case may be, on an arm's-length basis for similar properties, assets, rights,
goods or services by or to a Person not affiliated with the Company or its
Subsidiaries, as the case may be, and (y) all such transactions referred to in
clauses x(i) and (ii) of this Section 1011 are entered into in good faith. Any
transaction required to be approved by Independent Directors pursuant to the
preceding paragraph must be approved by at least one such Independent Director.
(b) The provisions of the preceding paragraph do not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the provisions of Section
1006 hereof, (ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors, (iii) loans or advances to employees in the ordinary course
of business consistent with past practices, not to exceed $500,000 aggregate
principal amount outstanding at any time, and (iv) the payment of fees and
compensation to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any of its Subsidiaries, as
determined by the Board of Directors in good faith and as paid or provided
pursuant to agreements or arrangements entered into in the ordinary course of
business.
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<PAGE>
Section 1012. Limitations on Liens.
--------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, create, incur, assume or suffer to exist any Lien upon any of their
respective assets or properties now owned or acquired after the Issue Date, or
any income or profits therefrom, unless the Securities are directly secured
equally and ratably (or prior to in the case of Liens with respect to
Indebtedness subordinated to the Securities or the Guarantees, as the case may
be), excluding, however, from the operation of the foregoing any of the
following:
(a) Liens existing as of the Issue Date or pursuant to an agreement
in existence on the Issue Date, including the Credit Agreements;
(b) Permitted Liens;
(c) Liens on assets or properties of the Company, or on assets or
properties of Restricted Subsidiaries, to secure the payment of all or a
part of the purchase price of assets or property acquired or constructed
after the Issue Date; provided, however, that (i) the aggregate principal
-------- -------
amount of Indebtedness secured by such Liens shall not exceed the original
cost or purchase price of the assets or property so acquired or
constructed, (ii) the Indebtedness secured by such Liens is otherwise
permitted to be incurred hereunder and (iii) such Liens shall not encumber
any other assets or property of the Company or any Restricted Subsidiary
and the Indebtedness secured by the Lien shall not be created more than 90
days after the later of the acquisition, completion of construction,
repair, improvement, addition or commencement of full operation of the
property subject to the Lien;
(d) Liens on the assets or property acquired by the Company or any
Restricted Subsidiary after the Issue Date; provided, however, that (i)
-------- -------
such Liens existed on the date such asset or property was acquired and were
not incurred as a result of or in anticipation of such acquisition and (ii)
such Liens shall not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets so
acquired;
(e) Liens securing Indebtedness which is incurred to refinance
Indebtedness which has been secured by a Lien permitted under the Indenture
and which is permitted to be refinanced under the Indenture; provided,
--------
however, that such Liens shall not extend to or cover any property or
-------
assets of the Company or any Restricted Subsidiary not securing the
Indebtedness so refinanced;
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<PAGE>
(f) Liens on assets or property of the Company or any Restricted
Subsidiary that is subject to a Sale and Leaseback Transaction, provided,
that the aggregate principal amount of Attributable Indebtedness in respect
of all Sale and Leaseback Transactions then outstanding shall not at the
time such a Lien is incurred exceed $5.0 million;
(g) Liens on property or shares of Capital Stock of a Person at the
time such Person becomes a Restricted Subsidiary; provided, however, that
-------- -------
such Liens are not created, incurred or assumed in contemplation of the
acquisition thereof by the Company or a Subsidiary; provided, further, that
-------- -------
such Liens shall not extend to any other property owned by the Company or a
Restricted Subsidiary;
(h) Liens securing Indebtedness of a Restricted Subsidiary owing to
the Company or a wholly-owned Restricted Subsidiary;
(i) Liens on inventory, accounts receivable, general intangibles,
trademarks and licenses and the proceeds thereof of the Company or any
Restricted Subsidiary securing the obligations under clause (d) of the
definition of "Permitted Indebtedness" in Section 101 hereof; and
(j) Liens securing Indebtedness in respect of Hedging Obligations
permitted to be incurred pursuant to the provisions of the definition of
"Permitted Indebtedness" in Section 101 hereof.
Section 1013. Corporate Existence.
-------------------
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence and the corporate or other existence of each of its Subsidiaries, in
accordance with their respective organizational documents (as the same may be
amended from time to time) and (ii) its (and its Subsidiaries) rights (charter
and statutory), licenses and franchises; provided, however, that the Company
-------- -------
shall not be required to preserve any such right, license or franchise, or the
corporate or other existence of any Subsidiary, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries taken as a whole and that the
loss thereof is not adverse in any material respect to the Holders.
Section 1014. Change of Control.
-----------------
(a) In the event of a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Company
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<PAGE>
shall notify the Holders in writing of such occurrence and shall make an
irrevocable offer (the "Change of Control Offer") to purchase on a Business Day
(the "Change of Control Payment Date") not later than 60 days following the
Change of Control Date, all Securities then outstanding at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Payment Date.
(b) Notice of a Change of Control Offer shall be mailed by the
Company to the Holders at their registered addresses not less than 30 days nor
more than 45 days before the Change of Control Payment Date. The Change of
Control Offer shall remain open for at least 20 Business Days and until 5:00
p.m., New York City time, on the Business Day next preceding the Change of
Control Payment Date. Substantially simultaneously with mailing of the notice,
the Company shall cause a copy of such notice to be published in a newspaper of
general circulation in the Borough of Manhattan, The City of New York.
(c) The notice, which governs the terms of the Change of Control
Offer, shall state:
(i) that the Change of Control Offer is being made pursuant to this
Section 1014 and that all Securities (or portions thereof) tendered will be
accepted for payment;
(ii) the Change of Control Purchase Price and the Change of Control
Payment Date;
(iii) that any Securities not surrendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Securities accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that any Holder electing to have a Security purchased (in whole
or in part) pursuant to a Change of Control Offer shall be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent at
the address specified in the notice (or otherwise make effective delivery
of the Security pursuant to book-entry procedures and the related rules of
the applicable Depositary) at least five Business Days before the Change of
Control Payment Date;
(vi) that any Holder shall be entitled to withdraw its election if the
Paying Agent receives, not later than
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<PAGE>
three (3) Business Days prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security the Holder delivered for
purchase, the certificate number of the Security and a statement that such
Holder is withdrawing his or her election to have such Security purchased;
(vii) that Holders whose Securities are purchased only in part shall be
issued Securities representing the unpurchased portion of the Securities
surrendered, which unpurchased portion must be equal to $1,000 principal
amount or an integral multiple thereof;
(viii) the instructions that Holders must follow in order to tender
their Securities; and
(ix) the circumstances and relevant facts regarding such Change of
Control (including but not limited to information with respect to pro forma
financial information after giving effect to such Change of Control, and
information regarding the Persons acquiring control).
(d) On the Change of Control Payment Date, the Company shall:
(i) accept for payment the Securities, or portions thereof,
surrendered and properly tendered and not withdrawn, pursuant to the Change
of Control Offer;
(ii) deposit with the Paying Agent money sufficient to pay the Change
of Control Purchase Price of all the Securities, or portions thereof, so
accepted; and
(iii) deliver to the Trustee the Securities so accepted together with
an Officers' Certificate stating that such Securities have been accepted
for payment by the Company.
The Paying Agent shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Change of Control Purchase Price and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to the unpurchased portion of the Security
surrendered.
(e) Subject to applicable escheat laws, as provided in the
Securities, the Trustee and the Paying Agent shall upon the Company's written
request return to the Company any cash that remains unclaimed, together with
interest or dividends, if any, thereon, held by them for the payment of the
Change of Control Purchase Price; provided, however, that (x) to the extent that
-------- -------
the aggregate amount of cash deposited by the Company pursuant to
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<PAGE>
clause (ii) of paragraph (d) above exceeds the aggregate Change of Control
Purchase Price of the Securities or portions thereof to be purchased, then the
Trustee shall hold such excess for the Company and (y) unless otherwise directed
by the Company in writing, promptly after the Business Day following the Change
of Control Payment Date the Trustee shall return any such excess to the Company
together with interest, if any, thereon.
(f) The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act, any other tender offer rules
under the Exchange Act and other securities laws or regulations in connection
with the offer to repurchase and the repurchase of the Securities as described
above.
(g) In the event a Change of Control occurs at a time when the
Company is prohibited from purchasing Securities, the Company shall, within
thirty (30) days following a Change of Control (i) seek the consent of its
lenders to the purchase of the Securities or (ii) refinance the Indebtedness
that prohibits such purchase; provided, however, that the failure to make or
-------- -------
consummate the Change of Control Offer shall constitute an Event of Default.
(h) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any restriction
(other than restrictions not more restrictive taken as a whole (as determined in
good faith by the chief financial officer of the Company) than those in effect
under Existing Indebtedness and Indebtedness under the Credit Agreements) that
would materially impair the ability of the Company to make a Change of Control
Offer to purchase the Securities or, if such Change of Control Offer is made, to
pay for the Securities tendered for purchase.
Section 1015. Maintenance of Properties.
-------------------------
The Company shall, and shall cause its Restricted Subsidiaries to,
maintain their respective properties and assets in normal working order and
condition as on the Issue Date (reasonable wear and tear excepted) and make all
repairs, renewals, replacements, additions, betterments and improvements
thereto, as shall be reasonably necessary for the proper conduct of the business
of the Company and its Restricted Subsidiaries taken as a whole, provided that
nothing herein shall prevent the Company or any of its Restricted Subsidiaries
from discontinuing any maintenance of any such properties if such discontinuance
is desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole.
- 101 -
<PAGE>
Section 1016. Maintenance of Insurance.
------------------------
The Company shall, and shall cause its Restricted Subsidiaries to
maintain liability, casualty and other insurance (subject to customary
deductibles and retentions) with responsible insurance companies in such amounts
and against such risks as is customarily carried by responsible companies
engaged in similar businesses and owning similar assets in the general areas in
which the Company and its Restricted Subsidiaries operate (which may include
self-insurance in comparable form to that maintained by such responsible
companies).
Section 1017. [Intentionally omitted].
Section 1018. Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Company shall at any time act as its own Paying Agent, it
shall, on or before each due date of the principal of, premium, if any, or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Holders entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and shall promptly notify
the Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company shall,
before 10:00 a.m. New York City time on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with a Paying Agent a
sum in same-day funds sufficient to pay the principal, premium, if any, or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company shall promptly notify the Trustee of such
action or any failure so to act.
If the Company is not acting as Paying Agent, the Company shall cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent shall:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the
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<PAGE>
Securities) in the making of any payment of principal, premium, if any, or
interest;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and
disabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, 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 thirty
(30) days from the date of such notification or publication, any unclaimed
balance of such money then remaining shall promptly be repaid to the Company.
Section 1019. Subsidiary Guarantees.
---------------------
(a) If (i) any Subsidiary of the Company becomes a Restricted
Subsidiary after the Issue Date, (ii) the Company or any Subsidiary of the
Company that is a Guarantor transfers or causes to be transferred, in one
transaction or a series of related transactions, property or assets (including,
without limitation, businesses, divisions, real property, assets or equipment)
which in the aggregate have a value equal to or
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<PAGE>
greater than 15% of the Company's total assets determined on a consolidated
basis as of the time of transfer to any Subsidiary or Subsidiaries of the
Company that is not a Guarantor or are not Guarantors, or (iii) any Subsidiary
of the Company which has a value equal to or greater than 5% of the Company's
total assets determined on a consolidated basis as of the time of determination
directly or indirectly guarantees or otherwise becomes obligated with respect to
any Senior Indebtedness of the Company, the Company shall cause such Subsidiary
or Subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Subsidiary or Subsidiaries shall unconditionally
guarantee, in accordance with Article Thirteen hereof, all of the Company's
obligations under the Indenture and the Securities on the same terms as the
other Guarantors, which Guarantee shall rank pari passu with any Senior
Indebtedness of such Subsidiary. The provisions of clauses (ii) and (iii) of
this paragraph shall not apply to any transaction permitted by Section 1009.
(b) Each guarantee created pursuant to the provisions described in
the foregoing paragraph is referred to as a "Guarantee" and the issuer of each
such Guarantee is referred to as a "Guarantor." Notwithstanding the foregoing,
any Guarantee shall be automatically and unconditionally released and discharged
upon any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Equity Interest in (or if such Subsidiary is
owned by a Restricted Subsidiary, of all of such Restricted Subsidiary's Equity
Interest in), or all or substantially all the assets of, such Subsidiary, which
is in compliance with this Indenture.
Section 1020. Limitation on Issuances and Sales of Capital Stock of
-----------------------------------------------------
Restricted Subsidiaries.
- -----------------------
The Company (i) shall not, and shall not permit any Restricted
Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Restricted Subsidiary to any Person other than the Company or a
wholly-owned Restricted Subsidiary), unless (a) such transfer, conveyance, sale,
lease or other disposition is of all the Capital Stock of such Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant in
Section 1009 hereof, and (ii) shall not permit any Restricted Subsidiary to
issue any of its Capital Stock (other than directors' qualifying shares) to any
Person other than to the Company or a wholly-owned Restricted Subsidiary.
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<PAGE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
--------------------
The Securities shall not be redeemable at the option of the Company
prior to December 1, 2000. On or after that date, the Securities shall be
redeemable at the option of the Company, in whole or in part from time to time,
on not less than thirty (30) nor more than sixty (60) days' prior notice, mailed
by first-class mail to the Holders' registered addresses, in cash, at the
following redemption prices (expressed as percentages of the principal amount),
if redeemed in the 12-month period commencing December 1 in the year indicated
below, in each case plus accrued and unpaid interest to the date fixed for
redemption:
<TABLE>
<CAPTION>
Year Redemption
---- ----------
<S> <C>
2000 105.0000%
2001 102.5000%
2002 and thereafter 100.0000%
</TABLE>
The Securities will not be subject to, or entitled to the benefits of,
any sinking fund.
Notwithstanding the foregoing, at any time prior to December 1, 1999,
the Company, at its option, may redeem up to $25,000,000 aggregate principal
amount of the Securities from the net proceeds of one or more Public Equity
Offerings by the Company, at a redemption price of 110% of the principal amount
thereof, plus accrued interest to the date fixed for redemption; provided that
at least $75,000,000 in aggregate principal amount of the Securities must remain
outstanding after such redemption. In order to effect the foregoing redemption,
the Company shall be required to send the redemption notice not later than sixty
(60) days after the receipt of the proceeds of such public offering.
Securities may be redeemed or repurchased as set forth in Sections
1009, 1014 and 1109 hereof. Any redemption pursuant to this Section 1101 shall
be made pursuant to the provisions of Sections 1102 through 1108 hereof.
Section 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
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<PAGE>
Section 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 1101 hereof shall be evidenced by a Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than thirty (30) nor more than sixty (60) days prior to
the Redemption Date fixed by the Company (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee in writing of such
Redemption Date, the Redemption Price and of the principal amount of Securities
to be redeemed.
Section 1104. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities or portions hereof to be redeemed shall be selected not more than
thirty (30) days prior to the Redemption Date by the Trustee, from the
Outstanding Securities not previously called for redemption, pro rata, by lot or
such other method as the Trustee shall deem fair and appropriate, and the
amounts to be redeemed may be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to
the Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification of the particular Securities to be redeemed;
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(d) in the case of a Security to be redeemed in part, the principal
amount of such Security to be redeemed and that after the Redemption Date
upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof, and that (unless
the Company shall default in payment of the Redemption Price) interest
thereon shall cease to accrue on and after said date;
(g) the place or places where such Securities are to be surrendered
for payment of the Redemption Price;
(h) the paragraph of the Securities and/or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed;
and
(i) the CUSIP number, if any, relating to such Securities.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to mail such notice, or any defect in any
notice so mailed, to any particular Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
Section 1106. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 a.m. New York City time on any Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent (or if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1018 hereof) an amount of money in same-day funds sufficient
to pay the Redemption Price of and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on that date. When the Redemption Date falls
on an Interest Payment Date, payments of interest due on such date are
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to be paid as provided hereunder as if no such redemption were occurring.
Section 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price together with accrued interest to
the Redemption Date; provided, however, that installments of interest whose
-------- -------
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such on the relevant Regular Record Dates according to the terms and the
provisions of Section 309 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.
Section 1108. Securities Redeemed or Purchased in Part.
----------------------------------------
Any Security which is to be redeemed or purchased only in part shall
be surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 1002 hereof (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in exchange
for, the unredeemed portion of the principal of the Security so surrendered that
is not redeemed or purchased.
Section 1109. Asset Sale Offers.
-----------------
In the event that the Company shall commence an Asset Sale Offer
pursuant to Section 1009 hereof, it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for twenty (20) Business Days
after the date on which such Asset Sale Offer is
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commenced (the "Commencement Date") except to the extent required to be extended
pursuant to applicable law (as so extended, the "Asset Sale Offer Period"). No
later than one Business Day after the termination of the Asset Sale Offer Period
(the "Asset Sale Purchase Date"), the Company shall purchase the principal
amount (the "Asset Sale Offer Amount") of Securities required pursuant to
Section 1009 hereof to be purchased in such Asset Sale Offer or, if less than
the Asset Sale Offer Amount has been tendered, all Securities tendered in
response to the Asset Sale Offer.
If the Asset Sale Purchase Date is on or after a Regular Record Date
and on or before the related Interest Payment Date, any accrued interest shall
be paid to the Person in whose name a Security is registered at the close of
business on such Regular Record Date, and no additional interest shall be
payable to Holders who tender Securities pursuant to the Asset Sale Offer.
On any Commencement Date, the Company shall send or cause to be sent,
by first class mail, a notice to each of the Holders, with a copy to the
Trustee. Such notice, which shall govern the terms of the Asset Sale Offer,
shall contain all instructions and materials necessary to enable the Holders to
tender Securities pursuant to the Asset Sale Offer and shall state:
(1) that the Asset Sale Offer is being made pursuant to Section 1009
hereof and this Section 1109 and the length of time the Asset Sale Offer
shall remain open;
(2) the Asset Sale Offer Amount, the Asset Sale Purchase Price and
the Asset Sale Purchase Date;
(3) that any Security not tendered or accepted for payment shall
continue to accrue interest in accordance with this Indenture;
(4) that, unless the Company defaults in the payment of the Asset
Sale Purchase Price, all Securities accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest after the Asset Sale
Purchase Date;
(5) that Holders electing to have Securities purchased pursuant to
any Asset Sale Offer shall be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Asset Sale Purchase
Date;
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(6) that Holders shall be entitled to withdraw their election if the
Company, Depositary or Paying Agent, as the case may be, receives not later
than the close of business on the Business Day preceding the termination of
the Asset Sale Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security the Holder delivered for purchase, the certificate number on the
Security and a statement that such Holder is withdrawing his election to
have the Security purchased;
(7) that, if the aggregate principal amount of Securities surrendered
by Holders exceeds the Asset Sale Offer Amount, the Company shall select
the Securities to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only Securities in
denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(8) that Holders whose Securities are purchased only in part shall be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered, which unpurchased portion must be equal to
$1,000 principal amount or an integral multiples thereof.
On or before 10:00 a.m. New York City time on each Asset Sale Purchase
Date, the Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate Asset Sale Purchase Price with respect
to a principal amount of Securities equal to the Asset Sale Offer Amount,
together with accrued interest thereon, to be held for payment in accordance
with the terms of this Section 1109. On the Asset Sale Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, an aggregate principal amount equal to the Asset Sale
Offer Amount of Securities tendered pursuant to the Asset Sale Offer, or if less
than the Asset Sale Offer Amount has been tendered, all Securities or portions
thereof tendered, (ii) deliver, or cause the Paying Agent or depositary, as the
case may be, to deliver to the Trustee Securities so accepted and (iii) deliver
to the Trustee an Officers' Certificate stating that such Securities or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 1109. The Company, a depositary or Paying Agent, as the case may
be, shall promptly (but in any case not later than two (2) Business Days after
the Asset Sale Purchase Date) mail or deliver to each tendering Holder an amount
equal to the Asset Sale Purchase Price with respect to the Securities tendered
by such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Security, and the Trustee shall authenticate and mail or
deliver such new Security, to such Holder, equal in principal amount to any
unpurchased portion of
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such Holder's Securities surrendered. Any Security not accepted in the Asset
Sale Offer shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce in a newspaper of general
circulation the results of the Asset Sale Offer on the Asset Sale Purchase Date.
The Asset Sale Offer shall be made by the Company in compliance with
all applicable laws, including, without limitation, the requirements of Rule
14e-1 under the Exchange Act, any other tender offer rules under the Exchange
Act and all other applicable federal and state securities laws.
Subject to applicable escheat laws, as provided in the Securities, the
Trustee and the Paying Agent shall return to the Company any cash that remains
unclaimed, together with interest, if any, thereon, held by them for the payment
of the Asset Sale Purchase Price; provided, however, that (x) to the extent that
-------- -------
the aggregate amount of an Asset Sale Offer exceeds the aggregate Asset Sale
Purchase Price of the Securities or portions thereof to be purchased, the
Trustee shall hold such excess for the Company and (y) unless otherwise directed
by the Company in writing, promptly after the Business Day following the Asset
Sale Purchase Date the Trustee shall return any such excess to the Company
together with interest or dividends, if any, thereon.
Other than as specifically provided in this Section 1109, each
purchase pursuant to this Section 1109 shall be made pursuant to the provisions
of Sections 1101 through 1108 hereof.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for) and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(1) all the Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 308 hereof
or (ii) all Securities for whose payment United States dollars have
theretofore been deposited in trust or segregated and held in trust by
the Company and
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thereafter repaid to the Company or discharged from such trust, as
provided in Section 1018 hereof) have been delivered to the Trustee
for cancellation; or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation (x) have become due and payable, (y) shall become due
and payable at their Stated Maturity within one year, or (z) are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company, and the Company or
any Guarantor, in the case of (2)(x), (y) or (z) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount in United States
dollars sufficient to pay and discharge the entire Indebtedness on the
Securities not theretofore delivered to the Trustee for cancellation,
for the principal of, premium, if any, and accrued interest at such
Stated Maturity or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company or any Guarantor; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel stating that (i) all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and discharge 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 or any Guarantor is a party or by which the Company or any
Guarantor is bound.
Opinions of Counsel required to be delivered under this Section may
have qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 hereof and, if
United States dollars shall have been deposited with the Trustee pursuant to
subclause (2) of Subsection (a) of this Section, the obligations of the Trustee
under Section 1202 and the last paragraph of Section 1018 hereof shall survive.
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Section 1202. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1018
hereof, all United States dollars deposited with the Trustee pursuant to Section
1201 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal of, premium, if any, and interest on the Securities for whose payment
such United States dollars have been deposited with the Trustee.
ARTICLE THIRTEEN
GUARANTEE
Section 1301. Guarantors' Guarantee.
---------------------
For value received, each of the Guarantors, in accordance with this
Article Thirteen, hereby absolutely, unconditionally and irrevocably guarantees,
jointly and severally, to the Trustee and the Holders, as if the Guarantors were
the principal debtor, the punctual payment and performance when due of all
Indenture Obligations (which for purposes of this Guarantee shall also be deemed
to include all commissions, fees, charges, costs and other expenses (including
reasonable legal fees and disbursements of one counsel) arising out of or
incurred by the Trustee or the Holders in connection with the enforcement of
this Guarantee).
Section 1302. Continuing Guarantee; No Right of Set-Off; Independent
------------------------------------------------------
Obligation.
- ----------
(a) This Guarantee shall be a continuing guarantee of the payment and
performance for all Indenture Obligations and shall remain in full force and
effect until the payment in full of all of the Indenture Obligations and shall
apply to and secure any ultimate balance due or remaining unpaid to the Trustee
or the Holders; and this Guarantee shall not be considered as wholly or
partially satisfied by the payment or liquidation at any time or from time to
time of any sum of money for the time being due or remaining unpaid to the
Trustee or the Holders. Each Guarantor, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in this Indenture including those set forth in Article Eight.
Without limiting the generality of the foregoing, each of the Guarantors'
liability shall extend to all amounts which constitute part of the Indenture
Obligations and would be owed by the Company under this Indenture and the
Securities but for the fact that they are unenforceable, reduced, limited,
impaired, suspended or not allowable due to the existence of a
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bankruptcy, reorganization or similar proceeding involving the Company.
(b) Each Guarantor, jointly and severally, hereby guarantees that the
Indenture Obligations shall be paid to the Trustee without set-off or
counterclaim or other reduction whatsoever (whether for taxes, withholding or
otherwise) in lawful currency of the United States of America.
(c) Each Guarantor, jointly and severally, guarantees that the
Indenture Obligations shall be paid strictly in accordance with their terms
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Holders of the
Securities.
(d) Each Guarantor's liability to pay or perform or cause the
performance of the Indenture Obligations under this Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to the Guarantors in the manner prescribed in Section 106 hereof.
(e) Except as provided herein, the provisions of this Article Thirteen
cover all agreements between the parties hereto relative to this Guarantee and
none of the parties shall be bound by any representation, warranty or promise
made by any Person relative thereto which is not embodied herein; and it is
specifically acknowledged and agreed that this Guarantee has been delivered by
each Guarantor free of any conditions whatsoever and that no representations,
warranties or promises have been made to any Guarantor affecting its liabilities
hereunder, and that the Trustee shall not be bound by any representations,
warranties or promises now or at any time hereafter made by the Company to any
Guarantor.
Section 1303. Guarantee Absolute.
------------------
The obligations of the Guarantors hereunder are independent of the
obligations of the Company under the Securities and this Indenture and a
separate action or actions may be brought and prosecuted against any Guarantor
whether or not an action or proceeding is brought against the Company and
whether or not the Company is joined in any such action or proceeding. The
liability of the Guarantors hereunder is irrevocable, absolute and unconditional
and (to the extent permitted by law) the liability and obligations of the
Guarantors hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:
(a) any defect or lack of validity or enforceability in respect of
any Indebtedness or other obligation of the Company or any other Person
under this Indenture or the
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Securities, or any agreement or instrument relating to any of the
foregoing;
(b) any grants of time, renewals, extensions, indulgences, releases,
discharges or modifications which the Trustee or the Holders may extend to,
or make with, the Company, any Guarantor or any other Person, or any change
in the time, manner or place of payment of, or in any other term of, all or
any of the Indenture Obligations, or any other amendment or waiver of, or
any consent to or departure from, this Indenture or the Securities;
(c) the taking of security from the Company, any Guarantor or any
other Person, and the release, discharge or alteration of, or other dealing
with, such security;
(d) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of
the Indenture Obligations and the obligations of any Guarantor hereunder;
(e) the abstention from taking security from the Company, any
Guarantor or any other Person or from perfecting, continuing to keep
perfected or taking advantage of any security;
(f) any loss, diminution of value or lack of enforceability of any
security received from the Company, any Guarantor or any other Person, and
including any other guarantees received by the Trustee;
(g) any other dealings with the Company, any Guarantor or any other
Person, or with any security;
(h) the Trustee's or the Holder's acceptance of compositions from the
Company or any Guarantor;
(i) the application by the Holders or the Trustee of all monies at
any time and from time to time received from the Company, any Guarantor or
any other Person on account of any indebtedness and liabilities owing by
the Company or any Guarantor to the Trustee or the Holders, in such manner
as the Trustee or the Holders deems best and the changing of such
application in whole or in part and at any time or from time to time, or
any manner of application of collateral, or proceeds thereof, to all or any
of the Indenture Obligations;
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(j) the release or discharge of the Company or any Guarantor of the
Securities or of any Person liable directly as surety or otherwise by
operation of law or otherwise for the Securities, other than an express
release in writing given by the Trustee, on behalf of the Holders, of the
liability and obligations of any Guarantor hereunder;
(k) any change in the name, business, capital structure or governing
instrument of the Company or any Guarantor or any refinancing or
restructuring of any of the Indenture Obligations;
(l) the sale of the Company's or any Guarantor's business or any
part thereof;
(m) subject to Section 1314 hereof, any merger or consolidation,
arrangement or reorganization of the Company, any Guarantor, any Person
resulting from the merger or consolidation of the Company or any Guarantor
with any other Person or any other successor to such Person or merged or
consolidated Person or any other change in the corporate or other
existence, structure or ownership of the Company or any Guarantor;
(n) the insolvency, bankruptcy, liquidation, winding-up, dissolution,
receivership or distribution of the assets of the Company or its assets or
any resulting discharge of any obligations of the Company (whether
voluntary or involuntary) or of any Guarantor or the loss of corporate or
other existence;
(o) subject to Section 1314 hereof, any arrangement or plan of
reorganization affecting the Company or any Guarantor;
(p) any other circumstance (including any statute of limitations)
that might otherwise constitute a defense available to, or discharge of,
the Company or any Guarantor; or
(q) any modification, compromise, settlement or release by the
Trustee, or by operation of law or otherwise, of the Indenture Obligations
or the liability of the Company or any other obligor under the Securities,
in whole or in part, and any refusal of payment by the Trustee, in whole or
in part, from any other obligor or other guarantor in connection with any
of the Indenture Obligations, whether or not with notice to, or further
assent by, or any reservation of rights against, each of the Guarantors.
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Section 1304. Right to Demand Full Performance.
--------------------------------
In the event of any demand for payment or performance by the Trustee
from any Guarantor hereunder, the Trustee or the Holders shall have the right to
demand its full claim and to receive all payments in respect thereof until the
Indenture Obligations have been paid in full, and the Guarantors shall continue
to be jointly and severally liable hereunder for any balance which may be owing
to the Trustee or the Holders by the Company under this Indenture and the
Securities. The retention by the Trustee or the Holders of any security, prior
to the realization by the Trustee or the Holders of its rights to such security
upon foreclosure thereon, shall not, as between the Trustee and any Guarantor,
unless otherwise agreed in writing by the Trustee, be considered as a purchase
of such security, or as payment, satisfaction or reduction of the Indenture
Obligations due to the Trustee or the Holders by the Company or any part
thereof.
Section 1305. Waivers.
-------
(a) Each Guarantor hereby expressly waives (to the extent permitted by
law) notice of the acceptance of this Guarantee and notice of the existence,
renewal, extension or the non-performance, non-payment, or non-observance on the
part of the Company of any of the terms, covenants, conditions and provisions of
this Indenture or the Securities or any other notice whatsoever to or upon the
Company or such Guarantor with respect to the Indenture Obligations. Each
Guarantor hereby acknowledges communication to it of the terms of this Indenture
and the Securities and all of the provisions therein contained and consents to
and approves the same. Each Guarantor hereby expressly waives (to the extent
permitted by law) diligence, presentment, protest and demand for payment.
(b) Without prejudice to any of the rights or recourses which the
Trustee or the Holders may have against the Company, each Guarantor hereby
expressly waives (to the extent permitted by law) any right to require the
Trustee or the Holders to:
(i) initiate or exhaust any rights, remedies or recourse against the
Company, any Guarantor or any other Person;
(ii) value, realize upon, or dispose of any security of the Company or
any other Person held by the Trustee or the Holders; or
(iii) initiate or exhaust any other remedy which the Trustee or the
Holders may have in law or equity;
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before requiring or becoming entitled to demand payment from such Guarantor
under this Guarantee.
Section 1306. The Guarantors Remain Obligated in Event the Company Is
-------------------------------------------------------
No Longer Obligated to Discharge Indenture Obligations.
- ------------------------------------------------------
It is the express intention of the Trustee and the Guarantors that if
for any reason the Company has no legal existence, is or becomes under no legal
obligation to discharge the Indenture Obligations owing to the Trustee or the
Holders by the Company or if any of the Indenture Obligations owing by the
Company to the Trustee or the Holders become irrecoverable from the Company by
operation of law or for any reason whatsoever, this Guarantee and the covenants,
agreements and obligations of the Guarantors contained in this Article Thirteen
shall nevertheless be binding upon the Guarantors, as principal debtor, until
such time as all such Indenture Obligations have been paid in full to the
Trustee and all Indenture Obligations owing to the Trustee or the Holders by the
Company have been discharged, or such earlier time as Section 402 hereof shall
apply to the Securities and the Guarantors shall be responsible for the payment
thereof to the Trustee or the Holders upon demand.
Section 1307. Fraudulent Conveyance; Subrogation.
----------------------------------
(a) Any term or provision of this Guarantee to the contrary
notwithstanding, the aggregate amount of the Indenture Obligations guaranteed
hereunder shall be reduced to the extent necessary to prevent this Guarantee
from violating or becoming voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally, including without limitation, Section 123.66 of the Quebec
Companies Act.
(b) Each Guarantor hereby waives until repayment in full of the
Indenture Obligations and except as provided in Section 1309, all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under federal bankruptcy
law) or otherwise by reason of any payment by it pursuant to the provisions of
this Article Thirteen.
Section 1308. Guarantee Is in Addition to Other Security.
------------------------------------------
This Guarantee shall be in addition to and not in substitution for any
other guarantees or other security which the Trustee may now or hereafter hold
in respect of the Indenture Obligations owing to the Trustee or the Holders by
the Company and (except as may be required by law) the Trustee shall be under no
obligation to marshal in favor of each of the Guarantors any
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other guarantees or other security or any moneys or other assets which the
Trustee may be entitled to receive or upon which the Trustee or the Holders may
have a claim.
Section 1309. Contribution.
------------
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
----- --
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the "Adjusted Net Assets" (as
--- ----
defined below) of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's obligations with respect to the Securities or any other
Guarantor's obligation with respect to its Guarantee. "Adjusted Net Assets"
means, with respect to any Guarantor, at any date, the lesser of the amount by
which (x) the fair value of the property of such Guarantor exceeds the total
amount of liabilities, including, without limitation, contingent liabilities
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date), but excluding liabilities under the Guarantee, of such
Guarantor at such date and (y) the present fair salable value of assets of such
Guarantor at such date exceeds the amount that shall be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date),
excluding debt in respect of its Guarantee, as they become absolute and matured.
Section 1310. No Bar to Further Actions.
-------------------------
Except as provided by law, no action or proceeding brought or
instituted under Article Thirteen and this Guarantee and no recovery or judgment
in pursuance thereof shall be a bar or defense to any further action or
proceeding which may be brought under Article Thirteen and this Guarantee by
reason of any further default or defaults under Article Thirteen and this
Guarantee or in the payment of any of the Indenture Obligations owing by the
Company.
Section 1311. Failure to Exercise Rights Shall Not Operate as a
-------------------------------------------------
Waiver.
- ------
No failure to exercise and no delay in exercising, on the part of the
Trustee or the Holders, any right, power, privilege or remedy under this Article
Thirteen and this Guarantee shall operate as a waiver thereof, nor shall any
single or partial exercise of any rights, power, privilege or remedy preclude
any other or further exercise thereof, or the exercise of any other rights,
powers, privileges or remedies. The rights
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and remedies herein provided for are cumulative and not exclusive of any rights
or remedies provided in law or equity.
Section 1312. Trustee's Duties; Notice to Trustee.
-----------------------------------
(a) Any provision in this Article Thirteen or elsewhere in this
Indenture allowing the Trustee to request any information or to take any action
authorized by, or on behalf of any Guarantor, shall be subject to Section 602(d)
and shall be permissive and shall not be obligatory on the Trustee except as the
Holders may direct in accordance with the provisions of this Indenture or where
the failure of the Trustee to request any such information or to take any such
action arises from the Trustee's gross negligence, bad faith or willful
misconduct.
(b) The Trustee shall not be required to inquire into the existence,
powers or capacities of the Company, any Subsidiary Guarantor or the officers,
directors or agents acting or purporting to act on their respective behalf.
Section 1313. Successors and Assigns.
----------------------
All terms, agreements and conditions of this Article Thirteen shall
extend to and be binding upon each Guarantor and its successors and permitted
assigns and shall enure to the benefit of and may be enforced by the Trustee and
its successors and assigns; provided, however, that the Guarantors may not
-------- -------
assign any of their rights or obligations hereunder other than in accordance
with Article Eight.
Section 1314. Release of Guarantee.
--------------------
Concurrently with the payment in full of all of the Indenture
Obligations, the Guarantors shall be released from and relieved of their
obligations under this Article Thirteen. Upon the delivery by the Company to
the Trustee of an Officers' Certificate and, if requested by the Trustee, an
Opinion of Counsel to the effect that the transaction giving rise to the release
of this Guarantee was made by the Company in accordance with the provisions of
this Indenture and the Securities, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantors from
their obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guarantors under this Guarantee shall be revived and
reinstated as if this Guarantee had not been terminated until such time as the
Indenture Obligations are paid in full, and each Guarantor shall enter into an
amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing
such revival and reinstatement.
- 120 -
<PAGE>
This Guarantee shall terminate with respect to each Guarantor and
shall be automatically and unconditionally released and discharged as provided
in Section 1019(b) hereof.
Section 1315. Execution of Guarantee.
----------------------
To evidence the Guarantee, each Guarantor hereby agrees to execute the
guarantee substantially in the form set forth in Section 206 hereof, to be
endorsed on each Security authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of each Guarantor by its Chairman of
the Board, its President, or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
If an officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Security on which a
Guarantee is endorsed, such Guarantee shall be valid nevertheless.
Section 1316. Payment Permitted by Each of the Subsidiary Guarantors
------------------------------------------------------
if No Default.
- -------------
Nothing contained in this Article, elsewhere in this Indenture or in
any of the Securities shall affect the obligation of any Guarantor to make, or
prevent any Guarantor from making at any time, payments pursuant to the
Securities.
Section 1317. Notice to Trustee by Each of the Guarantors. Each
-------------------------------------------
Guarantor shall give prompt written notice to the Trustee of any fact known to
such Guarantor which would prohibit the making of any payment to or by the
Trustee in respect of the Guarantee. Notwithstanding the provisions of this
Article or any provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to or by the Trustee in respect of the Securities, unless and until
the Trustee shall have received written notice thereof from any Guarantor or any
trustee, fiduciary or agent therefor; and, prior to the receipt of any such
written notice, the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
-------- -------
the notice provided for in this Section at least three (3) Business Days prior
to the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security or any other Indenture
Obligations), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by
- 121 -
<PAGE>
it after such date; nor shall the Trustee be charged with knowledge of the
curing of any such default or the elimination of the act or condition preventing
any such payment unless and until the Trustee shall have received an Officers'
Certificate to such effect.
Section 1318. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting under this Indenture, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
--------
however, that this Section 1318 shall not apply to the Company or any Affiliate
- -------
of the Company if it or such Affiliate acts as Paying Agent.
Section 1319. No Suspension of Remedies.
-------------------------
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Securities to take any action to accelerate the maturity of
the Securities pursuant to the provisions described under Article Five and as
set forth in this Indenture or to pursue any rights or remedies hereunder or
under applicable law.
- 122 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
RADNOR HOLDINGS CORPORATION
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
WINCUP HOLDINGS, INC.
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
WINCUP HOLDINGS, L.P.
By: Wincup Holdings, Inc.
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
SP ACQUISITION CO.
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
STYROCHEM INTERNATIONAL, INC.
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
STYROCHEM INTERNATIONAL, LTD.
Attest /s/ Michael V. Valenza By Michael T. Kennedy
------------------------- ----------------------------
Name: Michael V. Valenza Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
- 123 -
<PAGE>
FIRST UNION NATIONAL BANK,
as Trustee
Attest /s/ Terence C. McPoyle By /s/ Alan G. Finn
------------------------- ----------------------------
Name: Terence C. McPoyle Name: Alan G. Finn
Title: Assistant Vice Title: Assistant Vice
President President
- 124 -
<PAGE>
SCHEDULE 1
----------
EXISTING INDEBTEDNESS
<PAGE>
EXHIBIT A
---------
TRANSFEREE LETTER OF REPRESENTATION
ALEX. BROWN & SONS INCORPORATED
NATWEST CAPITAL MARKETS LIMITED
as Initial Purchasers in connection
with the offering referred to below
Radnor Holdings Corporation
c/o Alex. Brown & Sons Incorporated
Attn: High Yield Department
1290 Avenue of the Americas
10th Floor
New York, NY 10107
Dear Ladies and Gentlemen:
In connection with our proposed purchase of $________ aggregate
principal amount of 10% Senior Notes due 2003 (the "Notes") of Radnor Holdings
-----
Corporation, a Delaware corporation (the "Company"), we confirm that:
-------
1. We understand that the Notes and the Guarantees thereon (together,
the "Securities") have not been registered under the Securities Act of
----------
1933, as amended (the "Securities Act") or under the securities laws of any
--------------
state and, unless so registered, may not be sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is three years
after the later of the date of original issue and the last date on which
the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the "Resale Restriction
------------------
Termination Date") only (a) to the Company, (b) pursuant to a registration
----------------
statement which has been declared effective under the Securities Act, (c)
so long as the Securities are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own
---
account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales to non-U.S. persons that occur outside the United States of America
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the
<PAGE>
A-2
Securities Act that is purchasing for his own account or for the account of
such an institutional "accredited investor," in each case in a minimum
principal amount of Senior Notes of $250,000, for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act or (f) pursuant to
any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale shall not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Trustee,
which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution
in violation of the Securities Act. We acknowledge on our own behalf and
on behalf of any investor account for which we are purchasing Securities
that the Company and the Trustee reserve the right prior to any offer, sale
or other transfer prior to the Resale Restriction Termination Date of the
Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Securities for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and
we and any accounts for which we are acting are each able to bear the
economic risk of our or its investments.
3. We are acquiring at least $250,000 principal amount of the Senior
Notes and we are acquiring the Securities
<PAGE>
A-3
purchased by us for our own account or for one or more accounts as to each
of which we exercise sole investment discretion.
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
_______________________
(Name of Purchaser)
By:_____________________
Date:___________________
Upon transfer the Notes should be registered in the name of the new
beneficial owner as follows:
Name: ______________________
Address:_____________________
Taxpayer ID Number:__________
<PAGE>
EXHIBIT 4.1
________________________________________________________________________________
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
WINCUP HOLDINGS, L.P.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
STYROCHEM INTERNATIONAL, LTD.
RADNOR MANAGEMENT, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
-------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of December 17, 1996
(Supplementing a Trust Indenture Dated as of December 5, 1996)
-------------------
$100,000,000
10% Senior Notes due 2003
________________________________________________________________________________
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE dated as of the 17th day of December
1996, (the "First Supplemental Indenture") among RADNOR HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a Delaware
corporation, WINCUP HOLDINGS, L.P., a Delaware limited partnership, SP
ACQUISITION CO., a Delaware corporation, STYROCHEM INTERNATIONAL, INC., a Texas
corporation, STYROCHEM INTERNATIONAL, LTD., a Quebec corporation (collectively,
the "Guarantors"), RADNOR MANAGEMENT, INC., a Delaware corporation ("Radnor
Management") and FIRST UNION NATIONAL BANK, as trustee (the "Trustee").
RECITALS:
The Company, the Guarantors and the Trustee are parties to a certain
Indenture dated December 5, 1996 (the "Indenture") relating to the creation by
the Company of an issue of $100,000,000 of its 10% Senior Notes, due 2003 (the
"Securities");
Each Guarantor has issued a guarantee of the Securities (collectively,
the "Guarantees")pursuant to which the Guarantors have guaranteed, in accordance
with Article Thirteen of the Indenture, all Indenture Obligations (as such term
is defined in the Indenture); and
The Company, the Guarantors and the Trustee now desire to enter into
this First Supplemental Indenture pursuant to Section 901(vi) of the Indenture,
without the consent of the Holders, in order to add Radnor Management, a
wholly-owned subsidiary of Radnor Holdings Corporation, as a Guarantor and
Restricted Subsidiary under the Indenture;
Capitalized terms used herein without definition shall have the
meanings given such terms in the Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and for other good and
valuable consideration, it is covenanted and agreed, for the benefit of each
other and for the equal and proportionate benefit of the Holders of the
Securities issued under the Indenture, as follows:
ARTICLE ONE
JOINDER AND GUARANTEE OF RADNOR MANAGEMENT
Section 101. Radnor Management hereby absolutely, unconditionally and
irrevocably guarantees, on a joint and several basis with the Guarantors, to the
Trustee and the
- 2 -
<PAGE>
Holders, as if Radnor Management was the principal debtor, the punctual payment
and performance when due of all Indenture Obligations (which for purposes of
this Guarantee shall also be deemed to include all commissions, fees, charges,
costs and expenses (including reasonable legal fees and disbursements of one
counsel) arising out of or incurred by the Trustee or the Holders in connection
with the enforcement of this Guarantee). This Guarantee shall rank pari passu
with any Senior Indebtedness of Radnor Management and shall be subject in all
respects to, and governed by all of the terms and provisions applicable to
Guarantees in, the Indenture, including without limitation Article Thirteen
thereof.
Section 102. As of the date hereof, all references to the
"Guarantors" in the Indenture shall be deemed to refer collectively to: (i) the
Guarantors in existence on the date hereof and (ii) Radnor Management.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
RADNOR HOLDINGS CORPORATION
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
WINCUP HOLDINGS, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
General Partner
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
- 3 -
<PAGE>
SP ACQUISITION CO.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ----------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
STYROCHEM INTERNATIONAL, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
STYROCHEM INTERNATIONAL, LTD.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
RADNOR MANAGEMENT, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: R. Radcliffe Hastings Michael T. Kennedy
Title: Senior Vice President President
FIRST UNION NATIONAL BANK,
as Trustee
Attest:/s/ Terrence C. McPoyle By:/s/ Alan G. Finn
----------------------- ------------------------
Name: Terrence C. McPoyle Alan G. Finn
Title: Asst. Vice President Asst. Vice President
- 4 -
<PAGE>
[Execution Copy]
EXHIBIT 4.2
_________________________________________________________________
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of December 5, 1996
Between
RADNOR HOLDINGS CORPORATION
WINCUP HOLDINGS, INC.
WINCUP HOLDINGS, L.P.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
and
STYROCHEM INTERNATIONAL, LTD.
as Issuers
and
ALEX. BROWN & SONS INCORPORATED
and
NATWEST CAPITAL MARKETS LIMITED
as Initial Purchasers
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
- ----
<S> <C>
1. Definitions............................................................ 1
2. Exchange Offer......................................................... 5
3. Shelf Registration..................................................... 10
4. Additional Interest.................................................... 12
5. Registration Procedures................................................ 14
6. Registration Expenses.................................................. 25
7. Indemnification........................................................ 26
8. Rules 144 and 144A..................................................... 30
9. Underwritten Registrations............................................. 30
10. Miscellaneous.......................................................... 30
(a) No Inconsistent Agreements........................................ 30
(b) Adjustments Affecting Registrable Securities...................... 31
(c) Amendments and Waivers............................................ 31
(d) Notices........................................................... 31
(e) Successors and Assigns............................................ 32
(f) Counterparts...................................................... 33
(g) Headings.......................................................... 33
(h) Governing Law..................................................... 33
(i) Severability...................................................... 33
(j) Third Party Beneficiaries......................................... 33
(k) Entire Agreement.................................................. 33
(l) Underwriting Agreement............................................ 33
(m) Termination....................................................... 34
</TABLE>
i
<PAGE>
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (this "Agreement") is
---------
dated as of December 5, 1996 between Radnor Holdings Corporation, a Delaware
corporation (the "Company"), WinCup Holdings, Inc., a Delaware corporation,
-------
WinCup Holdings, L.P., a Delaware limited partnership, SP Acquisition Co., a
Delaware corporation, StyroChem International, Inc., a Delaware corporation and
StyroChem International, Ltd., a Canadian corporation (collectively, the
"Guarantors" and together with the Company, the "Issuers") and Alex. Brown &
- ----------- -------
Sons Incorporated and NatWest Capital Markets Limited (together, the "Initial
-------
Purchasers").
- ----------
This Agreement is entered into in connection with the Purchase
Agreement, dated December 2, 1996, among the Company, the Guarantors and the
Initial Purchasers (the "Purchase Agreement") which provides for the sale by the
------------------
Company to the Initial Purchasers of $100,000,000 aggregate principal amount of
the Company's 10% Senior Notes due 2003 (the "Notes") and the issuance by the
-----
Guarantors of their respective guarantees with respect to the Notes (the
"Guarantees", and together with the Notes, the "Securities"). In order to
- ----------- ----------
induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers
have agreed to provide the registration rights set forth in this Agreement for
the benefit of the Initial Purchasers and their direct and indirect transferees
and assigns. The execution and delivery of this Agreement by the Issuers is a
condition to the Initial Purchasers' obligation to purchase the Securities under
the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a) hereof.
-------------------
Advice: See the last paragraph of Section 5 hereof.
------
Agreement: See the first introductory paragraph hereto.
---------
Applicable Period: See Section 2(b) hereof.
-----------------
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
------------
which is not a "Federal holiday" (as such term is used in Rule 14d-1(c)(6) under
the Exchange Act); references to "day" shall mean a calendar day.
<PAGE>
Company: See the first introductory paragraph hereto.
-------
Effectiveness Date: The 120th day after the Issue Date.
------------------
Effectiveness Period: See Section 3(a) hereof.
--------------------
Event Date: See Section 4(b) hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
--------------
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Offer Registration Statement: See Section 2(a) hereof.
-------------------------------------
Exchange Securities: See Section 2(a) hereof.
-------------------
Filing Date: The 60th day after the Issue Date.
-----------
Guarantors: See the first introductory paragraph hereto.
----------
Holder: Any holder of a Registrable Security or Regis trable
------
Securities.
Holders' Counsel: See Section 5(a) hereof.
----------------
Indemnified Person: See Section 7(c) hereof.
------------------
Indemnifying Person: See Section 7(c) hereof.
-------------------
Indenture: The Indenture, dated as of December 5, 1996 among the
---------
Company, the Guarantors and First Union National Bank, as Trustee, pursuant to
which the Securities will be issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph hereto.
------------------
Inspectors: See Section 5(o) hereof.
----------
Issue Date: The date on which the Securities were originally issued
----------
under the Indenture.
Issuers: See the first introductory paragraph hereto.
-------
NASD: National Association of Securities Dealers, Inc.
----
Notes: See the second introductory paragraph hereto.
-----
2
<PAGE>
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(b) hereof.
---------------------------
Person: An individual, trustee, corporation, partnership, joint stock
------
company, trust, unincorporated association, union, business association, firm or
other legal entity.
Private Exchange: See Section 2(b) hereof.
----------------
Private Exchange Securities: See Section 2(b) hereof.
---------------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act (as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC)) as
amended or supplemented by any prospectus supplement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
------------------
Records: See Section 5(o) hereof.
-------
Registrable Securities: Each Security upon original issuance of the
----------------------
Securities and at all times subsequent thereto, each Exchange Security as to
which Section 2(c)(iv) hereof is applicable upon original issuance and at all
times subsequent thereto and each Private Exchange Security upon original
issuance thereof and at all times subsequent thereto, until in the case of any
such Security, Exchange Security or Private Exchange Security, as the case may
be, the earliest to occur of (i) a Registration Statement (other than, with
respect to any Exchange Security as to which Section 2(c)(iv) hereof is
applicable, the Exchange Offer Registration Statement) covering such Security,
Exchange Security or such Private Exchange Security having been declared
effective by the SEC and such Security, Exchange Security or Private Exchange
Security, as the case may be, having been disposed of in accordance with such
effective Registration Statement, (ii) such Security, Exchange Security or
Private Exchange Security, as the case may be, having been sold pursuant to Rule
144 or being eligible for sale pursuant to paragraph (k) of Rule 144, (iii) such
Security having been exchanged for an Exchange Security pursuant to an Exchange
Offer which may be resold without restriction under state and Federal securities
laws, or (iv) such Security, Exchange Security or Private Exchange Security, as
the case may be, ceasing to be outstanding for purposes of the Indenture.
3
<PAGE>
Registration Default: See Section 4(a) hereof.
--------------------
Registration Statement: Any registration statement of the Issuers,
----------------------
including, but not limited to, the Exchange Offer Registration Statement, filed
with the SEC pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such Registration
Statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for secondary offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities: See the second introductory paragraph hereto.
----------
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Filing Date: See Section 3(a) hereof.
-----------------
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration Statement: See Sections 3(a) and 3(b) hereof.
----------------------------
Staff: See Section 2(b) hereof.
-----
Subsequent Shelf Registration Statement: See Section 3(b) hereof.
---------------------------------------
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
---
regulations of the SEC promulgated thereunder.
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any subsequent indenture governing
4
<PAGE>
the Exchange Securities and/or Private Exchange Securities (if any).
Underwritten registration or underwritten offering: A registration
--------------------------------------------------
pursuant to the Securities Act in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Exchange Offer
--------------
(a) The Issuers shall file with the SEC, no later than the Filing
Date, a registration statement under the Securities Act with respect to a
registered offer to exchange (the "Exchange Offer") any and all of the
-------- -----
Registrable Securities (other than Private Exchange Securities, if any) for a
like aggregate principal amount of debt securities of the Company which are
identical in all material respects to the Notes (the "Exchange Notes"), and
--------------
which will be fully and unconditionally guaranteed on the same basis as the
Guarantees by the Guarantors (such guarantees, together with the Exchange Notes,
the "Exchange Securities") except that the Exchange Securities shall have been
-------------------
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon, and which are entitled to
the benefits of the Indenture or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification thereof under
the TIA) and which, in either case, has been qualified under the TIA. The
Exchange Offer shall be registered under the Securities Act on an appropriate
form under the Securities Act (the "Exchange Offer Registration Statement") and
-------------------------------------
shall comply with Regulation 14E and Rule 13e-4 under the Exchange Act (other
than the filing requirements of Rule 13e-4). The Issuers shall use their best
efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date. Upon
the Exchange Offer Registration Statement being declared effective, the Issuers
will offer the Exchange Securities in exchange for surrender of the Registrable
Securities. The Issuers will keep the Exchange Offer open for at least 20
Business Days (or longer if required by applicable law) after the commencement
of the Exchange Offer. For purposes of this Section 2(a) only, if after such
Exchange Offer Registration Statement is initially declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Securities thereunder is
interfered with by any stop order, injunction or other similar order or
requirement of the SEC 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 shall remain in effect. Each Holder who
participates in the Exchange Offer will be required to represent that any
Exchange Securities received by it will be acquired in the ordinary course of
its business, that at the time of the consummation of the
5
<PAGE>
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Securities, and that such Holder is not an affiliate of the
Company or any of the Guarantors within the meaning of the Securities Act, or if
it is such an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable
to it. Upon consummation of the Exchange Offer in accordance with this Section
2, the provisions of this Agreement shall continue to apply, mutatis mutandis,
------- --------
solely with respect to Registrable Securities that are Private Exchange
Securities and Exchange Securities held by Participating Broker-Dealers, and the
Issuers shall have no further obligation to register Registrable Securities
pursuant to Section 3 hereof (other than Private Exchange Securities and other
than in respect of any Exchange Securities as to which Section 2(c)(iv) hereof
applies). No securities other than the Exchange Securities shall be included in
the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement certain information necessary to allow a
broker-dealer who holds Securities that were acquired for its own account as a
result of marketmaking activities or other ordinary course trading activities
(other than Securities acquired directly from the Issuers or one of the Issuers'
affiliates) to exchange such Securities pursuant to the Exchange Offer and to
satisfy the prospectus delivery requirements in connection with resales of
Exchange Securities received by such broker-dealer in the Exchange Offer,
including a section entitled "Plan of Distribution," reasonably acceptable to
the Initial Purchasers, which shall contain a summary statement of the positions
taken or policies made by the Staff of the Division of Corporation Finance of
the SEC (the "Staff") with respect to the potential "underwriter" status of any
-----
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
---------------------------
policies have been publicly disseminated by the Staff or such positions or
policies, in the judgment of the Initial Purchasers and the Company, represent
the prevailing views of the Staff, including a statement that any such broker-
dealer who receives Exchange Securities for Registrable Securities pursuant to
the Exchange Offer may be deemed to be an "underwriter" within the meaning of
the Securities Act and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities, which
prospectus delivery requirement may be satisfied by the delivery of the final
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan
of Distribution" section shall also state that the delivery by a Participating
Broker-Dealer of the final Prospectus relating to the Exchange Offer in
connection with resales of Exchange Securities shall not be deemed to be an
admission by such Participating Broker-Dealer
6
<PAGE>
that it is an "underwriter" within the meaning of the Securities Act, and shall
contain all other information with respect to resales of the Exchange Securities
by Participating Broker-Dealers that the SEC may require in connection
therewith, but such "Plan of Distribution" shall not name any such Participating
Broker-Dealer or disclose the principal amount of Exchange Securities held by
any such Participating Broker-Dealer, except to the extent required by the
Staff. Such "Plan of Distribution" section shall also expressly permit the use
of the Prospectus by all Persons subject to the prospectus delivery requirements
of the Securities Act, including all Participating Broker-Dealers, and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Securities. Each broker-dealer that receives Exchange Securities
for its own account in exchange for Securities where such Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities must acknowledge that it will comply with any prospectus
delivery requirements under the Securities Act in connection with any resale of
Exchange Securities.
The Issuers shall use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Securities; provided, however, that
-------- -------
such period shall not exceed 150 days after the Exchange Offer Registration
Statement is declared effective (or such longer period if extended pursuant to
the last paragraph of Section 5 hereof) (the "Applicable Period").
-----------------
If, prior to consummation of the Exchange Offer, either Initial
Purchaser holds any Securities acquired by it and having, or which are
reasonably likely to be determined to have, the status of an unsold allotment in
the initial distribution, or any other Holder is not entitled to participate in
the Exchange Offer, the Issuers upon the request of the Initial Purchasers or
any such Holder shall simultaneously with the delivery of the Exchange
Securities in the Exchange Offer, issue and deliver to such Initial Purchaser
and any such Holder, in exchange (the "Private Exchange") for such Securities
----------------
held by such Initial Purchaser and any such Holder, a like principal amount of
debt securities of the Company and guarantees of the Guarantors with respect
thereto that are identical in all material respects to the Exchange Notes and
the guarantees with respect thereto, except for any such restrictions on
transfer that, in the opinion of counsel for the Issuers, are required under the
Securities Act (the "Private Exchange Securities"), and which are issued
---------------------------
pursuant to the same indenture as the Exchange Securities; provided, however,
-------- -------
the Issuers shall not be required to effect such exchange if, in the written
opinion of counsel for the Issuers (a copy of which shall be delivered to such
Initial Purchaser and any Holder affected thereby), such exchange cannot
7
<PAGE>
be effected without registration under the Securities Act. The Private Exchange
Securities shall bear the same CUSIP number as the Exchange Securities.
Interest on the Exchange Securities and the Private Exchange
Securities will accrue from (A) the later of (i) the last interest payment date
on which interest was paid on the Securities surrendered in exchange therefor or
(ii) if the Securities are surrendered for exchange on a date in a period which
includes the record date for an interest payment date to occur on or after the
date of such exchange and as to which interest will be paid, the date of such
interest payment date or (B) if no interest has been paid on the Securities,
from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in The City of New York;
(3) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day on which
the Exchange Offer shall remain open, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
Securities delivered for exchange, and a statement that such Holder is
withdrawing its election to have such Securities or a portion thereof
exchanged;
(4) notify each Holder that any Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the expiration of the Exchange Offer or
the Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Securities properly tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
8
<PAGE>
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Securities, Exchange Securities or Private Exchange Securities,
as the case may be, equal in principal amount to the Securities of such
Holder so accepted for exchange.
The Exchange Offer and any Private Exchange shall not be subject to
any conditions, other than that the Exchange Offer or such Private Exchange, as
the case may be, does not violate applicable law including, without limitation,
the Securities Act or the Exchange Act, or any applicable interpretation of the
Staff.
The Exchange Securities and any Private Exchange Securities may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that the Exchange
Securities shall not be subject to the transfer restrictions set forth in the
Indenture (and that the Private Exchange Securities shall be subject only to any
such restrictions on transfer that, in the opinion of counsel for the Issuers,
are required under the Securities Act). The Indenture or such indenture shall
provide that the Exchange Securities, any Private Exchange Securities and the
Securities shall vote and consent together on all matters as one class and that
neither the Exchange Securities, any Private Exchange Securities or the
Securities will have the right to vote or consent as a separate class on any
matter.
(c) If (i) the Company determines in reasonably good faith that (x)
because of any change in law or in the applicable interpretations of the Staff,
the SEC is not likely to permit the Issuers to effect the Exchange Offer prior
to the Effectiveness Date, or (y) that the Exchange Securities would not be
tradeable upon receipt by the Holders that participate in the Exchange Offer
without restriction under applicable state and Federal securities laws (other
than due solely to the status of a Holder as an affiliate of the Company or any
of the Guarantors within the meaning of the Securities Act or by breach by a
Holder of its representation described in the third to the last sentence of
Section 2(a) hereof), (ii) the Exchange Offer is not consummated within 150 days
after the Issue Date, (iii) any holder of Private Exchange Securities so
requests, or (iv) in the case of any Holder that participates in the Exchange
Offer, such Holder does not receive Exchange Securities on the date of the
exchange that may be sold without restriction under state and Federal securities
laws (other than due solely to the status of such Holder as an affiliate of the
Company or any of the Guarantors within the meaning of the Securities Act or by
breach by such Holder of its representation described in the third to the last
sentence of Section 2(a) hereof) and so notifies the Company within 60 days
after such Holder first becomes aware of any such restriction and concurrently
therewith provides the Company with a reasonable basis for its conclusion, then,
in the case of each of clauses (i), (ii), (iii) and (iv) of this sentence, the
Issuers shall promptly deliver to the Holders of Registrable
9
<PAGE>
Securities and the Trustee written notice thereof (the "Shelf Notice") and shall
------------
file a Shelf Registration Statement pursuant to Section 3 hereof.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Shelf Registration. The Issuers shall as promptly as practicable
------------------
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Securities
(the "Shelf Registration Statement"). If the Issuers shall not have filed an
----------------------------
Exchange Offer Registration Statement, the Issuers shall use their best efforts
to file with the SEC the Shelf Registration Statement on or prior to the Filing
Date. Otherwise, the Issuers shall use their best efforts to file with the SEC
the Shelf Registration Statement on or prior to the 30th day after the delivery
of the Shelf Notice (the "Shelf Filing Date"). The Shelf Registration Statement
-----------------
shall be on Form S-1 or another appropriate form under the Securities Act
permitting registration of such Registrable Securities for resale by Holders in
the manner or manners designated by them (including, without limitation, one or
more underwritten offerings). The Issuers shall not permit any securities other
than the Registrable Securities to be included in the Shelf Registration
Statement or any Subsequent Shelf Registration Statement.
The Issuers shall use their best efforts to cause the initial Shelf
Registration Statement to be declared effective under the Securities Act on or
before the 120th day after the Shelf Filing Date and to keep the Shelf
Registration Statement continuously effective under the Securities Act until the
date which is 36 months from its effective date, subject to extension pursuant
to the last paragraph of Section 5 hereof (the "Effectiveness Period"), or such
--------------------
shorter period ending when (i) all Registrable Securities covered by the Shelf
Registration Statement have been sold in the manner set forth and as
contemplated in the initial Shelf Registration Statement or (ii) a Subsequent
Shelf Registration Statement covering all of the Registrable Securities has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the initial Shelf
------------------------------
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), the
Issuers shall use their best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 15
days of such cessation of effectiveness amend the Shelf Registration Statement
in a manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional "shelf" Registration Statement pursuant to Rule
415
10
<PAGE>
covering all of the then remaining Registrable Securities (a "Subsequent Shelf
----------------
Registration Statement"). If a Subsequent Shelf Registration Statement is
- ----------------------
filed, the Issuers shall use their best efforts to cause the Subsequent Shelf
Registration to be declared effective under the Securities Act as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Shelf
Registration Statement and any other Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf Registration
------------------
Statement" means the Shelf Registration Statement and any Subsequent Shelf
- ---------
Registration Statement.
(c) Supplements and Amendments. The Issuers shall promptly
--------------------------
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Act, or if requested
by the Holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement or by any underwriter of such
Registrable Securities, and the Issuers agree to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(d) Hold-Back Agreements
--------------------
(1) Restrictions on Public Sale by Holders of Registrable Securities.
----------------------------------------------------------------
Each Holder of Registrable Securities whose Registrable Securities are
covered by a Shelf Registration Statement filed pursuant to this Section 3
(which Registrable Securities are not being sold in the underwritten
offering described below) agrees, if requested (pursuant to a timely
written notice) by the Issuers or the managing underwriter or underwriters
in an underwritten offering, not to effect any public sale or distribution
of any of the Registrable Securities or a similar security of the Company,
including a sale pursuant to Rule 144 or Rule 144A (except as part of such
underwritten offering), during the period beginning 20 days prior to, and
ending 90 days after, the closing date of each underwritten offering made
pursuant to such Shelf Registration Statement, to the extent timely
notified in writing by the Issuers or by the managing underwriter or
underwriters; provided, however, that each holder of Registrable Securities
-------- -------
shall be subject to the holdback restrictions of this Section 3(d)(1) only
once during the term of this Agreement.
The foregoing provisions shall not apply to any Holder if such Holder
is prevented by applicable statute or regulation from entering into any
such agreement; provided, however, that any such Holder shall undertake, in
-------- -------
its request to participate in any such underwritten offering, not to effect
any public sale or distribution of the class
11
<PAGE>
of securities covered by such Shelf Registration Statement (except as part
of such underwritten offering) during such period unless it has provided 30
days' prior written notice of such sale or distribution to the Issuers or
the managing underwriter or underwriters, as the case may be.
(2) Restrictions on the Issuers and Others. The Issuers agree (A)
--------------------------------------
not to effect any public or private sale or distribution (including,
without limitation, a sale pursuant to Regulation D under the Securities
Act) of any securities of the same class as or similar to those covered by
a Shelf Registration Statement filed pursuant to this Section 3, or any
securities convertible into or exchangeable or exercisable for such
securities, during the period beginning 20 days prior to, and ending 90
days after, the commencement of an underwritten public distribution of
Registrable Securities, where the managing underwriter or underwriters of
such distribution so requests; (B) to include in any agreements entered
into by the Issuers on or after the date of this Agreement (other than any
underwriting agreement relating to a public offering registered under the
Securities Act) pursuant to which the Issuers issue or agree to issue
securities of the same class as or similar to the Securities a provision
that each holder of such securities that are of the same class as or
similar to Securities issued at any time on or after the date of this
Agreement agrees not to effect any public or private sale or distribution,
or request or demand the registration, of any such securities (or any
securities convertible into or exchangeable or exercisable for such
securities) during the period referred to in clause (A) of this Section
3(d)(2), including any sale pursuant to Rule 144 or Rule 144A; and (C) not
to grant or agree to grant any "piggy-back registration" or other similar
rights to any holder of the Issuers' or any of their respective
subsidiaries' securities issued on or after the date of this Agreement with
respect to any Registration Statement.
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchasers agree that the Holders of
Securities will suffer damages if the Issuers fail to fulfill their obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Issuers
jointly and severally agree to pay, as liquidated damages and as set forth in
the Indenture and the Notes, additional interest on the Notes ("Additional
----------
Interest") under the circumstances and to the extent set forth below (each such
- --------
event referred to in clauses (i) through (v) below, a "Registration Default"):
--------------------
(i) if the Exchange Offer Registration Statement has not been
filed on or prior to the Filing Date;
12
<PAGE>
(ii) if the Exchange Offer Registration Statement has not been
declared effective on or prior to the Effectiveness Date;
(iii) if the Exchange Offer has not been consummated within 150
days after the Closing Date;
(iv) if the Shelf Registration has not been filed on or prior
to the Shelf Filing Date or declared effective within 120 days following
the delivery of the Shelf Notice, as the case may be; or
(v) if (A) the Exchange Offer Registration Statement has been
declared effective but ceases to be effective for a period of 15
consecutive days without being succeeded immediately by any additional
Registration Statement filed with the SEC and declared effective at any
time prior to the time that the Exchange Offer is consummated or (B) the
Shelf Registration or any Subsequent Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period for a period of 15 consecutive days without
being succeeded immediately by any additional Registration Statement filed
and declared effective,
then Additional Interest shall be accrued on the Notes over and above the
interest rate then applicable to the Notes on each day during the first 90-day
period immediately following the occurrence of such Registration Default, at a
rate equal to 25 basis points (0.25%) per annum. The amount of Additional
Interest will increase by an additional 25 basis points (0.25%) per annum during
each subsequent 90-day period until the applicable Registration Statement is
filed, the applicable Registration Statement is declared effective, the Exchange
Offer is consummated or the applicable Registration Statement again becomes
effective, as the case may be, provided, however, that the Additional Interest
-------- -------
rate on the Notes may not exceed 100 basis points (1.00%) per annum and,
accordingly, the maximum interest rate on the Notes may not exceed 11%; and
provided, further, that (1) upon the filing of the Exchange Offer Registration
- -------- -------
Statement (in the case of (i) above), (2) upon the effectiveness of the Exchange
Offer Registration Statement (in the case of (ii) above), (3) upon the
consummation of the Exchange Offer (in the case of (iii) above), (4) upon the
filing of the Shelf Registration or upon the effectiveness of a Shelf
Registration, as applicable (in the case of (iv) above), or (5) upon the
effectiveness of the Exchange Offer Registration Statement which had ceased to
remain effective (in the case of (v)(A) above), or upon the effectiveness of the
Shelf Registration which had ceased to remain effective (in the case of (v)(B)
above), the interest rate borne by the Notes, including Additional Interest,
will be reduced by the amount of Additional Interest on the Notes as a result of
such clause (i), (ii), (iii), (iv) or (v) (or the relevant subclause thereof),
as the case may be.
13
<PAGE>
Notwithstanding the foregoing, the Issuers shall not be required to
pay such Additional Interest with respect to the Registrable Securities held by
a Holder if the applicable Registration Default arises from the failure of the
Issuers to file, or cause to become effective, a Shelf Registration Statement
within the time periods specified in this Section 4 by reason of the failure of
such Holder to provide such information as (i) the Company may reasonably
request, with reasonable prior written notice, for use in the Shelf Registration
Statement or any Prospectus included therein to the extent the Company
reasonably determines that such information is required to be included therein
by applicable law, (ii) the NASD or the SEC may request in connection with such
Shelf Registration Statement or (iii) is required to comply with the agreements
of such Holder contained in the penultimate paragraph of Section 5 to the extent
compliance thereof is necessary for the Shelf Registration Statement to be
declared effective.
(b) The Company shall notify the Trustee within three Business Days
after each Registration Default (an "Event Date"). Any amounts of Additional
----------
Interest due pursuant to clause (i), (ii), (iii), (iv) or (v) of Section 4(a)
hereof will be payable in cash semi-annually on each June 1 and December 1 (to
the holders of record on the May 15 and November 15 immediately preceding such
dates), commencing with the first such date occurring after any such Additional
Interest commences to accrue. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes making up the Registrable Securities, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Section 2 or 3 hereof, the Issuer shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuers hereunder the Issuers
shall:
(a) Prepare and file with the SEC on or prior to the Filing Date (in
the case of an Exchange Offer Registration Statement) or the Shelf Filing Date
(in the case of a Shelf Registration Statement), a Registration Statement or
Registration Statements as prescribed by Sections 2 or 3 hereof, and use its
best efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided, however, that, if (1) such filing
-------- -------
is pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer
14
<PAGE>
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Par ticipating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuers shall furnish to and afford the Holders of the Registrable
Securities covered by such Registration Statement or each such Participating
Broker-Dealer, as the case may be, one counsel selected by the Holders of a
majority in aggregate principal amount of the Registrable Securities (the
"Holders' Counsel"), counsel for such Participating Broker-Dealer and the
- -----------------
managing underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case
at least five Business Days prior to such filing, or such later date as is
reasonable under the circumstances) and, in the event the Initial Purchasers are
participating in such Registration Statement, use their best efforts to reflect
in each such document, when filed with the SEC, such comments as the Initial
Purchasers or their counsel may reasonably propose. The Issuers shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement and the Holders'
Counsel, or any such Participating Broker-Dealer and its counsel, as the case
may be, or the managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 promulgated under the Securities Act (as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC); and comply with the provisions of the Securities Act and
the Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus.
The Issuers shall be deemed not to have used their best efforts to
cause a Registration Statement to become effective or to keep a Registration
Statement effective during the Applicable Period or the Effectiveness Period, as
the case may be, if any of them voluntarily takes any action that would result
in selling Holders of the Registrable Securities covered thereby or
Participating Broker-Dealers seeking to sell Exchange Securities not being able
to sell such Registrable Securities or such Exchange Securities during that
period unless (i) such action is
15
<PAGE>
required by applicable law or (ii) such action is taken by the Issuers in good
faith and for valid business reasons (not including avoidance of the Issuers'
obligations hereunder), including the acquisition or divestiture of assets.
(c) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, notify the selling
Holders of Registrable Securities and Holders' Counsel, or each such
Participating Broker-Dealer and their counsel, as the case may be, and the
managing underwriters, if any, promptly (but in any event within two Business
Days), (i) when a Prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any Holder
may, upon request, obtain, at the sole expense of the Issuers, one conformed
copy of such Registration Statement or post-effective amendment including
financial statements and schedules, documents incorporated or deemed to be
incorporated by reference therein and exhibits thereto), (ii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary Prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a Prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registrable Securities or resales of Exchange Securities by Participating
Broker-Dealers the representations and warranties of the Issuers contained in
any agreement (including any underwriting agreement) contemplated by Section
5(n) hereof, to the knowledge of the Company, cease to be true and correct in
all material respects, (iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Securities
or the Exchange Securities to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event, or any
information becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in or amendments or supplements to such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in
16
<PAGE>
the light of the circumstances under which they were made, not misleading, (vi)
of any request by the SEC or any state securities authority for amendments or
supplements to the Registration Statement or Prospectus (including schedules and
exhibits thereto), and (vii) of the Company's determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, use their best efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from qualification) of
any of the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, use their best efforts to obtain the withdrawal of any such
order at the earliest possible moment.
(e) If a Shelf Registration Statement is filed pursuant to Section 3
hereof and if requested by the managing underwriter or underwriters (if any),
the Holders of a majority in aggregate principal amount of the Registrable
Securities being sold in connection with an underwritten offering or any
Participating Broker-Dealer, (i) promptly incorporate in a prospectus supplement
or post-effective amendment such information as the managing underwriter or
underwriters (if any), their counsel, such Holders, Holders' Counsel, any
Participating Broker-Dealer or their counsel reasonably request to be included
therein and (ii) make all required filings of such prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment.
(f) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, furnish to each
selling Holder of Registrable Securities, Holders' Counsel and to each such
Participating Broker-Dealer who so requests and its counsel and each managing
underwriter, if any, at the sole expense of the Issuers, one conformed copy of
the Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated by reference
therein and all exhibits thereto.
17
<PAGE>
(g) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, deliver to each
selling Holder of Registrable Securities and Holders' Counsel, or each such
Participating Broker-Dealer and its counsel, as the case may be, and each
underwriter, if any, at the sole expense of the Issuers, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Securities or each such Participating Broker-Dealer, as
the case may be, and the underwriters or agents, if any, and dealers, if any, in
connection with the offering and sale of the Registrable Securities covered by,
or the sale by Participating Broker-Dealers of the Exchange Securities pursuant
to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, use their best efforts to register and qualify, and to
cooperate with the selling Holders of Registrable Securities and Holders'
Counsel or each such Participating Broker-Dealer and its counsel, as the case
may be, the managing underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of, such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters reasonably request; provided, however, that
-------- -------
where Exchange Securities held by Participating Broker-Dealers or Registrable
Securities are offered other than through an underwritten offering, the Issuers
agree to cause the Issuers' counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h); keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange
Securities held by Participating Broker-Dealers or the Registrable Securities
covered by the applicable Registration Statement; provided, however, that none
-------- -------
of the Issuers shall be required to (A) qualify generally to do business in any
jurisdiction where such Issuer is not then so qualified, (B) take any action
that would subject such Issuer to general service of process in any such
jurisdiction where it is not then so subject
18
<PAGE>
or (C) subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where such Issuer is not then so subject.
(i) If a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form eligible for deposit with The Depository Trust Company; and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
request.
(j) Use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be reasonably necessary to enable
the seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Issuers will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals; provided, however, that none of the Issuers shall be required to (A)
-------- -------
qualify generally to do business in any jurisdiction where such Issuer is not
then so qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or (C)
subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where such Issuer is not then so subject.
(k) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, upon the occurrence of
any event contemplated by Section 5(c)(v), 5(c)(vi) or 5(c)(vii) hereof, as
promptly as practicable prepare and (subject to Section 5(a) hereof) file with
the SEC, at the sole expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder or to the
purchasers of the Exchange Securities to whom such Prospectus will be delivered
by a Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
19
<PAGE>
(l) Use its best efforts to cause the Registrable Securities covered
by a Registration Statement or the Exchange Securities, as the case may be, to
continue to be rated by the rating agencies which initially rated the
Securities, during the period the Registration Statement is required to remain
effective hereunder.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) obtain a CUSIP number for the Registrable
Securities.
(n) In connection with any underwritten offering of Registrable
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes and take all other actions in order to expedite
or facilitate the registration or the disposition of such Registrable Securities
and, in such connection, (i) make such representations and warranties to, and
covenants with, the Holders of such Registrable Securities and the underwriters
with respect to the business of the Company and its subsidiaries (including any
acquired business, properties or entity, if applicable) and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii) obtain
the written opinions of counsel to the Issuers and written updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to each Holder of such Registrable Securities and the
underwriters covering the matters customarily covered in opinions given in
underwritten offerings and such other matters as may be reasonably requested by
the managing underwriter or underwriters; (iii) obtain "comfort" letters and
updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the Registration
Statement), addressed to each selling Holder of such Registrable Securities and
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "comfort" letters in connection with
underwritten offerings and such other matters as may be reasonably requested by
the managing underwriter or underwriters; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification and contribution provisions
and procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority in
aggregate
20
<PAGE>
principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriter or underwriters or agents) with respect
to all parties to be indemnified pursuant to said Section 7; and (v) deliver
such documents and certificates as may be reasonably requested by the Holders of
a majority in aggregate principal amount of all of the Registrable Securities
being sold and the managing underwriter or underwriters, if any, to evidence
compliance with any customary conditions contained in the underwriting agreement
or any other agreement entered into by the Issuers. The above shall be done at
each closing under such underwriting agreement, or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Securities being sold, or
each such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if any, and any
attorney or accountant retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept, during business hours,
----------
all financial and other records, pertinent corporate documents and instruments
of the Company and its subsidiaries (collectively, the "Records") as shall be
-------
reasonably necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement; provided, however,
-------- -------
that all information shall be kept confidential by each such Inspector, except
to the extent that (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is, in the
opinion of counsel for any Inspector, necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating
to, or involving this Agreement, or any transactions contemplated hereby or
arising hereunder; provided, however, that prior notice be provided, to the
-------- -------
Company as soon as practicable and in any event not less than three business
days before any such disclosure, of the potential disclosure of any information
by such Inspector pursuant to clause (ii) or this clause (iii) to permit the
Company to obtain a protective order (or waive the provisions of this Section
5(o)) and that such Inspector shall take such actions as are reasonably
necessary to protect the confidentiality of such information to the extent such
action is otherwise not inconsistent with an impairment of, or in
21
<PAGE>
derogation of, the rights and interests of the Holders or any Inspector, or (iv)
the information in such Records has been made generally available to the public.
Each selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree that information obtained by it as a
result of such inspections shall be deemed confidential, shall be used only for
due diligence purposes pursuant to this Section 5(o) and shall not be used by it
as the basis for any market transactions in the securities of the Issuers unless
and until such information is made generally available to the public. Each
selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company to undertake appropriate action to
prevent disclosure of the Records deemed confidential at the Company's sole
expense.
(p) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
Registration Statement or the first Registration Statement relating to the
Registrable Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders of the Registrable Securities, to
effect such changes to such indenture as may be required for such indenture to
be so qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.
(q) Use their best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC) no later than 45
days after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Securities
22
<PAGE>
participating in the Exchange Offer or the Private Exchange, as the case may be,
that the Exchange Securities or Private Exchange Securities, as the case may be,
and the related indenture constitute legal, valid and binding obligations of the
Issuers, enforceable against the Issuers in accordance with their respective
terms, subject to customary exceptions and qualifications.
(s) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or to
such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or cause to be marked, on such Registrable Securities that such
Registrable Securities are being canceled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(t) If a Shelf Registration Statement is filed pursuant to Section 3
hereof, a reasonable time prior to the filing of any document which is to be
incorporated by reference into a Registration Statement or Prospectus after the
initial filing of a Shelf Registration Statement, provide a reasonable number of
copies of such document to the Initial Purchasers on behalf of the Holders of
Registrable Securities covered thereby, and make available such of the
representatives of the Company and its subsidiaries as shall be reasonably
requested by such Holders or the Initial Purchasers on behalf of such Holders
for discussion of such document.
(u) Cooperate with each seller of Registrable Securities covered by
any Registration Statement, Holders' Counsel and each underwriter, if any,
participating in the disposition of such Registrable Securities and its counsel
in connection with any filings required to be made with the NASD (including,
without limitation, engaging and cooperating with a "qualified independent
underwriter" if required by the Rules of Fair Practice and the By-Laws of the
NASD).
(v) Use its reasonable best efforts to take all other steps necessary
or advisable to effect the registration of the Exchange Securities and/or
Registrable Securities covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Company may, from time to time, reasonably request, including, without
limitation, a written representation to the Issuers (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
23
<PAGE>
Statement or Shelf Registration Statement, as applicable) stating (A) that it is
not an affiliate of any of the Issuers, within the meaning of the Securities
Act, (B) that it is acquiring the Exchange Securities in the ordinary course of
business, (C) the amount of Registrable Securities held by such Holder prior to
the Exchange Offer and the amount of Registrable Securities owned by such Holder
to be exchanged in the Exchange Offer, and (D) if such Holder is not a broker-
dealer, that such Holder 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, within the meaning of the
Securities Act and if such Holder is a broker-dealer, that it will receive
Exchange Securities for its own account in exchange for Registrable Securities
that were acquired as a result of market-making activities or other trading
activities and that it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The
Company may exclude from such registration the Registrable Securities of any
seller or Participating Broker-Dealer who fails to furnish such information or
to make such representations within a reasonable time after receiving such
request. Each seller as to which any registration pursuant to a 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 seller not materially
misleading.
Each Holder of Registrable Securities and each Participating Broker-
Dealer will agree by acquisition of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
that upon actual receipt of any notice from the Company of the happening of any
event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), 5(c)(v),
5(c)(vi) or 5(c)(vii) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until such Holder's or Participating Broker-
Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
- -------
resumed, and has received copies of any amendments or supplements thereto. If
so directed by the Company, each Holder will deliver to the Company all copies
(other than permanent file copies then in such Holder's possession) of the
Prospectus covering the Registrable Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement or Exchange Securities to be
sold by such Participating Broker-Dealer, as the case may be, shall have
24
<PAGE>
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne jointly and severally by the
Issuers whether or not the Exchange Offer Registration Statement or a Shelf
Registration Statement is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for investment
under the laws of such jurisdictions (x) where the holders of Registrable
Securities are located, in the case of the Exchange Securities, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Securities or
Exchange Securities to be sold by a Participating Broker-Dealer during the
Applicable Period)), (ii) printing expenses, including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Securities included in any
Registration Statement or in respect of Registrable Securities or Exchange
Securities to be sold by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Issuers and reasonable fees and
disbursements of Holders' Counsel (subject to the provisions of Section 6(b)
hereof), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) hereof (including, without
limitation, the expenses of any special audit and "comfort" letters required by
or incident to such performance), (vi) rating agency fees, (vii) Securities Act
liability insurance, if the Company desires such insurance, (viii) fees and
expenses of all other Persons retained by the Company, (ix) internal expenses of
the Company (including, without limitation, all salaries and expenses of
officers and employees of the Issuers performing legal or accounting duties),
(x) the expense of any annual audit, (xi) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, if applicable, and (xii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement.
25
<PAGE>
(b) The Issuers shall reimburse the Holders of the Registrable
Securities being registered in a Shelf Registration Statement for the reasonable
fees and disbursements of Holders' Counsel (in addition to appropriate local
counsel) and other reasonable out-of-pocket expenses of such Holders of
Registrable Securities incurred in connection with the registration and sale of
the Registrable Securities.
7. Indemnification
---------------
(a) The Issuers jointly and severally agree to indemnify and hold
harmless each Holder of Registrable Securities (including each Initial
Purchaser, if such Initial Purchaser holds Registrable Securities or Private
Exchange Securities for its own account) and each Participating Broker-Dealer
selling Exchange Securities during the Applicable Period, the officers and
directors of each such Person, and each Person, if any, who controls any such
Person within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act (each, a "Participant"), from and against any and all
-----------
losses, claims, damages and liabilities (including, without limitation, and
subject to Section 7(c) below, any legal fees and other expenses reasonably
incurred by such Participant in connection with preparing to defend, defending,
investigating or appearing as a third-party witness in connection with any such
action or claim), joint or several, caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto), or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, in the
light of the circumstances under which they were made) not misleading, except
insofar as such losses, claims, damages, liabilities or expenses are caused by
any untrue statement or omission or alleged untrue statement or omission made in
any Registration Statement or Prospectus, or amendment or supplement thereto,
made in reliance upon and in conformity with information relating to any
Participant furnished to the Company in writing by such Participant expressly
for use therein; provided, however, that the Issuers shall not be required to
-------- -------
indemnify any such Person if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and any such loss, claim, damage, liability or expense
suffered or incurred by the Participants resulted from any action, claim or suit
by any Person who purchased Registrable Securities or Exchange Securities which
are the subject thereof from such Participant and it is established in the
related proceeding that such Participant failed to deliver or provide a copy of
the Prospectus
26
<PAGE>
(as amended or supplemented) to such Person with or prior to the confirmation of
the sale of such Registrable Securities or Exchange Securities sold to such
Person if required by applicable law, unless such failure to deliver or provide
a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Issuers with Section 5 hereof.
(b) The Issuers may require, as a condition to including any
Registrable Securities or Exchange Securities in any Registration Statement
filed pursuant to this Agreement that each Participant shall agree, severally
and not jointly, to indemnify and hold harmless the Issuers, their respective
officers and directors, and each Person who controls the Issuers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Issuers to each Participant,
but only with reference to information relating to such Participant furnished to
the Company in writing by such Participant expressly for use in any Registration
Statement or Prospectus or any amendment or supplement thereto. The liability
of any Participant under such agreement shall in no event exceed the proceeds
received by such Participant from sales of Registrable Securities or Exchange
Securities giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be instituted or asserted
against any Person in respect of which indemnity may be sought pursuant to
either of paragraph (a) or (b) above, such Person (the "Indemnified Person")
------------------
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing; provided, however, that the failure to so
------------------- -------- -------
notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder or otherwise (unless and only to the
extent that such failure directly results in the loss or compromise of any
material rights or defenses by the Indemnifying Person and the Indemnifying
Person was not otherwise aware of such action or claim). The Indemnifying
Person, upon request of the Indemnified Person, shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such action or proceeding. In any such action or proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i)
the Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties to any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate of either and representation of both parties by the same
counsel would be inappropriate due to
27
<PAGE>
actual or potential differing interests between them. It is understood that,
unless there exists a conflict among Indemnified Persons, the Indemnifying
Person shall not, in connection with any one such proceeding or separate but
substantially similar related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
appropriate local counsel) for all Indemnified Persons, and that all such
reasonable fees and expenses shall be reimbursed promptly after receipt of the
invoice therefor as they are incurred. Any such separate firm for the
Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in aggregate principal amount of
Registrable Securities and Exchange Securities sold by all such Participants and
any such separate firm for the Issuers, their respective directors, their
respective officers and such control Persons of the Issuers shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its prior written consent (which
consent shall not be unreasonably withheld), but if settled with such consent or
if there be a final judgment for the plaintiff for which the Indemnified Person
is entitled to indemnification pursuant to this Agreement, the Indemnifying
Person agrees to indemnify and hold harmless each Indemnified Person from and
against any loss or liability by reason of such settlement or judgment. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Persons (which consent shall not be unreasonably withheld), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement or
compromise includes an unconditional written release of such Indemnified Person,
in form and substance reasonably satisfactory to such Indemnified Person, from
all liability on claims that are the subject matter of such proceeding or such
Indemnifying Person indemnifies the Indemnified Person in writing and posts a
bond for an amount equal to the maximum liability for all such claims as
contemplated above.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is for any reason unavailable to (other than by reason of
exceptions provided therein), or insufficient to hold harmless, an Indemnified
Person in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other hand from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only
28
<PAGE>
such relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other hand
in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Participants on the other hand shall be deemed to be in the same
proportion as the total proceeds from the offering of the Securities (net of
discounts and commissions but before deducting expenses) received by the Issuers
bears to the total proceeds received by such Participant from the sale of
Registrable Securities or Exchange Securities, as the case may be. The relative
fault of the parties 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 Issuers on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other hand, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal fees or other expenses reasonably
incurred by such Indemnified Person in connection with defending or
investigating any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall a Participant be required to contribute any amount
in excess of the amount by which proceeds received by such Participant from
sales of Registrable Securities or Exchange Securities, as the case may be,
exceeds the amount of any damages that such Participant has otherwise been
required to pay or has paid by reason of such untrue or alleged untrue statement
or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The amount paid or payable by any party as a
result of this Section 7(e) shall be deemed to include any legal or other
expenses reasonably incurred by such party in connection with investigating,
preparing to defend or defending such claim.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability
29
<PAGE>
which the Indemnifying Persons may otherwise have to the Indemnified Persons
referred to above.
8. Rules 144 and 144A
------------------
The Issuers covenant to file with the Trustee copies of the annual
reports and of the information, documents and other reports which the Issuers
may be required to file with the SEC pursuant to Section 13 or Section 15(d) of
the Exchange Act, within 15 days after the Issuers are required to file the same
with the SEC. If, during any period in which Registrable Securities are
outstanding, the Issuers are not obligated to file annual reports, documents or
other reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act,
the Issuers will furnish to the Trustee the same such annual reports documents
or other reports as if the Issuers were so subject. The Issuers further
covenant, for so long as any Registrable Securities remain outstanding, to make
available to any Holder or beneficial owner of Registrable Securities in
connection with any sale thereof and any prospective purchaser of such
Registrable Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Registrable Securities pursuant to Rule 144A, unless the Issuers are
then subject to Section 13 or 15(d) of the Exchange Act and reports filed
thereunder satisfy the information requirements of Rule 144A(d)(4) as then in
effect.
9. Underwritten Registrations
--------------------------
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will be
selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering and shall be reasonably
acceptable to the Company.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Issuers have not, as of the date
--------------------------
hereof, and the Issuers shall not after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with
30
<PAGE>
and are not inconsistent with the rights granted to the holders of the Issuers'
other issued and outstanding securities under any such agreements. The Issuers
have not entered and will not enter into any agreement with respect to any of
their securities which will grant to any Person "piggy-back" registration rights
with respect to a Registration Statement.
(b) Adjustments Affecting Registrable Securities. The Issuers shall
--------------------------------------------
not, directly or indirectly, take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Securities and (B) in circumstances
that would adversely affect the Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount of
the Exchange Securities held by all Participating Broker-Dealers; provided,
--------
however, that Section 7 hereof and this Section 10(c) may not be amended,
- -------
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Securities or Exchange Securities, as
the case may be, disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable Securities may be
given by Holders of at least a majority in aggregate principal amount of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement.
(d) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next day air courier or facsimile:
(1) if to a Holder of the Registrable Securities or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
securities registrar under the Indenture, with a copy in like manner to the
Initial Purchasers as follows:
31
<PAGE>
Alex. Brown & Sons Incorporated
NatWest Capital Markets Limited
c/o Alex. Brown & Sons Incorporated
1290 Avenue of the Americas, 10th Floor
New York, NY 10107
Facsimile No.: (212) 227-2232
Attention: High Yield Department
with a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Facsimile No.: (212) 530-5219
Attention: Arnold B. Peinado, III
(2) if to the Initial Purchasers, at the address specified in Section
10(d)(1) hereof;
(3) if to the Issuers, at the addresses as follows:
Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Facsimile No: (610) 995-2697
Attention: Chief Financial Officer
with a copy to:
Duane, Morris & Heckscher
One Liberty Place, 42nd Floor
Philadelphia, PA 19103
Facsimile No: (215) 979-1020
Attention: Thomas G. Spencer
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; one Business Day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
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 and in the manner specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the parties
hereto, the Holders and the Participating Broker-Dealers; provided, however,
-------- -------
that this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless such successor or assign holds
Registrable Securities.
32
<PAGE>
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Third Party Beneficiaries. Holders of Registrable Securities and
-------------------------
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(k) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
(l) Underwriting Agreement. Notwithstanding the provisions of
----------------------
Sections 3(d), 5, 6 and 7 hereof, in the event of a Shelf Registration pursuant
to Section 3 hereof, to the extent that the Holders of Registrable Securities
shall enter into an underwriting or similar agreement, which agreement contains
33
<PAGE>
provisions covering one or more matters addressed in such Sections with
substantially similar effect, the provisions contained in such Sections
addressing such matter or matters shall be of no force or effect with respect to
the registration of securities being effected in connection with such
underwriting or similar agreement.
(m) Termination. This Agreement shall terminate and be of no further
-----------
force or effect when there shall not be any Registrable Securities, except that
the provisions of Sections 4, 6, 7, 10(h) and 10(j) hereof shall survive any
such termination.
[Signature Pages Follow]
34
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Exchange and
Registration Rights Agreement as of the date first written above.
RADNOR HOLDINGS CORPORATION
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
WINCUP HOLDINGS, INC.
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
WINCUP HOLDINGS, L.P.
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
SP ACQUISITION CO.
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
STYROCHEM INTERNATIONAL, INC.
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
STYROCHEM INTERNATIONAL. LTD.
By:/s/ MICHAEL T. KENNEDY
-----------------------------
Name: MICHAEL T. KENNEDY
Title: PRESIDENT
35
<PAGE>
ALEX. BROWN & SONS INCORPORATED
By:/s/ THOMAS J. HOPKINS
----------------------------
Name: THOMAS J. HOPKINS
Title: PRINCIPAL
NATWEST CAPITAL MARKETS LIMITED
By:/s/ ROGER W. HOIT
----------------------------
Name: ROGER W. HOIT
Title: DIRECTOR
GLEACHER NATWEST
36
<PAGE>
EXHIBIT 4.3
RADNOR HOLDINGS CORPORATION
$100,000,000 AGGREGATE PRINCIPAL
AMOUNT OF 10% SENIOR
NOTES DUE 2003
PURCHASE AGREEMENT
------------------
December 2, 1996
ALEX. BROWN & SONS INCORPORATED
NATWEST CAPITAL MARKETS LIMITED
c/o Alex. Brown & Sons Incorporated
1290 Avenue of the Americas
10th Floor
New York, New York 10104
Ladies and Gentlemen:
Radnor Holdings Corporation, a Delaware corporation (the "Company"),
-------
proposes, subject to the terms and conditions stated herein, to issue and sell
to Alex. Brown & Sons Incorporated and NatWest Capital Markets Limited
(together, the "Initial Purchasers") $100,000,000 aggregate principal amount of
------------------
10% Senior Notes due 2003 (the "Notes"). The companies listed on Schedule 2
----- ----------
hereto (collectively, the "Guarantors" and, together with the Company, the
----------
"Issuers") propose to fully and unconditionally guarantee, on an unsecured
- --------
senior basis, the obligations of the Company under the Notes (the "Guarantees"
----------
and, together with the Notes, the "Securities"). The Securities will be issued
----------
pursuant to the provisions of an Indenture to be dated as of December 5, 1996
(the "Indenture") among the Issuers and First Union National Bank, as trustee
---------
(the "Trustee"). Unless otherwise defined in this Agreement, capitalized terms
-------
have the meanings specified or referred to in the Final Offering Memorandum
referred to below.
The Company has entered into a Stock Purchase Agreement dated October
30, 1996 (the "Stock Purchase Agreement") with the holders (the "Sellers") of
------------------------ -------
all of the outstanding capital stock of and other equity interests in SP
Acquisition Co. (together with its subsidiaries, "StyroChem"), with respect to
---------
the
<PAGE>
acquisition by the Company (the "StyroChem Acquisition") of all the outstanding
---------------------
shares of common and preferred capital stock and all options and warrants to
purchase the common and preferred capital stock of SP Acquisition Co. and
certain related matters. Concurrently with the consummation of the offering of
the Securities, the Company will enter into an amended and restated credit
agreement (the "Amended Credit Agreement") with The Bank of New York Commercial
------------------------
Corporation, as agent and a lender, and the other lenders party thereto
(collectively, the "U.S. Banks"). Concurrently with the consummation of the
----------
StyroChem Acquisition, (i) the Company will issue and sell the Notes, (ii)
certain Guarantors will enter into a guaranty with the Banks and other related
agreements specified in the Amended Credit Agreement, (iii) the Company will
borrow certain amounts under the Amended Credit Agreement and (iv) the Company
will enter into an amendment with respect to, and will borrow certain amounts
under, the bank loan agreement with the Bank of Montreal (together with the U.S.
Banks, the "Banks"), dated February 25, 1994 (as amended, the "Canadian Credit
----- ---------------
Agreement" and, together with the Amended Credit Agreement, the "Credit
- --------- ------
Agreements"). The borrowings under the Credit Agreements are referred to
- ----------
collectively as the "Other Financings." The net proceeds of the sale of the
----------------
Securities will be used, together with the net proceeds of the Other Financings,
to fund a portion of the cash purchase price and related fees and expenses in
connection with the StyroChem Acquisition, to repay certain outstanding
indebtedness of WinCup Holdings, L.P. (the "Joint Venture"), to fund the
-------------
acquisition of the interest in the Joint Venture not currently held by WinCup
Holdings, Inc. ("WinCup"), including the repayment of outstanding indebtedness
------
of the Joint Venture (the "J.R. Cup Acquisition" and together with the StyroChem
--------------------
Acquisition, the "Acquisitions"), to redeem certain shares of the Company's
------------
preferred stock and certain outstanding equity warrants held by a third party
and for general corporate purposes. The term "Company" as used herein means the
-------
Company after the consummation of the Acquisitions, unless the context otherwise
requires. The Stock Purchase Agreement (including without limitation the non-
competition agreement and consulting agreement executed in connection
therewith), the Credit Agreements and the agreements entered into in connection
with the J.R. Cup Acquisition are referred to collectively as the "Other
-----
Transaction Documents."
- ---------------------
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
--------------
exemptions therefrom provided by Section 4(2) of the Securities Act and Rule
144A promulgated thereunder.
In connection with the sale of the Securities, the Company has
prepared and delivered to each Initial Purchaser a preliminary offering
memorandum dated November 12, 1996 (as amended or supplemented, the "Preliminary
-----------
Offering Memorandum") and will prepare and deliver to each Initial Purchaser on
- -------------------
the
2
<PAGE>
date hereof or the next succeeding business day a final offering memorandum
dated December 2, 1996 (as amended or supplemented, the "Final Offering
--------------
Memorandum" and, together with the Preliminary Offering Memorandum, each a
- ----------
"Memorandum") setting forth or including a description of the Securities, the
- -----------
terms of the offering of the Securities, a description of the StyroChem
Acquisition, a description of the Company and any material developments relating
to any of them occurring after the date of the most recent financial statements
included therein.
You and your direct and indirect transferees will be entitled to the
benefits of an Exchange and Registration Rights Agreement to be entered into
among the Issuers and the Initial Purchasers in form and substance reasonably
satisfactory to the Initial Purchasers (the "Registration Rights Agreement"),
-----------------------------
pursuant to which the Issuers will agree to use their best efforts to file and
have declared effective a registration statement (an "Exchange Offer
--------------
Registration Statement"), or a shelf registration statement, with the Securities
- ----------------------
and Exchange Commission (the "Commission") registering the offer and sale of the
----------
Exchange Notes and guarantees referred to in the Registration Rights Agreement,
or resales of the Securities, as the case may be, under the Securities Act.
1. Representations and Warranties. The Issuers, jointly and
------------------------------
severally, represent and warrant to and agree with you that:
(a) The Preliminary Offering Memorandum, as of its date, and the
Final Offering Memorandum, as of its date and as of the Closing Date (as
defined below), do not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this Section 1(a) do not apply to statements or omissions
contained in the Preliminary Offering Memorandum or the Final Offering
Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished by the Initial Purchasers to
the Company in writing expressly for use in either Memorandum or any
amendment or supplement thereto;
(b) Neither the Company nor any of the Guarantors has sustained,
since the date of the most recent financial statements included in the
Final Offering Memorandum, any loss or interference with its business (i)
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or (ii) from any labor dispute or court or governmental action,
order or decree, which loss or interference in the case of (i) and (ii)
above is material to the Company and the Guarantors, taken as a whole;
3
<PAGE>
(c) Since the respective dates as of which information is given in
the Final Offering Memorandum there has not been, and prior to the Closing
Date there will not be, any change in the capital stock or other equity
interests or long-term debt, or any material change in the short-term debt,
of the Company or any of the Guarantors, other than as contemplated in
connection with the Acquisitions and the Other Financings, or any change or
development which could reasonably be expected to have a material adverse
effect upon the business, assets, condition (financial or otherwise),
results of operations or prospects of the Company and the Guarantors, taken
as a whole, or on the ability of the Issuers to perform their respective
obligations under this Agreement, the Notes, the Guarantees, the Indenture,
the Registration Rights Agreement and the Other Transaction Documents (a
"Material Adverse Effect"), in each case other than as fully disclosed in
------------------------
the Final Offering Memorandum;
(d) The Company and the Guarantors have, as of the date hereof, and
will have, upon the consummation of the Acquisitions and the Other
Financings, good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
Permitted Liens, and any real property and buildings held under lease by
the Company and the Guarantors are, as of the date hereof, and will be,
upon the consummation of the Acquisitions and the Other Financings, held by
them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made of such real
property and buildings by the Company and the Guarantors; all rent and
other sums and charges payable by the Company and the Guarantors as tenants
thereunder are current, no termination event or condition or uncured
default on the part of the Company or any such Guarantor or, to the best of
the Company's knowledge and belief, the landlord, exists under any such
lease; each of the Company and the Guarantors has complied with all
material obligations, considering applicable grace periods, under all
material leases to which such person is a party and under which such person
is in occupancy; with respect to all such leases, to the best knowledge of
the Company, no person has instituted or threatened to institute
proceedings, or has taken or threatened to take any other action, to
challenge or terminate, and no event or circumstance has occurred which
reasonably could be expected to materially interfere with (x) the lessee's
right to occupy the premises leased thereunder or to continue to use such
premises in the manner in which it is currently being used, or (y) the
lessor's right to continue to lease such premises to the lessee; and none
of such leases contains any provision restricting the incurrence of
indebtedness by the lessee, or any unusual or
4
<PAGE>
burdensome provision which could reasonably be expected to have a Material
Adverse Effect;
(e) The Company and each Guarantor (excluding StyroChem
International, Inc. and StyroChem International, Ltd.) has been duly
incorporated or organized and is validly existing as a corporation or
limited partnership, as the case may be, in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as described in the Final Offering Memorandum and
to enter into and perform its obligations under this Agreement, and has
been duly qualified as a foreign corporation or limited partnership, as the
case may be, for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases property, or
conducts any business, so as to require such qualification; each of
StyroChem International, Inc., and StyroChem International, Ltd. has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and to conduct its
business as described in the Final Offering Memorandum and to enter into
and perform its obligations under this Agreement and, except as set forth
in the Disclosure Schedule provided by the Sellers pursuant to the Stock
Purchase Agreement, has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification; other than the Subsidiaries
listed on Schedule 2 hereto, the Company has no direct or indirect
----------
Subsidiaries;
(f) The Company had, at the date indicated in the Final Offering
Memorandum, an authorized, issued and outstanding capitalization as set
forth in the column entitled "Actual" under the caption "Capitalization" in
the Final Offering Memorandum and, based on the assumptions stated in the
Final Offering Memorandum, the Company would have had, on the date
indicated, the adjusted capitalization as set forth in the column entitled
"Pro Forma" under the caption "Capitalization" in the Final Offering
Memorandum; as of the date hereof and upon the consummation of the
Acquisitions and the Other Financings, (i) all of the outstanding shares of
capital stock of the Company are and will be duly and validly authorized
and issued and are fully paid and non-assessable, and will be owned of
record free and clear of all liens, encumbrances, equities or claims; (ii)
except as described in the Final Offering Memorandum, after giving effect
to the Acquisitions and the Other Financings, there will be no outstanding
options, warrants, or other rights, calling for the issuance of, and no
commitments, plans, or arrangements to issue any shares of capital stock
of, the Company or any security convertible or
5
<PAGE>
exchangeable or exercisable for capital stock of the Company; (iii) except
as described in the Final Offering Memorandum, all of the issued shares of
capital stock of each Guarantor are and will be duly and validly authorized
and issued, fully paid and non-assessable and, upon consummation of the
Acquisitions and Other Financings, will be owned directly by the Company or
a wholly-owned Subsidiary, free and clear of all liens, encumbrances,
equities or claims; (iv) all partnership interests of the Joint Venture,
upon consummation of the Acquisitions and the Other Financings, will be
owned directly or indirectly by the Company or a wholly-owned Subsidiary,
free and clear of all liens, encumbrances, equities or claims; and (v)
except as described in the Final Offering Memorandum, after giving effect
to the Acquisitions and the Other Financings, there will be no outstanding
rights, warrants or options to acquire, or instruments convertible into or
exchangeable for, any equity interests of any Guarantor;
(g) This Agreement has been duly authorized, executed and delivered
by each of the Issuers and, assuming due authorization, execution and
delivery by the Initial Purchasers, is a legal, valid and binding agreement
of the Issuers enforceable against the Issuers in accordance with its
terms, except as (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or fraudulent transfer or
other similar laws relating to or affecting creditors' rights generally,
(ii) such enforceability is subject to general principles of equity
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (iii) rights to indemnity and contribution may be
limited by state or Federal laws relating to securities or by policies
underlying such laws;
(h) The Indenture has been duly authorized by each of the Issuers,
and, when executed and delivered by the Issuers on the Closing Date, and
assuming due authorization, execution and delivery by the Trustee, will be
a legal, valid and binding agreement of the Issuers enforceable against the
Issuers in accordance with its terms, except as (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or fraudulent transfer or other similar laws relating to or affecting
creditors' rights generally and (ii) such enforceability is subject to
general principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law; and the Indenture will be
in sufficient form for qualification under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and the rules and regulations of
-------------------
the Commission promulgated thereunder and will conform in all material
respects to the description thereof set forth in the Final Offering
Memorandum;
6
<PAGE>
(i) The Notes and the Exchange Notes have been duly and validly
authorized and, when executed and authenticated in accordance with the
terms of the Indenture and when the Notes have been delivered to and paid
for by the Initial Purchasers in accordance with the terms of this
Agreement, (i) will be legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as
(A) may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or fraudulent transfer or other similar laws relating
to or affecting creditors' rights generally and (B) such enforceability is
subject to general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at law and (ii)
will be entitled to the benefits of the Indenture; and the Securities will
conform in all material respects to the descriptions thereof contained in
the Final Offering Memorandum under the heading "Description of the Notes;"
(j) The Guarantees have been duly and validly authorized and, when
executed and authenticated in accordance with the terms of the Indenture
and delivered to the Initial Purchasers in accordance with the terms of
this Agreement, (i) will be legal, valid and binding obligations of the
Guarantors enforceable against the Guarantors in accordance with their
terms, except as (A) may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or fraudulent transfer or
other similar laws relating to or affecting creditors' rights generally and
(B) such enforceability is subject to general principles of equity
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (ii) will be entitled to the benefits of the
Indenture;
(k) The Registration Rights Agreement has been duly authorized by
each of the Issuers, and, assuming due authorization, execution and
delivery by the Initial Purchasers, when executed and delivered by the
Issuers on or prior to the Closing Date, will be a legal, valid and binding
agreement of the Issuers enforceable against the Issuers in accordance with
its terms, except as (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or fraudulent transfer or
other similar laws relating to or affecting creditors' rights generally,
(ii) such enforceability is subject to general principles of equity
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (iii) rights to indemnity and contribution may be
limited by state or Federal laws relating to securities or by policies
underlying such laws; and the Registration Rights Agreement will conform in
all material respects to the description thereof set forth in the Final
Offering Memorandum;
7
<PAGE>
(l) The execution, delivery and performance by the Issuers of this
Agreement, the Indenture, the Securities and the Registration Rights
Agreement, in each case to the extent each Issuer is a party, and the
consummation of the transactions contemplated hereby and thereby including,
without limitation, the issuance, sale and delivery of the Securities, the
consummation of the Acquisitions and the Other Financings and the
execution, delivery and performance by the Company of the Other Transaction
Documents, will not (1) conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, bank loan or credit agreement, lease or
other agreement or instrument to which the Company or any of the Guarantors
is a party or by which the Company or any of the Guarantors is bound or to
which any of the property or assets of the Company or any of the Guarantors
is subject, (2) result in any violation of the provisions of the charter,
including without limitation any Certificate of Incorporation, Articles of
Incorporation or Certificate of Limited Partnership, as the case may be, or
the By-laws or Agreement of Limited Partnership (or other organizational or
governing documents), in each case as amended, of the Company or any of the
Guarantors or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
the Guarantors or any of their properties, (3) result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Company or any of the Guarantors, except pursuant to or
as contemplated by the terms of the Indenture and the Credit Agreements, or
(4) constitute a default under any ordinance, license or permit, except, in
the case of the events specified in clauses (1), (3) and (4) above, for
such conflicts, violations or defaults which would not have a Material
Adverse Effect; no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Securities or the consummation of
the other transactions contemplated by this Agreement, the Indenture and
the Registration Rights Agreement or the consummation of the Acquisitions
or the Other Financings, including, without limitation, the issuance, sale
and delivery of the Securities and the execution, delivery and performance
by the Company and the Guarantors of the Other Transaction Documents,
except such consents, approvals, authorizations, registrations or
qualifications as have been obtained or as may be required under state
securities or Blue Sky laws in connection with the offer and sale of the
Securities and as may be required by the Securities Act, the securities or
Blue Sky laws of the various states and the Trust Indenture Act in
conjunction with an exchange offer for, or registered resale of, the
Securities pursuant to the Registration Rights
8
<PAGE>
Agreement; the Company and each Guarantor has full power and authority to
enter into and perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement and the Other Transaction Documents and
to issue, sell and deliver the Securities to be sold to the Initial
Purchasers as provided herein and therein;
(m) Except as set forth in the Final Offering Memorandum, there are
no legal or governmental proceedings (other than proceedings with respect
to Environmental Laws or Hazardous Materials in respect of which Section
1(s) is applicable) pending to which the Company or any of the Guarantors
is a party or of which any property of the Company or any of the Guarantors
is the subject which are reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect; to the best knowledge of the
Issuers, no such proceedings are threatened or contemplated by governmental
authorities or threatened or contemplated by others; and the statements
made in the Final Offering Memorandum, insofar as they describe agreements,
contracts or legal proceedings, constitute fair summaries thereof and are
accurate in all material respects; all pending legal or governmental
proceedings to which the Company or any Guarantor is a party or of which
any of their respective property or assets is the subject which are not
described in the Final Offering Memorandum, including ordinary routine
litigation incidental to the business, are, considered in the aggregate,
not material;
(n) Except as set forth in the Final Offering Memorandum, the Company
and each Guarantor, on the date hereof, owns or possesses, and upon
consummation of the Acquisitions and the Other Financings, will own or
possess, all governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations (including those required by
applicable Environmental Laws (as defined below)) necessary to own, lease,
construct and operate its properties and to conduct its business as
presently conducted by it and described in the Final Offering Memorandum,
except where the failure to own or possess such licenses, permits,
certificates, consents, orders, approvals and other authorizations would
not have, individually or in the aggregate, a Material Adverse Effect
(collectively, "Material Licenses"); all of the Material Licenses are valid
-----------------
and in full force and effect, the Company and each Guarantor has fulfilled
and performed its respective obligations with respect to such Material
Licenses, and no event has occurred which allows, or after notice or lapse
of time or both would allow, revocation or termination thereof or result in
any other material impairment of the rights of the holder of any such
Material Licenses; and neither the Company nor any Guarantor has received
any written notice of proceedings relating to revocation, modification or
termination of any such Material Licenses which could reasonably be
expected to
9
<PAGE>
have, individually or in the aggregate, a Material Adverse Effect;
(o) Each of Arthur Andersen LLP and Deloitte and Touche LLP, who have
certified certain financial statements as set forth in their reports
included in each Memorandum, are independent public accountants as required
by the Securities Act and the rules and regulations of the Commission
thereunder;
(p) The consolidated financial statements of the Company and its
Subsidiaries, the financial statements of the J.R. Cup Foam Container
Operations of James River Paper Company, Inc. and the consolidated
financial statements of SP Acquisition Co. and its Subsidiaries included in
each Memorandum present fairly the consolidated financial condition,
results of operations, and cash flows of the Company and its Subsidiaries,
the J.R. Cup Foam Container Operations of James River Paper Company, Inc.
and SP Acquisition Co. and its Subsidiaries, respectively, as of the dates
and for the periods therein specified and the balance sheets included in
each Memorandum present fairly the financial condition and stockholders'
equity or owner's investment, as the case may be, of the Company and its
Subsidiaries, the J.R. Cup Foam Container Operations of James River Paper
Company, Inc. and SP Acquisition Co. and its Subsidiaries as of the date
specified, in each case in conformity with generally accepted accounting
principles consistently applied throughout the periods involved, except as
otherwise stated therein; the unaudited pro forma financial data included
--- -----
in each Memorandum have been prepared in accordance with the rules and
guidelines of the Commission with respect to pro forma financial data and
--- -----
give effect to assumptions which have been made on a reasonable basis and
the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein; and the other financial,
accounting and statistical information and data related to the Company and
its Subsidiaries, the J.R. Cup Foam Container Operations of James River
Paper Company, Inc. and SP Acquisition Co. and its Subsidiaries set forth
in each Memorandum present fairly, in all material respects, the
information purported to be shown thereby at the respective dates and for
the respective periods to which they apply, and except as disclosed
therein, have been prepared on a basis consistent with the financial
statements and the books and records of the entities as to which such
information is shown;
(q) Neither the Company nor any of the Guarantors has violated any
Federal, state, local or foreign law relating to discrimination in
employment nor any applicable wage or hour laws, nor any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder ("ERISA"), nor has the
-----
10
<PAGE>
Company or any of the Guarantors engaged in any unfair labor practice,
which in each case could reasonably be expected to result, singly or in the
aggregate, in a Material Adverse Effect; except as disclosed in the Final
Offering Memorandum, there is (i) no unfair labor practice complaint
pending against the Company or any of the Guarantors or, to the best
knowledge of the Issuers, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations board,
and no significant grievance or significant arbitration proceeding arising
out of or under any collective bargaining agreement pending or, to the best
knowledge of the Issuers, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage pending against the
Company or any of the Guarantors or, to the best knowledge of the Issuers,
threatened against any of them or by the employers of any of their
principal suppliers or contractors, except (with respect to any matter
specified in clause (i) or (ii) above, singly or in the aggregate) such as
would not have a Material Adverse Effect, and the Issuers have no reason to
believe that the relationship of the Company and the Guarantors with their
employees is likely to have a Material Adverse Effect;
(r) The Company and each Guarantor, as of the date hereof, owns or
possesses and, upon consummation of the Acquisitions and the Other
Financings, will own or possess, adequate patent rights or licenses or
other rights to use patent rights, inventions, trademarks, service marks,
trade names and copyrights necessary to conduct the general business now
operated by it and neither the Company nor any of the Guarantors has
received any written notice of infringement of or conflict with asserted
rights of others with respect to any patent, patent rights, inventions,
trademarks, service marks, trade names or copyrights which, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect;
(s) Except as described in the Final Offering Memorandum, the Company
and each Guarantor believes that it is in compliance in all respects with
all Environmental Laws, except to the extent that failure to comply with
such Environmental Laws would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect. Except as
described in the Final Offering Memorandum, none of the Company or any of
the Guarantors is the subject of any pending or, to the best knowledge of
the Issuers, threatened Federal, state, local or foreign investigation
evaluating whether any remedial action by the Company or the Guarantors is
needed to respond to a release of any Hazardous Materials (as defined
below) into the environment, resulting from the business operations of the
Company or any of the Guarantors or ownership or possession of any of their
properties or assets or is in contravention
11
<PAGE>
of any Environmental Law that the Company reasonably believes could result,
individually or in the aggregate, in a fine or penalty in excess of
$100,000 or in a Material Adverse Effect; except as described in the Final
Offering Memorandum, none of the Company or any of the Guarantors has
received any written notice or claim, nor are there pending or, to the
knowledge of the Issuers, threatened lawsuits or governmental proceedings
against them, with respect to violations of or liabilities under any
Environmental Law or in connection with any release of any Hazardous
Material into the environment that could reasonably be expected to result
in a Material Adverse Effect. As used herein, "Environmental Laws" means
------------------
any Federal, state, local or foreign law, regulation, license, permit,
certificate, consent, order, approval or other authorization applicable to
the business operations of the Company or any of the Guarantors or
ownership or possession of any of their properties or assets relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants and contaminants, and "Hazardous
---------
Materials" means those substances, wastes, pollutants or contaminants that
---------
are regulated by or form the basis of liability under any Environmental
Laws;
(t) Neither the Company nor any of the Guarantors is in violation of
any term or provision of its charter, including without limitation any
Certificate of Incorporation, Articles of Incorporation or Certificate of
Limited Partnership, as the case may be, or its By-Laws or Agreement of
Limited Partnership (or other organizational or governing documents), in
each case as amended to the date hereof; the Company and each Guarantor is
in compliance with all laws, rules, regulations, orders, judgments, writs
and decrees applicable to it (other than Environmental Laws in respect of
which Section 1(s) is applicable) other than those as to which failure to
be in compliance, individually or in the aggregate, could not reasonable be
expected to have a Material Adverse Effect;
(u) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, bank loan or credit agreement, lease or other
agreement or instrument to which the Company or any of the Guarantors is a
party or by which the Company or any of the Guarantors is bound or to which
any of the property or assets of the Company or any of the Guarantors is
subject, which could reasonably be expected to have a Material Adverse
Effect;
(v) The Company and each Guarantor is conducting its business in
compliance with all applicable Federal, state, local and foreign laws,
rules, regulations, codes and
12
<PAGE>
ordinances relating to zoning, land use and employee or occupational safety
except where such noncompliance would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(w) The Company and each Guarantor has timely filed all Federal,
state, local and foreign income and other tax returns and notices required
to be filed by applicable law and all such tax returns were in all material
respects true, correct and complete; no audit, administrative proceedings
or court proceedings are presently pending with regard to any material
potential Federal, state, local or foreign tax of any nature; the Issuers
have no knowledge, or any reasonable grounds to know, of any tax
deficiencies which could reasonably be expected to have a Material Adverse
Effect; the Company and each Guarantor has paid (within the time and in the
manner prescribed by law) all Federal, state, local and foreign taxes of
any nature which are shown on its returns to be due, in each case except
for those not yet delinquent and those being contested in good faith by
appropriate proceedings diligently conducted for which the Company and/or
each Guarantor has established on its books and records adequate reserves
to pay all outstanding tax liabilities in accordance with GAAP; neither the
Company nor any of the Guarantors has requested any extension of time
within which to file any material tax return, which return has not since
been filed; the amounts currently set up as provisions for taxes or
otherwise by the Company and the Guarantors on their books and records are
sufficient for the payment of all their unpaid Federal, state, local and
foreign taxes accrued through the dates as of which they speak, and for
which the Company and the Guarantors may be liable in their own right, or
as a transferee of the assets of, or as successor to any other corporation,
association, partnership, joint venture or other entity;
(x) The Company and each Guarantor maintains insurance covering their
properties, operations, personnel and businesses, and such insurance
insures against such losses and risks as are adequate in accordance with
customary industry practice in the opinion of the Company and the
Guarantors to protect the Company and the Guarantors and their businesses;
neither the Company nor any of the Guarantors has received written notice
from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance; and all such insurance is outstanding and duly in
force on the date hereof;
(y) The Company and each Guarantor maintains (and in the future will
maintain) a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization;
13
<PAGE>
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;
(z) The Company and each Guarantor, immediately after the Closing
Date and after giving effect to the issuance of the Securities, the
Acquisitions and the Other Financings, will, in the opinion of the Company,
be Solvent; as used herein, the term "Solvent" means, with respect to any
-------
such entity on a particular date (i) the fair value of the property of such
entity is greater than the total amount of liabilities (including
contingent liabilities) of such entity, (ii) the present fair saleable
value of the assets of such entity is greater than the probable liability
of such entity on its total existing debts (including contingent
liabilities) as they become absolute and matured, (iii) such entity will be
able to pay its debts and liabilities as they mature and (iv) such entity
will not have unreasonably small capital for the business in which it is
engaged, as now conducted and as proposed to be conducted following the
consummation of the Acquisitions, the Offering and the Other Financings;
(aa) Neither the Company nor any "affiliate" (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the
---------
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security
(as defined in the Securities Act) which is or will be integrated with the
sale of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) engaged in any form of
general solicitation or general advertising in connection with the offering
of the Securities (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act, or in any action which would
require the registration of the offering and sale of the Securities
pursuant to this Agreement or which would violate applicable state
securities or Blue Sky laws;
(ab) Neither the Company nor any of the Guarantors is an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act") and the published rules and regulations
-----------------------
thereunder;
14
<PAGE>
(ac) Assuming the representations and warranties of the Initial
Purchasers are true and correct, it is not necessary, in connection with
the offer, sale and delivery of the Securities to the Initial Purchasers in
the manner contemplated by this Agreement and the Final Offering Memorandum
to register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act;
(ad) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities of the Issuers which
are listed on a national securities exchange registered under Section 6 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
------------
the rules and regulations of the Commission promulgated thereunder, or
quoted in a U.S. automated interdealer quotation system;
(ae) None of the Issuers has distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of
the Securities, none of them will distribute, any offering material in
connection with the offering and sale of the Securities other than each
Memorandum;
(af) Neither the Company nor any Guarantor has or will take any
action, directly or indirectly, prohibited by Rule 10b-6 promulgated under
the Exchange Act, in connection with the offering of the Notes;
(ag) Except with respect to the fees and expenses of the Initial
Purchasers for their financial advisory services, which fees and expenses
will be paid by the Company on the Closing Date, neither the Company nor
any of the Guarantors nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
issuance of the Securities;
(ah) The Company and each Guarantor has complied and will comply with
all provisions of SECTION 517.075 of the Florida statutes, and all
regulations promulgated thereunder relating to issuers doing business with
the government of Cuba or with any person or affiliate located in Cuba;
(ai) None of the Company or the Guarantors or any agent thereof acting
on the behalf of any of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the
Securities to violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
15
<PAGE>
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System;
(aj) The Credit Agreements have been duly authorized by the Company
and the other Guarantors party thereto, and, when executed and delivered by
the Company and the other Guarantors party thereto on the Closing Date and
assuming due authorization, execution and delivery by the Banks, will be
legal, valid and binding agreements of the Company and the other Guarantors
party thereto, enforceable against the Company and the other Guarantors
party thereto in accordance with their terms, except as (i) may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or fraudulent transfer or other similar laws relating to or
affecting creditors' rights generally and (ii) such enforceability is
subject to general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at law; and the
Credit Agreements will conform in all material respects to the descriptions
thereof set forth in the Final Offering Memorandum;
(ak) To the actual knowledge of the Issuers, all of the
representations and warranties of the Sellers in the Stock Purchase
Agreement concerning the business of StyroChem and its Subsidiaries are
true and correct in all material respects, and none of the Issuers (i) has
any actual knowledge that any such representation or warranty will not be
true and correct in all material respects as of the Closing Date or (ii)
assumes any responsibility for the accuracy or completeness of any
representation or warranty of the Sellers, provided that none of the
Issuers had actual knowledge that such representation or warranty was
inaccurate or incomplete on the Closing Date; and
(al) No statement, representation, warranty or covenant made by the
Issuers in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Initial Purchasers was or will be,
when made, inaccurate, untrue or incorrect.
Any certificate signed by an officer of the Company or any Guarantor
pursuant to this Agreement or in connection with the payment of the purchase
price and delivery of the certificates for the Securities, and delivered to the
Initial Purchasers or to counsel for the Initial Purchasers shall be deemed a
representation or warranty by the Company and such Guarantor to each Initial
Purchaser as to the matters covered thereby. Except with respect to the
representation made in Section 1(ak) hereof, all representations and warranties
of the Issuers, to the extent they relate to StyroChem, are made to the best of
the Company's knowledge, after reasonable investigation.
16
<PAGE>
2. Purchase. On the basis of the representations and warranties
--------
contained in this Agreement, and subject to the terms and conditions herein set
forth, the Issuers agree to issue and sell to each Initial Purchaser, severally
and not jointly, and each Initial Purchaser, severally and not jointly, agrees
to purchase from the Issuers, at a purchase price of 97% of the principal amount
thereof, plus accrued interest, if any, from the Closing Date, the aggregate
principal amount of Securities set forth in Schedule A opposite the name of such
Initial Purchaser, plus any additional principal amount of Securities which such
Initial Purchaser may become obligated to purchase pursuant to the provisions of
Section 11 hereof.
3. Delivery of Securities. (a) Certificates evidencing beneficial
----------------------
interests in the Securities, in definitive form, without interest coupons,
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"), or in the name of such other eligible nominee of DTC identified by you
---
to the Issuers in writing at least two full business days prior to the Closing
Date, in the principal amounts corresponding to the aggregate principal amount
of the Securities sold to QIBs (as defined in Section 5 below) (the "Global
------
Securities"), and certificates evidencing one or more individually denominated
- ----------
Securities, each in definitive form, without interest coupons, registered in
such names and in such denominations as you may request in writing at least two
full business days prior to the Closing Date, in the principal amounts
corresponding to the aggregate principal amount of the Securities sold to
institutional "accredited investors" (as defined in Section 5 below) who are not
QIBs (the "Individual Securities") shall be delivered by or on behalf of the
---------------------
Issuers to you for your respective accounts against payment by you of the
purchase price therefor by wire transfer of immediately available funds to an
account specified by the Company by written notice to the Initial Purchasers,
for the purchase price of the Securities being sold by the Issuers in
Philadelphia, Pennsylvania, at 9:30 A.M., Philadelphia time, on December 5,
1996, or at such other time, date and place as you and the Company may agree
upon in writing, such time and date being herein called the "Closing Date." The
------------
Initial Purchasers and the Company have determined that it is not feasible to
close at an earlier date. The Issuers agree to reimburse the Initial Purchasers
by offset against the purchase price for the incremental cost of providing
immediately available funds over the cost of obtaining New York Clearing House
funds.
(b) Certificates for the Securities so to be delivered will be in
good delivery form, and will be made available for checking and packaging in
Philadelphia, Pennsylvania, at least 24 hours prior to the Closing Date.
(c) It is understood that each certificate evidencing Securities
shall bear the following legend, until in the opinion of counsel to the Issuers
such legend is no longer necessary or
17
<PAGE>
advisable because such Securities are no longer subject to the restrictions on
transfer described therein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD 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 INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES
FOR THE BENEFIT OF RADNOR HOLDINGS CORPORATION THAT IT WILL NOT, WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS SECURITY OR
THE LAST DATE ON WHICH THIS SECURITY WAS HELD BY AN AFFILIATE OF RADNOR
HOLDINGS CORPORATION, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO RADNOR HOLDINGS CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES
TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF SUCH HOLDER'S PROPERTY OR
THE PROPERTY OF SUCH HOLDER'S ACCOUNT AT ALL TIMES BE 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. IN CONNECTION WITH ANY
TRANSFER OF ANY CERTIFICATED SECURITY WITHIN THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE OF THE SECURITY OR THE LAST DATE ON WHICH SUCH
CERTIFICATED SECURITY WAS HELD BY AN AFFILIATE OF RADNOR HOLDINGS
CORPORATION, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE OF SUCH CERTIFICATED SECURITY RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT SUCH CERTIFICATED SECURITY TO THE TRUSTEE. IF ANY
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND RADNOR HOLDINGS
CORPORATION, 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 OR APPLICABLE STATE
SECURITIES LAWS. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY
18
<PAGE>
TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
The Company shall pay any transfer taxes payable in connection with
the initial delivery to the Initial Purchasers of the Securities.
4. Representations and Warranties of the Initial Purchasers. Each
--------------------------------------------------------
Initial Purchaser proposes to offer the Securities for resale only to certain
investors (as further described in subparagraph (a) of this Paragraph 4) upon
the terms and conditions set forth in this Agreement and each Memorandum at a
purchase price initially equal to 100% of their face amount and each Initial
Purchaser hereby represents and warrants to, and agrees with the Company, that:
(a) Such Initial Purchaser is an institutional "accredited investor"
(as defined in 501(a)(1), (2), (3) or (7) under the Securities Act) and
will offer or sell the Securities only to persons who the Initial Purchaser
reasonably believes are "qualified institutional buyers" ("QIBs") within
----
the meaning of Rule 144A under the Securities Act in transactions meeting
the requirements of Rule 144A and to a limited number of institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) that, prior to their purchase of the Securities,
deliver to such Initial Purchaser a letter containing the representations
and agreements set forth in Exhibit A hereto;
---------
(b) Such Initial Purchaser has not and will not offer or sell the
Securities by any form of general solicitation or general advertising,
including but not limited to, the methods described in Rule 502(c) under
the Securities Act;
(c) Such Initial Purchaser agrees that, prior to or simultaneously
with the confirmation of sale to any purchaser of any of the Securities
purchased by such Initial Purchaser from the Issuers pursuant hereto,
provided that the Issuers have complied with their obligations under
Section 6(a) hereof, such Initial Purchaser shall furnish to that purchaser
a copy of the Final Offering Memorandum (and any amendment thereof or
supplement thereto that the Issuers shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale); and
(d) Such Initial Purchaser understands that the Issuers, and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 7 hereof, Duane, Morris & Heckscher, counsel to the Issuers, and
Milbank, Tweed, Hadley & McCloy, counsel to the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
19
<PAGE>
5. Covenants of the Issuers. In consideration of the agreements of
------------------------
the Initial Purchasers contained in this Agreement, each of the Issuers jointly
and severally covenants and agrees as follows:
(a) To furnish to the Initial Purchasers, without charge, as many
copies of each Memorandum and any supplements and amendments thereto as the
Initial Purchasers may reasonably request;
(b) Before amending or supplementing the Final Offering Memorandum
subsequent to the execution of this Agreement, to furnish to the Initial
Purchasers a copy of each such proposed amendment or supplement and not to
use any such proposed amendment or supplement to which the Initial
Purchasers reasonably object;
(c) If, at any time prior to the completion of the distribution of the
Securities by the Initial Purchasers, any event occurs as a result of which
the Final Offering Memorandum as then amended or supplemented would include
any untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
is necessary at any time to amend or supplement the Final Offering
Memorandum to comply with applicable law, the Issuers will promptly notify
the Initial Purchasers thereof and will prepare, at the expense of the
Issuers, an amendment or supplement to the Final Offering Memorandum that
corrects such statement or omission or effects such compliance and deliver
such amendment or supplement to the Initial Purchasers;
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions in the United States as
the Initial Purchasers shall reasonably request; provided, however, that
-------- -------
none of the Issuers shall be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject; to file such statements and
reports as may be required by the laws of each jurisdiction in which the
Securities have been qualified as above provided; to supply the Initial
Purchasers with such information as is necessary for the determination of
the legality of the Securities in such jurisdictions as the Initial
Purchasers may reasonably request;
(e) Not, and not permit any of its Affiliates to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the
20
<PAGE>
Securities Act) which could be integrated with the sale of the Securities
in a manner which would require the registration under the Securities Act
of such Securities;
(f) Except following the effectiveness of the Exchange Offer
Registration Statement, not to solicit any offer to buy or offer to sell
the Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act;
(g) While any of the Securities remain outstanding, to make available,
upon request, to any seller and to any prospective purchaser of such
Securities the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to Section 13 or 15(d)
of the Exchange Act;
(h) To use its best efforts to permit the Securities to be designated
PORTAL securities in accordance with the rules and regulations adopted by
the National Association of Securities Dealers, Inc. relating to trading in
the PORTAL Market and to use its best efforts to permit the Securities to
be eligible for clearance and settlement through The Depository Trust
Company;
(i) For a period of five years following the Closing Date, furnish to
the Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or
such other similar forms as may be designated by the Commission, and such
other documents, reports and information as shall be furnished by the
Company to the Trustee or to the holders of the Securities pursuant to the
Indenture;
(j) Not, and not permit any of its Affiliates to, resell any
Securities that have been acquired by any of them;
(k) To use the proceeds from the sale of the Securities in the manner
set forth in the Final Offering Memorandum and in a manner that will not
result in any of the Issuers becoming an investment company within the
meaning of the Investment Company Act, and the rules and regulations of the
Commission thereunder; and
(l) Upon consummation of the StyroChem Acquisition and as of the
Closing Date, to cause each of SP Acquisition Co., StyroChem International
Inc. and StyroChem International, Ltd. to become a Guarantor within the
meaning of the Indenture and this Agreement and to sign and become parties
to the Indenture, this Agreement and the Registration Rights Agreement.
21
<PAGE>
The Company and each Guarantor shall not, and shall cause each of its
Affiliates not to, offer, sell, contract to sell or grant any option to purchase
or otherwise transfer or dispose of any debt security, or any security
convertible into or in exchange for, any such debt security of the Company or
any such Guarantor (other than any private loan, credit or financing agreement
with a bank or similar institution, or in connection with the Exchange Offer (as
defined in the Registration Rights Agreements)), for a period of 180 days after
the date of this Agreement, without the prior written consent of the Initial
Purchasers.
6. Expenses. Each of the Issuers jointly and severally covenants
--------
and agrees that the Issuers will pay or cause to be paid: (a) the fees,
disbursements and expenses of counsel and accountants for the Issuers and the
Trustee and its counsel, and all other expenses, in connection with the
preparation and printing of each Memorandum and amendments and supplements
thereto and the furnishing of copies thereof, including charges for mailing, air
freight and delivery and counting and packaging thereof and related offering
documents to the Initial Purchasers and dealers; (b) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 6(d) hereof, including disbursements and
expenses for counsel for the Initial Purchasers in connection with such
qualification and in connection with Blue Sky surveys; (c) any fees charged by
rating agencies for the rating of the Securities; (d) the costs and expenses in
connection with the preparation, issuance and delivery of the Securities; (e)
its pro rata share of the costs and expenses relating to investor presentations
on any "road show" undertaken in connection with the marketing of the Notes,
including, without limitation, travel fees and expenses; and (f) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section 6, including the fees,
if any, incurred in connection with the admission of the Securities for trading
in any appropriate market system, including fees of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the initial and continued
----
designation of the Securities as PORTAL Securities under the PORTAL Market Rules
pursuant to NASD Rule 5322, the cost of the personnel of each of the Issuers and
other internal costs, the cost of printing and engraving the certificates
representing the Securities and all expenses and property, excise and similar
taxes incident to the sale and delivery of the Securities to be sold by the
Issuers to the Initial Purchasers hereunder. The Company will also reimburse
the Initial Purchasers for all out-of-pocket expenses. It is understood,
however, that, except as provided in this Section 6, the Initial Purchasers
shall pay all of their own costs and expenses (including the fees of their
counsel), including any advertising expenses incurred in connection with any
offers they may make. If the sale of the Securities provided for herein is not
consummated pursuant to the termination provisions of Section 12
22
<PAGE>
hereof which prevent this Agreement from becoming effective, or by reason of any
failure, refusal or inability on the part of the Issuers to perform any
agreement on their part to be performed or because any other condition of the
Initial Purchasers' obligations hereunder are not fulfilled, the Company shall
reimburse the Initial Purchasers for all out-of-pocket disbursements (including
reasonable fees and disbursements of counsel) incurred by the Initial Purchasers
in connection with any investigation made by them, any preparation made by them
in respect of the marketing of the Securities or in contemplation of the
performance by them of their obligations hereunder.
7. Conditions to the Initial Purchasers' Obligations. The
-------------------------------------------------
obligations of the Initial Purchasers hereunder shall be subject, in the Initial
Purchasers' discretion, to the following additional conditions:
(a) The representations and warranties of the Issuers contained in
this Agreement shall be true and correct as of the date hereof and as of
the Closing Date; and the Issuers shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date.
(b) The sale of the Securities by the Issuers hereunder shall not be
enjoined (temporarily or permanently) on the Closing Date.
(c) Subsequent to the date as of which information is given in the
Final Offering Memorandum, except in each case as described in or as
contemplated by the Final Offering Memorandum, the Company and the
Guarantors shall not have incurred any liabilities or obligations, direct
or contingent (other than in the ordinary course of business), that are
material to the Company and the Guarantors taken as a whole or entered into
any transactions not in the ordinary course of business that are material
to the business, assets, condition (financial or other), results of
operations or prospects of the Company and the Guarantors taken as a whole.
(d) Subsequent to the date of this Agreement and prior to the Closing
Date, there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any of the Company's securities, including
the Securities, by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act.
(e) The Initial Purchasers shall have received on the Closing Date a
certificate of the Company dated the Closing
23
<PAGE>
Date and signed by its chief executive officer and by its chief financial
officer, to the effect set forth in clauses (a), (b), (c) and (d) above.
(f) The Initial Purchasers shall have received on the Closing Date a
certificate from each Guarantor, including StyroChem, dated the Closing
Date and signed by an executive officer of such Guarantor, to the effect
that the representations and warranties of such Guarantor contained in this
Agreement are true and correct as of the Closing Date and that such
Guarantor has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied on or before the
Closing Date.
(g) Milbank, Tweed, Hadley & McCloy, counsel to the Initial
Purchasers, shall have been furnished with such papers and information as
they may reasonably have requested to enable them to pass upon the issuance
and sale of the Securities and the authorization, delivery, form and
validity of this Agreement, the Indenture, the Registration Rights
Agreement and the Other Transaction Documents and the accuracy and
completeness of the representations, warranties or statements of the
Company or any of the Guarantors, the performance of the covenants of the
Company or any of the Guarantors, or the fulfillment of any of the
conditions contained herein.
(h) (i) Duane, Morris & Heckscher, counsel to the Issuers, shall
have furnished to the Initial Purchasers its written opinion, dated the
Closing Date, in the form attached hereto as Exhibit B. In furnishing such
---------
opinion, such counsel may rely on opinions of counsel, provided, however,
-------- -------
that the Initial Purchasers shall have received a copy of each of such
opinions which shall be dated the Closing Date, addressed to the Initial
Purchasers or otherwise authorizing the Initial Purchasers to rely thereon,
and that Duane, Morris & Heckscher, in its opinion delivered pursuant to
this subsection, shall state that Duane, Morris & Heckscher has no reason
to believe that the Initial Purchasers are, and they are, not justified in
relying thereon.
(ii) Stikeman, Elliott, special Canadian counsel to StyroChem, shall
have furnished to the Initial Purchasers its written opinion, dated the
Closing Date, in the form attached hereto as Exhibit C.
---------
(iii) Winstead Sechrest & Minick, special Texas counsel to StyroChem,
shall have furnished to the Initial Purchasers its written opinion, dated
the Closing Date, in the form attached hereto as Exhibit D.
---------
(i) Milbank, Tweed, Hadley & McCloy, counsel to the Initial
Purchasers, shall have furnished to the Initial
24
<PAGE>
Purchasers their written opinion or opinions, dated the Closing Date, in
form and substance satisfactory to you, with respect to the legal existence
of the Company and certain of the Issuers, the Securities, the Final
Offering Memorandum, the Indenture, the Registration Rights Agreement and
other related matters as the Initial Purchasers may reasonably request.
(j) (i) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
you, from Arthur Andersen LLP, independent public accountants for the
Company, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the consolidated financial statements of the Company, the financial
statements of the J.R. Cup Foam Container Operations of James River Paper
Company, Inc. and certain financial information (including pro forma
financial data) contained in the Final Offering Memorandum.
(ii) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers, from Deloitte & Touche LLP, independent public
accountants for StyroChem, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the consolidated financial statements of StyroChem and
certain financial information contained in the Final Offering Memorandum.
(k) (i) Neither the Company nor any of the Guarantors shall have
sustained since September 30, 1996 any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) since the respective dates as of which
information is given in the Final Offering Memorandum, there shall not have
been any change in the capital stock or equity interests or long-term debt,
or any material change in the short-term debt, of the Company or any of the
Guarantors nor any material change otherwise than as set forth or
contemplated in the Final Offering Memorandum, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of the
Initial Purchasers so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities
on the terms and in the manner contemplated in the Final Offering
Memorandum.
(l) Subsequent to the execution and delivery of this Agreement (i)
there shall have been no declaration of war by the Government of the United
States; (ii) there shall not
25
<PAGE>
have occurred any material adverse change in the financial or securities
markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or other calamity or crisis, the effect of which is such as to
make it, in the reasonable judgment of the Initial Purchasers,
impracticable to market the Securities or to enforce contracts for the
resale of Securities and (iii) no event shall have occurred resulting in
(A) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or on any automated quotation system or over-the-
counter market regulated by the NASD being suspended or materially limited
(other than limited halts due to market volatility pursuant to the rules of
such exchange, system or market) or minimum or maximum prices being
generally established on such exchange, or (B) additional material
governmental restrictions, not in force on the date of this Agreement,
being imposed upon trading in securities generally by such exchange or by
order of the Commission or any court or other governmental authority or (C)
a general banking moratorium being declared by either Federal or New York
authorities.
(m) The Issuers shall have furnished or caused to be furnished to the
Initial Purchasers at the Closing Date any additional certificates signed
by the secretary or by the chief executive officer and the chief financial
officer of the Company or any Guarantor, on behalf of the Issuers,
satisfactory to the Initial Purchasers as to such matters as the Initial
Purchasers may reasonably request.
(n) The Issuers and the Initial Purchasers shall have entered into
the Registration Rights Agreement.
(o) The Credit Agreements shall have been executed and delivered by
each of the parties thereto and shall be in full force and effect and the
Company shall have availability under the Credit Agreements to borrow the
amount necessary to consummate the transactions contemplated by the Final
Offering Memorandum.
(p) All of the elements of the StyroChem Acquisition and the Other
Financings to be consummated on or prior to the Closing Date shall have
been consummated, including without limitation the execution of the non-
competition agreement between the Company and Richard Davidovich and the
execution of the consulting agreement between the Company and Richard
Davidovich.
(q) The Company shall have consummated the J.R. Cup Acquisition and
shall have entered into such agreements in connection therewith as are
described in each Memorandum, including without limitation five-year
extensions of a sales agent agreement, an equipment use agreement and a
license
26
<PAGE>
relating to certain trademark rights, a sublease on manufacturing and
warehouse facilities and a settlement of a dispute relating to certain
disability claims.
(r) The Notes shall have been designated for trading on PORTAL.
(s) All legal opinions and accountants' "comfort" letters received in
connection with the Acquisitions, whose form and substance shall have been
determined by the Company, shall be addressed to, or permit reliance on by,
and delivered to the Initial Purchasers.
8. Indemnity and Contribution. (a) Each of the Issuers jointly and
--------------------------
severally agree to indemnify and hold harmless each Initial Purchaser, its
officers, authorized representatives and directors (such officers, authorized
representatives and directors of the Initial Purchasers being referred to in
this Section 8(a) as "affiliated persons") and each person, if any, who controls
------------------
the Initial Purchasers within the meanings of Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities ("Losses"), joint or several, to which the Initial Purchasers or any
------
such controlling or affiliated person may become subject, under the Securities
Act, the Exchange Act, any other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such Losses (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 Memorandum, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, and will reimburse the Initial Purchasers and such controlling or
affiliated persons for any legal or other expenses reasonably incurred by the
Initial Purchasers and such controlling or affiliated person in connection with
investigating, preparing to defend, defending or appearing as a third-party
witness in connection with any such action or claim; provided, however, that
-------- -------
none of the Issuers shall be liable in any such case to the extent that such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission relating to the Initial Purchasers
made in any Memorandum, or any amendment or supplement in reliance upon and in
conformity with written information furnished to the Issuers by Alex. Brown &
Sons Incorporated expressly for use therein; provided, further, that the
-------- -------
indemnity obligations arising under this Section 8(a) with respect to the
Preliminary Offering Memorandum shall not inure to the Initial Purchasers'
benefit or that of any such controlling or affiliated person if the person
asserting any such Losses purchased the Securities from the Initial Purchasers
and if a copy (provided that the Issuers have complied with their obligations
under Section 5(a) hereof) of the Final Offering
27
<PAGE>
Memorandum was not sent or given by the Initial Purchasers or on the Initial
Purchasers' behalf to such person at or prior to the written confirmation of the
sale of the Securities to such person, and if the Final Offering Memorandum
would have cured the untrue statement or omission giving rise to such Losses.
The indemnity agreement in this Section 8(a) shall be in addition to
any liability which any of the Issuers may otherwise have.
(b) The Initial Purchasers will indemnify and hold harmless each
Issuer, its officers, authorized representatives and directors (such officers,
authorized representatives and directors of the Issuers being referred to in
this Section 8(b) as "affiliated persons") and each person, if any, who controls
------------------
any of the Issuers within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any Losses to which the Issuers may
become subject, under the Securities Act, the Exchange Act, any Federal or state
statutory law or regulation, at common law or otherwise, insofar as such Losses
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement made by the Initial Purchasers in Section
4 hereof or (ii) an untrue statement or alleged untrue statement of a material
fact contained in any Memorandum, or any amendment 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, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Memorandum or such amendment or supplement in reliance
upon and in conformity with written information relating to the Initial
Purchasers furnished to the Issuers by the Initial Purchasers expressly for use
therein, and will reimburse the Issuers and such controlling persons for any
legal or other expenses reasonably incurred by any of the Issuers and such
controlling or affiliated persons in connection with investigating, preparing to
defend, defending or appearing as a third-party witness in connection with any
such action or claim.
The indemnity agreement in this Section 8(b) shall be in addition to
any liability which the Initial Purchasers may otherwise have.
(c) Promptly after receipt by an indemnified party under Section 8(a)
or 8(b) of notice of the commencement of any action (including any governmental
investigation), such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any
28
<PAGE>
indemnified party under Section 8(a) or 8(b), except to the extent it was
unaware of such action and has been prejudiced in any material respect by such
failure, or from any liability which it may have to any indemnified party
otherwise than under such Section 8(a) or 8(b). In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. If, however, (i) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party or (ii) an indemnified party
shall have reasonably concluded that representation of such indemnified party
and the indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them and the indemnified party so notifies the
indemnifying party, then the indemnified party shall be entitled to employ
counsel different from counsel for the indemnifying party at the expense of the
indemnifying party and the indemnifying party shall not have the right to assume
the defense of such indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
local counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. The counsel with respect to which
fees and expenses shall be so reimbursed shall be designated in writing by the
Initial Purchasers in the case of parties indemnified pursuant to Section 8(a)
and by Radnor Holdings Corporation in the case of parties indemnified pursuant
to Section 8(b).
The Issuers shall not be liable for any settlement of any such action
or proceeding effected without the Company's written consent (not to be
unreasonably withheld) and if settled with its written consent or if there is a
final judgment for the plaintiff, the Issuers agree to indemnify and hold
harmless each Initial Purchaser, its officers, authorized representatives and
directors and each person, if any, who controls the Initial Purchasers within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act to the extent provided in this Agreement. Without limiting the generality
of the foregoing, no indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or has been threatened
to be made a party by such indemnified
29
<PAGE>
party and to which the indemnity herein is applicable; provided, however, that
-------- -------
an indemnifying party may effect such a settlement without the consent of the
indemnified party if such settlement includes an unconditional release of such
indemnified party from all liability for claims that are the subject matter of
such proceeding or the indemnifying party indemnifies the indemnified party in
writing and posts a bond for an amount equal to the maximum liability for all
such claims as contemplated above.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 8 is for any reason unavailable to (other than by reason of
exceptions provided therein), or insufficient to hold harmless, an indemnified
party in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party under such
paragraphs, in lieu of indemnifying such indemnified party thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand in connection with the
statements or omissions or alleged statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative benefits received
by the Issuers on the one hand and the Initial Purchasers on the other hand
shall be deemed to be in the same proportion as the total proceeds from the
offering of the Securities (net of discounts and commissions but before
deducting expenses) received by the Issuers bears to the total discounts and
commissions received by the Initial Purchasers, as set forth on the cover page
of the Final Offering Memorandum. The relative fault of the parties 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 Issuers, on the one hand
or in writing by the Initial Purchasers, on the other hand, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
--- ----
(even if the Issuer and the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately
30
<PAGE>
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to in Section 8(d) shall be deemed to include, subject to the
limitations set forth above, any legal fees or other expenses reasonably
incurred by such indemnified party in connection with defending or investigating
any such action or claim. Notwithstanding the provisions of this Section 8, in
no event shall the Initial Purchasers be required to contribute any amount in
excess of the Initial Purchasers' discounts and commissions applicable to the
Notes. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The amount paid
or payable by any party as a result of this Section 8(e) shall be deemed to
include any legal or other expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending such claim.
(f) Promptly after receipt by any party to this Agreement of notice of
the commencement of any action, suit or proceeding, such party will, if a claim
for contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
------------------
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party for contribution
under the Securities Act, the Exchange Act or otherwise, except to the extent it
was unaware of such action and has been prejudiced in any material respect by
such failure or from any liability which it may have to any other party other
than for contribution under the Securities Act, the Exchange Act or otherwise.
In case any such action, suit or proceeding is brought against any party, and
such party notifies a contributing party of the commencement thereof, the
contributing party will be entitled to participate therein with the notifying
party and any other contributing party similarly notified.
9. Survival of Representations and Warranties. The respective
------------------------------------------
indemnities, agreements, representations, warranties and other statements of the
Issuers and the Initial Purchasers, as set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Initial Purchasers or any
controlling person of the Initial Purchasers, any of the Issuers, or an officer
or director or controlling person of any of the Issuers, and shall survive
delivery of and payment for the Securities.
10. Termination. The obligations of the Initial Purchasers hereunder
-----------
may be terminated by the Initial Purchasers by notice given to and received by
the Company prior to delivery of and payment for the Securities, if, prior to
that time, any of
31
<PAGE>
the events described in Section 7(d), 7(k) or 7(l) shall have occurred or if the
Initial Purchasers shall decline to purchase the Securities for any reason
permitted under this Agreement.
11. Default by Initial Purchasers. (a) If any Initial Purchaser
-----------------------------
shall default in its obligation to purchase the Securities which it has agreed
to purchase hereunder, the non-defaulting Initial Purchaser may in its
discretion arrange for it or another party or other parties to purchase such
Securities on the terms contained herein. If within 24 hours after such default
by any Initial Purchaser the non-defaulting Initial Purchaser does not arrange
for the purchase of such Securities, then the Issuers shall be entitled to a
further period of 24 hours within which to procure another party or other
parties satisfactory to the non-defaulting Initial Purchaser to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, the non-defaulting Initial Purchaser notifies the Issuers that it has
so arranged for the purchase of such Securities, or the Issuers notify the non-
defaulting Initial Purchaser that they have so arranged for the purchase of such
Securities, the non-defaulting Initial Purchaser or the Issuers shall have the
right to postpone the Closing Date for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the Final
Offering Memorandum or in any other documents or arrangements, and the Issuers
agree to prepare promptly any amendments or supplements to the Final Offering
Memorandum which in the opinion of the non-defaulting Initial Purchaser may
thereby be made necessary. The term "Initial Purchasers" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Initial Purchaser by the non-defaulting Initial
Purchaser or the Issuers as provided in subsection (a) above, the aggregate
principal amount of such Securities which remain unpurchased exceeds one-
eleventh of the aggregate principal amount of all the Securities, then this
Agreement shall thereupon terminate without liability on the part of any non-
defaulting Initial Purchaser or the Issuers, except for the expenses to be borne
by the Issuers as provided in Section 7 and the indemnity agreement in Section
8, but nothing herein shall relieve a defaulting Initial Purchaser from
liability for its default.
12. Default by the Issuers. If (a) the Issuers shall fail to tender
----------------------
the Securities for delivery to the Initial Purchasers for any reason or (b) the
Initial Purchasers shall decline to purchase the Securities for any reason
permitted under this Agreement (including the termination of this Agreement
pursuant to Section 10), the Issuers shall jointly and severally reimburse the
Initial Purchasers for the reasonable fees and expenses of its counsel and for
such other reasonable out-of-
32
<PAGE>
pocket expenses as shall have been incurred by it in connection with this
Agreement and the proposed purchase of the Securities, and upon demand the
Issuers shall jointly and severally pay the full amount of such fees and
expenses to the Initial Purchasers.
13. Notices. All statements, requests, notices and agreements
-------
hereunder shall be in writing or by written telecommunication, and shall be
sufficient in all respects if delivered or sent by registered mail, if to the
Initial Purchasers, to Alex. Brown & Sons Incorporated at 1290 Avenue of the
Americas, 10th Floor, New York, New York 10104, Attention: High Yield
Department; and if to any of the Issuers, to Radnor Holdings Corporation, 3
Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, PA 19087,
Attention: Treasurer.
14. Parties. This Agreement shall be binding upon, and inure solely
-------
to the benefit of, the Initial Purchasers, the Issuers, and, to the extent
provided in Section 8 hereof, the officers and directors of the Issuers and each
person who controls the Issuers or the Initial Purchasers and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Securities from the Initial Purchasers shall be deemed a
successor or assign by reason merely of such purchase.
15. Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
16. Time of Essence. Time shall be of the essence of this Agreement.
---------------
17. Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the State of New York.
18. Counterparts. This Agreement may be executed by any one or more
------------
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
[Signature Pages Follow]
33
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us a counterpart hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
among you and the Issuers.
Very truly yours,
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
---------------------------------
Name: Michael T. Kennedy
Title: President
WINCUP HOLDINGS, INC.
By: /s/ Michael T. Kennedy
---------------------------------
Name: Michael T. Kennedy
Title: President
WINCUP HOLDINGS, L.P.
By: /s/ Michael T. Kennedy
---------------------------------
Name: Michael T. Kennedy
Title: President
SP ACQUISITION CO. *
By: /s/ Michael T. Kennedy
---------------------------------
Name: Michael T. Kennedy
Title: President
_____________________
* Only upon consummation of the StyroChem Acquisition on the Closing Date.
34
<PAGE>
STYROCHEM INTERNATIONAL, INC. *
By: /s/ Michael T. Kennedy
------------------------------
Name: Michael T. Kennedy
Title: President
STYROCHEM INTERNATIONAL, LTD. *
By: /s/ Michael T. Kennedy
------------------------------
Name: Michael T. Kennedy
Title: President
Accepted as of the date hereof:
ALEX. BROWN & SONS INCORPORATED
By: /s/ Thomas J. Hopkins
--------------------------
Name: Thomas J. Hopkins
Title: Principal
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Charles A. Phillips
----------------------------
Name: Charles A. Phillips
Title: Managing Director/Gleacher
_________________
* Only upon consummation of the StyroChem Acquisition on the Closing Date.
35
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Initial Purchasers Principal Amount
------------------
of Securities
----------------
<S> <C>
Alex. Brown & Sons Incorporated $ 80,000,000
NatWest Capital Markets Limited 20,000,000
-------------
$100,000,000
</TABLE>
<PAGE>
SCHEDULE 2
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
GUARANTORS OR FORMATION
---------- ------------
<S> <C>
WinCup Holdings, Inc. Delaware
WinCup Holdings, L.P. Delaware
SP Acquisition Co.* Delaware
StyroChem International, Inc.* Texas
StyroChem International, Ltd.* Quebec
</TABLE>
___________________________
* Only upon consummation of the StyroChem Acquisition on the Closing Date.
<PAGE>
SCHEDULE 3
<TABLE>
<CAPTION>
JURISDICTION OF
GUARANTORS FOREIGN QUALIFICATION
---------- ---------------------
<S> <C>
WINCUP HOLDINGS, L.P. Arizona
California
Florida
Georgia
Illinois
Louisiana
Missouri
New Jersey
Ohio
Pennsylvania
Texas
WINCUP HOLDINGS, INC. Arizona*
California
Florida
Georgia
Illinois*
Louisiana
New Jersey
Ohio
Pennsylvania
Texas
Washington
</TABLE>
____________________________
* Only upon consummation of the Closing on the Closing Date.
<PAGE>
EXHIBIT A
TRANSFEREE LETTER OF REPRESENTATION
ALEX. BROWN & SONS INCORPORATED
NATWEST CAPITAL MARKETS LIMITED
as Initial Purchasers in connection with
the offering referred to below
Radnor Holdings Corporation
c/o Alex. Brown & Sons Incorporated
Attn: High Yield Department
1290 Avenue of the Americas
10th Floor
New York, NY 10104
Dear Ladies and Gentlemen:
In connection with our proposed purchase of $________ aggregate
principal amount of 10% Senior Notes due 2003 (the "Notes") of Radnor Holdings
-----
Corp., a Delaware corporation (the "Company"), we confirm that:
-------
1. We understand that the Senior Notes and the Guarantees thereon
(together, the "Securities") have not been registered under the Securities
----------
Act of 1933, as amended (the "Securities Act") or under the securities laws
--------------
of any state and, unless so registered, may not be sold except as permitted
in the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is three years
after the later of the date of original issue and the last date on which
the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the "Resale Restriction
------------------
Termination Date") only (a) to the Company, (b) pursuant to a registration
----------------
statement which has been declared effective under the Securities Act, (c)
so long as the Securities are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own
---
account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales to non-U.S. persons that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3)
or (7) of Rule 501 under the Securities Act that is purchasing for his own
account or for the account of
A-1
<PAGE>
such an institutional "accredited investor," in each case in a minimum
principal amount of Senior Notes of $250,000, for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act or (f) pursuant to
any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Trustee,
which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution
in violation of the Securities Act. We acknowledge on our own behalf and
on behalf of any investor account for which we are purchasing Securities
that the Company and the Trustee reserve the right prior to any offer, sale
or other transfer prior to the Resale Restriction Termination Date of the
Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Securities for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and
we and any accounts for which we are acting are each able to bear the
economic risk of our or its investments.
3. We are acquiring at least $250,000 principal amount of the Senior
Notes and we are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
A-2
<PAGE>
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
________________________
(Name of Purchaser)
By:_____________________
Date:___________________
Upon transfer the Senior Notes should be registered in the name of the
new beneficial owner as follows:
Name: ______________________
Address:_____________________
Taxpayer ID Number:__________
A-3
<PAGE>
EXHIBIT B
FORM OF OPINION OF DUANE, MORRIS & HECKSCHER
(pursuant to Section 7(h)(i) of the Purchase Agreement)
Capitalized terms are used as defined in the Purchase Agreement.
(a) Each of the Company, WinCup Holdings, Inc., WinCup Holdings, L.P.
and SP Acquisition Co. (the above Guarantors being referred to herein as the
"Delaware Subsidiaries") has been duly incorporated or organized and is validly
- ----------------------
existing as a corporation or a limited partnership in good standing under the
laws of the State of Delaware, with corporate or partnership power and authority
to own its properties and to conduct its affairs as described in the Final
Offering Memorandum. Each of the Company and the Guarantors has been duly
qualified as a foreign corporation or limited partnership for the transaction of
business and is in good standing under the laws of each jurisdiction set forth
beside the Company's or such Subsidiary's name on Schedule 3 to the Purchase
Agreement.
(b) As of the date hereof (after giving effect to the Acquisitions and
the Other Financings), (i) all of the outstanding shares of capital stock of the
Company are duly and validly authorized and issued and are fully paid and non-
assessable, and are owned of record free and clear, to such counsel's knowledge,
of all liens, encumbrances, equities or claims; (ii) such counsel has no
knowledge of any outstanding options, warrants or other rights, calling for the
issuance of, or any commitments, plans, or arrangements to issue any shares of
capital stock of, the Company or any security convertible or exchangeable or
exercisable for capital stock of the Company except, in each case, as described
in the Final Offering Memorandum; (iii) all of the issued shares of capital
stock of each of the Delaware Subsidiaries are duly and validly authorized and
issued, fully paid and non-assessable and are owned of record directly by the
Company or a wholly-owned Subsidiary, and such counsel has no knowledge of any
encumbrances, equities or claims on such shares; (iv) all partnership interests
of the Joint Venture are owned of record directly or indirectly by the Company
or a wholly-owned Subsidiary, and such counsel has no knowledge of any liens,
encumbrances, equities or claims on such interests; and (v) such counsel has no
knowledge of any outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, any equity interests of any
Delaware Subsidiary except, in each case, as described in the Final Offering
Memorandum.
(c) The Purchase Agreement has been duly authorized, executed and
delivered by the Company and each of the Delaware Subsidiaries.
B-1
<PAGE>
(d) The Indenture has been duly authorized, executed and delivered by
the Company and each of the Delaware Subsidiaries and, assuming due
authorization, execution and delivery by the other parties thereto, is a legal,
valid and binding agreement of the Company and the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or fraudulent transfer or other similar laws relating to
or affecting the enforcement of creditors' rights generally and except as the
enforceability of the Indenture is subject to the application of general
principles of equity (regardless of whether considered in a proceeding in at law
or in equity) including, without limitation, (i) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (ii)
concepts of materiality, reasonableness, good faith and fair dealing. The
Indenture conforms in all material respects to the description thereof set forth
in the Final Offering Memorandum.
(e) The Notes have been duly and validly authorized and, when executed
and authenticated in accordance with the terms of the Indenture and delivered to
and paid for by the Initial Purchasers in accordance with the terms of the
Purchase Agreement, (i) will be legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or fraudulent transfer or other similar laws relating to
or affecting the enforcement of creditors' rights generally and except as the
enforceability of the Notes is subject to the application of general principles
of equity (regardless of whether considered in a proceeding at law or in equity)
including, without limitation, (A) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (B) concepts of
materiality, reasonableness, good faith and fair dealing and (ii) will be
entitled to the benefits of the Indenture. The Securities conform in all
material respects to the description thereof set forth in the Final Offering
Memorandum under the heading "Description of the Notes."
(f) The Guarantees have been duly and validly authorized by the
Delaware Subsidiaries and, when the Notes have been executed by the Company and
authenticated, and the Guarantees have been executed by the Guarantors, in
accordance with the terms of the Indenture and the Guarantees have been
delivered to the Initial Purchasers in accordance with the terms of the Purchase
Agreement, the Guarantees (i) will be legal, valid and binding obligations of
the Guarantors enforceable against the Guarantors in accordance with their
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or fraudulent transfer or other similar laws
relating to or affecting the enforcement of creditors' rights generally and
except as the enforceability of the Guarantees is subject to the application of
general
B-2
<PAGE>
principles of general equity (regardless of whether considered in a proceeding
at law or in equity) including, without limitation, (i) the possible
unavailability of specific performance, injunctive relief or any other equitable
remedy and (ii) concepts of materiality, reasonableness, good faith and fair
dealing and (ii) will be entitled to the benefits of the Indenture. Such
counsel may assume, in rendering the opinion expressed in this paragraph (f),
that, at the time of the execution and delivery by each of the Guarantors of the
Guarantees, each Guarantor is, and after giving effect to any payment by such
Guarantor under the Guarantee (or any other provision of the Indenture under
which such Guarantor agrees to be liable for the payment of principal of,
premium, if any, and interest on the Notes) such Guarantor will be, Solvent and
that adequate consideration exists, in the case of each Guarantor, for its
execution, delivery and performance of the Guarantee (and its agreements in
respect of any such other provision).
(g) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and each of the Delaware Subsidiaries and,
assuming due authorization, execution and delivery by the other parties thereto,
is a legal, valid and binding agreement of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with its terms,
except (i) as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or fraudulent transfer or other similar laws
relating to or affecting the enforcement of creditors' rights generally and
except as the enforceability of the Registration Rights Agreement is subject to
the application of general principles of equity (regardless of whether
considered in a proceeding at law or in equity) including, without limitation,
(A) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (B) concepts of materiality, reasonableness, good
faith and fair dealing, and (ii) for limitations on the enforceability of
indemnification provisions imposed by law or public policy. The Registration
Rights Agreement conforms in all material respects to the description thereof
set forth in the Final Offering Memorandum.
(h) The execution, delivery and performance by the Company and each
of the Guarantors of the Purchase Agreement, the Indenture, the Securities and
the Registration Rights Agreement, in each case to the extent the Company and
each of the Guarantors is a party, and the performance by the Company and each
of the Guarantors of its obligations thereunder, including, without limitation,
the issuance, sale and delivery of the Securities, the performance by the
Company and each of the Guarantors of its obligations on or prior to the Closing
Date with respect to the Acquisitions and the Other Financings, and the
execution, delivery and performance by the Company or any Guarantor of the Other
Transaction Documents, do not and will not (1) to our knowledge, result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture,
B-3
<PAGE>
mortgage, deed of trust, bank loan or credit agreement, lease or other agreement
or instrument to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound or to which any of the property or assets of
the Company or any Guarantor is subject, (2) result in any violation of the
provisions of the Certificate of Incorporation or Certificate of Limited
Partnership or the By-laws or Agreement of Limited Partnership, as the case may
be, in each case as amended, of the Company or any Delaware Subsidiary, (3)
result in any violation of the provisions of any statute known by such counsel
to be applicable to the Company or any Guarantor, or any order known to such
counsel, or rule or regulation known by such counsel to be applicable to the
Company or any Guarantor of any court or governmental agency or body having
jurisdiction over the Company or any Guarantor or any of its properties (other
than state securities or Blue Sky laws, as to which such counsel need express no
opinion), (4) to our knowledge, result in or require the creation or imposition
of any Lien upon or with respect to any of the properties of the Company or any
Guarantor, except pursuant to the terms of the Indenture or the Credit
Agreements, or (5) to our knowledge, constitute a default under any ordinance,
license or permit, except, in the case of the events specified in clauses (1),
(4) and (5) above, for such breaches, conflicts, violations or defaults which
would not have a Material Adverse Effect.
(i) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the issue and sale of the Securities or the performance by the Company and
each of the Guarantors of its obligations under the Purchase Agreement, the
Indenture and the Registration Rights Agreement or the consummation of the
Acquisitions or the Other Financings, including, without limitation, the
issuance, sale and delivery of the Securities and the execution, delivery and
performance by the Company and the Guarantors of the Other Transaction
Documents, except such consents, approvals, authorizations, registrations or
qualifications as have been obtained or as may be required under state
securities or Blue Sky laws in connection with the offer and sale of the
Securities, and as may be required by the Securities Act, the securities or Blue
Sky laws of the various states and the Trust Indenture Act in conjunction with
an exchange offer for, or registered resale of, the Securities pursuant to the
Registration Rights Agreement; and the Company and each Delaware Subsidiary has
corporate or partnership power and authority to enter into and perform its
obligations under the Purchase Agreement, the Indenture, the Registration Rights
Agreement and the Other Transaction Documents and to issue, sell and deliver the
Securities to be sold by the Issuers to the Initial Purchasers as provided in
the Purchase Agreement.
(j) The Stock Purchase Agreement, the Non-Competition Agreement, the
Consulting Agreement and Partnership Interest Purchase Agreement, Sales Agent
Extension and Modification
B-4
<PAGE>
Agreement, License Extension and Modification Agreement, the Equipment Use
Extension and Modification Agreement, assuming due authorization, execution and
delivery by Richard Davidovich, James River Paper Company and the other parties
thereto, as the case may be, are legal, valid and binding agreements of the
Company and each Guarantor that is a party thereto, enforceable against each of
them in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or fraudulent
transfer or other similar laws relating to or affecting the enforcement of
creditors' rights generally and except as the enforceability of such agreements
is subject to the application of general principles of equity (regardless of
whether in a proceeding at law or in equity) including, without limitation, (i)
the possible unavailability of specific performance, injunctive relief or any
other equitable remedy and (ii) concepts of materiality, reasonableness, good
faith and fair dealing.
(k) Such counsel has no knowledge of any legal or governmental
proceedings pending or threatened to which the Company or any Guarantor is a
party or of which any property of the Company or any Guarantor is the subject
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(l) Such counsel has no knowledge that any of the Company or any
Delaware Subsidiary is in violation of any term or provision of its Certificate
of Incorporation or Certificate of Limited Partnership or By-Laws or Agreement
of Limited Partnership, as the case may be, in each case as amended to the date
hereof.
(m) Such counsel has no knowledge of any legal or governmental
proceedings, Material Licenses, contracts or documents of a character required
by the representations of the Company or the Delaware Subsidiaries in the
Purchase Agreement to be described in the Final Offering Memorandum which are
not described as required.
(n) Neither the Company nor any of the Guarantors is an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act and the rules and regulations of the
Commission promulgated thereunder.
(o) Assuming that the representations and warranties of the Initial
Purchasers set forth in the Purchase Agreement are true and correct, the
representations and warranties of the Issuers set forth in Section 1(aa) through
1(ag) of the Purchase Agreement are true and correct and, with respect to any
institutional "accredited investors," the representations and warranties
contained in the Transferee Letter of Representations set forth in Exhibit A to
the Purchase Agreement are true and correct, it is not necessary in connection
with the offer, sale
B-5
<PAGE>
and delivery of the Securities to the Initial Purchasers or in connection with
the initial resale of the Securities, in each case in the manner contemplated by
the Purchase Agreement and the Final Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act. The Indenture is in sufficient form in all material respects for
qualification under the Trust Indenture Act and the rules and regulations of the
Commission promulgated thereunder.
(p) When the Securities are issued and delivered pursuant to the
Purchase Agreement, the Securities will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities of the Issuers, if
any, which are listed on a national securities exchange registered under Section
6 of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder or quoted in a U.S. automated interdealer quotation
system. Accordingly, the offer and sale of the Securities in the manner
contemplated by the Purchase Agreement and the Final Offering Memorandum will be
in compliance with paragraph (d)(3) of Rule 144A under the Securities Act.
(q) The Final Offering Memorandum appears on its face to comply as to
form in all material respects with the applicable requirements of paragraph
(d)(4) of Rule 144A under the Securities Act (except that such counsel need
express no opinion or belief as to the financial statements or other financial
data included in or omitted from the Final Offering Memorandum).
(r) The statements set forth in the Final Offering Memorandum under
the caption "Certain Federal Income Tax Considerations" are accurate and
complete in all material respects and fairly present the information set forth
therein.
In addition, such counsel shall state that they have participated in
conferences with officers and representatives of the Issuers, representatives of
Arthur Andersen LLP and Deloitte & Touche LLP, independent auditors for the
Company and StyroChem, respectively, and representatives of the Initial
Purchasers and their counsel at which conferences the contents of the Final
Offering Memorandum were discussed. Although such counsel has not investigated
or verified independently, and does not pass upon or assume any responsibility
for, the accuracy, completeness or fairness of the statements contained in the
Final Offering Memorandum, such counsel shall state that, based upon the
foregoing, they have no knowledge that the Final Offering Memorandum, as of its
date and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Such counsel need express no view as to the
financial statements and other financial data included in or omitted from the
Final Offering Memorandum.
B-6
<PAGE>
Such counsel need express no opinion as to the laws of any
jurisdiction other than the laws of the State of New York, the General
Corporation Law of the State of Delaware, the Delaware Revised Uniform Limited
Partnership Act and the federal laws of the United States. In addition to
relying on Texas and Quebec counsel as contemplated by Section 7(h) of the
Purchase Agreement, such counsel may also rely on the opinion delivered by
counsel to the Sellers pursuant to the Stock Purchase Agreement with respect to
the opinions in paragraphs (b)(iii), (b)(v), (j) and (k) hereof.
Such counsel may also state that, when reference is made in such
opinion to such counsel's "knowledge", such reference means the actual knowledge
attributable to such counsel's representation of the Company of only those
attorneys who have given substantive attention to the transactions contemplated
by the Purchase Agreement and the Other Transaction Documents.
Such counsel may also state that, in rendering the opinions set forth
in paragraphs (d), (e), (f), (g) and (j) above, such counsel expresses no
opinion with respect to (i) any provision of any of the Indenture, the
Registration Rights Agreement and the Stock Purchase Agreement insofar as it
provides for the payment or reimbursement of costs and expenses or
indemnification for claims, losses, or liabilities in excess of a reasonable
amount determined by a court or other tribunal, (ii) the ability of any party to
collect attorneys' fees and costs in an action involving any of the Indenture,
the Registration Rights Agreement and the Stock Purchase Agreement if such party
is not the prevailing party in such action or to the extent such fees and costs
are greater than such fees and costs as may be determined to be reasonable by a
court or other tribunal or (iii) any provisions of the Indenture, the
Registration Rights Agreement and the Stock Purchase Agreement providing for
liquidated damages, if the amount of such damage is found to be in the nature of
a penalty.
B-7
<PAGE>
EXHIBIT C
FORM OF OPINION OF STIKEMAN, ELLIOTT
(pursuant to Section 7(h)(ii) of the Purchase Agreement)
Capitalized terms are used as defined in the Purchase Agreement.
(a) StyroChem International, Ltd. ("StyroChem Ltd.") has been
--------------
incorporated and is validly existing as a corporation under the laws of the
Province of Quebec, with corporate power and authority to own its properties and
to conduct its affairs as described in the Final Offering Memorandum.
(b) As of the date hereof (after giving effect to the Acquisitions and
the Other Financings), all of the outstanding shares of capital stock of
StyroChem Ltd. are duly and validly authorized and issued, are non-assessable if
fully paid, and are owned of record by BankMont & Co.; there are, to such
counsel's knowledge, which knowledge is based solely on a review of the minute
books of StyroChem Ltd. as furnished to such counsel, no outstanding rights,
warrants or options to acquire, or instruments convertible into or exchangeable
for, any equity interests of StyroChem Ltd.
(c) The Purchase Agreement has been authorized by all necessary
corporate action on the part of StyroChem Ltd. and has been duly executed and
delivered by StyroChem Ltd.
(d) The Indenture has been authorized by all necessary corporate
action on the part of StyroChem Ltd. and has been duly executed and delivered by
StyroChem Ltd.
(e) The execution, delivery and performance by StyroChem Ltd. of the
Purchase Agreement, the Indenture, the StyroChem Ltd. Guarantee and the
Registration Rights Agreement, in each case to which it is a party, and the
performance by StyroChem Ltd. of its obligations thereunder, including, without
limitation, the execution of the StyroChem Ltd. Guarantee, the performance by
StyroChem Ltd. of its obligations on or prior to the Closing Date with respect
to the Acquisitions and the Other Financings, and the execution, delivery and
performance by StyroChem Ltd. of the Canadian Credit Agreement, do not and will
not (1) result in any violation of the provisions of the Articles of
Incorporation, Articles of Amendment or the By-laws, in each case as amended, of
StyroChem Ltd. or (2) result in any violation of the laws of the Province of
Quebec or federal laws of Canada applicable therein.
(f) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the execution of the StyroChem Ltd. Guarantee or the consummation by
StyroChem Ltd. of
C-1
<PAGE>
the other transactions contemplated by the Purchase Agreement, the Indenture and
the Registration Rights Agreement or the consummation of the Other Financings,
including, without limitation, the execution of the StyroChem Ltd. Guarantee and
the execution, delivery and performance by StyroChem Ltd. of the Canadian Credit
Agreement; and StyroChem Ltd. has corporate power and authority to enter into
and perform its obligations under the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Canadian Credit Agreement and to execute
the StyroChem Ltd. Guarantee for the benefit of the Initial Purchasers as
provided in the Purchase Agreement.
(g) The Credit Agreements have been authorized by all necessary
corporate action on the part of StyroChem Ltd. and have been duly executed and
delivered by StyroChem Ltd. to the extent that it is a party thereto.
C-2
<PAGE>
EXHIBIT D
FORM OF OPINION OF WINSTEAD SECHREST & MINICK
(pursuant to Section 7(h)(iii) of the Purchase Agreement)
Capitalized terms are used as defined in the Purchase Agreement.
(a) StyroChem International, Inc. ("StyroChem International") has been
-----------------------
duly incorporated and is validly existing as a corporation under the laws of the
State of Texas, with corporate power and authority to own its properties and to
conduct its affairs as described in the Final Offering Memorandum.
(b) As of the date hereof (after giving effect to the Acquisitions and
the Other Financings), all of the outstanding shares of capital stock of
StyroChem International are duly and validly authorized and issued, fully paid
and non-assessable, are owned of record directly by the Company or a Wholly-
Owned Subsidiary, free and clear of all liens, encumbrances, equities or claims;
there are, to such counsel's knowledge, no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, any
equity interests of StyroChem International.
(c) The Purchase Agreement has been duly authorized, executed and
delivered by StyroChem International.
(d) The Indenture has been duly authorized, executed and delivered by
StyroChem International.
(e) The execution, delivery and performance by StyroChem
International of the Purchase Agreement, the Indenture, the Securities and the
Registration Rights Agreement, in each case to it is a party, and the
performance by StyroChem International of its obligations thereunder, including,
without limitation, the issuance, sale and delivery of the Securities, the
performance by StyroChem International of its obligations on or prior to the
Closing Date with respect to the Acquisitions and the Other Financings, and the
execution, delivery and performance by StyroChem International of the Other
Transaction, do not and will not (1) result in any violation of the provisions
of the Articles of Incorporation or the By-laws, in each case as amended, of
StyroChem International or (2) result in any violation of the provisions of any
statute, or any order known to such counsel, or rule or regulation of any court
or governmental agency or body having jurisdiction over StyroChem International
or any of its properties (other than state securities or Blue Sky laws, as to
which such counsel need express no opinion).
D-1
<PAGE>
(f) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the issuance and sale of the Securities or the consummation of the other
transactions contemplated by the Purchase Agreement, the Indenture and the
Registration Rights Agreement or the consummation of the Acquisitions or the
Other Financings, including, without limitation, the issuance, sale and delivery
of the Securities and the execution, delivery and performance by StyroChem
International of the Other Transaction, except such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the offer and sale of the
Securities or such shares, and as may be required by the Securities Act, the
securities or Blue Sky laws of the various states and the Trust Indenture Act in
conjunction with an exchange offer for, or registered resale of, the Securities
pursuant to the Registration Rights Agreement; and StyroChem International has
corporate power and authority to enter into and perform its obligations under
the Purchase Agreement, the Indenture, the Registration Rights Agreement and the
Other Transaction Documents and to issue, sell and deliver the Securities to be
sold by the Issuers to the Initial Purchasers as provided in the Purchase
Agreement.
(g) The Credit Agreements have been duly authorized, executed and
delivered by StyroChem International to the extent that it is a party thereto.
(h) To such counsel's knowledge, StyroChem International is in not in
violation of any term or provision of its Articles of Incorporation or By-Laws,
in each case as amended to the date hereof.
D-2
<PAGE>
EXHIBIT 4.4
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., PHILADELPHIA TIME, ON ,
1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., PHILADELPHIA TIME, ON THE EXPIRATION DATE.
RADNOR HOLDINGS CORPORATION
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
LETTER OF TRANSMITTAL
To Exchange 10% Senior Notes due 2003
Exchange Agent:
FIRST UNION NATIONAL BANK
To: First Union National Bank
Facsimile Transmission:
(215) 985-3428
Confirm by telephone to:
(215) 985-7207
By Mail/Hand Delivery/Overnight Delivery:
First Union National Bank
123 South Broad Street
12th Floor
PA 1249
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Administration
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Old Notes of which you are the holder. If the space
provided in Box 1 is inadequate, list the certificate numbers and principal
amount of Old Notes on a separate signed schedule and affix that schedule to
this Letter.
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT OLD NOTES
(PLEASE FILL IN IF BLANK) NUMBER(S) (1) OF OLD NOTES TENDERED (2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Totals:
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Need not to be completed if Old Notes are being tendered by book-entry
transfer.
(2) Unless otherwise indicated, the entire principal amount of Old Notes
represented by a certificate or Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered.
2
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Issuer the principal amount of Old Notes indicated
above. Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered with this Letter, the undersigned exchanges, assigns and
transfers to, or upon the order of, the Issuer all right, title and interest
in and to the Old Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Issuer) with respect to the tendered Old Notes, with
full power of substitution, to: (a) deliver certificates for such Old Notes;
(b) deliver Old Notes and all accompanying evidence of transfer and
authenticity to or upon the order of the Issuer upon receipt by the Exchange
Agent, as the undersigned's agent, of the New Notes to which the undersigned
is entitled upon the acceptance by the Issuer of the Old Notes tendered under
the Exchange Offer; and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of the Old Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full power
and authority to tender, exchange, assign and transfer the Old Notes tendered
hereby and that the Issuer will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Issuer to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered.
The undersigned agrees that acceptance of any tendered Old Notes by the
Issuer and the issuance of New Notes (together with the New Guarantees of the
Guarantors (as defined in the Prospectus) with respect thereto) in exchange
therefor shall constitute performance in full by the Issuer and the Guarantors
of their obligations under the Registration Rights Agreement (as defined in
the Prospectus) and that, upon the issuance of the New Notes, the Issuer and
the Guarantors will have no further obligations or liabilities thereunder
(except in certain limited circumstances). By tendering Old Notes, the
undersigned certifies (a) that it is not an affiliate of the Issuer, that it
is not a broker-dealer that owns Old Notes acquired directly from the Issuer
or an affiliate of the Issuer, that it is acquiring the New Notes offered
hereby in the ordinary course of the undersigned's business and that the
undersigned has no arrangement or understanding with any person to participate
in the distribution of such New Notes; (b) that it is an affiliate of the
Issuer or of the initial purchaser of the Old Notes in the Offering and that
it will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable to it; or (c) that it is a
Participating Broker-dealer (as defined in the Registration Rights Agreement)
and that it will deliver a prospectus in connection with any resale of the New
Notes.
The undersigned acknowledges that, if it is a broker-dealer that will
receive New Notes for its own account, it will deliver a prospectus in
connection with any resale of such New Notes. By so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
The undersigned understands that the Issuer may accept the undersigned's
tender by delivering written notice of acceptance to the Exchange Agent, at
which time the undersigned's right to withdraw such tender will terminate.
All authority conferred or agreed to be conferred by this Letter shall
survive the death or incapacity of the undersigned, and every obligation of
the undersigned under this Letter shall be binding upon the undersigned's
heirs, personal representatives, successors and assigns. Tenders may be
withdrawn only in accordance with the procedures set forth in the Instructions
contained in this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver New Notes (and, if applicable, a certificate for
any Old Notes not tendered but represented by a certificate also encompassing
Old Notes which are tendered) to the undersigned at the address set forth in
Box 1.
3
<PAGE>
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the terms of the Prospectus and this Letter, the Prospectus shall
prevail.
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
- --------------------------------------------------------------------------------
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Window Ticket Number (if available): _______________________________________
Name of Institution which Guaranteed Delivery: _____________________________
4
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
BOX 2
PLEASE SIGN HERE
WHETHER OR NOT OLD NOTES ARE BEING
PHYSICALLY TENDERED HEREBY
This box must be signed by registered holder(s) of Old Notes as their
name(s) appear(s) on certificate(s) for Old Notes, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Letter. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below. (See Instruction 3)
X __________________________________________________________________________
X __________________________________________________________________________
(SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY)
Date: , 1997
Name(s): ___________________________________________________________________
(PLEASE PRINT)
Capacity: __________________________________________________________________
Address: ___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTIONS 4 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
----------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
----------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
----------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
----------------------------------------------------------------------------
(TITLE)
----------------------------------------------------------------------------
(PRINTED NAME)
Date: , 1997
- --------------------------------------------------------------------------------
5
<PAGE>
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME: FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
PART 1 Social Security Number
orEmployer
Identification Number
PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND ----------------------
DATING BELOW
--------------------------------------------------------
SUBSTITUTE PART 2 [_]
FORM W-9 Check the box if you are NOT subject to back-up
DEPARTMENT OF THE withholding under the provisions of Section
TREASURY, INTERNAL 2406(a)(1)(C) of the Internal Revenue Code because
REVENUE SERVICE (1) you have not been notified that you are subject
to back-up withholding as a result of failure to
PAYOR'S REQUEST FOR report all interest or dividends or (2) the Internal
TAXPAYER INDENTIFICATION Revenue Service has notified you that you are no
NUMBER (TIN) longer subject to back-up withholding.
--------------------------------------------------------
PART 3 [_]
Check if Awaiting TIN
--------------------------------------------------------
CERTIFICATION. UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
Signature _________________________ Date ___________
-----------------------------------
NAME: (PLEASE PRINT)
- --------------------------------------------------------------------------------
6
<PAGE>
BOX 4 BOX 5
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Old Notes in a princi- cates for Old Notes in a princi-
pal amount not exchanged, or New pal amount not exchanged, or New
Notes, are to be issued in the Notes, are to be sent to someone
name of someone other than the other than the person whose sig-
person whose signature appears in nature appears in Box 2 or to an
Box 2, or if Old Notes delivered address other than that shown in
by book-entry transfer which are Box 1.
not accepted for exchange are to
be returned by credit to an ac-
count maintained in the Book-En-
try Transfer Facility other than
the account indicated above.
Deliver:
(CHECK APPROPRIATE BOXES)
[_] Old Notes not tendered
Issue and deliver: [_] New Notes, to:
(CHECK APPROPRIATE BOXES)
(PLEASE PRINT)
[_] Old Notes not tendered
Name: ____________________________
[_] New Notes, to:
Address: _________________________
(PLEASE PRINT)
----------------------------------
Name: ____________________________
----------------------------------
Address: _________________________
----------------------------------
----------------------------------
Please complete the Substitute Form
---------------------------------- W-9 at Box 3
---------------------------------- Tax I.D. or Social Security
Number:
Please complete the Substitute Form
W-9 at Box 3
----------------------------------
Tax I.D. or Social Security
Number:
----------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND CERTIFICATES. Certificates for Old Notes or a
Book-Entry Confirmation, as the case may be, as well as a properly completed
and duly executed copy of this Letter and any other documents required by this
Letter, must be received by the Exchange Agent at its address set forth herein
on or before the Expiration Date. The method of delivery of this Letter,
certificates for Old Notes or a Book-Entry Confirmation, as the case may be,
and any other required documents is at the election and risk of the tendering
holder, but except as otherwise provided below, the delivery will be deemed
made when actually received by the Exchange Agent. If delivery is by mail, the
use of registered mail with return receipt requested, properly insured, is
suggested.
If tendered Old Notes are registered in the name of the signer of the Letter
of Transmittal and the New Notes to be issued in exchange therefore are to be
issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder, the signature of such signer need not be guaranteed. In any
other case, the tendered Old Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Issuer and duly executed by
the registered holder and the signature on the endorsement or instrument of
transfer must be guaranteed by a bank, broker, dealer, credit union, savings
association, clearing agency or other institution (each an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Exchange Act. If the New
Notes and/or Old Notes not exchanged are to be delivered to an address other
than that of the registered holder appearing on the note register for the Old
Notes, the signature on the Letter of Transmittal must be guaranteed by an
Eligible Institution.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender Old Notes should contact such holder promptly and instruct such holder
to tender Old Notes on such beneficial owner's behalf. If such beneficial owner
wishes to tender such Old Notes himself, such beneficial owner must, prior to
completing and executing the Letter of Transmittal and delivering such Old
Notes, either make appropriate arrangements to register ownership of the Old
Notes in such beneficial owner's name or follow the procedures described in the
immediately preceding paragraph. The transfer of record ownership may take
considerable time.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes or a Book-Entry Confirmation, as the case may be, and all other
required documents to the Exchange Agent on or before the Expiration Date may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in the Prospectus. Pursuant to such procedure: (i) tender must be made by or
through an Eligible Institution; (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by telegram, telex,
facsimile transmission, mail or hand delivery) (x) setting forth the name and
address of the holder, the description of the Old Notes and the principal
amount of Old Notes tendered, (y) stating that the tender is being made thereby
and (z) guaranteeing that, within five New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery, this Letter
together with the certificates representing the Old Notes or a Book-Entry
Confirmation, as the case may be, and any other documents required by this
Letter will be deposited by the Eligible Institution with the Exchange Agent;
and (iii) the certificates for all tendered Old Notes or a Book-Entry
Confirmation, as the case may be, as well as all other documents required by
this Letter, must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering Old Notes."
The method of delivery of Old Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance be
obtained, and the mailing be made sufficiently in advance of the Expiration
Date to permit delivery to the Exchange Agent on or before the Expiration Date.
8
<PAGE>
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder pursuant to the Exchange Offer if the holder does not
provide his or her taxpayer identification number (social security number or
employer identification number) and certify that such number is correct. Each
tendering holder should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal, so as to
provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Issuer and the Exchange Agent.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Old Notes to reach the Exchange Agent before the
Expiration Date, a tender may be effected if the Exchange Agent has received at
its office listed on the back cover hereof on or prior to the Expiration Date a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering holder, the principal amount of the
Old Notes being tendered, the names in which the Old Notes are registered and,
if possible, the certificate numbers of the Old Notes to be tendered, and
stating that the tender is being made thereby and guaranteeing that within
three New York Stock Exchange trading days after the date of execution of such
letter, telegram or facsimile transmission by the Eligible Institution, the Old
Notes, in proper form for transfer, will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Old Notes being tendered
by the above-described method (or a timely Book-Entry Confirmation) are
deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents), the Issuer may, at its option, reject the tender.
Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the Purposes described in this paragraph are available from
the Exchange Agent.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a timely Book-Entry Confirmation) is received
by the Exchange Agent. Issuances of New Notes in exchange for Old Notes
tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal (and
any other required documents) and the tendered Old Notes (or a timely Book-
Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Issuer, whose determination will be final and binding. The Issuer reserves
the absolute right to reject any or all tenders that are not in proper form or
the acceptance of which, in the opinion of the Issuer's counsel, would be
unlawful. The Issuer also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. All tendering holders, by
execution of this Letter, waive any right to receive notice of acceptance of
their Old Notes. The Issuer's interpretation of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding.
Neither the Issuer, the Exchange Agent nor any other person shall be
obligated to give notice of defects or irregularities in any tender, nor shall
any of them incur any liability for failure to give any such notice.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of
any Old Note evidenced by a submitted certificate or by a Book-Entry
Confirmation is tendered, the tendering holder must fill in the principal
amount tendered in the fourth column of Box 1 above. All of the Old Notes
represented by a certificate or by a Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
A certificate for Old Notes not tendered will be sent to the holder, unless
otherwise provided in Box 5, as soon as practicable after the Expiration Date,
in the event that less than the entire principal amount of Old Notes
represented by a submitted certificate is tendered (or, in the case of Old
Notes tendered by book-entry transfer, such non-exchanged Old Notes will be
credited to an account maintained by the holder with the Book-Entry Transfer
Facility).
9
<PAGE>
If not yet accepted, a tender pursuant to the Exchange Offer may be withdrawn
prior to the Expiration Date. To be effective with respect to the tender of Old
Notes, a notice of withdrawal must: (i) be received by the Exchange Agent
before the Issuer notifies the Exchange Agent that it has accepted the tender
of Old Notes pursuant to the Exchange Offer; (ii) specify the name of the
person who tendered the Old Notes; (iii) contain a description of the Old Notes
to be withdrawn, the certificate numbers shown on the particular certificates
evidencing such Old Notes and the principal amount of Old Notes represented by
such certificates; and (iv) be signed by the holder in the same manner as the
original signature on this Letter (including any required signature guarantee).
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth on the back cover of the Prospectus prior to the Expiration Date. Any
such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Old Notes to be withdrawn, the certificate
numbers of Old Notes to be withdrawn, the principal amount of Old Notes to be
withdrawn, a statement that such holder is withdrawing his election to have
such Old Notes exchanged, and the name of the registered holder of such Old
Notes, and must be signed by the holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Issuer that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. All
questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Issuer, and such determination will be final
and binding on all parties.
3. SIGNATURES ON THIS LETTER; ASSIGNMENT: GUARANTEE OF SIGNATURES. If this
Letter is signed by the holder(s) of Old Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificate(s)
for such Old Notes, without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned by two or more joint
owners, all owners must sign this Letter. If any tendered Old Notes are held in
different names on several certificates, it will be necessary to complete, sign
and submit as many separate copies of this Letter as there are names in which
certificates are held.
If this Letter is signed by the holder of record and (i) the entire principal
amount of the holder's Old Notes are tendered; and/or (ii) untendered Old
Notes, if any, are to be issued to the holder of record, then the holder of
record need not endorse any certificates for tendered Old Notes, nor provide a
separate bond power. In any other case, the holder of record must transmit a
separate bond power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to the
Issuer of their authority to so act must be submitted, unless waived by the
Issuer.
Signatures on this Letter must be guaranteed by an Eligible Institution,
unless Old Notes are tendered: (i) by a holder who has not completed the Box
entitled "Special Delivery Instructions" on this Letter; or (ii) for the
account of an Eligible Institution. In the event that the signatures in this
Letter or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantees must be by an eligible guarantor institution which
is a member of The Securities Transfer Agents Medallion Program (STAMP), The
New York Stock Exchanges Medallion Signature Program (MSP) or The Stock
Exchanges Medallion Program (SEMP). If Old Notes are registered in the name of
a person other than the signer of this Letter, the Old Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuer, in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in Box 4 or 5, as applicable, the name and address to which the New
Notes or certificates for Old Notes not exchanged are to be issued or sent, if
different from the name and address of the person signing this Letter. In the
case of issuance in a different name, the tax identification number of the
person named must also be indicated. Holders tendering Old
10
<PAGE>
Notes by Book-Entry transfer may request that Old Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as such
holder may designate.
5. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a holder
whose tendered Old Notes are accepted for exchange must provide the Exchange
Agent (as payor) with his or her correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to the holder of the New Notes pursuant to the
Exchange Offer may be subject to back-up withholding. (If withholding results
in overpayment of taxes, a refund may be obtained.) Exempt holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these back-up withholding and reporting requirements. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
Under federal income tax laws, payments that may be made by the Issuer on
account of New Notes issued pursuant to the Exchange Offer may be subject to
back-up withholding at a rate of 31%. In order to prevent back-up withholding,
each tendering holder must provide his or her correct TIN by completing the
"Substitute Form W-9" referred to above, certifying that the TIN provided is
correct (or that the holder is awaiting a TIN) and that: (i) the holder has not
been notified by the Internal Revenue Service that he or she is subject to
back-up withholding as a result of failure to report all interest or dividends;
(ii) the Internal Revenue Service has notified the holder that he or she is no
longer subject to back-up withholding; or (iii) in accordance with the
Guidelines, such holder is exempt from back-up withholding. If the Old Notes
are in more than one name or are not in the name of the actual owner, consult
the enclosed Guidelines for information on which TIN to report.
6. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any, applicable
to the transfer of Old Notes to it or its order pursuant to the Exchange Offer.
If, however, the New Notes or certificates for Old Notes not exchanged are to
be delivered to, or are to be issued in the name of, any person other than the
record holder, or if tendered certificates are recorded in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed by any reason other than the transfer of Old Notes to the Issuer or its
order pursuant to the Exchange Offer, then the amount of such transfer taxes
(whether imposed on the record holder or any other person) will be payable by
the tendering holder. If satisfactory evidence of payment of taxes or exemption
from taxes is not submitted with this Letter, the amount of transfer taxes will
be billed directly to the tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter.
7. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend or
waive any of the specified conditions in the Exchange Offer in the case of any
Old Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any holder whose
certificates for Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above, for further
instruction.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: THIS LETTER (TOGETHER WITH CERTIFICATES REPRESENTING TENDERED OLD
NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS) MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE (AS DEFINED IN
THE PROSPECTUS).
11
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payor.
- -------------------------------------- --------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF--
- ---------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals the account or, if
(joint account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF--
---
<S> <C>
9. A valid trust, The legal entity
estate, or (Do not furnish the
pension trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization
account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, The organization
or other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or
prison) that
receives
agricultural
program payments
</TABLE>
- -------------------------------------- --------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
12
<PAGE>
EXHIBIT 4.5
RADNOR HOLDINGS CORPORATION
NOTICE OF GUARANTEED DELIVERY
OF 10% SENIOR NOTES
DUE 2003
As set forth in the Prospectus dated , 1997 (as the same may be amended
or supplemented from time to time, the "Prospectus") of Radnor Holdings
Corporation (the "Issuer") and its subsidiaries under "The Exchange Offer--
Procedures for Tendering Old Notes" and in the Letter of Transmittal for 10%
Senior Notes due 2003 (the "Letter of Transmittal"), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer (as
defined below) of the Issuer if: (i) certificates for the above-referenced
Notes (the "Old Notes") are not immediately available, (ii) time will not
permit all required documents to reach the Exchange Agent (as defined below)
on or prior to the Expiration Date (as defined in the Prospectus) or (iii) the
procedures for book-entry transfer cannot be completed on or prior to the
Expiration Date. Such form may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or letter to the Exchange Agent.
TO: FIRST UNION NATIONAL BANK
(the "Exchange Agent")
By Facsimile:
(215) 985-3428
Confirm by telephone to:
(215) 985-7207
By Mail/Hand Delivery/Overnight Delivery:
First Union National Bank
123 South Broad Street
12th Floor
PA 1249
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Administration
Delivery of this instrument to an address other than
as set forth above or transmittal of this instrument to
a facsimile number other than as set forth
above does not constitute a valid delivery.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer, upon the terms and conditions
set forth in the Prospectus and the Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which are hereby acknowledged,
the principal amount of Old Notes set forth below pursuant to the guaranteed
delivery procedures described in the Prospectus and the Letter of Transmittal.
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., Philadelphia time, on , 1997, unless extended by the
Issuer. With respect to the Exchange Offer, "Expiration Date" means such time
and date, or if the Exchange Offer is extended, the latest time and date to
which the Exchange Offer is so extended by the Issuer.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed
Delivery shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
Principal amount of Old Notes
SIGNATURES
Exchanged: $__________________________
__________________________________
SIGNATURE OF OWNER Certificate Nos. of Old Notes (if
available)
__________________________________
SIGNATURE OF OWNER (IF MORE THAN ______________________________________
ONE)
______________________________________
Dated: ____________________ , 199
Total: $______________________________
Name(s): _________________________
IF OLD NOTES WILL BE DELIVERED BY
____________________________ BOOK-ENTRY TRANSFER, PROVIDE THE
(PLEASE PRINT) DEPOSITORY TRUST COMPANY ("DTC")
ACCOUNT NO.:
Address: _________________________
Account No.: _________________________
____________________________
____________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _____
Capacity (full title), if signing
in a representative capacity:
__________________________________
Taxpayer Identification or
Social Security No.:
__________________________________
2
<PAGE>
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, hereby guarantees (a) that the above-named
person(s) own(s) the above-described securities tendered hereby within the
meaning of Rule 10b-4 under the Securities Exchange Act of 1934, (b) that
such tender of the above-described securities complies with Rule 10b-4, and
(c) that delivery to the Exchange Agent of certificates tendered hereby, in
proper form for transfer, or delivery of such certificates pursuant to the
procedure for book-entry transfer, in either case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents, is being made within five New
York Stock Exchange trading days after the date of execution of a Notice of
Guaranteed Delivery of the above-named person.
- --------------------------------------------------------------------------------
Name of Firm:
__________________________________ __________________________________
(AUTHORIZED SIGNATURE)
__________________________________
Number and Street or P.O. Box Title:
__________________________________ __________________________________
City State Zip Code
Date:
Tel. No.: ________________________
__________________________________
Fax No.: _________________________
NOTE: DO NOT SEND CERTIFICATES REPRESENTING NOTES WITH THIS NOTICE. NOTES
SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED
AND DULY EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 4.6
RADNOR HOLDINGS CORPORATION
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
10% SENIOR NOTES DUE 2003
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 10% SENIOR NOTES DUE 2003
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AND AMENDED
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1997 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Radnor Holdings Corporation (the "Issuer") to
exchange up to $100,000,000 in aggregate principal amount of its 10% Senior
Notes due 2003 (the "New Notes") for up to $100,000,000 in aggregate principal
amount of its outstanding 10% Senior Secured Notes due 2003 that were issued
and sold in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Old Notes").
The material is being forwarded to you as the beneficial owner of Old Notes
carried by us for your account or benefit but not registered in your name. A
tender of any Old Notes may be made only by us as the registered holder and
pursuant to your instructions. Therefore, the Issuer urges beneficial owners
of Old Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee to contact such registered holder promptly if
they wish to tender Old Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all Old Notes, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal. We urge you to read carefully the
Prospectus and Letter of Transmittal before instructing us to tender your Old
Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
Philadelphia time, on , , 1997, unless extended (the "Expiration
Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to
the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount at
maturity of the New Notes for each $1,000 principal amount at maturity of the
Old Notes, of which $100,000,000 aggregate principal amount of the Old Notes
was outstanding as of , 1997. The terms of the New Notes are
substantially identical (including principal amount, interest rate, maturity,
security and ranking) to the terms of the Old Notes, except that the New Notes
are freely transferrable by holders thereof (except as provided in the
Prospectus).
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE EXCHANGE
OFFER--CERTAIN CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS.
1
<PAGE>
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
Philadelphia time, on , 1997, unless extended.
4. The issuer has agreed to pay the expenses of the Exchange Offer except as
provided in the Prospectus and the Letter of Transmittal.
5. Any transfer taxes incident to the transfer of Old Notes from the
tendering Holder to the Issuer will be paid by the Issuer, except as provided
in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to nor will exchange be accepted from
or on behalf of holders of Old Notes in any jurisdiction in which the making
of the Exchange Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction.
If you wish to have us tender any or all of your Old Notes held by us for
your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying
Letter of Transmittal is furnished to you for informational purposes only and
may not be used by you to tender Old Notes held by us and registered in our
name for your account or benefit.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Radnor Holdings
Corporation, including the Prospectus and the Letter of Transmittal.
This form will instruct you to exchange the aggregate principal amount of
Old Notes indicated below (or, if no aggregate principal amount is indicated
below, all Old Notes) held by you in the account or benefit of the
undersigned, pursuant to the terms and conditions set forth in the Prospectus
and Letter of Transmittal.
Aggregate Principal Amount of Old Notes to be exchanged
$ *
*I (we) understand that if I (we) _____________________________________
sign these instruction forms without
indicating an aggregate principal
amount of Old Notes in the space
above, all Old Notes held by you for
my (our) account will be exchanged.
_____________________________________
Signature(s)
_____________________________________
_____________________________________
_____________________________________
(Please Print name(s) and address
above)
Dated: ________________, 1997
_____________________________________
(Area Code & Telephone Number)
_____________________________________
(Taxpayer Identification or Social
Security Number)
2
<PAGE>
EXHIBIT 4.7
RADNOR HOLDINGS CORPORATION
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
10% SENIOR NOTES DUE 2003
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 10% SENIOR NOTES DUE 2003
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
To Securities Dealers, Commercial Banks Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1997 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Radnor Holdings Corporation (the "Issuer") to
exchange up to $100,000,000 in aggregate principal amount of its 10% Senior
Notes due 2003 (the "New Notes") for up to $100,000,000 in aggregate principal
amount of its outstanding 10% Senior Notes due 2003 that were issued and sold
in a transaction exempt from registration under the Securities Act of 1933, as
amended (the "Old Notes").
We are asking you to contact your clients for whom you hold Old Notes
registered in your name or in the name of your nominee. In addition, we ask
you to contact your clients who, to your knowledge, hold Old Notes registered
in their own name. The Issuer will not pay any fees or commissions to any
broker, dealer or other person in connection with the solicitation of tenders
pursuant to the Exchange Offer. You will, however, be reimbursed by the Issuer
for customary mailing and handling expenses incurred by you in forwarding any
of the enclosed materials to your clients. The Issuer will pay all transfer
taxes, if any, applicable to the tender of Old Notes to it or its order,
except as otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the exchange of
Old Notes and for the information of your clients (facsimile copies of the
Letter of Transmittal may be used to exchange Old Notes);
3. A form of letter that may be sent to your clients for whose accounts you
hold Old Notes registered in your name or the name of your nominee, with space
provided for obtaining the clients' instructions with regard to the Exchange
Offer;
4. A Notice of Guaranteed Delivery;
5. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
6. A return envelope addressed to First Union National Bank, the Exchange
Agent.
1
<PAGE>
Your prompt action is requested. The Exchange Offer will expire at 5:00 p.m.,
Philadelphia time, on , , 1997, unless extended (the "Expiration
Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
To tender Old Notes, certificates for Old Notes or a Book-Entry Confirmation,
a duly executed and properly completed Letter of Transmittal or a facsimile
thereof, and any other required documents, must be received by the Exchange
Agent as provided in the Prospectus and the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange Offer or
for additional copies of the enclosed material may be directed to the Exchange
Agent at its address set forth in the Prospectus or at (215) 985-7207.
Very truly yours,
Radnor Holdings Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE ISSUER OR THE EXCHANGE AGENT, OR ANY AFFILIATE
THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT
FOR THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS
AND THE LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
among
RADNOR HOLDINGS CORPORATION
and
RICHARD DAVIDOVICH
THE DAVIDOVICH CHARITABLE TRUST
JAMES RIVER PAPER COMPANY, INC.
GRUPO INDUSTRIAL HERMES, S.A. de C.V.
ROSENTHAL GROUP
Dated October 30, 1996
EXECUTION COPY
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
1. DEFINITIONS............................................................ 1
2. SALE AND TRANSFER OF SHARES AND OTHER INTERESTS; CLOSING............... 9
2.1 Shares and Other Interests................................... 9
2.2 Purchase Price............................................... 9
2.3 Noncompetition Agreement..................................... 10
2.4 Closing...................................................... 10
2.5 Closing Obligations.......................................... 10
2.6 Adjustment Amount............................................ 12
2.7 Adjustment Procedure......................................... 12
2.8 Tax Matters.................................................. 13
2.9 Environmental Escrow......................................... 15
3. REPRESENTATIONS AND WARRANTIES OF DAVIDOVICH........................... 16
3.1 Organization and Good Standing............................... 16
3.2 Authority; No Conflict....................................... 16
3.3 Capitalization............................................... 17
3.4 Financial Statements......................................... 18
3.5 Books and Records............................................ 18
3.6 Title to Properties; Encumbrances............................ 19
3.7 Condition and Sufficiency of Assets.......................... 20
3.8 Accounts Receivable.......................................... 20
3.9 Inventory.................................................... 20
3.10 No Undisclosed Liabilities................................... 21
3.11 Taxes........................................................ 21
3.12 No Material Adverse Change................................... 22
3.13 Employee Benefits............................................ 23
3.14 Compliance with Legal Requirements; Governmental
Authorizations............................................... 32
3.15 Legal Proceedings; Orders.................................... 33
3.16 Absence of Certain Changes and Events........................ 34
3.17 Contracts; No Defaults....................................... 35
3.18 Insurance.................................................... 37
3.19 Environmental Matters........................................ 37
3.20 Employees.................................................... 39
3.21 Labor Relations; Compliance.................................. 40
3.22 Intellectual Property........................................ 40
3.23 Certain Payments............................................. 41
3.24 Disclosure................................................... 42
3.25 Relationships with Related Persons........................... 42
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
3.26 Brokers or Finders........................................... 43
3A. REPRESENTATIONS AND WARRANTIES OF SELLERS............................... 43
4. REPRESENTATIONS AND WARRANTIES OF BUYER................................. 44
4.1 Organization and Good Standing............................... 44
4.2 Authority; No Conflict....................................... 44
4.3 Investment Intent............................................ 44
4.4 Certain Proceedings.......................................... 45
4.5 Brokers or Finders........................................... 45
4.6 Financing.................................................... 45
4.7 Independent Investigation.................................... 45
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE.............................. 46
5.1 Access and Investigation..................................... 46
5.2 Operation of the Businesses of the Acquired Companies........ 46
5.3 Negative Covenant............................................ 46
5.4 Required Approvals........................................... 47
5.5 Notification................................................. 47
5.6 Payment of Indebtedness by Related Persons................... 47
5.7 No Negotiation............................................... 47
5.8 Commercially Reasonable Efforts.............................. 48
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE................................ 48
6.1 Approvals of Governmental Bodies............................. 48
6.2 Commercially Reasonable Efforts.............................. 48
6.3 Notification................................................. 48
6A. COVENANTS OF PARTIES AFTER CLOSING DATE................................. 49
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE..................... 49
7.1 Accuracy of Representations.................................. 49
7.2 Sellers' Performance......................................... 50
7.3 Supply Contract.............................................. 50
7.4 Additional Documents......................................... 50
7.5 No Proceedings............................................... 51
7.6 No Claim Regarding Stock Ownership or Sale Proceeds.......... 51
7.7 Senior Notes Offering........................................ 51
7.8 Audited Financial Statements................................. 51
7.9 Environmental Reports........................................ 51
7.10 Resignations................................................. 51
7.11 Consent of the Bank of Montreal.............................. 52
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE.................... 52
8.1 Accuracy of Representations.................................. 52
8.2 Buyer's Performance.......................................... 52
8.3 Supply Contract.............................................. 52
8.4 Additional Documents......................................... 52
8.5 No Injunction................................................ 53
8.6 Release of Personal Guaranty................................. 53
9. TERMINATION ............................................................ 53
9.1 Termination Events........................................... 53
9.2 Effect of Termination........................................ 54
10. INDEMNIFICATION; REMEDIES............................................... 54
10.1 Survival; Right to Indemnification Not Affected by Knowledge. 54
10.2 Indemnification and Payment of Damages by each Seller........ 54
10.3 Indemnification and Payment of Damages by Davidovich......... 55
10.4 Indemnification and Payment of Damages by Buyer.............. 56
10.5 Time Limitations............................................. 56
10.6 Limitations on Amount--Davidovich............................ 57
10.7 Limitations on Amount--Buyer................................. 57
10.8 Procedure for Indemnification--Third Party Claims............ 57
10.9 Procedure for Indemnification--Other Claims.................. 58
10.10 Limitations of Liability..................................... 58
10.11 Sole and Exclusive Remedies.................................. 59
11. GENERAL PROVISIONS...................................................... 60
11.1 Expenses..................................................... 60
11.2 Public Announcements......................................... 60
11.3 Confidentiality.............................................. 61
11.4 Notices...................................................... 61
11.5 Jurisdiction; Service of Process............................. 62
11.6 Further Assurances........................................... 62
11.7 Waiver....................................................... 63
11.8 Entire Agreement and Modification............................ 63
11.9 Disclosure Letter............................................ 63
11.10 Assignments, Successors, and No Third-Party Rights........... 63
11.11 Severability................................................. 64
11.12 Section Headings, Construction............................... 64
11.13 Time of Essence.............................................. 64
11.14 Governing Law................................................ 64
11.15 Counterparts................................................. 64
</TABLE>
(iii)
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement ("Agreement") is made as of October 28, 1996,
by and among RADNOR HOLDINGS CORPORATION, a Delaware corporation ("Buyer") and
RICHARD DAVIDOVICH ("Davidovich"), the Davidovich Charitable Trust, Richard
Davidovich, trustee (the "Trust"), JAMES RIVER PAPER COMPANY, INC., a Virginia
corporation ("JR"), GRUPO INDUSTRIAL HERMES, S.A. de C.V., a sociedad anonima
de capital variable, organized and existing under the laws of Mexico ("Grupo
Hermes"), and the persons and trusts listed in Schedule A hereto, (collectively,
the "Rosenthal Group," and collectively with Davidovich, the Trust, JR and Grupo
Hermes, the "Sellers").
RECITAL
-------
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of common and preferred capital
stock, and all options and warrants (collectively, the "Other Interests") to
purchase the common and preferred capital stock, of SP ACQUISITION CO., a
Delaware corporation (the "Company"), for the consideration and on the terms set
forth in this Agreement.
NOW, THEREFORE, in consideration of their respective covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound, Buyer and Sellers hereby agree as follows:
AGREEMENT
---------
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"Acquired Companies"--the Company and its Subsidiaries, collectively.
"Adjustment Amount"--as defined in Section 2.6.
"Applicable Contract"--any Contract to which any Acquired Company is a party or
by which any Acquired Company or any of the assets owned or used by it is bound.
"Applicable Employee Benefit Laws"--as defined in Section 3.13(2).
"Assignments of Other Interests"--as defined in Section 2.4.
"Balance Sheets"--as defined in Section 3.4.
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<PAGE>
"Breach"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any inaccuracy
in or breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision.
"Business Day"--any day other than a Saturday, Sunday or legal holiday under the
laws of the State of Delaware.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer's Releases"--as defined in Section 2.4.
"Canadian GAAP"--generally accepted Canadian accounting principles from time to
time approved by the Canadian Institute of Chartered Accountants, applied on a
basis consistent with the basis on which the Balance Sheets and the other
financial statements of StyroChem International, Ltd. referred to in Section 3.4
were prepared.
"Canadian Plan"--as defined in Section 3.13(2).
"Canadian Revenue Authorities"--Revenue Canada and Revenue Quebec or any
successor agencies.
"Canadian Securities Legislation"--the securities legislation of each of the
provinces and territories of Canada or any successor legislation or regulations
and rules pursuant to such legislation or any successor legislation.
"Closing"--as defined in Section 2.4.
"Closing Date"--the date and time as of which the Closing actually takes place.
"Company"--as defined in the Recital of this Agreement.
"Competition Act"--the Competition Act (Canada) or any successor law and
---------------
regulations and rules issued pursuant to that act or any successor law.
"Confidentiality Agreement"--that certain letter agreement between the Company
and Benchmark Corporation of Delaware, dated June 27, 1996.
"Consent"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
2
<PAGE>
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares and the Other Interests by Sellers to Buyer;
(b) the execution, delivery, and performance of the Noncompetition
Agreement, the Sellers' Releases and the Buyer's Releases;
(c) the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and the Other
Interests.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 10.2.
"Disclosure Letter"--the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, hypothec, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental Escrow Agreement"--as defined in Section 2.5.
"Environmental Liabilities"--any cost, damages, expense, liability, obligation,
or other responsibility arising from or under Environmental Law and consisting
of or relating to:
(a) any environmental matters or conditions (including on-site or off-site
contamination);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law;
3
<PAGE>
(c) financial responsibility under Environmental Law for cleanup costs or
corrective action, including any investigation, cleanup, removal,
containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law (whether or not such Cleanup
has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601 et seq., as amended
("CERCLA") or covered by any Environmental Law applicable in Canada.
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances,
violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) protecting resources, species, or ecological amenities;
(e) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(f) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-
appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Escrow Agent"--Duane, Morris & Heckscher.
4
<PAGE>
"Escrow Agreement"--as defined in Section 2.5.
"Escrowed Funds"--as defined in Section 2.5.
"Facilities"--any real and immoveable property, leaseholds, or other interests
owned or operated by any Acquired Company and any buildings, plants, structures,
or equipment (including motor vehicles, tank cars, and rolling stock) owned or
operated by any Acquired Company.
"GAAP"--means U.S. GAAP in reference to the financial statements of StyroChem
International, Inc. and the Company, and Canadian GAAP in reference to the
financial statements of StyroChem International, Ltd.
"Governmental Authorization"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
(a) nation, state, province, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, province, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, ministry, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof.
"Hazardous Materials"--any waste or other substance that is listed, defined,
designated, or classified on the date hereof as hazardous, radioactive, or toxic
or a pollutant or a contaminant under or pursuant to any Environmental Law,
including any admixture or solution thereof, and specifically including
petroleum and all derivatives thereof or synthetic substitutes therefor and
asbestos or asbestos-containing materials.
5
<PAGE>
"HSR Act"--the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Intellectual Property Assets"--as defined in Section 3.22.
"Interim Balance Sheets"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"ITA"--the Income Tax Act (Canada) and the Taxation Act (Quebec) or any
-------------- ------------
successor law and regulations and rules issued pursuant to the Income Tax Act
--------------
(Canada) or the Taxation Act (Quebec) or any successor law.
------------
"Knowledge"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if such individual is actually aware of such fact or other
matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has Knowledge of such fact or other matter
when serving in such capacity.
"Legal Requirement"--any applicable federal, state, provincial, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, civil law, regulation,
statute, or treaty in effect as of the date hereof.
"Management"--Davidovich, Dick Schwarz, Ivan Banat, Jim Mercado and Mike Pate.
"Material Adverse Effect"--when such term is used to describe or refer to the
impact, magnitude, or significance of any Contract, obligation, liability,
consequence, effect, circumstance or condition, shall mean that the subject
matter of such description or reference has a material adverse effect on the
properties, assets, business, financial condition or prospects of the Acquired
Companies, taken as a whole.
"Noncompetition Agreement"--as defined in Section 2.4(a)(iii).
"Order"--any applicable award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
6
<PAGE>
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Organizational Documents"--(a) the articles or certificate of incorporation and
the bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of a Person; and (e) any amendment to any of the foregoing.
"Other Interests"--as defined in the Recital of this Agreement.
"Person"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Plan"--as defined in Section 3.13.
"Proceeding"--any arbitration, hearing, litigation, or suit (whether civil,
criminal, administrative or investigative) commenced, brought, conducted, or
heard by or before any Governmental Body or arbitrator.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer,
partner, executor, liquidator, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
7
<PAGE>
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
liquidator, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 51% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 51% of the outstanding equity securities or
equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
"Representative"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller"--as defined in the first paragraph of this Agreement.
"Sellers' Releases"--as defined in Section 2.4.
"Senior Notes Offering"--the sale by Buyer of up to $100,000,000 of its Senior
Notes.
"Shares"--as defined in the Recital of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not
8
<PAGE>
occurred) are held by the Owner or one or more of its Subsidiaries; when used
without reference to a particular Person, "Subsidiary" means a Subsidiary of the
Company.
"Tax"--any income tax or similar assessments or any sales, excise, occupation,
use, ad valorem, property, production, severance, transportation, employment,
payroll, franchise, withholding, estate, social service and corporation,
capital, value added, profits, gross receipts, custom duties, stamp, transfer,
water, business, goods and services, or other tax imposed by any United States
federal, state, or local (or any foreign or provincial) taxing authority,
including any interest, penalties, or additions attributable thereto.
"Tax Return"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any
Tax or in connection with the administration, implementation, or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), that
would lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"U.S. GAAP"--generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the Balance Sheets and the other
financial statements of the Company and StyroChem International, Inc. referred
to in Section 3.4 were prepared.
2. SALE AND TRANSFER OF SHARES AND OTHER INTERESTS; CLOSING
2.1 Shares and Other Interests
--------------------------
Subject to the terms and conditions of this Agreement, at the Closing, Sellers
will sell and transfer the Shares and the Other Interests to Buyer, and Buyer
will purchase the Shares and the Other Interests from Sellers.
2.2 Purchase Price
--------------
The purchase price (the "Purchase Price") for the Shares and the Other Interests
will be Twenty-Six Million Dollars ($26,000,000) less amounts shown on Exhibit
2.2 plus or minus the Adjustment Amount.
9
<PAGE>
2.3 Noncompetition Agreement
------------------------
In addition to the Purchase Price, at the Closing Buyer will pay the sum of Four
Million Seven Hundred Sixty Thousand Dollars ($4,760,000) to Davidovich pursuant
to the Noncompetition Agreement.
2.4 Closing
-------
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Buyer's counsel at One Liberty Place, Philadelphia,
Pennsylvania 19103, at 9:00 a.m. (local time) on the date that is concurrent
with the closing of the Senior Notes Offering, or at such other time and place
as the parties may agree. Subject to the provisions of Section 9, failure to
consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 2.3 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
2.5 Closing Obligations
-------------------
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers);
(ii) releases in the form of Exhibit 2.5(a)(ii) executed by Sellers
(collectively, the "Sellers' Releases");
(iii) a noncompetition agreement in the form of Exhibit 2.5(a)(iii),
executed by Davidovich (the "Noncompetition Agreement");
(iv) a consulting agreement in the form of Exhibit 2.5(a)(iv)
executed by Davidovich ("Consulting Agreement");
(v) such assignments of options and assignments of warrants
(collectively, the "Assignments of Other Interests") necessary
to effect the assignment to Buyer of all of the Other Interests,
each reasonably satisfactory in form and substance to Buyer and
duly executed by the appropriate Seller or Sellers; and
(vi) a certificate executed by each Seller representing and
warranting to Buyer that such Seller's representations and
warranties in this Agreement are accurate in all material
respects as of the Closing Date
10
<PAGE>
as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by
Sellers to Buyer prior to the Closing Date in accordance with
Section 5.5);
(vii) an escrow agreement (the "Escrow Agreement") by and among
Escrow Agent, Buyer and Davidovich, in the form of Exhibit
2.5(a)(vii), executed by Davidovich; and
(viii) an environmental escrow agreement (the "Environmental Escrow
Agreement") by and among Escrow Agent, Buyer and Davidovich,
in the form of Exhibit 2.5(a)(viii), executed by Davidovich.
(b) Buyer will make the following payments on account of the Purchase
Price:
(i) pay to Wells Fargo Bank (the "Bank"), the amount which will
pay in full and satisfy the Company's outstanding indebtedness
to the Bank as of the Closing Date;
(ii) transfer to the Escrow Agent pursuant to the terms of the
Escrow Agreement the sum of One Million Dollars ($1,000,000)
(the "Escrowed Funds") pending final determination of the
Adjustment Amount in accordance with Sections 2.6 and 2.7
below and transfer to the Escrow Agent pursuant to the
Environmental Escrow Agreement the sum of One Million Three
Hundred Seventy-five Thousand Dollars ($1,375,000); and
(iii) pay the Sellers, in consideration for the Shares and the Other
Interests, an amount equal to $26,000,000 less the sum of the
payments referred to in Sections 2.5(b)(i) and 2.5(b)(ii) and
Exhibit 2.2, which will be allocated among the Sellers in
accordance with Schedule 2.5(b)(iii) and will be paid by wire
transfer to the Sellers (or to Davidovich on behalf of those
Sellers which have authorized Davidovich to receive payments
on their behalf) as specified on Schedule 2.5(b)(iii).
(c) Buyer will deliver to Sellers:
(i) a certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate
in all material respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made
on the Closing Date;
11
<PAGE>
(ii) the Escrow Agreement, the Noncompetition Agreement, the
Consulting Agreement and the Environmental Escrow Agreement,
executed by Buyer; and
(iii) releases in the form of Exhibit 2.5(c)(iii) executed by Buyer
and the Acquired Companies (the "Buyer's Releases").
2.6 Adjustment Amount
-----------------
The Adjustment Amount (which may be a positive or negative number) will be equal
to the Company's net working capital as of the Closing Date calculated in
accordance with GAAP on a consolidated basis, minus the Company's net working
-----
capital as of August 3, 1996 as set forth on Schedule 2.6 to this Agreement,
------------
provided that for purposes of determining the Adjustment Amount the balance
sheet as of the Closing Date will be compared to Schedule 2.6 with respect to
the asset and liability accounts shown on Schedule 2.6.
2.7 Adjustment Procedure
--------------------
(a) Buyer will cause Arthur Andersen LLP, the Buyer's certified public
accountants, to determine the consolidated net working capital of the Company as
of the close of business on the Closing Date in accordance with GAAP and to
determine the Adjustment Amount based on the consolidated net working capital of
the Company as so determined as of the close of business on the Closing Date as
compared to the consolidated net working capital of the Company as shown on
Schedule 2.6, based on the asset and liability accounts specified on Schedule
2.6 and subject to the instructions provided in Schedule 2.6, but not subject to
any disclosures or statements made in the Disclosure Letter delivered to Sellers
pursuant to this Agreement. Buyer will deliver the statement prepared by Arthur
Andersen LLP showing the calculation of the Adjustment Amount ("Closing
Statement") to Davidovich within sixty (60) days after the Closing Date,
together with copies of Buyer's and Arthur Andersen LLP's work papers, and other
documents and information, used to prepare the Closing Statement. If, within
sixty (60) days following delivery of the Closing Statement and related
documents and information, Davidovich has not given Buyer notice of his
objection to the Closing Statement (such notice must contain a statement of the
basis of Davidovich's objection), then the Company's net working capital
reflected in the Closing Statement will be used in computing the Adjustment
Amount. Buyer agrees upon reasonable notice to make available to Davidovich at
the offices of the Acquired Companies the books and records of the Acquired
Companies as required by Davidovich to verify the determination reflected in the
Closing Statement. If Davidovich gives such notice of objection, and the parties
are unable to resolve the subject of such objection within thirty (30) days
after such notice, then the issues in dispute will be submitted to Ernst &
Young, certified public accountants (the "Accountants"), for resolution with
instructions to the Accountants to resolve such dispute within forty-five (45)
days. If issues in dispute are submitted to the Accountants for resolution, (i)
each party will furnish to the Accountants such workpapers and other documents
and information relating to the disputed issues as the Accountants may request
and
12
<PAGE>
are available to that party or its Subsidiaries (or its independent public
accountants), and will be afforded the opportunity to present to the Accountants
any material relating to the determination and to discuss the determination with
the Accountants; (ii) the determination by the Accountants, as set forth in a
notice delivered to both parties by the Accountants, will be binding and
conclusive on the parties; and (iii) Buyer and Sellers will each bear 50% of the
fees of the Accountants for such determination.
(b) The final determination of the Adjustment Amount shall occur on the
earliest of (i) sixty (60) days after delivery of the Closing Statement to
Davidovich without objection, (ii) written agreement of Davidovich and Buyer to
the Closing Statement or any modification thereof, or (iii) written
determination by the Accountants. On the tenth (10th) Business Day following
the final determination of the Adjustment Amount, (i) if the Adjustment Amount
is a negative number and greater than negative $1,000,000, the Escrowed Funds
shall be paid to Buyer, and the Sellers shall pay to Buyer (in proportion to the
relative percentage of the Purchase Price payable to each Seller under Section
2.5(b)(iii) (such relative proportions, hereinafter, a "Pro Rata Basis")) an
amount equal to the amount by which the negative Adjustment Amount exceeds
negative $1,000,000, (ii) if the Adjustment Amount is a negative number and less
than or equal to negative $1,000,000, an amount equal to the negative Adjustment
Amount shall be paid to Buyer out of the Escrowed Funds, and the balance of the
Escrowed Funds, if any, shall be paid to the Sellers, and (iii) if the
Adjustment Amount is zero or a positive number, all of the Escrowed Funds shall
be paid to the Sellers, and Buyer shall pay to the Sellers an amount equal to
the positive Adjustment Amount, if any. All payments of the Escrowed Funds will
be made together with interest at the rate earned thereon. Payments must be
made in immediately available funds by wire transfer to such bank account as the
party entitled to receive such funds shall specify. Payments made to Sellers
under this Section and under Section 2.5(b)(iii) shall be paid on a Pro Rata
Basis in accordance with Schedule 2.5(b)(iii), and payments made to Davidovich
on behalf of Sellers other than JR shall be paid to Davidovich and then
distributed by Davidovich to such Sellers in accordance with Schedule
2.5(b)(iii). Any portion of the Adjustment Amount which is not disputed under
the procedures set forth above shall be paid to the party or parties entitled
thereto in accordance with the provisions of this Section 2.7, and the remaining
portion of the Adjustment Amount shall be paid when any dispute has been
resolved in accordance with the provisions of this Section 2.7. An example of
the calculation of the amount payable to Sellers at Closing and the calculation
and payment of the Adjustment Amount is set forth on Exhibit 2.7(b) attached
hereto (the assumptions set forth therein being arbitrary and used for
illustrative purposes only).
2.8 Tax Matters
-----------
The following provisions shall govern the allocation of responsibility as
between Buyer and Sellers for certain tax matters following the Closing Date:
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(a) Tax Periods Ending on or Before the Closing Date. Buyer shall prepare
------------------------------------------------
or cause to be prepared and file or cause to be filed all Tax Returns for the
Acquired Companies for all periods ending on or prior to the Closing Date which
are filed after the Closing Date. Buyer shall permit Davidovich to review and
comment on each such Tax Return described in the preceding sentence prior to
filing and shall make such revisions to such Tax Returns as are reasonably
requested by Davidovich. Davidovich shall reimburse Buyer for Taxes of the
Acquired Companies with respect to such periods within fifteen (15) days after
payment by Buyer or the Acquired Companies of such Taxes to the extent such
Taxes are not reflected in the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the Closing Statement.
(b) Tax Periods Beginning Before and Ending After the Closing Date. Buyer
--------------------------------------------------------------
shall prepare or cause to be prepared and file or cause to be filed any Tax
Returns of the Acquired Companies for Tax periods which begin before the Closing
Date and end after the Closing Date in a manner reasonably consistent with past
tax returns. Buyer shall permit Davidovich to review and comment on each such
Tax Return described in the preceding sentence prior to filing and shall make
such revisions to such Tax Returns as are reasonably requested by Davidovich.
Davidovich shall pay to Buyer within fifteen (15) days after the date on which
Taxes are paid with respect to such periods an amount equal to the portion of
such Taxes which relates to the portion of such Taxable period ending on the
Closing Date to the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the Closing Statement.
For purposes of this Section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates to the portion
of such Taxable period ending on the Closing Date shall (x) in the case of any
Taxes other than Taxes based upon or related to income or receipts, be deemed to
be the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
Taxable period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if the relevant
Taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the Acquired Companies.
(c) Refunds and Tax Benefits. Any Tax refunds that are received by Buyer
------------------------
or the Acquired Companies, and any amounts credited against Tax to which Buyer
or the Acquired Companies become entitled, that relate to Tax periods or
portions thereof ending on or before the Closing Date shall be for the account
of Sellers, and Buyer shall pay over to Sellers on a Pro Rata Basis any such
refund or the amount of any such credit within fifteen (15) days after receipt
or entitlement thereto, unless Sellers have received credit therefor on the
Closing Statement. In addition, to the extent that a claim for refund or a
proceeding results in a payment or credit against Tax by a taxing authority to
the Buyer or the Acquired Companies
14
<PAGE>
of any amount accrued on the Closing Statement, the Buyer shall pay such amount
to Sellers on a Pro Rata Basis within fifteen (15) days after receipt or
entitlement thereto.
(d) Cooperation on Tax Matters.
--------------------------
(i) Buyer and Sellers shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Buyer and Sellers agree (A) that Buyer will cause the
Acquired Companies to retain all books and records with respect to Tax
matters pertinent to the Acquired Companies relating to any taxable period
beginning before or including the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Buyer or Sellers,
any extensions thereof) of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing authority, and
(B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if
the other party so requests, Buyer will cause the Acquired Companies to
allow the other party to take possession of such books and records.
(ii) Buyer and Sellers further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to,
with respect to the transactions contemplated hereby).
(e) Any dispute between the parties regarding the matters set forth in
this Section 2.8 shall be submitted to the Accountants for resolution in
accordance with the procedures set forth in Section 2.7 above.
2.9 Environmental Escrow
--------------------
At the Closing, Buyer will pay $1,375,000 to the Escrow Agent to be held and
disbursed pursuant to the Environmental Escrow Agreement. Buyer shall have no
claim against Davidovich for breach of any representation or warranty related to
the matters specified on Exhibit A to the Environmental Escrow Agreement, other
than the right which Buyer has under the Escrow Agreement to apply the escrowed
funds to correct and address the matters specified on Exhibit A. Prior to
Closing, Buyer and Sellers will mutually agree on the independent consultant to
serve as contemplated by the Environmental Escrow Agreement.
15
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF DAVIDOVICH
Davidovich represents and warrants to Buyer as follows:
3.1 Organization and Good Standing
------------------------------
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder, option holder or
warrant holder and the number of shares, options or warrants held by each). Each
Acquired Company is a corporation duly incorporated and organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. Except as set forth on Part 3.1 of the Disclosure Schedule, each
Acquired Company is duly qualified and registered to do and carry on business as
a foreign corporation and is in good standing under the laws of each state,
province or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification and registration.
(b) Davidovich has delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 Authority; No Conflict
----------------------
(a) Except as set forth in Part 3.2 of the Disclosure Letter, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Acquired
Companies, or (B) any resolution adopted by the board of
directors or the stockholders of any Acquired Company;
(ii) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to
which any Acquired Company, or any of the assets owned or used
by any Acquired Company, may be subject;
16
<PAGE>
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Authorization that is held by any
Acquired Company or that otherwise relates to the business of,
or any of the assets owned or used by, any Acquired Company; or
(iv) except as set forth in Part 3.2 of the Disclosure Letter,
contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; or
(v) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Acquired
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no Acquired Company is
or will be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 Capitalization
--------------
The authorized equity securities of the Company consist of (i) 400,000 shares of
Common Stock, par value $.01 per share, of which certain shares are issued and
outstanding as set forth in Part 3.3 of the Disclosure Schedule (the "Common
Shares") and (ii) 100,000 shares of Class A Preferred Stock, par value $.01 per
share, of which certain shares are issued and outstanding as set forth in Part
3.3 of the Disclosure Schedule (the "Preferred Shares"). The Common Shares and
the Preferred Shares collectively constitute the Shares and are owned of record
as set forth in Part 3.3 of the Disclosure Schedule. The authorized equity
securities of StyroChem International, Inc., a Texas corporation, consist of 100
shares of common stock, par value $10.00, of which 100 shares are issued and
outstanding and are owned by the Company. The authorized equity securities of
StyroChem International, Ltd., a Quebec corporation, consist of 10 shares of
common stock, par value $10.00 per share, of which 10 shares are issued and
outstanding and owned by the Company. The authorized equity securities of
StyroChem FSC, Ltd., a Barbados corporation, consist of 1,000 shares of common
stock, no par value, all of which are owned by the Company. All of the
outstanding equity securities of each Acquired Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except as described in
Part 3.3 of the Disclosure Letter, and with the exception of the Shares and the
Other Interests (which are owned by Sellers), all of the outstanding equity
securities and other securities of each Acquired Company are owned of record and
beneficially by one or more of the Acquired Companies, free and clear of all
Encumbrances. Except as described in Part 3.3 of the Disclosure Letter, there
are no outstanding Contracts obligating any Acquired Company to issue, sell or
transfer any equity
17
<PAGE>
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act, the Canadian Securities Legislation or any
other Legal Requirement. Except as set forth in Part 3.3 of the Disclosure
Letter, no Acquired Company owns, or has any Contract to acquire, any equity
securities or other securities of any Person (other than Acquired Companies) or
any direct or indirect equity or ownership interest in any other business. The
following debentures have been paid in full by the Company: (i) SP Acquisition
Co. 1994 Debenture No. 1, dated February 25, 1994, in the principal amount of
$400,000, in favor of Grupo Industrial Hermes, S.A. de C.V.; (ii) SP Acquisition
Co. 1994 Debenture No. 2, dated February 25, 1994, in the principal amount of
$800,000, in favor of James River Paper Company, Inc.; (iii) SP Acquisition Co.
1994 Debenture No. 3, dated February 25, 1994, in the principal amount of
$800,000, in favor of E.M. Rosenthal; (iv) SP Acquisition Co. 1994 Debenture No.
4, dated December 22, 1994, in the principal amount of $666,000, in favor of
E.M. Rosenthal; and (v) SP Acquisition Co. 1994 Debenture No. 5, dated December
22, 1994, in the principal amount of $334,000, in favor of Grupo Industrial
Hermes, S.A. de C.V.
3.4 Financial Statements
--------------------
Davidovich has delivered to Buyer: (a) balance sheets of StyroChem
International, Inc. and Styrochem International, Ltd. for the period from
February 26, 1994 to April 1, 1995, and the related statements of income,
changes in stockholders' equity, and cash flow for the period ended April 1,
1995, together with the notes thereto and the report thereon of Coopers &
Lybrand L.L.P., independent certified public accountants ("Audited Financial
Statements"), (b) consolidated balance sheets of the Company, StyroChem
International, Inc. and Styrochem International, Ltd. (the "Balance Sheets"),
and the related consolidated statements of income, changes in stockholders'
equity, and cash flow for the fiscal year ended March 30, 1996, and (c)
unaudited balance sheets of the Company, StyroChem International, Inc. and
Styrochem International, Ltd. as at September 28, 1996 (the "Interim Balance
Sheets") and the related unaudited statements of income, changes in
stockholders' equity, and cash flow for the 6 months then ended. Except as set
forth in Part 3.4 of the Disclosure Letter, such financial statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Acquired Companies as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the Audited Financial Statements); except as set forth in Part 3.4
of the Disclosure Letter, the financial statements referred to in this Section
3.4 reflect the consistent application of such accounting principles throughout
the periods involved. No financial statements of any Person other than the
Acquired Companies are required by GAAP to be included in the consolidated
financial statements of the Company.
3.5 Books and Records
-----------------
18
<PAGE>
Except as set forth in Part 3.4 of the Disclosure Letter, the books of account,
minute books, stock record books, and other records of the Acquired Companies,
all of which have been made available to Buyer, are complete and correct in all
material respects. At the Closing, all of those books and records will be in
the possession of the Acquired Companies.
3.6 Title to Properties; Encumbrances
---------------------------------
Part 3.6 of the Disclosure Letter contains a complete and accurate list of all
real and immoveable property, real property leaseholds, or other interests
therein owned by any Acquired Company. The Acquired Companies own (with good
and indefeasible title in the case of real and immoveable property, subject only
to the matters permitted by the following sentence) all the properties and
assets (whether real and immoveable, personal and moveable, or mixed and whether
tangible or intangible) that they purport to own located in the facilities owned
or operated by the Acquired Companies or reflected as owned in the books and
records of the Acquired Companies, including all of the properties and assets
reflected in the Interim Balance Sheets and including all Intellectual Property
Assets (as hereinafter defined) (except for (i) assets held under capitalized
leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure
Letter, (ii) personal and moveable property sold since the dates of the Interim
Balance Sheets, as the case may be, in the Ordinary Course of Business and (iii)
certain real and immoveable property and improvements thereon located in Keller,
Texas and identified in Part 3.6 of the Disclosure Letter as sold prior to
Closing, and all of the properties and assets purchased or otherwise acquired by
the Acquired Companies since the date of the Interim Balance Sheets (except for
personal and moveable property acquired and sold since the date of the Interim
Balance Sheets in the Ordinary Course of Business and consistent with past
practice), which subsequently purchased or acquired properties and assets (other
than inventory and short-term investments) are listed in Part 3.6 of the
Disclosure Letter. All material properties and assets reflected in the Interim
Balance Sheets and all Intellectual Property Assets are free and clear of all
Encumbrances except, with respect to all such properties and assets, (a)
mortgages, hypothecs or security interests shown on the Interim Balance Sheets
as securing specified liabilities or obligations, (b) mortgages, hypothecs or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheets (such mortgages, hypothecs
and security interests being limited to the property or assets so acquired), (c)
liens for current taxes not yet due or the validity of which is being contested
in good faith by appropriate legal proceedings, (d) statutory liens (including
materialmen's, mechanic's, repairmen's, landlord's, and other similar liens)
arising in connection with the Ordinary Course of Business securing payments not
yet due and payable or, if due and payable, the validity of which is being
contested in good faith by appropriate legal proceedings, and (e) such
imperfections or irregularities of title, if any, as (A) are not substantial in
character, amount, or extent and do not materially detract from the value of the
property subject thereto, (B) do not materially interfere with either the
present or intended use of such property, and (C) do not, individually or in the
aggregate, materially interfere with the conduct of the Acquired Companies
normal operations or otherwise have a Material Adverse Effect.
19
<PAGE>
3.7 Condition and Sufficiency of Assets
-----------------------------------
Except as disclosed in Part 3.7 of the Disclosure Schedule, to the knowledge of
Management, the buildings, plants, structures, and equipment of the Acquired
Companies are structurally sound, are in good operating condition and repair,
and are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
(except for ordinary, routine maintenance and repairs). The building, plants,
structures, and equipment of the Acquired Companies are sufficient for the
continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 Accounts Receivable
-------------------
All accounts receivable of the Acquired Companies that are reflected on the
Interim Balance Sheets or on the Closing Statement and the accounting records of
the Acquired Companies as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectible net of the reserves, if any, shown
on the Closing Statement (which reserves, if any, are adequate consistent with
past practice and will not represent a material adverse change in the
composition of such Accounts Receivable in terms of aging). Subject to such
reserves, if any, each of the Accounts Receivable either has been or will be
collected in full, without any set-off, within 180 days after the day on which
it first becomes due and payable. There is no contest, claim, or right of set-
off, other than returns in the Ordinary Course of Business, under any Contract
with any obligor of an Accounts Receivable relating to the amount or validity of
such Accounts Receivable. Part 3.8 of the Disclosure Letter contains a complete
and accurate list of all Accounts Receivable as of the date of the Interim
Balance Sheets, which list sets forth the aging of such Accounts Receivable.
3.9 Inventory
---------
Except as stated in Part 3.4 of the Disclosure Letter: All inventory of the
Acquired Companies, whether or not reflected in the Interim Balance Sheets,
consists of a quality and quantity useable and salable in the Ordinary Course of
Business. Inventories will be valued in accordance with GAAP applied on a
consistent basis, net of any reserves required in accordance with GAAP. Raw
materials, work in process and finished goods will be valued at the lower of
cost or market, with cost being calculated on an average cost basis, the lower
of cost or market test for raw materials and work in process will be determined
on a FIFO basis using the most current invoice and the next prior invoice(s)
unit all pounds of raw material and WIP have been valued. The amount of overhead
and labor added to work in process and finished goods is based on the direct
cost method where all material costs directly related to the production process
along with direct labor, depreciation, utilities, and repairs and maintenance
are capitalized into inventory and is
20
<PAGE>
consistent with the prior periods. Non-prime inventory will be stated at the net
realizable value, using the average sales price of the last 90 days actual sales
of the specific product. The Acquired Companies will try to sell all non-prime
inventory prior to Closing.
3.10 No Undisclosed Liabilities
--------------------------
Except as set forth in Part 3.10 of the Disclosure Letter, the Acquired
Companies have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Interim Balance
Sheets and current liabilities incurred in the Ordinary Course of Business since
the respective dates thereof which, if still outstanding on the Closing Date,
will be reflected in the Closing Statement; provided, however, the foregoing
representation does not apply to or cover any liabilities or obligations that
are generally the subject of any other representation or warranty made by
Davidovich in this Agreement, whether or not such liabilities or obligations
would be required to be disclosed under the express terms of such other
representation or warranty.
3.11 Taxes
-----
(a) Except as set forth in Part 3.11 of the Disclosure Letter, the Acquired
Companies have filed or caused to be filed on a timely basis since February 25,
1994 all Tax Returns that are or were required to be filed by or with respect to
any of them, either separately or as a member of a group of corporations,
pursuant to applicable Legal Requirements. The Acquired Companies have paid, or
made provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise (since February 25, 1994), or
pursuant to any assessment received by Sellers or any Acquired Company, except
such Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter and are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Interim Balance Sheets. Each of
the Acquired Companies has paid adequate and timely installments of taxes.
(b) Part 3.11 of the Disclosure Letter contains a complete and accurate
list of all audits of all Tax Returns filed since February 25, 1994. All
deficiencies proposed as a result of such audits have been paid, reserved
against, settled, or, as described in Part 3.11 of the Disclosure Letter, are
being contested in good faith by appropriate proceedings. Part 3.11 of the
Disclosure Letter describes all adjustments to the United States federal income
Tax Returns and Canadian (federal and provincial) income Tax Returns filed by
any Acquired Company or any group of corporations including any Acquired Company
for all taxable years since February 25, 1994, and the resulting deficiencies
proposed by the IRS or Canadian Revenue Authorities, as the case may be. Except
as described in Part 3.11 of the Disclosure Letter, neither Seller nor any
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or
21
<PAGE>
for which any Acquired Company may be liable for any Tax Return filed after
February 25, 1994.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of each Acquired Company are adequate (determined in accordance
with GAAP) and are at least equal to that Acquired Company's liability for Taxes
for any Tax Return filed after February 25, 1994. To Management's Knowledge,
there exists no proposed tax assessment against any Acquired Company except as
disclosed in the Interim Balance Sheets or in Part 3.11 of the Disclosure Letter
for any Return filed after February 25, 1994. No consent to the application of
Section 341(f)(2) of the IRC or any similar provision of the ITA has been filed
with respect to any property or assets held, acquired, or to be acquired by any
Acquired Company. All Taxes that any Acquired Company is or was required by
Legal Requirements to withhold or collect after February 25, 1994 have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed since February 25, 1994 by (or that include on a
consolidated basis) any Acquired Company are true, correct, and complete in all
material respects. There is no tax sharing agreement that will require any
payment by any Acquired Company after the date of this Agreement. During the
consistency period (as defined in Section 338(h)(4) of the IRC or any equivalent
provision of the ITA with respect to the sale of the Shares to Buyer), no
Acquired Company or target affiliate (as defined in Section 338(h)(6) of the IRC
or any equivalent provision of the ITA with respect to the sale of the Shares to
Buyer) has sold or will sell any property or assets to Buyer or to any member of
the affiliated group (as defined in Section 338(h)(5) of the IRC or any
equivalent provision of the ITA) that includes Buyer. Part 3.11 of the
Disclosure Letter lists all such target affiliates.
(e) The paid-up capital for tax purposes of 10 shares of common stock, par
value $10.00 per share, of StyroChem International Ltd. is no less than its
stated capital for corporate purposes.
3.12 No Material Adverse Change
--------------------------
Except as set forth in Part 3.12 of the Disclosure Letter, since the date of the
Interim Balance Sheets, there has not been any material adverse change in the
business, operations, properties, prospects, assets, or condition of any
Acquired Company that would have a Material Adverse Effect, and, to the
Knowledge of Management, no event has occurred or circumstance exists that may
result in such a Material Adverse Effect.
22
<PAGE>
3.13 Employee Benefits
-----------------
(1) U.S. Plans
----------
(a) As used in this Section 3.13, the following terms have the meanings
set forth below.
"Canadian Plan" has the meaning set forth in Section 3.13(2).
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by an Acquired Company or an ERISA Affiliate.
"Company Plan" means (a) a Plan of which an Acquired Company or an
ERISA Affiliate is a Plan Sponsor, or to which an Acquired Company or an
ERISA Affiliate contributes or in which an Acquired Company or an ERISA
Affiliate participates or (b) a Plan of which an Acquired Company or an
ERISA Affiliate was a Plan Sponsor, or to which an Acquired Company or an
ERISA Affiliate contributed or in which an Acquired Company or an ERISA
Affiliate participated at any time after 1990. All references to Plans are
to Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate.
"ERISA Affiliate" means, with respect to an Acquired Company, any
other person that, together with the Acquired Company, would be treated as
a single employer under IRC (S) 414.
"Multi employer Plan" has the meaning given in ERISA (S) 3(37)(A).
"Other Benefit Obligation" means an obligation, arrangement, contract
agreement, or customary practice, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered,
to one or more present or former directors, employees, or agents, other
than an obligation, arrangement, or practice that is a Plan or Canadian
Plan. An Other Benefit Obligation includes consulting agreements under
which the compensation paid does not depend upon the amount of service
rendered, sabbatical policies, severance payments, and fringe benefits
within the meaning of IRC (S) 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in ERISA (S) 3(2)(A).
23
<PAGE>
"Plan" has the meaning given in ERISA (S) 3(3), but does not include a
Canadian Plan.
"Plan Sponsor" has the meaning given in ERISA (S) 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC (S) 401(a).
"Title IV Plan" means a Pension Plan that is subject to Title IV of
ERISA, 29 U.S.C. (S) 1301 et seq., other than a Multi employer Plan.
"VEBA" means a voluntary employees' beneficiary association under IRC
(S) 501(c)(9).
(b) (i) Part 3.13(i) of the Disclosure Letter contains a complete and
accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are (A) defined
benefit Pension Plans, (B) Qualified Plans, (C) Title IV Plans, or (D) Multi
employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains a complete and
accurate list of (A) all ERISA Affiliates of each Acquired Company, and (B)
all Plans of which any such ERISA Affiliate is or was (since February 25,
1994) a Plan Sponsor, in which any such ERISA Affiliate participates or has
participated (since February 25, 1994) or to which any such ERISA Affiliate
contributes or has contributed (since February 25, 1994).
(iii) Part 3.13(iii) of the Disclosure Letter sets forth, for each
Multi employer Plan, as of its last valuation date, the amount of potential
withdrawal liability of the Acquired Companies and their ERISA Affiliates,
calculated according to information made available pursuant to ERISA (S)
4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a calculation
of the liability of the Acquired Companies for post-retirement benefits
other than pensions, made in accordance with Financial Accounting Statement
106 of the Financial Accounting Standards Board, regardless of whether any
Acquired Company is required by this Statement to disclose such
information.
(v) Part 3.13(v) of the Disclosure Letter sets forth the financial
cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation that is not subject to the disclosure and reporting
requirements of ERISA.
24
<PAGE>
(c) Sellers have delivered to Buyer, or will deliver to Buyer within ten
(10) days of the date of this Agreement:
(i) all documents that set forth the terms of each Company Plan,
Foreign Plan, Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary plan
descriptions of Company Plans and Foreign Plans for which Sellers or the
Acquired Companies are required to prepare, file, and distribute plan
descriptions and summary plan descriptions, and (B) all summaries and
descriptions furnished to participants and beneficiaries regarding Company
Plans, Foreign Plans, Company Other Benefit Obligations, and Company VEBAs
for which a plan description or summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both
pension and welfare benefits) by the Acquired Companies and the ERISA
Affiliates, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) a written description of any Company Plan, Foreign Plan or
Company Other Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company
Plan;
(vi) all insurance policies purchased by or to provide benefits
under any Company Plan;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that
relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) all reports submitted within the four years preceding the date
of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) the forms of notice to employees of their rights under ERISA
(S) 601 et seq. and IRC (S) 4980B given at any time since February 25,
1994;
(x) the Forms 5500 filed since February 25, 1994 with respect to
each Company Plan, including all schedules thereto and the opinions of
independent accountants;
25
<PAGE>
(xi) all notices that were given by any Acquired Company or any
ERISA Affiliate or any Company Plan to the IRS, the PBGC, or any
participate or beneficiary, pursuant to statute, since February 25, 1994,
including notices that are expressly mentioned elsewhere in this Section
3.13;
(xii) all notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate or any
Company Plan since February 25, 1994;
(xiii) the Form PBGC 1 filed for each Title IV Plan since February 25,
1994; and
(xiv) the most recent determination letter for each Plan of the
Acquired Companies that is a Qualified Plan.
(d) Except as set forth in Part 3.13(vi) of the Disclosure Letter:
(i) The Acquired Companies have performed their obligations under
all Company Plans, Foreign Plans, Company Other Benefit Obligations, and
Company VEBAs;
(ii) No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan, Foreign Plan or
Other Benefit Obligation that was not in accordance with the Plan, Foreign
Plan or Other Benefit Obligation and that could have an adverse economic
consequence to any Acquired Company or to Buyer;
(iii) The Acquired Companies, with respect to all Company Plans,
Company Other Benefits Obligations, and Company VEBAs, are, and each
Company Plan, Company Other Benefit Obligation, and Company VEBA is, in
compliance with ERISA, the IRC, and other applicable laws including the
provisions of such laws expressly mentioned in this Section 3.13, and with
any applicable collective bargaining agreement;
(A) No transaction prohibited by ERISA (S) 406 and no "prohibited
transaction" under IRC (S) 4975(c) have occurred with respect to any
Company Plan.
(B) No Seller or Acquired Company has any liability to the IRS
with respect to any Plan, including any liability imposed by Chapter
43 of the IRC.
(C) No Seller or Acquired Company has any liability to the PBGC
with respect to any Plan or has any liability under ERISA (S) 502 or
(S) 4071.
26
<PAGE>
(D) All filings required by ERISA and the IRC as to each Plan
have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely
provided.
(E) All contributions made to Company Plans and Company VEBAs
have been deductible for federal income tax purposes. To Management's
Knowledge, no trust under a Company Plan or Company VEBA receives
income that is subject to tax as unrelated business taxable income.
(iv) Each Company Plan can be terminated within sixty days, without
payment of any additional contribution or amount and without the vesting or
acceleration of any benefits promised by such Plan;
(v) Since February 25, 1994, there has been no establishment or
amendment of any Company Plan, Foreign Plan, Company VEBA, or Company Other
Benefit Obligation;
(vi) No event has occurred or circumstance exists that could result
in a material increase in premium costs of Company Plans, Foreign Plans and
Company Other Benefit Obligations that are insured, or a material increase
in benefit costs of such Plans and Obligations that are self-insured;
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Foreign Plan, Company Other Benefit Obligation, or Company VEBA is
pending or, to Sellers' Knowledge, is Threatened;
(viii) Each Qualified Plan of each Acquired Company is qualified in
form and operation under IRC (S) 401(a); each trust for each such Plan is
exempt from federal income tax under IRC (S) 501(a). Each Company VEBA is
exempt from federal income tax. No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of tax-
exempt status of any such Plan or trust;
(ix) Each Acquired Company and each ERISA Affiliate has met the
applicable minimum funding standard for each Plan, and has made all
contributions required, under ERISA (S) 302 and IRC (S) 412;
(x) No Company Plan is subject to Title IV of ERISA;
(xi) The Acquired Companies have paid all amounts due to the PBGC
pursuant to ERISA (S) 4007;
27
<PAGE>
(xii) No Acquired Company or any ERISA Affiliate has ceased
operations at any facility or has withdrawn from any Title IV Plan in a
manner that would subject an Acquired Company or Sellers to liability under
ERISA (S) 4062(e), (S) 4063, or (S) 4064;
(xiii) No Acquired Company or any ERISA Affiliate has filed a notice
of intent to terminate any Plan or has adopted any amendment to treat a
Plan as terminated. The PBGC has not instituted proceedings to treat any
Company Plan as terminated. No event has occurred or circumstance exists
that may constitute grounds under ERISA (S) 4042 for the termination of, or
the appointment of a trustee to administer, any Company Plan;
(xiv) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision of
security under ERISA (S) 307 or IRC (S) 401(a)(29);
(xv) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as
of the last day of the current plan year of any such Plan;
(xvi) The actuarial report for each Pension Plan of each Acquired
Company and each ERISA Affiliate fairly presents the financial condition
and the results of operations of each such Plan in accordance with GAAP;
(xvii) Since the last valuation date for each Pension Plan of each
Acquired Company and each ERISA Affiliate, no event has occurred or
circumstance exists that would increase the amount of benefits under any
such Plan or that would cause the excess of Plan assets over benefit
liabilities (as defined in ERISA (S) 4001) to decrease, or the amount by
which benefit liabilities exceed assets to increase;
(xviii) No reportable event (as defined in ERISA (S) 4043) has
occurred;
(xix) No Seller or Acquired Company has Knowledge of any facts or
circumstances that may give rise to any liability of any Seller, any
Acquired Company, or Buyer to the PBGC under Title IV of ERISA;
(xx) No Acquired Company or any ERISA Affiliate has ever
established, maintained, or contributed to or otherwise participated in, or
had an obligation to maintain, contribute to, or otherwise participate in,
any Multi employer Plan;
(xxi) No Acquired Company or any ERISA Affiliate of an Acquired
Company has withdrawn from any Multi employer Plan with respect to which
there is any outstanding liability as of the date of this Agreement. No
event has occurred or
28
<PAGE>
circumstance exists that presents a risk of the occurrence of any
withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multi employer Plan that could result in any liability
of either any Acquired Company or Buyer to a Multi employer Plan;
(xxii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has received notice from any Multi employer Plan that it is in
reorganization or is insolvent, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that such Plan intends to terminate or has terminated;
(xxiii) No Multi employer Plan to which any Acquired Company or any
ERISA Affiliate contributes or has contributed is a party to any pending
merger or asset or liability transfer or is subject to any proceeding
brought by the PBGC;
(xxiv) Except to the extent required under ERISA (S) 601 et seq. and
IRC (S) 4980B, no Acquired Company provides health or welfare benefits for
any retired or former employee or is obligated to provide health or welfare
benefits to any active employee following such employee's retirement or
other termination of service;
(xxv) Each Acquired Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired and
active employees;
(xxvi) Sellers and all Acquired Companies have complied in all
material with the provisions of ERISA (S) 601 et seq. and IRC (S) 4980B;
(xxvii) No payment that is owed or may become due to any director,
officer, employee, or agent of any Acquired Company will be nondeductible
to the Acquired Companies under IRC (S) 280G or subject to tax under IRC
(S) 4999; nor will any Acquired Company be required to "gross up" or
otherwise compensate any such person because of the imposition of any
excise tax on a payment to such person; and
(xxviii) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit under a
Company Plan, a Company Other Benefit Obligation or a Company VEBA.
(2) Canadian Plans
--------------
(a) Part 3.13.2 of the Disclosure Letter lists all the employee benefit,
health, welfare, supplemental unemployment benefit, bonus, severance, pension,
profit sharing, deferred compensation, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental, legal, disability and
similar plans or arrangements or practices relating to the employees or former
employees of StyroChem International Ltd. which are
29
<PAGE>
currently maintained or were maintained at any time since February 25, 1994 (the
"Canadian Plans").
(b) All of the Canadian Plans are and have been established, registered,
qualified, invested and administered, in all respects, in accordance with all
laws, regulations, orders or other legislative, administrative or judicial
promulgations applicable to the Canadian Plans ("Applicable Employee Benefit
Laws"). No fact or circumstance exists that could adversely affect the tax-
exempt status of any Canadian Plan.
(c) All obligations regarding the Canadian Plans have been satisfied,
there are no outstanding defaults or violations by any party to any Canadian
Plan and no taxes, penalties or fees are owing or exigible under any of the
Canadian Plans.
(d) StyroChem International Ltd. may unilaterally amend or terminate, in
whole or in part, each Canadian Plan and take contribution holidays under or
withdraw surplus from each Canadian Plan, subject only to approvals required by
Applicable Employee Benefit Laws and, with respect to amendment or termination,
the collective agreements disclosed in Part 3.13.2 of the Disclosure Letter.
(e) No Canadian Plan, nor any related trust or other funding medium
thereunder, is subject to any pending investigation, examination or other
proceeding, action or claim initiated by any governmental agency or
instrumentality, or by any other party (other than routine claims for benefits),
and there exists no state of facts which after notice or lapse of time or both
could reasonably be expected to give rise to any such investigation, examination
or other proceeding, action or claim or to affect the registration of any
Canadian Plan required to be registered.
(f) All contributions or premiums required to be made by StyroChem
International Ltd. under the terms of each Canadian Plan or by Applicable
Employee Benefit Laws have been made in a timely fashion in accordance with
Applicable Employee Benefit Laws and the terms of the Canadian Plans, and
StyroChem International Ltd. does not have, and as of the Closing Date will not
have, any liability (other than liabilities accruing after the Closing Date)
with respect to any of the Canadian Plans. Contributions or premiums will be
paid by StyroChem International Ltd. on an accrual basis for the period up to
the Closing Date even though not otherwise required to be made until a later
date.
(g) No amendments have been made to any Canadian Plan, no improvements to
any Canadian Plan have been promised and no amendments or improvements to any
Canadian Plan will be made or promised prior to the Closing Date.
(h) There have been no improper withdrawals, applications or transfers of
assets from any Canadian Plan or the trusts or other funding media relating
thereto, and neither StyroChem International Ltd., nor any of its agents or
delegates or any other person, has
30
<PAGE>
been in breach of any fiduciary obligation with respect to the administration of
the Canadian Plans or the trusts of other funding media relating thereto.
(i) Subject to approvals under Applicable Employee Benefit Laws, StyroChem
International Ltd. may merge or consolidate any Canadian Plan or the assets
transferred from any Canadian Plan with any other arrangement, plan or fund.
(j) Sellers have furnished to Buyer true, correct and complete copies of
all the Canadian Plans as amended as of the date hereof together with all
related documentation including, without limitation, funding agreements,
actuarial reports, funding and financial information returns and statements, all
professional opinions (whether or not internally prepared) with respect to each
Canadian Plan, all material internal memoranda concerning the Canadian Plans,
copies of material correspondence with all regulatory authorities with respect
to each Canadian Plan and plan summaries, booklets and personnel manuals. No
material changes have occurred to the Canadian Plans or are expected to occur
which would affect the actuarial reports or financial statements required to be
provided to Buyer pursuant to this provision.
(k) Each Canadian Plan which is a funded plan is fully funded as of the
Closing Date on both a going concern and a solvency basis pursuant to the
actuarial assumptions and methodology utilized in the most recent actuarial
valuation therefor.
(l) None of the Canadian Plans enjoys any special tax status under
Applicable Employee Benefit Laws, nor have any advance tax rulings been sought
or received in respect of the Canadian Plans.
(m) All employee data necessary to administer each Canadian Plan have been
provided by Sellers to Buyer and are true and correct as of the date of this
Agreement and Sellers will notify Buyer of any changes thereto.
(n) No insurance policy or any other contract or agreement affecting any
Canadian Plan requires or permits a retroactive increase in contributions,
premiums or payments due thereunder. The level of insurance reserves under each
insured Canadian Plan is reasonable and sufficient to provide for all incurred
but unreported claims.
(o) Except as disclosed in Plan 3.13.2 of the Disclosure Letter, none of
the Canadian Plans which is not a pension plan provides benefits to retired
employees or to the beneficiaries or dependents of retired employees.
31
<PAGE>
3.14 Compliance with Legal Requirements; Governmental Authorizations
---------------------------------------------------------------
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since February 25,
1994 has been, in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any
Acquired Company to comply with, any Legal Requirement, or (B) may give
rise to any obligation on the part of any Acquired Company to undertake, or
to bear all or any portion of the cost of, any remedial action of any
nature; and
(iii) no Acquired Company has received, at any time since February
25, 1994, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Acquired Company to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company. Each Governmental Authorization listed or required to
be listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since February 25,
1994 has been, in material compliance with all of the terms and
requirements of each Governmental Authorization identified or required to
be identified in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter; and
32
<PAGE>
(iii) no Acquired Company has received, at any time since February
25, 1994, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner in which they currently conduct and operate such
businesses and to permit the Acquired Companies to own and use their assets in
the manner in which they currently own and use such assets.
The representations, warranties and statements contained in this Section
3.14 do not apply to any matters covered by Section 3.19 below.
3.15 Legal Proceedings; Orders
-------------------------
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there is
no pending Proceeding:
(i) that has been commenced by or against any Acquired Company or any
of the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Management, no such Proceeding has been Threatened and no
audit of the business or operations or Tax Returns of any of the Acquired
Companies by any Governmental Body is pending or Threatened. The Proceedings
listed in Part 3.15 of the Disclosure Letter will not have a Material Adverse
Effect.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or any
of the assets owned or used by any Acquired Company, is subject; and
(ii) no officer, director, agent, or employee of any Acquired Company
is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of any Acquired Company.
33
<PAGE>
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since February 25,
1994 has been, in full compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has
been subject; and
(ii) no Acquired Company has received, at any time since February 25,
1994, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, is or has been subject.
The representations, warranties and statements contained in this Section 3.15 do
not apply to any matters covered by Section 3.19 below.
3.16 Absence of Certain Changes and Events
-------------------------------------
Except as set forth in Part 3.16 of the Disclosure Letter, since the date of the
Interim Balance Sheets, the Acquired Companies have conducted their businesses
only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of any
Acquired Company; issuance of any security convertible into such capital stock;
grant of any registration rights; purchase, redemption, retirement, or other
acquisition by any Acquired Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired Company;
(c) increase by any Acquired Company in the amount of any bonuses,
salaries, or other compensation payable to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company, except as required under any such plan;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, which would have a
Material Adverse Effect;
34
<PAGE>
(f) entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Contract or transaction involving a
total remaining commitment by or to any Acquired Company of at least $20,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business and the sale of non-prime inventory prior to the Closing), lease, or
other disposition of any asset or property of any Acquired Company or mortgage,
hypothec, pledge, or imposition of any lien or other encumbrance on any material
asset or property of any Acquired Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $20,000;
(i) material change in the accounting methods used by any Acquired
Company (except as disclosed in Part 3.4 of the Disclosure Letter); or
(j) agreement, whether oral or written, by any Acquired Company to do any
of the foregoing.
3.17 Contracts; No Defaults
----------------------
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Davidovich has delivered to Buyer true and complete copies,
of:
(i) each Applicable Contract that involves performance of services
or delivery of goods or materials by one or more Acquired Companies of an
amount or value in excess of $20,000;
(ii) each Applicable Contract that involves performance of services
or delivery of goods or materials to one or more Acquired Companies of an
amount or value in excess of $20,000;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of
one or more Acquired Companies in excess of $20,000;
(iv) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other
interest in, any real or immoveable or personal or moveable property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$20,000 and with terms of less than one year);
35
<PAGE>
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including material agreements with current employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a
group of employees;
(vii) each Applicable Contract for capital expenditures in excess of
$50,000;
(viii) all other Applicable Contracts which individually or aggregated
together are material to the business, assets, results of operations,
condition (financial or otherwise), or prospects of the Acquired Companies
considered as a whole; and
(ix) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) no Seller, and no Related Person of any Seller, has or may
acquire any rights under, and no Seller has or may become subject to any
obligation or liability under, any Contract that relates to the business
of, or any of the assets owned or used by, any Acquired Company; and
(ii) no officer, director, agent, employee, consultant, or
contractor of any Acquired Company is bound by any Contract that purports
to limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of any Acquired Company, or
(B) assign to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter, each
Contract identified or required to be identified in Part 3.17(a) of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) each Acquired Company is, in full compliance with all applicable
terms and requirements of each Contract identified or required to be
identified in Part 3.17(a) of the Disclosure Letter;
(ii) each other Person that has or had any obligation or liability
under any Contract identified or required to be identified in Part 3.17(a)
of the Disclosure Letter, in full compliance with all applicable terms and
requirements of such Contract; and
36
<PAGE>
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result
in a violation or breach of, or give any Acquired Company or other Person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, or terminate, any
Applicable Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter; and
3.18 Insurance
---------
Set forth on Part 3.18 of the Disclosure Letter is a list of all material
policies of fire, liability, casualty, life, and other insurance owned or held
by the Acquired Companies. Such policies are in full force and effect, are
sufficient to satisfy all requirements of Legal Requirements and any material
Applicable Contracts to which any Acquired Company is a party. To the Knowledge
of Management, no event has occurred nor does any fact or condition exist which
would render any of such policies void or voidable or subject any such policies
to cancellation or termination, and the Acquired Companies have given timely
notice to the appropriate insurance carrier of all pending or threatened claims
against it that are insured.
3.19 Environmental Matters
---------------------
Except as set forth in Part 3.19 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times since February 25, 1994 to
the Closing Date has been, in compliance with, and is not and has not been since
February 25, 1994 in violation of or liable under, any Environmental Law. To
the Knowledge of Management, each Acquired Company, and each other Person for
whose conduct they are or may be held responsible, was, at all times prior to
February 25, 1994, in compliance with, and was not in violation of or liable
under any Environmental Law. Management has no Knowledge of, or any reasonable
basis to expect, receipt by any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, of any actual or Threatened
citation, directive, inquiry, summons, warning, order, notice, or other
communication from any Governmental Body or private citizen (including but not
limited to the current or prior owner or operator of any Facilities), of any
actual or potential violation of or failure to comply with any Environmental
Law, or of any actual or Threatened obligation to undertake or bear the cost of
any Environmental Liabilities with respect to any of the Facilities or any other
properties or assets (whether real and immoveable, personal and moveable, or
mixed) in which any Acquired Company has or had an interest, or with respect to
any property or Facility at or to which Hazardous Materials generated,
manufactured, refined, transferred, stored, imported, used, processed, owned or
possessed by any Acquired Company, or any other Person for whose conduct they
are or may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, received or otherwise come to be located.
37
<PAGE>
(b) Since February 25, 1994 no claims, Encumbrances or other restrictions
of any nature, resulting from any Environmental Liabilities or arising under or
pursuant to any Environmental Law, have been asserted, imposed, or, to the
Knowledge of Management, threatened, with respect to or affecting any of the
Facilities or any other properties and assets (whether real and immoveable,
personal and moveable, or mixed) in which any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, has or had an
interest. To the Knowledge of Management, at all times prior to February 25,
1994, no claims, Encumbrances or other restrictions of any nature, resulting
from any Environmental Liabilities or arising under or pursuant to any
Environmental Law, were asserted, imposed, or threatened with respect to or
affecting any of the Facilities or any other properties and assets (whether real
and immoveable, personal and moveable, or mixed) in which any Acquired Company,
or any other Person for whose conduct they are or may be held responsible, has
or had an interest.
(c) To the Knowledge of Management, no Acquired Company, or any other
Person for whose conduct they are or may be held responsible, has any
Environmental Liabilities with respect to the Facilities or any other properties
or assets (whether real and immoveable, personal and moveable, or mixed) in
which any Acquired Company, or any other Person for whose conduct they are or
may be held responsible, has or had an interest, or with respect to any property
or Facility at or to which Hazardous Materials generated, manufactured, refined,
stored, transferred, imported, used, processed, owned or possessed by any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, received or otherwise come to be located.
(d) As of the date hereof, there are no Hazardous Materials present at the
Facilities, including any Hazardous Materials contained in barrels, above or
underground storage tanks, ponds, lagoons, impoundments, landfills, land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, or located in land, surface water, ground water,
sumps, or any other part of the Facilities, or incorporated into any structure
therein or thereon, except in compliance with all applicable Environmental Laws.
Since February 25, 1994, no Acquired Company, or any other Person for whose
conduct they are or may be held responsible, or to the Knowledge of Management,
any other Person, has permitted or conducted, or has been aware of, any
Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real and immoveable, personal and moveable, or
mixed) in which any Acquired Company has or had an interest, except in
compliance with all applicable Environmental Laws. To the Knowledge of
Management, at all times prior to February 25, 1994, no Acquired Company, or any
other Person for whose conduct they are or may be held responsible, permitted or
conducted, or was aware of, any Hazardous Activity conducted with respect to the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any Acquired Company has or had an interest, except in compliance with
all applicable Environmental Laws.
38
<PAGE>
(e) Since February 25, 1994, there has been no Release or, to the Knowledge
of Management, Threat of Release, of any Hazardous Materials at or from the
Facilities or any other locations where any Hazardous Materials were generated,
manufactured, refined, stored, transferred, produced, imported, used, processed,
owned or possessed by any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, or from or by any other properties
and assets (whether real and immoveable, personal and moveable, or mixed) in
which any Acquired Company has or had an interest, or, to the Knowledge of
Management, any geologically or hydrologically adjoining property, whether by
any Acquired Company or any other Person. To the Knowledge of Management, at
all times prior to February 25, 1994, there was no Release or Threat of Release
of any Hazardous Materials at or from the Facilities or at any other locations
where any Hazardous Materials generated, manufactured, refined, stored,
transferred, produced, imported, used, possessed, owned, or possessed by any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, or at or from any other properties and assets (whether real and
immoveable, personal and moveable, or mixed) in which any Acquired Company has
or had an interest, or, to the Knowledge of Management, any geologically or
hydrologically adjoining property, whether by any Acquired Company or any other
Person.
(f) Davidovich has delivered to Buyer true and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed or initiated
by Sellers or, to the Knowledge of Management, by any Acquired Company,
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by any Acquired Company, or any other
Person for whose conduct they are or may be held responsible, with Environmental
Laws.
3.20 Employees
---------
(a) Part 3.20 of the Disclosure Letter contains a complete and accurate
list of the following information for each employee or director of the Acquired
Companies, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or payable and any change
in compensation payable to managerial personnel since January 1, 1995; vacation
accrued; and service credited for purposes of vesting and eligibility to
participate under any Acquired Company's pension, retirement, profit-sharing,
thrift-savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any other
employee benefit plan or any Director Plan; and
(b) Except as set forth in Part 3.20 of the Disclosure Letter, to
Management's Knowledge, no officer, or other key employee of any Acquired
Company intends to terminate his employment with such Acquired Company.
39
<PAGE>
3.21 Labor Relations; Compliance
---------------------------
Since February 25, 1994, no Acquired Company has been or is a party to any
collective bargaining or other labor Contract. Since February 25, 1994, there
has not been, there is not presently pending or existing, and to Management's
Knowledge there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, or (b) any application for
certification of a collective bargaining agent. To Management's Knowledge, no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
any Acquired Company, and no such action is contemplated by any Acquired
Company. Each Acquired Company has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. No Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22 Intellectual Property
---------------------
(a) Intellectual Property Assets--The term "Intellectual Property Assets"
includes:
(i) the names "SP Acquisition Co.," "StyroChem International,
Inc.," "StyroChem International, Ltd." and "StyroChem," all fictional
business names, trading names, registered and unregistered trademarks,
service marks, and applications owned, used or Licensed by any Acquired
Company (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable owned, used or Licensed by any Acquired
Company (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
owned, used or Licensed by any Acquired Company (collectively,
"Copyrights");
(iv) all rights in mask works owned, used or Licensed by any
Acquired Company (collectively, "Rights in Mask Works"); and
(v) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, "Trade Secrets"); owned, used, or
licensed by any Acquired Company as licensee or licensor.
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(b) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for the
operation of the Acquired Companies' businesses as they are currently
conducted. Except as set forth in Part 3.22(b) of the Disclosure Letter,
one or more of the Acquired Companies has the right to use without payment
to a third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the Disclosure Letter, no
employee of any Acquired Company has entered into any Contract that
restricts or limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than one or more
of the Acquired Companies.
(c) Patents
(i) Part 3.22(d) of the Disclosure Letter contains a complete and
accurate list and summary description of all Patents.
(d) Trademarks
(i) Part 3.22(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks.
(e) Copyrights
(i) Part 3.22(f) of the Disclosure Letter contains a complete and
accurate list and summary description of all Copyrights.
3.2 Certain Payments
----------------
Except as set forth in Part 3.23 of the Disclosure Schedule, and except for
normal business entertainment not exceeding a cost of $1,000 per person in any
instance, since February 25, 1994, no Acquired Company or director, officer,
agent, or employee of any Acquired Company, or any other Person associated with
or acting for or on behalf of any Acquired Company, has directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of any Acquired Company, or (iv) in violation of any Legal
Requirement, (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Acquired Companies.
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<PAGE>
3.24 Disclosure
----------
(a) No representation or warranty of Davidovich in this Agreement and no
statement in the Disclosure Letter (giving effect to any supplements thereto)
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) Except as set forth in Part 3.24 of the Disclosure Letter, there is no
fact known to Davidovich that has specific application to Davidovich or any
Acquired Company (other than general economic or industry conditions) and that
materially adversely affects or, as far as Davidovich can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of the Acquired Companies (on a consolidated basis) that
has not been set forth in this Agreement or the Disclosure Letter; provided,
however, the foregoing representation does not apply to or otherwise cover any
facts or matters that are generally the subject of any representation or
warranty made by Davidovich in this Agreement, whether or not any such facts or
matters would be required to be disclosed under the express terms of such other
representation or warranty.
3.25 Relationships with Related Persons
----------------------------------
Except as set forth in Part 3.25 of the Disclosure Letter, no Seller or any
Related Person of any Seller or of any Acquired Company has, or since February
25, 1994 has had, any material interest in any property (whether real and
immoveable, personal and moveable, or mixed and whether tangible or intangible),
used in or pertaining to the Acquired Companies' businesses. To the Knowledge of
Management, no Seller or any Related Person of any Seller or of any Acquired
Company is, or since January 1, 1994 has owned (of record or as a beneficial
owner) a material equity interest or any other financial or profit interest in,
a Person that has (i) had business dealings or a material financial interest in
any transaction with any Acquired Company, other than business dealings or
transactions conducted in the Ordinary Course of Business with the Acquired
Companies at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with any Acquired
Company with respect to any line of the products or services of such Acquired
Company (a "Competing Business") in any market presently served by such Acquired
Company, except for less than one percent (1%) of the outstanding capital stock
of any Competing Business that is publicly traded on any recognized exchange or
in the over-the-counter market. To the Knowledge of Management, except as set
forth in Part 3.25 of the Disclosure Letter, no Seller or any Related Person of
any Seller or of any Acquired Company is a party to any Contract with, or has
any claim or right against, any Acquired Company.
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<PAGE>
3.26 Brokers or Finders
------------------
Sellers and their agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3A. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller (i) severally and not jointly, and (ii) only as to such Seller
and not with respect to any other Seller, represents and warrants to Buyer as
follows:
(i) This Agreement constitutes the legal, valid, and binding obligation of
such Seller, enforceable against such Seller in accordance with its terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally and (ii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances. Upon the execution and delivery by such Seller of the Sellers'
Releases, and the Noncompetition Agreement to the extent such Seller is a party
thereto (collectively, the "Seller's Closing Documents"), such Seller's Closing
Documents will constitute the legal, valid, and binding obligations of such
Seller, enforceable against such Seller in accordance with their respective
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances. Such Seller has the full right, power, authority, and
capacity to execute and deliver this Agreement and such Seller's Closing
Documents and to perform such Seller's obligations under this Agreement and such
Seller's Closing Documents;
(ii) Except as set forth in Part 3.2 of the Disclosure Letter, such
Seller is not and will not be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions;
(iii) Except as set forth in Part 3.3 of the Disclosure Letter, such
Seller is and will be on the Closing Date the record and beneficial owners and
holders of the Shares shown on Part 3.3 of the Disclosure Schedule as owned by
such Seller, free and clear of all Encumbrances; and
(iv) Except as set forth in Part 3.15 of the Disclosure Letter, such
Seller is not subject to any Order that relates to the business of, or any of
the assets owned or used by, any Acquired Company.
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<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization and Good Standing
------------------------------
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
4.2 Authority; No Conflict
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreements (collectively, the
"Buyer's Closing Documents"), the Buyer's Closing Documents will constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
------------
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject;
or
(iv) any Contract to which Buyer is a party or by which Buyer may be
bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required to
------------
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 Investment Intent
-----------------
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
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4.4 Certain Proceedings
-------------------
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 Brokers or Finders
------------------
Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Sellers harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents.
4.6 Financing
---------
Buyer represents that prior to the closing that it will use its best efforts
(but not more than commercially reasonable) to obtain financing through the
Senior Notes Offering in an aggregate amount sufficient to consummate the
transactions contemplated hereby, and believes in good faith that such efforts
will be successful, although no commitments to purchase such notes have been
obtained and Buyer does not guarantee or otherwise assure Sellers that the
Senior Notes Offering will be completed.
4.7 Independent Investigation
-------------------------
Buyer represents that it has had an opportunity to ask questions of and receive
answers from the Acquired Companies regarding the Acquired Companies and their
business, assets, results of operations, and financial condition and the terms
and conditions of the sale of the Shares. In addition, Buyer hereby acknowledges
and affirms that it has completed its own independent investigation, analysis,
and evaluation of the Acquired Companies, that it has made all such reviews and
inspections of the business, assets, results of operations, condition (financial
or otherwise), and prospects of the Acquired Companies as it has deemed
necessary or appropriate, and that in making its decision to enter into this
Agreement and to consummate the transactions contemplated hereby it has relied
solely on (i) its own independent investigation, analysis, and evaluation of the
Acquired Companies and (ii) the representations and warranties of Sellers
contained herein.
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<PAGE>
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 Access and Investigation
------------------------
Between the date of this Agreement and the Closing Date, Davidovich will, and
will cause each Acquired Company and its Representatives to, (a) afford Buyer
and its Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") reasonable access to each Acquired Company's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Buyer and Buyer's Advisors
with copies of all such contracts, books and records, and other existing
documents and data as Buyer may reasonably request, and (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request, and (d) furnish Buyer and Buyer's
advisers with written consents and authorizations to obtain access to any
governmental files and records relating to StyroChem International Ltd.
5.2 Operation of the Businesses of the Acquired Companies
-----------------------------------------------------
Between the date of this Agreement and the Closing Date, Davidovich will, and
will cause each Acquired Company to:
(a) conduct the business of such Acquired Company only in the Ordinary
Course of Business;
(b) use its best efforts (but not more than commercially reasonable) to
preserve intact the current business organization of such Acquired Company, keep
available the services of the current officers, employees, and agents of such
Acquired Company, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with such Acquired Company;
(c) confer with Buyer concerning operational matters of a material nature;
and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of such Acquired Company.
5.3 Negative Covenant
-----------------
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Davidovich will not, and will cause each
Acquired Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within its control, as
a result of which any of the changes or events listed in Section 3.16 is likely
to occur.
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5.4 Required Approvals
------------------
As promptly as practicable after the date of this Agreement, Sellers will, and
will cause each Acquired Company to, make all filings required by Legal
Requirements to be made by it in order to consummate the Contemplated
Transactions (including all filings under the HSR Act and Competition Act).
---------------
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause each Acquired Company to, (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by Legal Requirements to make
in connection with the Contemplated Transactions and the Competition Act, and
---------------
(b) cooperate with Buyer in obtaining all consents identified in Schedule 4.2
------------
(including taking all actions requested by Buyer to cause early termination of
any applicable waiting period under the HSR Act).
5.5 Notification
------------
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller or any Acquired Company becomes
aware of any fact or condition that causes or constitutes a Breach of any of
Sellers' representations and warranties as of the date of this Agreement, or if
such Seller or any Acquired Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Letter if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition, Sellers will promptly deliver to Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, each Seller will
promptly notify Buyer of the occurrence of any Breach of any covenant of Sellers
in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely. No
supplement to the Disclosure Letter may be delivered by Sellers after the
Closing.
5.6 Payment of Indebtedness by Related Persons
------------------------------------------
Except as expressly provided in this Agreement or in Part 5.6 of the Disclosure
Letter, Sellers will cause all indebtedness owed to an Acquired Company by any
Seller or any Related Person of any Seller to be paid in full prior to Closing.
5.7 No Negotiation
--------------
Until such time, if any, as this Agreement is terminated pursuant to Section 9,
Sellers will not, and will cause each Acquired Company and each of their
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any non-
public information to, or consider the merits of any unsolicited inquiries or
proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of
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any Acquired Company, or any of the capital stock of any Acquired Company, or
any merger, consolidation, business combination, or similar transaction
involving any Acquired Company.
5.8 Commercially Reasonable Efforts
-------------------------------
Between the date of this Agreement and the Closing Date, Sellers will use their
best efforts (but not more than commercially reasonable) to cause the conditions
in Sections 7 and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies
--------------------------------
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act and the Competition Act). Between the
date of this Agreement and the Closing Date, Buyer will, and will cause each
Related Person to, cooperate with Sellers with respect to all filings that
Sellers are required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Sellers in obtaining all
consents identified in Part 3.2 of the Disclosure Letter; provided that this
Agreement will not require Buyer to dispose of or make any change in any portion
of its business or to incur any other burden to obtain a Governmental
Authorization.
6.2 Commercially Reasonable Efforts
-------------------------------
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its best efforts (but not more
than commercially reasonable) to cause the conditions in Sections 7 and 8 to be
satisfied.
6.3 Notification
------------
Between the date of this Agreement and the Closing Date, Buyer will promptly
notify Davidovich in writing if Buyer becomes aware of any fact or condition
that causes or constitutes a Breach of any of Buyer's representations and
warranties as of the date of this Agreement, or if Buyer becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. During the same period, Buyer will promptly notify Davidovich of the
occurrence of any Breach of any covenant of Buyer in this Section 6 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely. Within two weeks prior to the Closing, Buyer
will endeavor to notify Davidovich if, to the Knowledge of Buyer, any employees
of the Acquired Companies (other than Davidovich and Ivan Banat)
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<PAGE>
will not be employed by the Acquired Companies after the Closing Date, although
nothing in this Agreement shall obligate Buyer to continue the employment of any
employees of the Acquired Companies after the Closing Date.
6A. COVENANTS OF PARTIES AFTER CLOSING DATE
6A.1 Not more than three (3) business days after the Closing Date, Buyer
shall cause the Acquired Companies to pay an amount not exceeding $2,250,000 to
Chevron Chemical Company, such amount to be determined by Davidovich and set
forth in written instructions delivered by Davidovich to Buyer at Closing.
6A.2 For as long as Davidovich or Sellers have liability to Buyer for
indemnification under Section 10 of this Agreement, Buyer shall cause the
Acquired Companies to make available to Davidovich and Sellers, upon reasonable
advance notice and at a time reasonably convenient to the Acquired Companies,
copies of the books and records of the Acquired Companies reasonably required by
Davidovich and Seller to defend or resolve any claim for indemnification by
Buyer.
6A.3 Accounts receivable of the Acquired Companies which are reflected in
the Closing Statement as collectible and not reserved against, and which are in
fact not collected within 180 days after the Closing Date, will be assigned by
the Buyer to Davidovich, but only if (i) the Acquired Companies are no longer
doing business with the account debtors and (ii) Buyer has received payment from
Davidovich for such accounts receivable by way of indemnification with respect
to the breach of the representation and warranty made by Davidovich in Section
3.8 hereof. Davidovich will attempt to collect any accounts receivable assigned
to him and will remit any net proceeds collected, after costs and expenses of
collection, to the Sellers on a Pro Rata Basis. The Buyer will apply
collections received from customers for which there are accounts receivable
reflected in the Closing Statement, to the accounts receivable of such customers
in the order in which the invoices were submitted to such customers, unless
there is a bona fide dispute or billing error with respect to a particular
invoice.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and the Other Interests and to take
the other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations
---------------------------
(a) All of Sellers' and Davidovich's representations and warranties in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of
49
<PAGE>
this Agreement, and must be accurate in all material respects as of the Closing
Date as if made on the Closing Date, without giving effect to any supplement to
the Disclosure Letter.
(b) Each of Davidovich's representations and warranties in Sections 3.3,
3.12, and 3.24 must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Letter.
7.2 Sellers' Performance
--------------------
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to Section 2.4 must
have been delivered, and each of the other covenants and obligations in Sections
5.4 and 5.8 must have been performed and complied with in all respects.
7.3 Supply Contract
---------------
The Acquired Companies shall have entered into a contract with Chevron Chemical
Company ("Chevron") substantially in the form most recently submitted to Buyer
by Chevron for review prior to the date of this Agreement.
7.4 Additional Documents
--------------------
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Thompson & Knight, P.C., dated the Closing Date, in form
and substance satisfactory to Buyer;
(b) release and termination of all options to acquire any of the Shares
held by Chevron Chemical Company; and
(c) such other documents as Buyer may reasonably request for the purpose
of (i) enabling its counsel to provide the opinion referred to in Section
8.4(a), (ii) evidencing the accuracy of any of Sellers' representations and
warranties, (iii) evidencing the performance by any Seller of, or the compliance
by any Seller with, any covenant or obligation required to be performed or
complied with by such Seller, (iv) evidencing the satisfaction of any condition
referred to in this Section 7, or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
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7.5 No Proceedings
--------------
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.6 No Claim Regarding Stock Ownership or Sale Proceeds
---------------------------------------------------
There must not have been made or Threatened by any Person (excluding Buyer) any
claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, any stock of,
or any other voting, equity, or ownership interest in, any of the Acquired
Companies, other than claims of the Sellers which are the subject of this
Agreement or (b) is entitled to all or any portion of the Purchase Price payable
for the Shares and the Other Interests other than payments to Sellers of the
Purchase Price.
7.7 Senior Notes Offering
---------------------
Buyer shall have completed the Senior Notes Offering, and shall have received
net proceeds of not less than $75,000,000 from such Senior Notes Offering.
7.8 Audited Financial Statements
----------------------------
The balance sheets, statements of income, changes in stockholders' equity and
cash flows of the Acquired Companies for the period ended April 1, 1996,
together with the unqualified audit report thereon of Deloitte & Touche, shall
have been delivered to Buyer, disclosing no material adverse change from the
unaudited financial statements for such period previously delivered to Buyer,
except for changes in deferred taxes and the effect of push-down accounting.
7.9 Environmental Reports
---------------------
Phase I and, if required by Buyer, Phase II environmental surveys of each parcel
of real estate owned or occupied by the Acquired Companies, satisfactory in form
and substance to Buyer, shall have been delivered to Buyer (copies of which
Buyer agrees to deliver to Davidovich prior to Closing).
7.10 Resignations
------------
Each of the directors of each of the Acquired Companies shall have resigned and
Davidovich shall have also resigned as an officer of each of the Acquired
Companies.
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7.11 Consent of the Bank of Montreal
-------------------------------
The Bank of Montreal shall have consented to the Buyer's entering into this
Agreement and to the release of Davidovich from his personal guaranty of the
obligations of StyroChem International, Ltd, under the Agreement Respecting a
Term Loan and other Credit Facilities dated February 25, 1994, as amended, with
the Bank of Montreal.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and the Other Interests and to take the
other actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
8.1 Accuracy of Representations
---------------------------
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 Buyer's Performance
-------------------
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the cash payments
required to be made by Buyer pursuant to Section 2.4(b).
8.3 Supply Contract
---------------
The Acquired Companies shall have entered into a contract with Chevron
substantially in the form most recently submitted to Buyer by Chevron prior to
the date of this Agreement.
8.4 Additional Documents
--------------------
Buyer must have caused the following documents to be delivered to Sellers:
(a) an opinion of Duane, Morris & Heckscher, dated the Closing Date, in
form and substance satisfactory to Sellers; and
(b) such other documents as Sellers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in Section
7.4(a), (ii) evidencing
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the accuracy of any representation or warranty of Buyer, (iii) evidencing the
performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by Buyer, (ii) evidencing
the satisfaction of any condition referred to in this Section 8, or (v)
otherwise facilitating the consummation of any of the Contemplated Transactions.
8.5 No Injunction
-------------
There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the sale of the Shares or the Other Interests by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
8.6 Release of Personal Guaranty
----------------------------
Davidovich shall have been released from all personal guarantees in connection
with indebtedness of the Acquired Companies to Bank of Montreal.
9. TERMINATION
9.1 Termination Events
------------------
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Davidovich if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has not
been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Davidovich, if any of the conditions in
Section 8 has not been satisfied of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Sellers
to comply with their obligations under this Agreement) and Davidovich has not
waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Davidovich if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before December
31, 1996, or such later date as the parties may agree upon.
9.2 Effect of Termination
---------------------
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Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement and the exercise of a right of
termination will not be an election of remedies; provided, however, the
foregoing shall not apply in the event of the non-satisfaction of the conditions
in Sections 7.1 or 8.1 (unless the Breach of the representation or warranty
which caused such non-satisfaction was intentional or fraudulent), in which case
the parties agree that termination of this Agreement shall be the sole and
exclusive remedy of either party prior to the Closing due to the non-
satisfaction of the conditions set forth in Sections 7.1 or 8.1. If this
Agreement is terminated pursuant to Section 9.1, all further obligations of the
parties under this Agreement will terminate, except that the obligations in
Sections 11.1 and 11.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the Breach of the Agreement by the other
party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, other than
as limited by the proviso in the preceding sentence, the terminating party's
right to pursue all remedies under this Agreement will survive such termination
unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected by Knowledge
------------------------------------------------------------
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the certificate
delivered pursuant to Section 2.4(a)(v), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 Indemnification and Payment of Damages by each Seller
-----------------------------------------------------
Each Seller, severally but not jointly, will indemnify and hold harmless Buyer,
the Acquired Companies, and their respective Representatives, stockholders,
controlling and persons (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
or expense (including costs of investigation and defense and reasonable
attorneys' fees) whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from:
(a) any Breach of any representation or warranty made by such Seller in
this Agreement, the Disclosure Letter (giving effect to any supplement to the
Disclosure Letter),
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the supplements to the Disclosure Letter, or any other certificate or document
delivered by Sellers pursuant to this Agreement, as if such representation or
warranty were made on and as of the Closing Date;
(b) any Breach by such Seller of any covenant or obligation of such Seller
in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with such Seller or any Acquired Company (or any
Person acting on such Seller's behalf) in connection with any of the
Contemplated Transactions.
10.3 Indemnification and Payment of Damages by Davidovich
----------------------------------------------------
Davidovich will indemnify and hold harmless the Indemnified Persons for, and
will pay to the Indemnified Persons the amount of, any Damages arising from:
(a) any Breach of any representation or warranty made by Davidovich in
Section 3 of this Agreement, the Disclosure Letter (giving effect to any
supplement to the Disclosure Letter), the supplements to the Disclosure Letter,
or any other certificate or document delivered by Davidovich pursuant to this
Agreement;
(b) any Breach by Davidovich of any covenant or obligation of Davidovich
in this Agreement; and
(c) any claim by any person for brokerage or finders fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with Davidovich (or any Person acting on
Davidovich's behalf) in connection with any of the Contemplated Transactions.
10.4 Indemnification and Payment of Damages by Buyer
-----------------------------------------------
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions, and (d) the
ownership, operation, and management by Buyer of the Acquired Companies, and the
operations and activities of the Acquired Companies, from and after the Closing
Date, except to the extent Buyer is indemnified by Sellers or Davidovich with
respect to such matters pursuant to Sections 10.2 or 10.3 above.
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10.5 Time Limitations
----------------
If the Closing occurs, Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
within one (1) year following the Closing Date, Buyer notifies Sellers of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer, except that (i) any claims with respect to Sections
3.8 and 3.9 shall be made in connection with the determination of the Adjustment
Amount and no such claim shall be allowed after the final determination of the
Adjustment Amount except to the extent that accounts receivable which are
treated as collectible and are not reserved against in determining the
Adjustment Amount are in fact not collected within 180 days; (ii) a claim with
respect to Section 3.11 must be made prior to the expiration of the applicable
statute of limitations on the assessment of additional Taxes which is the basis
of such claim, (iii) a claim with respect to Section 3.3 must be made prior to
three (3) years following the Closing Date; (iv) a claim with respect to Section
3.13 or 3.19 must be made prior to two years following the Closing Date; and (v)
a claim for indemnification or reimbursement not based upon any representation
or warranty or any covenant or obligation to be performed and complied with
prior to the Closing Date, may be made at any time. If the Closing occurs,
Buyer will have no liability (for indemnification or otherwise) with respect to
any representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless within one (1) year following
the Closing Date, Sellers notify Buyer of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Sellers, except
that a claim for indemnification or reimbursement not based upon any
representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time.
10.6 Limitations on Amount--Davidovich
---------------------------------
(a) Davidovich will not have liability (for indemnification or otherwise)
with respect to the matters described in Section 10.3 until the total of all
Damages with respect to such matters exceeds $350,000 (the "Basket') and then
only for the amount by which such Damages exceed the Basket. Damages arising
from a single matter will not subject Davidovich to such liability for
indemnification, or be counted toward the Basket, unless they exceed $10,000,
but if they exceed $10,000 for a single matter, the entire amount of Damages for
such matter shall be counted toward the Basket and will subject Davidovich to
liability for indemnification to the extent the Basket is exceeded.
(b) This Section 10.6 will not apply to any Breach of any of Davidovich's
representations and warranties of which Davidovich had Knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional Breach by Davidovich of any covenant or obligation, and Davidovich
will be liable for all Damages with respect to such Breaches.
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10.7 Limitations on Amount--Buyer
----------------------------
Buyer will have no liability (for indemnification or otherwise) with respect to
the matters described in clause (a) or (b) of Section 10.4 until the total of
all Damages with respect to such matters exceeds $350,000, and then only for the
amount by which such Damages exceed $350,000. However, this Section 10.7 will
not apply to any Breach of any of Buyer's representations and warranties of
which Buyer had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Buyer of any
covenant or obligation, and Buyer will be liable for all Damages with respect to
such Breaches.
10.8 Procedure for Indemnification--Third Party Claims
-------------------------------------------------
(a) Promptly after receipt by an indemnified party under Section 10.2,
10.3, or 10.4 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any Proceeding referred to in Section 10.8(a) is brought against an
indemnified party and it shall give written notice to the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party elects to assume the defense of such action, the indemnified
party shall have the right to employ separate counsel at its own expense and to
participate in the defense thereof. If the indemnifying party elects not to
assume (or fails to assume) the defense of such action, the indemnified party
shall be entitled to assume the defense of such action with counsel of its own
choice, at the expense of the indemnifying party. If the action is asserted
against both the indemnifying party and the indemnified party and there is a
conflict of interests which renders it inappropriate for the same counsel to
represent both the indemnifying party and the indemnified party, the
indemnifying party shall be responsible for paying for separate counsel for the
indemnified party. If the indemnifying party elects to assume the defense of
such action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's written consent (which shall
not be unreasonably withheld) unless the sole relief provided is monetary
damages that are paid in full by the indemnifying party and (b) the indemnifying
party shall have no liability with respect to any compromise or settlement
thereof effected without its written consent (which shall not be unreasonably
withheld). If notice is given to an indemnifying party of the commencement of
any Proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of
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such Proceeding, the indemnifying party will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Sellers hereby consent to the non-exclusive jurisdiction of any court
in which a Proceeding is brought against any Indemnified Person for purposes of
any claim that an Indemnified Person may have under this Agreement with respect
to such Proceeding or the matters alleged therein, and agree that process may be
served on Sellers with respect to such a claim anywhere in the world.
10.9 Procedure for Indemnification--Other Claims
-------------------------------------------
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
10.10 Limitations of Liability
------------------------
The indemnification obligations of the parties hereto pursuant to this Section
10 shall be subject to the following limitations:
(a) The amount of Damages required to be paid by any party to indemnify
any other party pursuant to this Section 10 as a result of any claim for
indemnification shall be reduced to the extent of any amounts actually received
by such other party after the Closing Date pursuant to the terms of the
insurance policies (if any) covering such claim, and each party shall pursue
available claims against such insurance policies in good faith.
(b) The amount of Damages required to be paid by any party to indemnify
any other party pursuant to this Section 10 as a result of any claim shall be
reduced by the amount of any Tax benefit actually realized by such other party
as a result of such claim, provided that such reduced amount shall be increased
by the amount of any Taxes actually payable by such other party as a result of
the payment to such other party of Damages for such claim (the net reduction is
hereinafter referred to in this paragraph as the "Claim Reduction Amount"). The
Claim Reduction Amount shall be calculated by the indemnified party on a present
value basis using the appropriate applicable federal rate for the month that the
claim will be paid as specified under Section 1274(d) of the IRC. Any factual
assumptions, Tax rate assumptions, assumptions relating to the appropriate
applicable federal rate, or assumptions relating to the appropriate Tax
treatment of a particular item shall be made by the indemnified party. The
indemnified party shall supply to the indemnifying party such information as the
indemnifying party may reasonably request to support the indemnified party's
assumptions and calculations. If the indemnifying party believes that the
overall calculation is unreasonable, the parties shall submit the issue to an
independent public accounting firm of recognized national standing mutually
agreeable to the parties for determination as to whether such calculation is in
fact reasonable on an overall basis. If such firm determines that the
calculation is not reasonable, such firm shall modify whichever assumptions it
deems necessary to make the overall calculation reasonable. The
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<PAGE>
determinations of such firm shall be final and conclusive as to any dispute
regarding the Claim Reduction Amount. The costs and expenses of such firm in
connection with its determinations pursuant to this paragraph shall be borne
equally by the parties. Each party shall be solely responsible for all other
costs and expenses incurred by such party pursuant to this paragraph.
(c) No indemnification shall be required to be made by any indemnifying
party pursuant to this Section 10 with respect to any claims for indemnification
to the extent that the aggregate amount of Damages incurred by the indemnified
party with respect to all such claims (whether asserted, resulting, imposed, or
incurred before, on, or after the Closing Date) exceeds $4,000,000.
(d) The indemnification obligations of the parties pursuant to this
Section 10 (including the definition of the term "Damages" as provided herein)
shall be limited to actual and direct damages and shall not, except in the case
of a willful Breach of this Agreement or fraud, include consequential, punitive,
or exemplary damages or damages based on lost profits or lost opportunities.
10.11 Sole and Exclusive Remedies
---------------------------
The parties hereto agree that, in relation to any Breach of any representation,
warranty, covenant, or agreement made or entered into by a party hereto pursuant
to this Agreement or any certificate, instrument, or document delivered pursuant
hereto, the only sole and exclusive relief and remedies available to the other
party hereto in respect of such Breach (regardless of any other rights and
remedies provided by law or in equity) shall be:
(a) termination, but only if said termination is expressly permitted
under the provisions of Section 9.1;
(b) damages, but only to the extent properly claimable hereunder and as
provided and limited pursuant to this Section 10 and by Section 9.2;
(c) specific performance if a court of competent jurisdiction in its
discretion grants the same; and
(d) injunctive or declaratory relief if a court of competent jurisdiction
in its discretion grants the same.
The parties hereto hereby expressly (i) waive and forego any other rights and
remedies other than the foregoing, whether provided by law or in equity, and
(ii) agree that no action for termination or rescission, or claiming
repudiation, of this Agreement may be brought or maintained by either party
against the other following the Closing Date no matter how severe, grave, or
fundamental any such Breach may be by one party. Accordingly, the parties
hereby also expressly waive and forego any and all rights they may possess to
bring any such action.
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11. GENERAL PROVISIONS
11.1 Expenses
--------
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants, except as otherwise provided in this Section. Buyer
will pay the fees of Deloitte & Touche incurred in connection with the
Contemplated Transactions, the costs of obtaining environmental reports for the
real properties owned by the Acquired Companies, and the HSR Act filing fee.
Sellers will cause the Acquired Companies not to incur any out-of-pocket
expenses in connection with this Agreement. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
11.2 Public Announcements
--------------------
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer and Davidovich mutually agree. Unless consented to by the
other party in advance or required by Legal Requirements, prior to the Closing
each party hereto shall, keep this Agreement strictly confidential and may not
make any disclosure of this Agreement to any Person, other than to their
financial advisors, legal counsel, accountants, bankers and others with a "need
to know" in order for the parties to carry out the Contemplated Transactions.
Sellers and Buyer will consult with each other concerning the means by which the
Acquired Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
11.3 Confidentiality
---------------
The Buyer's obligations with respect to the confidentiality of all Evaluation
Material (as defined in the Confidentiality Agreement) shall be governed by the
Confidentiality Agreement. Between the date of this Agreement and the Closing
Date, Sellers will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Sellers and the Acquired Companies
to maintain in confidence, any written, oral or other information obtained in
confidence from Buyer or any subsidiary of Buyer in connection with this
Agreement on the Contemplated Transactions unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transaction, or (c) the furnishing or use of such information is
required by legal proceedings. If the Contemplated Transactions are not
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consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
11.4 Notices
-------
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Davidovich or Sellers:
Richard Davidovich
312 Ridgewood Road
Fort Worth, Texas 76107
Fax: (817) 625-7337
with a copy to:
Stephen Norris, Esquire
Thompson & Knight, P.C.
801 Cherry Street, Suite 1600
Fort Worth, TX 76102
Fax: (817) 347-1799
Buyer:
Radnor Holdings Corporation
Three Radnor Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Fax: (610) 995-2697
Attention: Michael T. Kennedy, Chairman
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with a copy to:
Vincent F. Garrity, Jr., Esquire
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Fax: (215) 979-1020
11.5 Jurisdiction; Service of Process
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of Delaware, County of New Castle, or, if it has or
can acquire jurisdiction, in the United States District Court for the District
of Delaware, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
11.6 Further Assurances
------------------
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 Waiver
------
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless
in writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.8 Entire Agreement and Modification
---------------------------------
62
<PAGE>
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
11.9 Disclosure Letter
-----------------
(a) Except as otherwise provided in the Disclosure Letter, the disclosures
in the Disclosure Letter, and those in any supplement thereto, must relate only
to the representations and warranties in the Section of the Agreement to which
they expressly relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements in the body of
this Agreement and those in the Disclosure Letter, and those in any supplement
thereto, (other than an exception expressly set forth as such in the Disclosure
Letter, and those in any supplement thereto, with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
11.10 Assignments, Successors, and No Third-Party Rights
--------------------------------------------------
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, which will not be unreasonably withheld,
except that Buyer may assign any of its rights under this Agreement to any
Subsidiary of Buyer, provided, however, that no such assignment shall be
effective to release or discharge Buyer from any of its obligations or
liabilities hereunder. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. Except as
otherwise expressly provided in Section 10, this Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
11.11 Severability
------------
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 Section Headings, Construction
------------------------------
63
<PAGE>
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
11.13 Time of Essence
---------------
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 Governing Law
-------------
This Agreement will be governed by the laws of the State of Delaware without
regard to conflicts of laws principles.
11.15 Counterparts
------------
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
64
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER:
-----
RADNOR HOLDINGS CORPORATION,
formerly known as
BENCHMARK CORPORATION OF DELAWARE
By: /s/ Michael T. Kennedy
-----------------------------------
Michael T. Kennedy, Chairman
SELLERS:
-------
/s/ Richard Davidovich
-------------------------------------------
Richard Davidovich
JAMES RIVER PAPER COMPANY, INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
GRUPO INDUSTRIAL HERMES, S.A. de C.V.
By: [SIGNATURE APPEARS HERE]
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
E.M. Rosenthal
By: [SIGNATURE APPEARS HERE]
----------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
--------------------------------
65
<PAGE>
Rozanne Rosenthal
By: [SIGNATURE APPEARS HERE]
--------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
Ashli M. Rosenthal Trust
By: [SIGNATURE APPEARS HERE]
--------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
Benjamin A. Rosenthal Trust
By: [SIGNATURE APPEARS HERE]
--------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
Madelyn E. Rosenthal Trust
By: [SIGNATURE APPEARS HERE]
--------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
JMC Family Investment Limited Partnership,
Jon M. Cohen, General Partner
By: [SIGNATURE APPEARS HERE]
--------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
66
<PAGE>
Joseph C. Penshorn
By: [SIGNATURE APPEARS HERE]
----------------------------------------
Name:
---------------------------------
Title: Attorney-in-Fact
Richard Davidovich Charitable Trust
By: [SIGNATURE APPEARS HERE]
----------------------------------------
Name: Richard Davidovich
Title: Trustee
67
<PAGE>
EXHIBIT 2.2
Amounts Reducing Purchase Price
-------------------------------
1. Amount payable by Acquired Companies to Chevron
after the Closing Date not exceeding $2,250,000, such
amount to be set forth in written instructions delivered
by Davidovich to Buyer at Closing
2. Indebtedness of Acquired Companies to Bank of Montreal
as of the Closing Date
3. Legal fees and costs of Thompson & Knight in connection
with the Contemplated Transactions, such amount to be set
forth in written instructions delivered by Davidovich to
Buyer at Closing
<PAGE>
SCHEDULE 2.6
Working Capital of the Company on a Consolidated Basis as of August 3, 1996
---------------------------------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C>
Cash and Cash Equivalents $ 119
Accounts Receivable, net 13,518
Inventory 7,184
Prepaid Expenses 299
-------
Total Current Assets 21,120
-------
Accounts Payable 14,779
Accrued Liabilities 1,972
Insurance Notes Payable 95
Taxes Payable 262
-------
Total Current Liabilities 17,108
-------
Net Working Capital $ 4,012
=======
</TABLE>
1. Sellers have disclosed to Buyer a possible claim of Kimberly-Clark
Corporation, as successor to Scott Paper Company, against the Company in
the amount of $995,000 related to additional purchase price payable to
Scott Paper Company in connection with the purchase of the Company's
business from Scott Paper Company on February 25, 1994 with respect to the
aging of certain accounts receivable payable by WinCup. No adjustment to
the calculation of Net Working Capital and no adjustment to the Purchase
Price shall be made with respect to such claim in the event that
Kimberly-Clark Corporation either releases such claim or refuses to release
such claim.
2. No adjustment to the Purchase Price shall be made to the extent that Net
Working Capital is reduced between the date of the Stock Purchase Agreement
and the Closing Date by reason of any reductions of purchases of products
from the Acquired Companies by Buyer which are not in the Ordinary Course
of Business of Buyer.
3. In the preparation of the Closing Statement, Sellers shall be entitled to
the benefit of any income tax deduction which can be utilized by the
Acquired Companies prior to the Closing Date with respect to the bonus paid
prior to the Closing Date to certain employees of the Acquired Companies
and with respect to the payment to Chevron Chemical Company referred to on
Exhibit 2.2.
<PAGE>
4. In the preparation of the Closing Statement, accrued liabilities of the
Acquired Companies, whether or not reflected in the Interim Balance Sheets,
will include all uninvoiced liabilities for products and services rendered
prior to the Closing Date not included in accounts payable or uninvoiced
receipts. With respect to items accrued on a monthly basis that are
impacted by the 52-53 week accounting periods, accruals will be computed
consistent with prior periods. With respect to accrued employee benefit
plans,the accrued balance will include the amounts related to services or
obligations incurred prior to the closing date.
5. Accounts receivable deemed uncollectible will be written off prior to
Closing.
6. Inventory will be calculated as stated in Section 3.9, without regard to
Part 3.4 of the Disclosure Letter.
7. Accounts payable and accrued liabilities reflect amounts owing or accrued
in accordance with GAAP.
8. Accrued liabilities will be reduced by amounts accrued as incentive
compensation which will be paid to employees at Closing. In addition, up
to $1,000,000 will be drawn down on line and paid to employees at Closing.
9. Prepaid taxes are specifically excluded from this calculation.
10. Intercompany receivables and payables are excluded from this calculation.
11. Any refund due which will be received by any of the Acquired Companies for
over payment of taxes prior to Closing will be added to the total current
assets for this calculation.
12. Financial statements will be based on a 52/53 week year for pro rata
allocation purposes.
13. Accrued health insurance claims will be recorded as of the closing date
based on the procedure set forth on Exhibit 2.5.1 hereto.
<PAGE>
SCHEDULE 4.2
Required Consents - Buyer
-------------------------
a. Buyer filed a premerger notification with the Federal Trade Commission
(the "FTC") seeking approval of the transactions contemplated by this
Agreement, pursuant to the HSR Act, and has received notice from the
FTC of the early termination of the HSR Act waiting period.
b. Buyer must receive the consent of the Bank of Montreal under the
Agreement Respecting a Term Loan and other Credit Facilities dated
February 25, 1994, as amended, between the Bank of Montreal and
StyroChem International, Ltd.
<PAGE>
EXHIBIT 2.6.1
Calculation for Accrued Health Care Liability/Receivable
--------------------------------------------------------
PART 1
Claims incurred by Closing for
health insurance year beginning
February 25, 1996 A
Less amounts paid by StyroChem
against above claims through Closing B
-----
A - B
Less amounts in A which are
reimbursable under individual
stop loss of $30,000 at Closing C
------
(A-B) - C =
If positive this is added to liability.
If negative this is subtracted from liability.
PART 2
Claims incurred by Closing for
health insurance year beginning
February 25, 1996 A
Less amounts paid by StyroChem
against above claims through Closing B
------
A - B
Less annual aggregate stop loss
Pro Rata to date of Closing. Should
be equal to amounts accrued by
StyroChem. Maximum included in the
aggregate stop loss pool for any individual
will not exceed $30,000. C
--------
(A-B) - C =
Any amounts deemed receivable as a result of
the calculation in Part 2, will be paid to the
Acquired Company at which time all claims
incurred within the February 25, 1996 claim year
have been settled.
<PAGE>
EXHIBIT 2.7(B)
Example of Purchase Price Calculation
-------------------------------------
<TABLE>
<S> <C>
Assumptions:
(a) Net Working Capital on Closing Date $ 3,000,000
(b) Chevron payment 1,000,000
(c) Wells Fargo payment 3,000,000
(d) Bank of Montreal assumption 1,500,000
(e) Thompson & Knight legal fees 100,000
Calculation at Closing:
Base Purchase Price $26,000,000
less Chevron 1,000,000
less Wells Fargo 3,000,000
less escrow for working capital 1,000,000
less escrow for environmental 1,375,000
less Bank of Montreal 1,500,000
less Thompson & Knight 100,000
---------------
Net payable to Sellers at the Closing $18,025,000
</TABLE>
Post Closing Adjustment:
Adjustment Amount: negative $1,012,000 (this is based on the difference
between the August 3, 1996 net working capital of $4,012,000 and the
assumed net working capital as of the Closing Date of $3,000,000).
$1,000,000 working capital escrow (plus interest accrued thereon) is paid
to Buyer. Sellers on a Pro Rata Basis pay additional $12,000 to Buyer
<PAGE>
EXHIBIT 21.1
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
State or Jurisdiction of Names under which
Name of Subsidiary Incorporation or Organization Subsidiary does Business
- ------------------------------- ----------------------------- ------------------------------
<S> <C> <C>
WinCup Holdings, Inc. Delaware WinCup Holdings, Inc.
WinCup Holdings of Texas, Inc.
Benchmark Holdings, Inc. Delaware Benchmark Holdings, Inc.
WinCup Holdings, L.P. Delaware WinCup Holdings, L.P.
SP Acquisition Co. Delaware SP Acquisition Co.
StyroChem International, Inc. Texas StyroChem International, Inc.
StyroChem International, Ltd. Quebec StyroChem International, Ltd.
StyroChem FSC, Ltd. Barbados StyroChem FSC, Ltd.
Radnor Management, Inc. Delaware Radnor Management, Inc.
</TABLE>
<PAGE>
EXHIBIT 10.3
JR CAPITAL CONTRIBUTION AGREEMENT
---------------------------------
THIS CAPITAL CONTRIBUTION AGREEMENT (this "Agreement") is made as of
this 20th day of January, 1996, by and between JAMES RIVER PAPER COMPANY,
INC., a Virginia corporation ("James River") and WINCUP HOLDINGS, L.P., a
Delaware limited partnership (the "Partnership").
BACKGROUND
----------
A. Pursuant to the terms and conditions of a Limited Partnership
Agreement (the "Partnership Agreement") dated as of the date hereof, James River
is a limited partner of the Partnership.
B. James River desires to make an initial capital contribution of
certain assets to the Partnership, and the Partnership desires to accept such
initial capital contribution, pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants hereinafter set forth, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
CONTRIBUTION OF ASSETS
AND ASSUMPTION OF LIABILITIES
1.1 Contribution. On the Closing Date (as hereinafter defined) James
------------
River shall contribute to the Partnership as an initial capital contribution,
and the Partnership shall accept as an initial capital contribution, all of the
tangible and intangible property and rights of James River used or held for use
exclusively in connection with the Foam Business (as hereinafter defined),
including, without limitation, the properties and rights described below and
described and assigned a preliminary estimated value in Schedule 1.1 hereto,
with final values to be assigned and provided to the Partnership within sixty
(60) days after the Closing Date, and made a part hereof (collectively, the
"Transferred Assets"):
(a) All fixed assets, leasehold improvements, technology, patents,
trademarks, real property and other non-current assets associated with
HandiKup's one-piece foam cup container and thermoform lid manufacturing
operations exclusively related to the one-piece foam cup container operations
located in Corte Madera, California; Jacksonville, Florida; Metuchen, New
Jersey; West Chicago, Illinois and other locations.
<PAGE>
(b) The inventory, spare parts and other current assets associated
with the Foam Business; and
(c) All of James River's contractual rights in and under the contracts
listed on Schedule 1.1(c) (the "Contracts"), copies of which have been
delivered to the Partnership.
In addition to the foregoing, James River shall contribute to the
Partnership substantially all of the James River employees associated with the
Transferred Assets (collectively, the "Transferred Employees"). A list of the
Transferred Employees is contained in Schedule 1.1(d). A list of those
employees associated with the Transferred Assets, but who will not be
contributed to the Partnership ("Retained Employees"), is contained in Schedule
1.1(e).
1.2 Excluded Assets. James River will not transfer to the
---------------
Partnership (a) any interest in any of the other assets of James River which are
not included in the Transferred Assets, including, without limitation, the cash,
cash equivalents and accounts receivable of James River, and (b) the assets
listed on attached Schedule 1.2.
1.3 Assumption of Liabilities.
------------------------
(a) The Partnership hereby agrees to assume, satisfy and discharge:
(i) all liabilities and obligations relating to the Transferred Assets arising
on or after the Closing Date including those relating to the Contracts; and
(ii) annual (but not carried forward) employee liabilities for vacation, holiday
and sick pay in the amounts set forth on Schedule 1.3(a) (collectively, the
"Assumed Liabilities").
(b) The Partnership will distribute to James River, in accordance with
the terms of that certain promissory note, in the original principal amount of
$4,400,000, the form of which is attached hereto as Exhibit A (the "$4,400,000
Note"), the amount of $4,400,000 less any Inventory Deficiency (as hereinafter
defined) (the "Payment").
(c) The Partnership shall also assume responsibility for claims
related to the Foam Business and covered under standard policies of commercial
general liability insurance arising from events that occurred prior to the
Closing Date but which have not been reported to and are not known to James
River on or before the Closing Date. James River shall have the right to
review, approve and amend, if necessary, the commercial general liability
insurance policy when issued by the insurance carrier, which is anticipated
within 60 days after Closing, to insure that the policy conforms to this
Agreement and the other documents related to the transactions contemplated
herein.
(d) As of the Closing Date, the Partnership shall assume, and James
River shall have no further obligation with respect to (i) all employee related
liabilities and obligations that are payable on or after the Closing Date with
respect to Transferred Employees and their beneficiaries and dependents other
than those liabilities and obligations
-2-
<PAGE>
that arose before the Closing Date which are not assumed pursuant to clause (ii)
hereafter; and (ii) all employee related liabilities and obligations that arose
prior to the Closing Date with respect to the Transferred Employees and their
employee benefits to the extent set forth in Article 11 of the Partnership
Agreement.
(e) It is expressly acknowledged and agreed by the parties hereto
that, except for the Assumed Liabilities and the liabilities described in
Sections 1.3(c) and 1.3(d) of this Agreement, all other liabilities and
obligations of James River, whether or not related to the Transferred Assets,
whether now existing or arising in the future, fixed or contingent, known or
unknown, and attributable to any facts existing on or prior to the Closing Date,
including without limitation those arising out of trade accounts payable and
litigation matters, shall be and remain the liabilities and obligations of James
River and shall not be booked as or become a liability of the Partnership.
(f) Notwithstanding Section 1.3(a)(i) hereof or any other provision of
this Agreement, James River shall retain, and the Partnership will assume no
liability for, related to, arising out of, under or in respect of any Hazardous
Substances existing as of the Closing Date on, in or about the Transferred
Assets or the leased premises on which the Transferred Assets are located or any
Hazardous Emissions or Handling Hazardous Substances prior to the Closing Date
at any location (including, without limitation, remote storage, treatment,
recycling or disposal sites). For the purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
"Hazardous Substances" means (i) those substances defined as hazardous
by Section 9601(14) of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA"), 42 USCA 9601 et seq., (ii) all fluids
------
containing polychlorinated biphenyls, (iii) asbestos and asbestos-containing
materials, (iv) nuclear fuel and waste, (v) petroleum and petroleum products,
and (vi) all other substances regulated under Environmental Laws.
"Environmental Laws" means federal statutes and regulations
promulgated thereunder intended to provide protection for public health and the
environment, including, without limitation, CERCLA, the Clean Air Act, the Clean
Water Act, the Solid Waste Disposal Act (including the Resource Conservation and
Recovery Act), the Toxic Substances Control Act, their state and regulatory
counterparts, and other substantially similar foreign statutes and regulations,
as the foregoing may be in effect from time to time.
"Handling Hazardous Substances" means the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"Hazardous Emissions" means all emissions, releases, leaks, escapes,
dumping, discharges or threatened discharges of Hazardous Substances into the
air, surface water, ground water or the ocean or on or into the land.
-3-
<PAGE>
1.4 Value of the Transferred Assets. The parties agree that the
-------------------------------
value of the Transferred Assets and the allocation of such value will be as set
forth, as of the Closing Date, on Schedule 1.1 hereto.
1.5 Transfer of Assets and Assumption of the Assumed Liabilities. At
------------------------------------------------------------
the Closing (as hereinafter defined) James River and the Partnership shall
execute and deliver to each other a bill of contribution and assignment and
assumption agreement, in a form agreeable to the parties hereto and WinCup
Holdings, Inc. ("WinCup"), pursuant to which James River shall transfer the
Transferred Assets to the Partnership and the Partnership shall specify the
amount of and assume the Assumed Liabilities and shall assume the other
liabilities to be assumed by the Partnership under this Agreement.
1.6 Closing.
-------
(a) Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall take effect as of 12:00 a.m., January 20, 1996 (the
"Closing Date").
(b) Effect of the Closing. On and subsequent to the Closing Date, all
---------------------
business transacted in connection with the Transferred Assets, and, except as
otherwise provided in this Agreement, all obligations accruing in connection
with the Transferred Assets and Assumed Liabilities, shall be for the account of
the Partnership.
1.7 Post-Closing Adjustments.
------------------------
(a) The value of the inventory (including raw materials, work in
process, finished goods, spare parts, supplies and stores inventory) contributed
by James River on the Closing Date is estimated to be Eight Million Three
Hundred Thousand Dollars ($8,300,000). As provided in Section 1.3(b), the
Payment shall take into account any Inventory Deficiency determined in
accordance with Section 1.7(b) below.
(b) Inventory Level Adjustment.
--------------------------
(1) The Partnership caused its auditors, on November 18 and 19,
1995, to conduct a physical inventory of the inventory contributed by James
River pursuant to Section 1.1(b) of the Agreement, which physical inventory the
Partnership shall roll forward to the Closing Date (as rolled forward, the "JR
Inventory"). As promptly as practical, but in any event not more than thirty
(30) days after the Closing, the Partnership shall cause its auditors to
prepare, on the basis of such physical inventory and the rolling forward of such
physical inventory, and deliver to James River a draft of a statement of the "JR
Inventory Value" as of the commencement of business on the Closing Date (the
"Preliminary Closing Statement"). "JR Inventory Value" shall mean the value of
the JR Inventory on hand as of the Closing Date calculated as set forth in this
Section 1.7(b). JR Inventory on hand as of the Closing Date, as determined by
the physical inventory and rolling forward of the physical
-4-
<PAGE>
inventory referred to above, will include items which have historically been
carried on the books of James River and held for sale in the ordinary course of
James River's business. Raw materials, WIP and finished goods inventory will be
valued at the lower of cost or market determined in accordance with generally
accepted accounting principles applied on a consistent basis. Cost for raw
materials, WIP and finished goods will be calculated to reflect raw material
prices as of the Closing Date. Supplies, store and spare parts will be valued
at cost as of the Closing Date. Finished goods inventory will be reduced for
obsolete, slow-moving or damaged inventory. Spare parts will be reduced for
obsolete spare parts. The use of the term "slow moving" with respect to
inventory shall mean all inventory in excess of the most recent total of twelve
(12) months' external customer shipments in cases before the Closing Date, which
slow moving inventory shall be valued at fifty percent (50%) of cost. The use of
the term "obsolete" with respect to inventory shall mean all inventory where the
most recent total of twelve (12) months before the Closing Date for all external
customer shipments in cases is zero, except for newly introduced products, which
obsolete inventory shall be valued at zero. The use of the term "damaged" with
respect to inventory shall mean all inventory contributed by James River which
is ripped, torn, defaced or squashed, which damaged inventory shall be valued at
zero. The term "obsolete" with respect to spare parts shall mean those spare
parts which are no longer used in the production process, which obsolete spare
parts shall be valued at zero.
(2) During the ten (10) days following the receipt by James River
of the draft of the Preliminary Closing Statement and the report of the
Partnership's auditors with respect thereto, James River shall be permitted to
review the working papers of the Partnership's auditors relating to the draft of
the Preliminary Closing Statement and shall have such access to the
Partnership's personnel as may be reasonably necessary to permit it to review in
detail the manner in which the draft was prepared. Before the end of such ten
(10) day period, James River shall give any comments or objections it has with
respect to the draft of the Preliminary Closing Statement to the Partnership.
Such comments or objections, insofar as they relate to the valuation of the JR
Inventory, shall be resolved without regard to any materiality standard, and the
Final Closing Statement delivered to James River pursuant to the provisions of
the next paragraph shall reflect such resolution.
(3) Within ten (10) days after the expiration of such ten-day
period described in the preceding paragraph, the Partnership shall deliver to
James River a Final Closing Statement (the "Final Closing Statement")
accompanied by a definitive report of the Partnership's auditors with respect
thereto. Within five (5) business days after receipt of such Final Closing
Statement and report, James River shall deliver a letter to the Partnership
stating whether they concur with such report and their exceptions thereto, if
any, together with the reasons therefor. If such objections cannot be resolved
between the Partnership and James River within five (5) business days after
delivery of such letter to the Partnership by James River, the question or
questions in dispute shall then be submitted, as soon as practicable, to a
mutually acceptable firm of independent public accountants of nationally
recognized standing, the decision of which as to such question or questions in
dispute shall be made within ten (10) days thereafter and shall be final and
binding upon the parties hereto.
-5-
<PAGE>
(4) If the Final Closing Statement, after the resolution of all
disputes, indicates that the value of the JR Inventory is less than Eight
Million Three Hundred Thousand Dollars ($8,300,000) ("Inventory Deficiency"),
the Partnership shall amend the $4,400,000 Note to deduct from the payments due
thereunder the amount of such Inventory Deficiency.
(5) The fees of James River (including the fees of any auditors
independently retained by James River) incurred in connection with the
preparation of the Preliminary and Final Closing Statements shall be reimbursed
by the Partnership in accordance with Section 1.8 below. The fees of any
independent accounting firm appointed pursuant to Paragraph (3) of this Section
1.7(b) shall be paid one-half by the Partnership and one-half by James River.
1.8 Reimbursement of Expenses. The Partnership shall reimburse James
-------------------------
River for all fees and expenses incurred by James River for its legal counsel,
accountants (for fees associated with conducting physical inventories and
preparing inventory valuations and financial statements in connection with the
formation of the Partnership and excluding fees incurred in connection with the
consummation of the transactions contemplated by that certain Asset Purchase
Agreement, dated as of October 31, 1995, among WinCup, Benchmark Holdings, Inc.
and James River) and investment bankers, in connection with the negotiation,
documentation and consummation of the transactions contemplated by this
Agreement and the other documents executed in connection herewith. Attached
hereto as Schedule 1.8 is an itemization of all such fees and expenses paid or
estimated to be due by James River, all of which are deemed to be reasonable.
The Partnership shall reimburse James River for all such fees and expenses as
promptly as practicable after receipt by the Partnership of sufficient evidence
supporting the payment by James River of such fees and expenses. The estimated
amounts listed on Schedule 1.8 shall be adjusted from time to time after the
Closing, either upward or downward, to the extent required to reflect the actual
fees and expenses paid by James River and reimburseable pursuant to this Section
1.8. To the extent permitted under the Capital Expenditure Loans (as defined in
that certain Revolving Credit, Term Loan and Security Agreement, dated as of the
date hereof, among the Partnership, WinCup and The Bank of New York Commercial
Corporation (as Lender and as Agent)), the Partnership shall draw on amounts
from such loan and pay such drawed amounts to James River to reimburse James
River for all capital expenditures incurred by James River within ninety (90)
days prior to Closing and related to any engineering projects undertaken for the
benefit of the Partnership and its business.
1.9 Retention of Books and Records; Availability of Employees.
--------------------------------------------------------
James River will retain and maintain, in an organized and retrievable manner,
all material documents and records pertaining to the Foam Business for periods
prior to the Closing Date. James River agrees to make available to the
Partnership all such documents and records, including, without limitation, such
documents and records as the Partnership shall reasonably require to compile the
previous three years audited financials, as well as such employees of James
River, as may be reasonably requested by the Partnership in order to comply with
all
-6-
<PAGE>
pertinent requests from the Internal Revenue Service and state taxing
authorities which relate to periods prior to the Closing or as the Partnership
otherwise deems necessary to the efficient operation of the Partnership's
business, which shall be deemed to include any refinancing of the Partnership's
indebtedness.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF JAMES RIVER
2.1 Representations and Warranties of James River. James River
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hereby represents and warrants to the Partnership as follows:
(a) Organization. James River is a duly organized and validly
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existing corporation in good standing under the laws of Virginia, its
jurisdiction of incorporation, and has all requisite corporate power and
authority to own, lease and operate its assets and to carry on its business as
presently conducted and to execute, deliver and perform its obligations under
this Agreement. James River is duly qualified and in good standing to do
business in each jurisdiction in which its Foam Business makes such
qualification necessary except where failure to so qualify has no material
adverse effect on James Rivers' financial condition or the conduct of the Foam
Business. James River has heretofore delivered to the Partnership complete and
correct copies of its Certificate of Incorporation and Bylaws, as currently in
effect.
(b) Due Authorization and Binding Effect. This Agreement has been
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duly authorized by James River's Board of Directors, has been duly executed and
delivered by James River and constitutes the legal and binding obligation of
James River enforceable in accordance with its terms except as the same may be
limited by (i) any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally or (ii) general principles
of equity, whether considered in a proceeding in equity or at law.
(c) Non-Contravention. Except as set forth in Schedule 2.1(c) and
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Schedule 2.1(t), the execution and delivery by James River of this Agreement
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does not and the consummation of the transactions contemplated hereby will not
(i) violate or result in a breach of any provision of the Certificate of
Incorporation or Bylaws of James River (ii) result in a default, or give rise
to any right of termination, modification or acceleration, or the imposition of
any Encumbrance (as hereinafter defined), whether immediately or after the
giving of notice or the passage of time, under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement, lease or
other instrument or obligation to which James River is a party or by which any
of the Transferred Assets may be bound, or (iii) violate any law, regulation,
judgment, order or decree applicable to James River or any of the Transferred
Assets or the Foam Business.
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(d) Brokers and Finders. James River has not employed any broker,
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finder, consultant or intermediary who would be entitled to a broker's, finder's
or similar fee or commission in connection with or upon the consummation of the
transactions contemplated in this Agreement.
(e) Title to Transferred Assets. James River is the sole and
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exclusive owner of the Transferred Assets and possesses good (and, with respect
to owned real estate, marketable) title thereto free and clear, except as
otherwise disclosed herein, of any and all pledges, security interests,
mortgages, liens, conditional sales agreements, restrictions, encumbrances or
charges other than Permitted Encumbrances (as hereinafter defined) (collectively
"Encumbrances") and, except for the consents and approvals set forth in Schedule
2.1(e) hereto, has the complete and unrestricted power and unqualified right to
sell, convey, assign, transfer and deliver to the Partnership sole and exclusive
ownership of the Transferred Assets free and clear of any and all Encumbrances
other than Permitted Encumbrances. "Permitted Encumbrances" shall mean: (i)
statutory liens for current taxes or assessments not yet due or delinquent; (ii)
mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which
there is no default on the part of James River, provided that the same shall be
fully discharged of record before the Closing; (iii) exceptions shown on the
Commonwealth Land Title Insurance Company Policies of title insurance to be
issued pursuant Commitment No. T950363 (Metuchen, New Jersey) and Commitment No.
95D073 (West Chicago, Illinois); and (iv) such other Encumbrances which do not
materially adversely affect the use or value of the real property contained in
the Transferred Assets.
(f) Financial Statements. James River has delivered to the
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Partnership: (a) unaudited balance sheet items of James River's HandiKup foam
container operations ("HandiKup Division") as at December 31 in each of the
years 1993 and 1994, and the related unaudited statements of sales and operating
expenses for each of the fiscal years then ended ("Year-end Financial
Statements") and (b) unaudited balance sheet items of the HandiKup Division as
of September 24, 1995 and the related unaudited statements of sales and
operating expenses for the period then ended ("Interim Financial Statements").
Such Year-end Financial Statements and Interim Financial Statements fairly
present the financial condition and results of operations of the HandiKup
Division as at the respective dates of and for the periods referred to therein.
(g) Inventory. All inventory of James River included within the
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Transferred Assets (i) is usable or saleable in the ordinary course of the Foam
Business, (ii) is sufficient but not excessive in kind or amount for the conduct
of the Foam Business as it is presently being conducted, and (iii) is carried on
the books of James River as reflected on the Interim Financial Statements at an
amount which reflects valuations not in excess of the lower of cost or market
(FIFO) determined in accordance with generally accepted accounting principles
applied on a consistent basis. Schedule 2.1(g) sets forth the locations of
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inventory not located at the sites identified in Section 1.1(a) hereof.
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(h) No Material Adverse Change. Since September 24, 1995, there has
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not been any material adverse change in the financial condition of James River,
and no event has occurred or circumstance exists that can reasonably be expected
to result in such a material adverse change.
(i) Contracts; Materiality; No Defaults. Except as set forth on
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Schedule 2.1(i), the Contracts constitute all of the agreements or contracts
which are Material to the HandiKup one-piece foam cup container business of
James River (the "Foam Business"). "Material" for this purpose shall mean an
agreement, contract or commitment: (i) upon which any part of the Foam Business
is dependent or which, if breached, could reasonably be expected to materially
and adversely affect the Transferred Assets or the earnings, financial
condition, operations or prospects of the Foam Business; (ii) which provides for
aggregate future payments by or to James River for the Foam Business of more
than $50,000 in any year, except for purchase orders or sales orders arising in
the ordinary course of business, in which case they are listed only if any party
thereto may be obligated to make future payments aggregating more than $100,000
in any year; (iii) which relates to the Transferred Assets, extends more than
one year from the date hereof and is not cancelable by either party on 30 days'
notice; (iv) which provides for the sale or lease or other transfer, after the
date hereof and other than in the ordinary course of business, of any of the
Transferred Assets; (v) which relates to the employment, retirement or
termination of the services of any employee, officer, former officer or
consultant of James River whose employment relates or was related to the Foam
Business; or (vi) which contains covenants pursuant to which any person has
agreed not to compete with any business conducted by the Foam Business or not
disclose to others information concerning the Transferred Assets or the Foam
Business. Except as set forth on Schedule 2.1(i), James River is not in default
under any of the Contracts. To James River's knowledge, except as set forth on
Schedule 2.1(i), each other party to any of the Contracts is not in default and
no event has occurred or circumstance exists that (with or without notice or
lapse of time) may result in a violation or breach of any of the Contracts.
(j) Licenses and Permits. Except as set forth in Schedule 2.1(j),
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James River has all licenses and permits required to conduct the Foam Business
as it is presently being conducted. Schedule 2.1(j) contains a complete list of
all such licenses and permits, all of which are in full force and effect and,
except as noted on Schedule 2.1(j), all of which are assignable. Except as
disclosed on Schedule 2.1(j), James River has operated the Foam Business in
compliance with all of the terms and conditions set forth in such licenses and
permits. Except as set forth in Schedule 2.1(j), no investigation or review is
pending with respect to any alleged failure of James River to comply with the
provisions of its license and permits, and no event has occurred or condition
exists which, with the giving of notice or the passage of time, can reasonably
be expected to result in any such allegation.
(k) Litigation. Except as set forth in Schedule 2.1(k), there are no
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actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of James River, threatened against
James River, whether at law or in equity and whether civil or criminal in
nature, before any court, governmental body, commission,
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agency or arbitrator, domestic or foreign, nor are there any judgments, orders
or decrees of any such court, governmental body, commission, agency or
arbitrator outstanding against James River which have or can reasonably be
expected to have, directly or indirectly, an adverse effect on the Transferred
Assets or the earnings, financial conditions, operations or prospects of the
Foam Business, or which seek specifically to prevent, restrict or delay
consummation of the transactions contemplated hereby or fulfillment of any of
the conditions hereof.
(l) Undisclosed Liabilities. Except as set forth in Schedule 2.1(l),
-----------------------
the HandiKup Division does not have, with respect to the Transferred Assets or
the operations of the Foam Business, any liabilities (whether matured or
unmatured, accrued, contingent or otherwise) which are not reflected in the
Interim Financial Statements other than those which were incurred subsequent to
the date of such financial statements in the ordinary course of business and
consistent with past practices and cannot reasonably be expected to materially
and adversely affect the Transferred Assets or the earnings, financial
condition, operations or prospects of the Foam Business.
(m) Absence of Changes. Except as set forth in Schedule 2.1(m), since
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September 24, 1995, there has not been:
(i) any change, or development involving a prospective change,
including, without limitation, any damage, destruction or loss (whether or not
covered by insurance) which adversely affects or, to the knowledge of a James
River, can reasonably be expected to materially and adversely affect the
Transferred Assets or the earnings, financial condition, operations or prospects
of the Foam Business;
(ii) any obligation or liability involving more than $200,000
(whether matured or unmatured, accrued, contingent, or otherwise) incurred in
the aggregate by James River with respect to the Transferred Assets or the Foam
Business;
(iii) any general uniform increase in the compensation of the
employees of the Foam Business (including, without limitation, any increase
pursuant to any bonus, pension, profit sharing or other plan or commitment);
(iv) an increase (other than normal increases consistent with
past practices and those required by law) in the compensation payable to any
employee (including officers) of the Foam Business;
(v) any amendment to any employment agreement to which any
employee of the Foam Business is a party;
(vi) any sale of any of the Transferred Assets other than in the
ordinary course of business; or
(vii) any material deterioration of relations between the Foam
Business and its suppliers or customers.
Since the date of the Interim Financial Statements, the Foam Business has been
conducted only in the ordinary and usual course and in a manner consistent with
past practices.
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(n) Leases. Schedule 2.1(n) includes a complete list of each lease
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into which James River has entered, whether as lessor or lessee, on behalf of
the Foam Business which relates to either real or personal property, other than
monthly leases of personal property which may be cancelled upon not more than 60
days notice and require the payment of not more than $100 per month. The leases
listed in Schedule 2.1(n) are referred to herein as a "Lease" or the "Leases."
James River has not breached any such Lease and, to the knowledge of James
River, no other party to any Lease has breached the Lease and no event has
occurred or condition exists which, with the giving of notice or the passage of
time, can reasonably be expected to result in a default under, or permit the
termination, modification or acceleration of any Lease by any party thereto.
James River has good and valid leasehold title to the real estate covered by the
Leases, free and clear of all encumbrances. Complete copies of all of the
Leases have been delivered to the Partnership. Except as disclosed on Schedule
2.1(n), the Leases can be transferred to the Partnership without the consent of
the lessors thereunder or any other person.
(o) Intellectual Property. Schedule 2.1(o) sets forth (i) a list of
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certain identified intellectual property which James River owns and uses in
connection with the Foam Business; and (ii) a list of certain identified
intellectual property which James River does not own but has the right to use in
connection with the Foam Business. Except as is set forth in Schedule 2.1(o),
James River has the right to use the intellectual property listed on Schedule
2.1(o) free and clear of any restrictions and its right to such intellectual
property is assignable. To the knowledge of James River, James River is not
infringing upon the rights of any person, is not aware of any claim of such
infringement, and no person is infringing upon the rights of James River in the
intellectual property. To the best knowledge of James River, all letters
patent, registrations and certificates issued by any governmental agency
relating to the intellectual property are valid and subsisting and have been
properly maintained. Complete copies of all documents of the intellectual
property listed on Schedule 2.1(o) pursuant to which James River has acquired
the right to use, or has licensed or otherwise permitted any other person to
use, any such intellectual property listed on Schedule 2.1(o) have been
delivered to the Partnership.
(p) Maintenance of Equipment. The equipment which is a part of the
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Transferred Assets has been maintained in good repair in accordance with the
usual practices in the United States of businesses similar to the Foam Business
conducted by James River, is in good condition, ordinary wear and tear excepted,
and is useable in the ordinary course of the Foam Business as it is presently
being conducted.
(q) Sufficiency of Transferred Assets. Except as set forth on
---------------------------------
Schedule 2.1(q), the Transferred Assets include all properties and rights of
James River that are necessary for the conduct of the business of the Foam
Business as it is presently being conducted.
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(r) Labor and Employment Matters. Except as set forth in Schedule
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2.1(r), there are no collective bargaining agreements or employment agreements
(other than the Contracts) to which James River is a party or by which it is
otherwise obligated. There are no controversies, claims or grievances pending,
or, to the knowledge of each James River, threatened between James River and any
employees of the Foam Business which affect, or can reasonably be expected to
have, directly or indirectly, an adverse effect on the Transferred Assets or the
earnings, financial condition, operations or prospects of the Foam Business or
relate to any specific effort to prevent, restrict or delay consummation of the
transactions contemplated by this Agreement.
(s) Certain Practices. To the knowledge of James River, no
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shareholder, director or officer, employee or agent of James River has, directly
or indirectly, made, or agreed to make, any improper or illegal payment, gift or
political contribution to, or taken any other improper or illegal action, for
the benefit of any customer, supplier, governmental employee or other person who
is or may be in a position to assist or hinder the business of the Foam
Business.
(t) Consents and Approvals. Except as set forth in Schedule 2.1(t),
----------------------
there is no requirement applicable to James River to make any filing with, or to
obtain any consent or approval of any Person (as hereinafter defined) as a
condition to the transfer of the Transferred Assets to the Partnership or the
consummation of the transactions contemplated by this Agreement (other than as
may be required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976).
(u) Compliance with Laws. Except as set forth in Schedule 2.1(u),
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James River has operated the Foam Business in compliance with all laws,
regulations, judgments, orders or decrees of any federal, state, local or
foreign court or governmental body applicable to James River or any of the
Transferred Assets or the Foam Business including, without limitation, those
related to (i) antitrust and trade matters, (ii) civil rights, (iii) zoning and
building codes, (iv) public health and safety, (v) worker health and safety and
(vi) labor, employment and discrimination in employment. Except as set forth on
Schedule 2.1(u), no investigation or review is pending with respect to any
alleged failure by James River to comply with any such law, regulation, order,
judgment or decree and no event has occurred or condition exists which, with the
giving of notice or the passage of time, can reasonably be expected to result in
any such allegation.
(v) Disclosure. Neither this Agreement, nor the Year-End Financial
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Statements nor the Interim Financial Statements, contains an untrue statement of
a material fact. To the knowledge of James River no event has occurred or
condition exists which, with the giving of notice or the passage of time, can
reasonably be expected to have a material adverse effect on the Transferred
Assets or the earnings, financial condition, operations or prospects of the Foam
Business.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PARTNERSHIP
3.1 Representations and Warranties of the Partnership. The
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Partnership hereby represents and warrants to James River as follows:
(a) Organization. The Partnership is a duly organized and validly
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existing limited partnership in good standing under the laws of Delaware, the
jurisdiction in which it is organized, and has all requisite power and authority
to own, lease and operate its assets and to carry on its business as presently
contemplated and to execute, deliver and perform its obligations under this
Agreement.
(b) Due Authorization and Binding Effect. This Agreement has been
------------------------------------
duly authorized by all requisite action on the part of the Partnership, has been
duly executed and delivered by the Partnership and constitutes the legal and
binding obligation of the Partnership enforceable in accordance with its terms.
(c) Compliance. The execution, delivery and performance of this
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Agreement by the Partnership will not conflict with, result in any breach of or
constitute a default under or cause the acceleration of, any provision of any
partnership agreement, certificate of limited partnership, judgment, decree,
law, ordinance, regulation or order to which the Partnership is a party or by
which the Partnership or any of its assets are bound or affected.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent. The obligations of the Partnership and
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James River, respectively, to proceed with the transactions contemplated hereby
are subject to the satisfaction of the following conditions:
(a) The execution and delivery of the instruments referred to in
Section 1.5 hereof and 1.3 of the Agreement, dated as of October 31, 1995,
between WinCup and James River (the "Foam Agreement").
(b) The concurrent consummation of the closing contemplated under the
Foam Agreement.
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ARTICLE V
FURTHER ASSURANCES; COVENANTS
5.1 Further Assurances. If at any time after the Closing Date any
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further assignments, conveyances or assurances in law are necessary or desirable
to vest, perfect or confirm of record in the Partnership the title to any of the
Transferred Assets, or otherwise to carry out the provisions hereof, the proper
officers and directors of James River shall execute and deliver any and all
proper assignments, instruments of assumption, powers of attorney and assurances
in law, and do all things necessary or proper to vest, perfect or confirm title
to such property or rights in the Partnership and otherwise to carry out the
provisions hereof.
5.2 Intellectual Property. James River shall make due inquiry as
---------------------
soon as reasonably practicable after the Closing Date to determine the existence
of any patents owned or used in connection with the Foam Business which are not
listed on Schedule 2.1(o) ("Undisclosed Patents"). James River shall, promptly
after the discovery any such Undisclosed Patents, disclose to the Partnership
Undisclosed Patents of which it becomes aware. If James River becomes aware of
any Undisclosed Patents used exclusively by James River prior to the date hereof
in the Foam Business, it shall assign, at no cost to the Partnership, such
Undisclosed Patents to the Partnership if it owns such Undisclosed Patents or it
shall grant a royalty-free license to the Partnership in such Undisclosed
Patents for the duration of the term of the right to use such Undisclosed
Patents.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.
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(a) Indemnification by James River. Subject to the limitations
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contained in this Article VI, James River will indemnify and hold the
Partnership harmless from any damage, loss, liability or expense (including,
without limitation, reasonable expenses of investigation and litigation and
reasonable attorneys', accountants', and other professional fees) arising out
of:
(i) a breach of any representation or warranty made by James
River in this Agreement;
(ii) a breach of any agreement of James River
contained in this Agreement;
(iii) the failure of James River to satisfy in full any of the
payables and allocated expenses associated with the Foam Business and not
assumed by the Partnership hereunder; and
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(iv) any liability or obligation of James River not assumed by
the Partnership pursuant to this Agreement.
(b) Indemnification by the Partnership. Subject to the limitations
----------------------------------
contained in this Article VI, the Partnership will indemnify and hold James
River harmless from any damage, loss, liability or expense (including, without
limitation, reasonable expenses of investigation and litigation and reasonable
attorney's, accountants' and other professional fees) arising out of:
(i) a breach of any representation or warranty made by the
Partnership in this Agreement;
(ii) a breach of any agreement of the Partnership contained in
this Agreement; and
(iii) the Assumed Liabilities and other liabilities assumed by
the Partnership under this Agreement.
(c) Third Party Claims. The obligation of an indemnifying party to
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indemnify another party to this Agreement under the provisions of this Article
VI with respect to claims resulting from the assertion of liability by those not
parties to this Agreement (including governmental claims for penalties, fines
and assessments) shall be subject to the following terms and conditions:
(i) The indemnified party shall give prompt written notice to
the indemnifying party of any assertion of liability by a third party which
might give rise to a claim for indemnification based on the foregoing provisions
of this Article VI, which notice shall state the nature and basis of the
assertion and the amount thereof, to the extent known, provided, however, that
no delay on the part of the indemnified party in giving notice shall relieve the
indemnifying party of any obligation to indemnify unless (and then solely to the
extent that) the indemnifying party is prejudiced by such delay;
(ii) If any action, suit or proceeding (a "Legal Action") is
brought against an indemnified party with respect to which the indemnifying
party may have liability under the foregoing provisions of this Article VI, the
Legal Action shall be defended (such defense to include all proceedings for
appeal or review which counsel for the indemnified party shall deem appropriate)
by the indemnifying party;
(iii) Notwithstanding the provisions of the previous subsection
of this Agreement, until the indemnifying party shall have assumed the defense
of any such Legal Action, the defense shall be handled by the indemnified party.
Furthermore, (a) if the indemnified party shall have reasonably concluded that
there are likely to be defenses available to the indemnified party that are
different from or in addition to those available to the indemnifying party; (b)
if the indemnifying party fails to provide the indemnified party
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with evidence reasonably acceptable to the indemnified party that the
indemnifying party has sufficient financial resources to defend and fulfill its
indemnification obligation with respect to the Legal Action; (c) if the Legal
Action involves other than money damages and seeks injunctive or other equitable
relief; or (d) if a judgment against the indemnified party in the Legal Action
will, in the good faith opinion of the indemnified party, establish a custom or
precedent which will be materially adverse to the best interest of its
continuing business, the indemnifying party shall not be entitled to assume the
defense of the Legal Action and the defense shall be handled by the indemnified
party. If the defense of the Legal Action is handled by the indemnified party
under the provisions of this subsection, the indemnifying party shall pay all
legal and other expenses reasonably incurred by the indemnified party in
conducting such defense;
(iv) In any Legal Action initiated by a third party and
defended by the indemnifying party (a) the indemnified party shall have the
right to be represented by advisory counsel and accountants, at its own expense,
(b) the indemnifying party shall keep the indemnified party fully informed as to
the status of such Legal Action at all stages thereof, whether or not the
indemnified party is represented by its own counsel, (c) the indemnifying party
shall make available to the indemnified party, and its attorneys, accountants
and other representatives, all books and records of the indemnifying party
relating to such Legal Action and (d) the parties shall render to each other
such assistance as may be reasonably required in order to ensure the proper and
adequate defense of such Legal Action; and
(v) In any Legal Action initiated by a third party and
defended by the indemnifying party, the indemnifying party shall not make any
settlement of any claim without the written consent of the indemnified party,
which consent shall not be unreasonably withheld. Without limiting the
generality of the foregoing, it shall not be deemed unreasonable to withhold
consent to a settlement involving injunctive or other equitable relief against
the indemnified party or its assets, employees or business, or relief which the
indemnified party reasonably believes could establish a custom or precedent
which will be materially adverse to the best interests of its continuing
business.
(d) Limitations on Indemnification.
------------------------------
(i) Notwithstanding the foregoing provisions of this Article VI,
James River shall not be liable to the Partnership under Section 6.l(a)(i) and
the Partnership shall not be liable to James River under Section 6.1(b)(i), (1)
with respect to any single claim, or series of claims arising from a single
occurrence, unless and to the extent the liability under such claim or series of
claims exceeds $50,000, and thereafter the indemnified party shall be entitled
to indemnification thereunder only for the aggregate amount of such liability in
excess of $50,000 or (2) except as set forth in clause (1), unless and to the
extent the aggregate amount of liability under such Section (including any
amounts for which liability is determined under clause (1) above) exceeds
$250,000, and thereafter the indemnified party
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shall be entitled to indemnification thereunder only for the aggregate amount of
such liability in excess of $250,000.
(ii) All damages to which an indemnified party may be entitled
pursuant to the provisions of this Article VI shall be net of any insurance
coverage with respect thereto.
(e) Survival; Investigation. The representations and warranties of
-----------------------
the parties contained in Sections 2.1 and 3.1 of this Agreement and James
River's indemnification obligations under Section 6.1(a)(iii) shall survive any
investigation by any party and shall not terminate until eighteen (18) months
after the Closing Date. With respect to any claim asserted by the Partnership
with respect to the liabilities retained by James River pursuant to Section
1.3(f), the right of indemnification provided for in Section 6.1(a)(iv) shall
survive for a period of five (5) years from the Closing Date. Notwithstanding
the provisions of the preceding sentences, any representation or warranty in
respect of which indemnification may be sought under Section 6.l(a)(i) or
6.1(b)(i) and any claim in respect of which indemnification may be sought
pursuant to Section 6.1(a)(iii) or 6.1(a)(iv) shall survive the applicable
termination date set forth in the preceding sentences if written notice, given
in good faith, of a specific breach thereof is given to the indemnifying party
on or before such termination date, whether or not liability has actually been
incurred.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. The execution, validity, construction and
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performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to conflicts of laws
principles.
7.2 Binding Effect. This Agreement shall be binding upon, and inure
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to the benefit of, the respective heirs, successors and permitted assigns of the
parties hereto.
7.3 Entire Agreement. This Agreement and the documents contemplated
----------------
by this Agreement set forth the entire understanding of the parties with respect
to the subject matter hereof. Any previous agreements or understandings between
the parties regarding the subject matter hereof are merged into and superseded
by this Agreement.
7.4 Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument, binding on the parties hereto, and
the signature of any party to any counterpart shall be deemed a signature to,
and may be appended to, any other counterpart.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its General Partner
By: /s/ Michael T. Kennedy
-----------------------
Michael T. Kennedy
President
JAMES RIVER PAPER COMPANY, INC.
By: /s/ Stephen E. Hare
---------------------------------------
Name: Stephen E. Hare
Title: Senior Vice President and
Treasurer
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EXHIBIT 10.4
WINCUP CAPITAL CONTRIBUTION AGREEMENT
-------------------------------------
THIS CAPITAL CONTRIBUTION AGREEMENT (this "Agreement") is made as of
this 20th day of January, 1996, by and between WINCUP HOLDINGS, INC., a
Delaware corporation ("WinCup") and WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Partnership").
BACKGROUND
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A. Pursuant to the terms and conditions of a Limited Partnership
Agreement (the "Partnership Agreement") dated as of the date hereof, WinCup is a
general partner of the Partnership.
B. WinCup desires to make an initial capital contribution of certain
assets to the Partnership, and the Partnership desires to accept such initial
capital contribution, pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and covenants hereinafter set forth, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
CONTRIBUTION OF ASSETS
AND ASSUMPTION OF LIABILITIES
1.1 Contribution. On the Closing Date (as hereinafter defined)
------------
WinCup shall contribute to the Partnership as an initial capital contribution,
and the Partnership shall accept as an initial capital contribution, all of the
tangible and intangible property and rights of WinCup used or held for use in
connection with the Foam Business (as hereinafter defined), excluding those
assets of WinCup used in the thermoforming business and acquired by James River
Paper Company, Inc. ("James River") pursuant to that certain Asset Purchase
Agreement, dated as of October 31, 1995, among WinCup, Benchmark Holdings, Inc.
and James River (the "Asset Purchase Agreement"), and including, without
limitation, the properties and rights described below and described and assigned
a preliminary estimated value in Schedule 1.1 hereto, with final values to be
assigned and provided to the Partnership within sixty (60) days after the
Closing Date, and made a part hereof (collectively, the "Transferred Assets"):
(a) All fixed assets, leasehold improvements, technology, patents,
trademarks, real property and other non-current assets associated with Wincup's
foam container and thermoform lid manufacturing operations located in Tolleson,
Arizona; El
<PAGE>
Campo, Texas; Shreveport, Louisiana; Higginsville, Missouri; Des Plaines,
Illinois; Mount Sterling, Ohio; Stone Mountain, Georgia and other locations;
(b) The inventory, spare parts and other current assets associated
with the Foam Business;
(c) All of Wincup's contractual rights in and under the contracts
listed on Schedule 1.1(c) (the "Contracts"), copies of which have been
delivered to the Partnership; and
(d) Cash in the amount of $300,000 as well as any cash WinCup has
remaining after satisfaction in full of all payables and other expenses and
accruals of WinCup.
In addition to the foregoing, WinCup shall contribute to the Partnership
all WinCup employees associated with the Transferred Assets (collectively, the
"Transferred Employees"). A list of the Transferred Employees is contained in
Schedule 1.1(d).
1.2 Excluded Assets. WinCup will not transfer to the Partnership (a)
---------------
any interest in any of the other assets of WinCup which are not included in the
Transferred Assets, including, without limitation, the cash (other than as set
forth in Section 1.1(d) above), cash equivalents and accounts receivable of
WinCup, and (b) the assets listed on attached Schedule 1.2.
1.3 Assumption of Liabilities.
-------------------------
(a) The Partnership hereby agrees to assume, satisfy and discharge:
(i) all liabilities and obligations relating to the Transferred Assets arising
on or after the Closing Date including those relating to the Contracts; (ii)
annual (but not carried forward) employee liabilities for vacation, holiday and
sick pay in the amounts set forth on Schedule 1.3; (iii) WinCup's obligations to
Scott Paper Company under the Negotiable Secured Note described on Schedule
1.3; and (iv) lease liabilities associated with the closures, respectively, of
the distribution centers in Kent, Washington and Tinton Falls, New Jersey but
not in excess of $50,000 in the aggregate and the distribution center in Des
Plaines, Illinois, in the event it is closed, but not in excess of $150,000
(collectively, the "Assumed Liabilities").
(b) The Partnership will distribute to WinCup, in accordance with the
terms of that certain promissory note, in the original principal amount of
$1,000,000, the form of which is attached hereto as Exhibit A (the $1,000,000
Note"), the amount of $1,000,000 less any Inventory Deficiency (as hereinafter
defined) (the "Payment").
-2-
<PAGE>
(c) The Partnership shall also assume responsibility for claims
related to the Foam Business and covered under standard policies of commercial
general liability insurance arising from events that occurred prior to the
Closing Date but which have not been reported to and are not known to Wincup on
or before the Closing Date.
(d) As of the Closing Date, the Partnership shall assume, and WinCup
shall have no further obligation with respect to, (i) all employee related
liabilities and obligations that are payable on or after the Closing Date with
respect to Transferred Employees and their beneficiaries and dependents other
than those liabilities and obligations that arose before the Closing Date which
are not assumed pursuant to clause (ii) hereafter; and (ii) all employee related
liabilities and obligations that arose prior to the Closing Date with respect to
the Transferred Employees and their employee benefits to the extent set forth in
Article 11 of the Partnership Agreement.
(e) It is expressly acknowledged and agreed by the parties hereto
that, except for the Assumed Liabilities and the liabilities described in
Sections 1.3(c) and 1.3(d) of this Agreement, all other liabilities and
obligations of Wincup, whether or not related to the Transferred Assets, whether
now existing or arising in the future, fixed or contingent, known or unknown,
and attributable to any facts existing on or prior to the Closing Date,
including without limitation those arising out of trade accounts payable and
litigation matters, shall be and remain the liabilities and obligations of
WinCup and shall not be booked as or become a liability of the Partnership.
(f) Notwithstanding Section 1.3(a)(i) hereof or any other provision of
this Agreement, WinCup shall retain, and the Partnership will assume no
liability for, related to, arising out of, under or in respect of any Hazardous
Substances existing as of the Closing Date on, in or about the Transferred
Assets or the leased premises on which the Transferred Assets are located or any
Hazardous Emissions or Handling Hazardous Substances prior to the Closing Date
at any location (including, without limitation, remote storage, treatment,
recycling or disposal sites). For the purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
"Hazardous Substances" means (i) those substances defined as hazardous
by Section 9601(14) of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA"), 42 USCA 9601 et seq., (ii) all fluids
------
containing polychlorinated biphenyls, (iii) asbestos and asbestos-containing
materials, (iv) nuclear fuel and waste, (v) petroleum and petroleum products,
and (vi) all other substances regulated under Environmental Laws.
"Environmental Laws" means federal statutes and regulations
promulgated thereunder intended to provide protection for public health and the
environment, including, without limitation, CERCLA, the Clean Air Act, the Clean
Water Act, the Solid Waste Disposal Act (including the Resource Conservation and
Recovery Act), the Toxic Substances
-3-
<PAGE>
Control Act, their state and regulatory counterparts, and other substantially
similar foreign statutes and regulations, as the foregoing may be in effect from
time to time.
"Handling Hazardous Substances" means the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"Hazardous Emissions" means all emissions, releases, leaks, escapes,
dumping, discharges or threatened discharges of Hazardous Substances into the
air, surface water, ground water or the ocean or on or into the land.
1.4 Value of the Transferred Assets. The parties agree that the value of
-------------------------------
the Transferred Assets and the allocation of such values will be as set forth,
as of the Closing Date, on Schedule 1.1 hereto.
1.5 Transfer of Assets and Assumption of the Assumed Liabilities. At the
------------------------------------------------------------
Closing (as hereinafter defined), WinCup and the Partnership shall execute and
deliver to each other a bill of contribution and assignment and assumption
agreement, in a form agreeable to the parties hereto and James River, pursuant
to which WinCup shall transfer the Transferred Assets to the Partnership and the
Partnership shall specify the amount of and assume the Assumed Liabilities and
shall assume the other liabilities to be assumed by the Partnership under this
Agreement.
1.6 Closing.
-------
(a) Closing Date. The closing (the "Closing") of the transactions
contemplated hereby shall take effect as of 12:00 a.m. on January 20, 1996 (the
"Closing Date").
(b) Effect of the Closing. On and subsequent to the Closing Date, all
business transacted in connection with the Transferred Assets, and, except as
otherwise provided in this Agreement, all obligations accruing in connection
with the Transferred Assets and Assumed Liabilities, shall be for the account of
the Partnership.
1.7 Post-Closing Adjustments.
------------------------
(a) The value of the inventory (including raw materials, work in
process, finished goods, spare parts, supplies and stores inventory) contributed
by WinCup on the Closing Date shall not be less than Ten Million Three Hundred
Thousand Dollars ($10,300,000). As provided in Section 1.3(b), the Payment shall
take into account any Inventory Deficiency determined in accordance with Section
1.7(b) below.
-4-
<PAGE>
(b) Inventory Level Adjustment.
--------------------------
(1) The Partnership caused its auditors, on November 18 and 19,
1995, to conduct a physical inventory of the inventory contributed by WinCup
pursuant to Section 1.1(b) of the Agreement, which physical inventory the
Partnership shall roll forward to the Closing Date (as rolled forward, the
"WinCup Inventory"). As promptly as practical, but in any event not more than
thirty (30) days after the Closing, the Partnership shall cause its auditors to
prepare, on the basis of such physical inventory and the rolling forward of such
physical inventory, and deliver to WinCup a draft of a statement of the "WinCup
Inventory Value" as of the commencement of business on the Closing Date (the
"Preliminary Closing Statement"). "WinCup Inventory Value" shall mean the value
of the WinCup Inventory on hand as of the Closing Date calculated as set forth
in this Section 1.7(b). WinCup Inventory on hand as of the Closing Date, as
determined by the physical inventory and rolling forward of the physical
inventory referred to above, will include items which have historically been
carried on the books of WinCup and held for sale in the ordinary course of
WinCup's business. Raw materials, WIP and finished goods inventory will be
valued at the lower of cost or market determined in accordance with generally
accepted accounting principles applied on a consistent basis. Cost for raw
materials, WIP and finished goods will be calculated to reflect raw material
prices as of the Closing Date. Supplies, store and spare parts will be valued at
cost as of the Closing Date. Finished goods inventory will be reduced for
obsolete, slow-moving or damaged inventory. Spare parts will be reduced for
obsolete spare parts. The use of the term "slow moving" with respect to
inventory shall mean all inventory in excess of the most recent total of twelve
(12) months' external customer shipments in cases before the Closing Date, which
slow moving inventory shall be valued at fifty percent (50%) of cost. The use of
the term "obsolete" with respect to inventory shall mean all inventory where the
most recent total of twelve (12) months before the Closing Date for all external
customer shipments in cases is zero, except for newly introduced products, which
obsolete inventory shall be valued at zero. The use of the term "damaged" with
respect to inventory shall mean all inventory contributed by WinCup which is
ripped, torn, defaced or squashed, which damaged inventory shall be valued at
zero. The term "obsolete" with respect to spare parts shall mean those spare
parts which are no longer used in the production process, which obsolete spare
parts shall be valued at zero.
(2) During the ten (10) days following the receipt by WinCup of
the draft of the Preliminary Closing Statement and the report of the
Partnership's auditors with respect thereto, WinCup shall be permitted to review
the working papers of the Partnership's auditors relating to the draft of the
Preliminary Closing Statement and shall have such access to the Partnership's
personnel as may be reasonably necessary to permit it to review in detail the
manner in which the draft was prepared. Before the end of such ten (10) day
period, WinCup shall give any comments or objections it has with respect to the
draft of the Preliminary Closing Statement to the Partnership. Such comments or
objections, insofar as they relate to the valuation of the WinCup Inventory,
shall be resolved without regard to any materiality standard, and the Final
Closing Statement delivered to WinCup pursuant to the provisions of the next
paragraph shall reflect such resolution.
-5-
<PAGE>
(3) Within ten (10) days after the expiration of such ten-day
period described in the preceding paragraph, the Partnership shall deliver to
WinCup a Final Closing Statement (the "Final Closing Statement") accompanied by
a definitive report of the Partnership's auditors with respect thereto. Within
five (5) business days after receipt of such Final Closing Statement and report,
WinCup shall deliver a letter to the Partnership stating whether they concur
with such report and their exceptions thereto, if any, together with the reasons
therefor. If such objections cannot be resolved between the Partnership and
WinCup within five (5) business days after delivery of such letter to the
Partnership by WinCup, the question or questions in dispute shall then be
submitted, as soon as practicable, to a mutually acceptable firm of independent
public accountants of nationally recognized standing, the decision of which as
to such question or questions in dispute shall be made within ten (10) days
thereafter and shall be final and binding upon the parties hereto.
(4) If the Final Closing Statement, after the resolution of all
disputes, indicates that the value of the WinCup Inventory is less than Ten
Million Three Hundred Thousand Dollars ($10,300,000) ("Inventory Deficiency"),
the Partnership shall amend the $1,000,000 Note to deduct from the payments due
thereunder the amount of such Inventory Deficiency.
(5) The fees of WinCup (including the fees of any auditors
independently retained by WinCup) incurred in connection with the preparation of
the Preliminary and Final Closing Statements shall be reimbursed by the
Partnership in accordance with Section 1.8 below. The fees of any independent
accounting firm appointed pursuant to Paragraph (3) of this Section 1.7(b) shall
be paid one-half by the Partnership and one-half by WinCup.
1.8 Reimbursement of Expenses. The Partnership shall reimburse WinCup for
-------------------------
all fees and expenses incurred by WinCup for its legal counsel, accountants (for
fees associated with conducting physical inventories and preparing inventory
valuations and audited financial statements in connection with the formation of
the Partnership and excluding fees incurred in connection with the consummation
of the transactions contemplated by the Asset Purchase Agreement) and Alex.
Brown & Sons, Inc., in connection with the negotiation, documentation and
consummation of the transactions contemplated by this Agreement and the other
documents executed in connection herewith; provided, however, that the
Partnership shall be responsible for the payment of no more than $550,000 of the
fees payable to Alex. Brown & Sons, Inc. for arranging the bank financing
entered into in connection with the transactions contemplated hereby, the
balance of which fees and all other fees payable to Alex. Brown & Sons, Inc.
shall be the sole responsibility of WinCup. Attached hereto as Schedule 1.8 is
an itemization of all such fees and expenses paid or estimated to be due by
WinCup, all of which are deemed to be reasonable. The Partnership shall
reimburse WinCup for all such fees and expenses as promptly as practicable after
receipt by the Partnership of sufficient evidence supporting the payment by
WinCup of such fees and expenses. The estimated amounts listed on Schedule 1.8
shall be adjusted from time to time after Closing, either
-6-
<PAGE>
upward or downward, to the extent required to reflect the actual fees and
expenses paid by WinCup and reimburseable pursuant to this Section 1.8. To the
extent permitted under the Capital Expenditure Loans (as defined in that certain
Revolving Credit, Term Loan and Security Agreement, dated as of the date hereof,
among the Partnership, WinCup and The Bank of New York Commercial Corporation
(as Lender and as Agent)), the Partnership shall draw on amounts from such loan
and pay such drawed amounts to WinCup to reimburse WinCup for all capital
expenditures incurred by WinCup within the ninety (90) days prior to Closing and
related to any engineering projects undertaken for the benefit of the
Partnership and its business.
1.9 Retention of Books and Records; Availability of Employees.
---------------------------------------------------------
WinCup will retain and maintain, in an organized and retrievable manner, all
material documents and records pertaining to the Foam Business for periods prior
to the Closing Date. WinCup agrees to make available to the Partnership all
such documents and records, as well as such employees of WinCup, as may be
reasonably requested by the Partnership in order to comply with all pertinent
requests from the Internal Revenue Service and state taxing authorities which
relate to periods prior to the Closing or as the Partnership otherwise deems
necessary to the efficient operation of the Partnership's business.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF WINCUP
2.1 Representations and Warranties of WinCup. WinCup hereby represents and
----------------------------------------
warrants to the Partnership as follows:
(a) Organization. WinCup is a duly organized and validly existing
------------
corporation in good standing under the laws of Delaware, its jurisdiction of
incorporation, and has all requisite corporate power and authority to own, lease
and operate its assets and to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this Agreement. Except as
set forth on Schedule 2.1(a), WinCup is duly qualified and in good standing to
do business in each jurisdiction in which its Foam Business makes such
qualification necessary except where failure to so qualify has no material
adverse effect on WinCup's financial condition or the conduct of the Foam
Business. WinCup has heretofore delivered to the Partnership complete and
correct copies of its Certificate of Incorporation and Bylaws, as currently in
effect.
(b) Due Authorization and Binding Effect. This Agreement has been
------------------------------------
duly authorized by WinCup' s Board of Directors, has been duly executed and
delivered by WinCup and constitutes the legal and binding obligation of WinCup
enforceable in accordance with its terms except as the same may be limited by
(i) any applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors' rights
-7-
<PAGE>
generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
(c) Non-Contravention. Except as set forth in Schedule 2.1(c) and
----------------- ---------------
Schedule 2.1(t), the execution and delivery by WinCup of this Agreement does not
- ---------------
and the consummation of the transactions contemplated hereby will not (i)
violate or result in a breach of any provision of the Certificate of
Incorporation or Bylaws of WinCup (ii) result in a default, or give rise to any
right of termination, modification or acceleration, or the imposition of any
Encumbrance (as hereinafter defined), whether immediately or after the giving of
notice or the passage of time, under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which WinCup is a party or by which any of the Transferred
Assets may be bound, or (iii) violate any law, regulation, judgment, order or
decree applicable to WinCup or any of the Transferred Assets or the Foam
Business.
(d) Brokers and Finders. Other than as described on Schedule 2.1(d)
-------------------
attached hereto with respect to Alex. Brown & Sons Incorporated, WinCup has not
employed any broker, finder, consultant or intermediary who would be entitled to
a broker's, finder's or similar fee or commission in connection with or upon the
consummation of the transactions contemplated in this Agreement.
(e) Title to Transferred Assets. WinCup is the sole and exclusive
---------------------------
owner of the Transferred Assets and possesses good (and, with respect to owned
real estate, marketable) title thereto free and clear, except as otherwise
disclosed on Schedule 2.1(e), of any and all pledges, security interests,
mortgages, liens, conditional sales agreements, restrictions, encumbrances or
charges other than Permitted Encumbrances (as hereinafter defined) (collectively
"Encumbrances") and, except for the consents and approvals set forth in Schedule
2.1(e) hereto, has the complete and unrestricted power and unqualified right to
sell, convey, assign, transfer and deliver to the Partnership sole and exclusive
ownership of the Transferred Assets free and clear of any and all Encumbrances
other than Permitted Encumbrances. "Permitted Encumbrances" shall mean (i)
statutory liens for current taxes or assessments not yet due or delinquent; (ii)
mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which
there is no default on the part of WinCup, provided that the same shall be fully
discharged of record before the Closing; (iii) exceptions shown on the surveys
furnished by Wincup to the Partnership on or before the date hereof and agreed
to by the Partnership; and (iv) such other Encumbrances which do not materially
adversely affect the use or value of the Transferred Assets.
(f) Financial Statements. Wincup has delivered to the Partnership:
--------------------
(a) unaudited balance sheets of WinCup as at December 31, 1994, and the related
unaudited statements of income and cash flow for such fiscal year then ended
("Year-end Financial Statements") and (b) an unaudited balance sheet of WinCup
as at September 29, 1995 and the related unaudited statements of income and cash
flow for the period then ended ("Interim
-8-
<PAGE>
Financial Statements"). Such Year-end Financial Statements and Interim Financial
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") and fairly present the financial condition and results of
operations and cash flow of Wincup as at the respective dates of and for the
periods referred to therein.
(g) Inventory. All inventory of WinCup included within the
---------
Transferred Assets (i) is usable or saleable in the ordinary course of the Foam
Business (ii) is sufficient but not excessive in kind or amount for the conduct
of the Foam Business as it is presently being conducted, and (iii) is carried on
the books of WinCup reflected on the Interim Financial Statements at an amount
which reflects valuations not in excess of the lower of cost or market (FIFO)
determined in accordance with GAAP applied on a consistent basis. Schedule
--------
2.1(g) sets forth the locations of inventory not located at the sites identified
- ------
in Section 1.1(a) hereof.
(h) No Material Adverse Change. Since September 24, 1995, there has
--------------------------
not been any material adverse change in the financial condition of WinCup, and
no event has occurred or circumstance exists that can reasonably be expected to
result in such a material adverse change.
(i) Contracts; Materiality; No Defaults. Except as set forth on
-----------------------------------
Schedule 2.1(i), the Contracts constitute all of the agreements or contracts
which are Material to the foam cup container business of WinCup (the "Foam
Business"). "Material" for this purpose shall mean an agreement, contract or
commitment: (i) upon which any part of the Foam Business is dependent or which,
if breached, could reasonably be expected to materially and adversely affect the
Transferred Assets or the earnings, financial condition, operations or prospects
of the Foam Business; (ii) which provides for aggregate future payments by or to
WinCup for the Foam Business of more than $50,000 in any year, except for
purchase orders or sales orders arising in the ordinary course of business, in
which case they are listed only if any party thereto may be obligated to make
future payments aggregating more than $100,000 in any year; (iii) which relates
to the Transferred Assets, extends more than one year from the date hereof and
is not cancelable by either party on 30 days' notice; (iv) which provides for
the sale or lease or other transfer, after the date hereof and other than in the
ordinary course of business, of any of the Transferred Assets; (v) which relates
to the employment, retirement or termination of the services of any employee,
officer, former officer or consultant of WinCup whose employment relates or was
related to the Foam Business; or (vi) which contains covenants pursuant to which
any person has agreed not to compete with any business conducted by the Foam
Business or not disclose to others information concerning the Transferred Assets
or the Foam Business. Except as set forth in Schedule 2.1(i), WinCup is not in
default under any of the Contracts. To WinCup's knowledge, except as set forth
in Schedule 2.1(i), each other party to any of the Contracts is not in default
and no event has occurred or circumstance exists that (with or without notice or
lapse of time) may result in a violation or breach of any of the Contracts.
-9-
<PAGE>
(j) Licenses and Permits. Except as set forth in Schedule 2.1(j),
--------------------
WinCup has all licenses and permits required to conduct the Foam Business as it
is presently being conducted. Schedule 2.1(j) contains a complete list of all
such licenses and permits, all of which are in full force and effect and, except
as noted on Schedule 2.1(j), all of which are assignable. Except as disclosed on
Schedule 2.1(j), WinCup has operated the Foam Business in compliance with all of
the terms and conditions set forth in such licenses and permits. Except as set
forth in Schedule 2.1(j), no investigation or review is pending with respect to
any alleged failure of WinCup to comply with the provisions of its license and
permits, and no event has occurred or condition exists which, with the giving of
notice or the passage of time, can reasonably be expected to result in any such
allegation.
(k) Litigation. Except as set forth in Schedule 2.1(k), there are no
----------
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of WinCup, threatened against WinCup,
whether at law or in equity and whether civil or criminal in nature, before any
court, governmental body, commission, agency or arbitrator, domestic or foreign,
nor are there any judgments, orders or decrees of any such court, governmental
body, commission, agency or arbitrator outstanding against WinCup which have or
can reasonably be expected to have, directly or indirectly, an adverse effect on
the Transferred Assets or the earnings, financial conditions, operations or
prospects of the Foam Business, or which seek specifically to prevent, restrict
or delay consummation of the transactions contemplated hereby or fulfillment of
any of the conditions hereof.
(l) Undisclosed Liabilities. Except as set forth in Schedule 2.1(l),
-----------------------
WinCup does not have, with respect to the Transferred Assets or the operations
of the Foam Business, any liabilities (whether matured or unmatured, accrued,
contingent or otherwise) which are not reflected in the Interim Financial
Statements other than those which were incurred subsequent to the date of such
financial statements in the ordinary course of business and consistent with past
practices and cannot reasonably be expected to materially and adversely affect
the Transferred Assets or the earnings, financial condition, operations or
prospects of the Foam Business.
(m) Absence of Changes. Except as set forth in Schedule 2.1(m), since
------------------
September 24, 1995, there has not been:
(i) any change, or development involving a prospective change,
including, without limitation, any damage, destruction or loss (whether or
not covered by insurance) which adversely affects or, to the knowledge of a
WinCup, can reasonably be expected to materially and adversely affect the
Transferred Assets or the earnings, financial condition, operations or
prospects of the Foam Business;
(ii) any obligation or liability involving more than $200,000
(whether matured or unmatured, accrued, contingent, or otherwise) incurred
in the aggregate by WinCup with respect to the Transferred Assets or the
Foam Business;
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<PAGE>
(iii) any general uniform increase in the compensation of the
employees of the Foam Business (including, without limitation, any increase
pursuant to any bonus, pension, profit sharing or other plan or
commitment);
(iv) an increase (other than normal increases consistent with
past practices and those required by law) in the compensation payable to
any employee (including officers) of the Foam Business;
(v) any amendment to any employment agreement to which any
employee of the Foam Business is a party;
(vi) any sale of any of the Transferred Assets other than in the
ordinary course of business; or
(vii) any material deterioration of relations between the Foam
Business and its suppliers or customers.
Since the date of the Interim Financial Statements, the Foam Business has been
conducted only in the ordinary and usual course and in a manner consistent with
past practices.
(n) Leases. Schedule 2.1(n) includes a complete list of each lease
------
into which WinCup has entered, whether as lessor or lessee, on behalf of the
Foam Business which relates to either real or personal property, other than
monthly leases of personal property which may be cancelled upon not more than 60
days notice and require the payment of not more than $100 per month. The leases
listed in Schedule 2.1(n) are referred to herein as a "Lease" or the "Leases."
Except as set forth on Schedule 2.1(n), WinCup has not breached any such Lease
and, to the knowledge of WinCup, no other party to any Lease has breached the
Lease and no event has occurred or condition exists which, with the giving of
notice or the passage of time, can reasonably be expected to result in a default
under, or permit the termination, modification or acceleration of any Lease by
any party thereto. WinCup has good and valid leasehold title to the real estate
covered by the Leases, free and clear of all encumbrances. Complete copies of
all of the Leases have been delivered to the Partnership. Except as disclosed on
Schedule 2.1(n), the Leases can be transferred to the Partnership without the
consent of the lessors thereunder or any other person.
(o) Intellectual Property. Schedule 2.1(o) sets forth (i) a list of
---------------------
all of the intellectual property which WinCup owns and uses in connection with
the Foam Business; and (ii) a list of all of the intellectual property which
WinCup does not own but has the right to use in connection with the Foam
Business. Except as is set forth in Schedule 2.1(o), WinCup has the right to use
the intellectual property free and clear of any restrictions and its right to
such intellectual property is assignable. To the knowledge of WinCup, WinCup is
not infringing upon the rights of any person, is not aware of any claim of such
infringement, and no person is infringing upon the rights of WinCup in the
intellectual property. All letters patent, registrations and certificates issued
by any governmental agency relating to the intellectual property are valid and
subsisting and have been properly maintained. Complete copies of all documents
pursuant to which WinCup has acquired the right to use, or has licensed or
otherwise permitted any other person to use, any intellectual property have been
delivered to the Partnership.
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<PAGE>
(p) Maintenance of Equipment. The equipment which is a part of the
------------------------
Transferred Assets has been maintained in good repair in accordance with the
usual practices in the United States of businesses similar to the Foam Business
conducted by WinCup, is in good condition, ordinary wear and tear excepted, and
is useable in the ordinary course of the Foam Business as it is presently being
conducted.
(q) Sufficiency of Transferred Assets. Except as set forth in
---------------------------------
Schedule 2.1(q), the Transferred Assets include all properties and rights of
WinCup that are necessary for the conduct of the business of the Foam Business
as it is presently being conducted.
(r) Labor and Employment Matters. Except as set forth on Schedule
----------------------------
2.1(r), there are no collective bargaining agreements or employment agreements
(other than the Contracts) to which WinCup is a party or by which it is
otherwise obligated. Except as set forth on Schedule 2.1(k), there are no
controversies, claims or grievances pending, or, to the knowledge of each
WinCup, threatened between WinCup and any employees of the Foam Business which
affect, or can reasonably be expected to have, directly or indirectly, an
adverse effect on the Transferred Assets or the earnings, financial condition,
operations or prospects of the Foam Business or relate to any specific effort to
prevent, restrict or delay consummation of the transactions contemplated by this
Agreement.
(s) Certain Practices. To the knowledge of WinCup, no shareholder,
-----------------
director or officer, employee or agent of WinCup has, directly or indirectly,
made, or agreed to make, any improper or illegal payment, gift or political
contribution to, or taken any other improper or illegal action, for the benefit
of any customer, supplier, governmental employee or other person who is or may
be in a position to assist or hinder the business of the Foam Business.
(t) Consents and Approvals. Except as set forth in Schedule 2.1(t),
----------------------
there is no requirement applicable to WinCup to make any filing with, or to
obtain any consent or approval of any Person (as hereinafter defined) as a
condition to the transfer of the Transferred Assets to the Partnership or the
consummation of the transactions contemplated by this Agreement (other than as
may be required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976).
(u) Compliance with Laws. Except as set forth in Schedule 2.1(u),
--------------------
WinCup has operated the Foam Business in compliance with all laws, regulations,
judgments, orders or decrees of any federal, state, local or foreign court or
governmental body applicable to WinCup or any of the Transferred Assets or the
Foam Business including, without limitation, those related to (i) antitrust and
trade matters, (ii) civil rights, (iii) zoning and building codes, (iv) public
health and safety, (v) worker health and safety and (vi) labor, employment and
discrimination in employment. Except as set forth on Schedule 2.1(u), no
investigation or review is pending with respect to any alleged failure by WinCup
to comply with any such law, regulation, order, judgment or decree and no event
has occurred or condition exists
-12-
<PAGE>
which, with the giving of notice or the passage of time, can reasonably be
expected to result in any such allegation.
(v) Receivables. The receivables associated with WinCup's Foam
-----------
Business (taking into account appropriate reserves) shall be sufficient at
Closing to pay all payables and allocated expenses and performance allowances
associated with WinCup's Foam Business.
(w) Disclosure. Neither this Agreement, nor the Year-End Financial
----------
Statements nor the Interim Financial Statements, contains an untrue statement of
a material fact. To the knowledge of WinCup no event has occurred or condition
exists which, with the giving of notice or the passage of time, can reasonably
be expected to have a material adverse effect on the Transferred Assets or the
earnings, financial condition, operations or prospects of the Foam Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PARTNERSHIP
3.1 Representations and Warranties of the Partnership. The Partnership
-------------------------------------------------
hereby represents and warrants to WinCup as follows:
(a) Organization. The Partnership is a duly organized and validly
------------
existing limited partnership in good standing under the laws of Delaware, the
jurisdiction in which it is organized, and has all requisite power and authority
to own, lease and operate its assets and to carry on its business as presently
contemplated and to execute, deliver and perform its obligations under this
Agreement.
(b) Due Authorization and Binding Effect. This Agreement has been
------------------------------------
duly authorized by all requisite action on the part of the Partnership, has been
duly executed and delivered by the Partnership and constitutes the legal and
binding obligation of the Partnership enforceable in accordance with its terms.
(c) Compliance. The execution, delivery and performance of this
----------
Agreement by the Partnership will not conflict with, result in any breach of or
constitute a default under or cause the acceleration of, any provision of any
partnership agreement, certificate of limited partnership, judgment, decree,
law, ordinance, regulation or order to which the Partnership is a party or by
which the Partnership or any of its assets are bound or affected.
-13-
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent. The obligations of the Partnership and WinCup,
--------------------
respectively, to proceed with the transactions contemplated hereby are subject
to the satisfaction of the following conditions:
(a) The execution and delivery of the instruments referred to in
Section 1.5 hereof and Section 1.3 of the Agreement, dated as of October 31,
1995, between WinCup and James River (the "Foam Agreement").
(b) The concurrent consummation of the closing contemplated under the
Foam Agreement.
ARTICLE V
FURTHER ASSURANCES
5.1 Further Assurances. If at any time after the Closing Date any further
------------------
assignments, conveyances or assurances in law are necessary or desirable to
vest, perfect or confirm of record in the Partnership the title to any of the
Transferred Assets, or otherwise to carry out the provisions hereof, the proper
officers and directors of WinCup shall execute and deliver any and all proper
assignments, instruments of assumption, powers of attorney and assurances in
law, and do all things necessary or proper to vest, perfect or confirm title to
such property or rights in the Partnership and otherwise to carry out the
provisions hereof.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.
---------------
(a) Indemnification by WinCup. Subject to the limitations contained
-------------------------
in this Article VI, WinCup will indemnify and hold the Partnership harmless from
any damage, loss, liability or expense (including, without limitation,
reasonable expenses of investigation and litigation and reasonable attorneys',
accountants', and other professional fees) arising out of:
(i) a breach of any representation or warranty made by WinCup
in this Agreement;
(ii) a breach of any agreement of WinCup contained in this
Agreement;
(iii) the failure of WinCup to satisfy in full any of the
payables and allocated expenses and performance allowances associated with the
Foam Business and not assumed by the Partnership hereunder; and
-14-
<PAGE>
(iv) any liability or obligation of WinCup not assumed by the
Partnership pursuant to this Agreement.
(b) Indemnification by the Partnership. Subject to the limitations
----------------------------------
contained in this Article VI, the Partnership will indemnify and hold WinCup
harmless from any damage, loss, liability or expense (including, without
limitation, reasonable expenses of investigation and litigation and reasonable
attorney's, accountants' and other professional fees) arising out of:
(i) a breach of any representation or warranty made by the
Partnership in this Agreement;
(ii) a breach of any agreement of the Partnership contained in
this Agreement; and
(iii) the Assumed Liabilities and other liabilities assumed by
the Partnership under this Agreement.
(c) Third Party Claims. The obligation of an indemnifying party to
------------------
indemnify another party to this Agreement under the provisions of this Article
VI with respect to claims resulting from the assertion of liability by those not
parties to this Agreement (including governmental claims for penalties, fines
and assessments) shall be subject to the following terms and conditions:
(i) The indemnified party shall give prompt written notice to
the indemnifying party of any assertion of liability by a third party which
might give rise to a claim for indemnification based on the foregoing provisions
of this Article VI, which notice shall state the nature and basis of the
assertion and the amount thereof, to the extent known, provided, however, that
no delay on the part of the indemnified party in giving notice shall relieve the
indemnifying party of any obligation to indemnify unless (and then solely to the
extent that) the indemnifying party is prejudiced by such delay;
(ii) If any action, suit or proceeding (a "Legal Action") is
brought against an indemnified party with respect to which the indemnifying
party may have liability under the foregoing provisions of this Article VI, the
Legal Action shall be defended (such defense to include all proceedings for
appeal or review which counsel for the indemnified party shall deem appropriate)
by the indemnifying party;
(iii) Notwithstanding the provisions of the previous subsection
of this Agreement, until the indemnifying party shall have assumed the defense
of any such Legal Action, the defense shall be handled by the indemnified party.
Furthermore, (a) if the indemnified party shall have reasonably concluded that
there are likely to be defenses available to the indemnified party that are
different from or in addition to those available to the indemnifying party;
(b) if the indemnifying party fails to provide the indemnified party
-15-
<PAGE>
with evidence reasonably acceptable to the indemnified party that the
indemnifying party has sufficient financial resources to defend and fulfill its
indemnification obligation with respect to the Legal Action; (c) if the Legal
Action involves other than money damages and seeks injunctive or other equitable
relief; or (d) if a judgment against the indemnified party in the Legal Action
will, in the good faith opinion of the indemnified party, establish a custom or
precedent which will be materially adverse to the best interest of its
continuing business, the indemnifying party shall not be entitled to assume the
defense of the Legal Action and the defense shall be handled by the indemnified
party. If the defense of the Legal Action is handled by the indemnified party
under the provisions of this subsection, the indemnifying party shall pay all
legal and other expenses reasonably incurred by the indemnified party in
conducting such defense;
(iv) In any Legal Action initiated by a third party and defended
by the indemnifying party (a) the indemnified party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (b) the
indemnifying party shall keep the indemnified party fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
indemnified party is represented by its own counsel, (c) the indemnifying party
shall make available to the indemnified party, and its attorneys, accountants
and other representatives, all books and records of the indemnifying party
relating to such Legal Action and (d) the parties shall render to each other
such assistance as may be reasonably required in order to ensure the proper and
adequate defense of such Legal Action; and
(v) In any Legal Action initiated by a third party and defended
by the indemnifying party, the indemnifying party shall not make any settlement
of any claim without the written consent of the indemnified party, which consent
shall not be unreasonably withheld. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement involving injunctive or other equitable relief against the
indemnified party or its assets, employees or business, or relief which the
indemnified party reasonably believes could establish a custom or precedent
which will be materially adverse to the best interests of its continuing
business.
(d) Limitations on Indemnification.
------------------------------
(i) Notwithstanding the foregoing provisions of this Article VI,
WinCup shall not be liable to the Partnership under Section 6.l(a)(i) and the
Partnership shall not be liable to WinCup under Section 6.1(b)(i), (1) with
respect to any single claim, or series of claims arising from a single
occurrence, unless and to the extent the liability under such claim or series of
claims exceeds $50,000, and thereafter the indemnified party shall be entitled
to indemnification thereunder only for the aggregate amount of such liability in
excess of $50,000 or (2) except as set forth in clause (1), unless and to the
extent the aggregate amount of liability under such Section (including any
amounts for which liability is determined under clause (1) above) exceeds
$250,000, and thereafter the indemnified party
-16-
<PAGE>
shall be entitled to indemnification thereunder only for the aggregate amount of
such liability in excess of $250,000.
(ii) All damages to which an indemnified party may be entitled
pursuant to the provisions of this Article VI shall be net of any insurance
coverage with respect thereto.
(e) Survival; Investigation. The representations and warranties of the
-----------------------
parties contained in Sections 2.1 and 3.1 of this Agreement and WinCup's
indemnification obligations under Section 6.1(a)(iii) shall survive any
investigation by any party and shall not terminate until eighteen (18) months
after the Closing Date. With respect to any claim asserted by the Partnership
with respect to the liabilities retained by WinCup pursuant to Section 1.3(f),
the right of indemnification provided for in Section 6.1(a)(iv) shall survive
for a period of five (5) years from the Closing Date. Notwithstanding the
provisions of the preceding sentences, any representation or warranty in respect
of which indemnification may be sought under Section 6.l(a)(i) or 6.1(b)(i) and
any claim in respect of which indemnification may be sought pursuant to Section
6.1(a)(iii) or 6.1(a)(iv) shall survive the applicable termination date set
forth in the preceding sentences if written notice, given in good faith, of a
specific breach thereof is given to the indemnifying party on or before such
termination date, whether or not liability has actually been incurred.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. The execution, validity, construction and performance
-------------
of this Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware without regard to conflicts of laws principles.
7.2 Binding Effect. This Agreement shall be binding upon, and inure to
--------------
the benefit of, the respective heirs, successors and permitted assigns of the
parties hereto.
7.3 Entire Agreement. This Agreement and the documents contemplated by
----------------
this Agreement set forth the entire understanding of the parties with respect to
the subject matter hereof. Any previous agreements or understandings between the
parties regarding the subject matter hereof are merged into and superseded by
this Agreement.
7.4 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original and all of which, when taken together, shall
constitute one and the same instrument, binding on the parties hereto, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its General Partner
By: /s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy
President
WINCUP HOLDINGS, INC.
By: /s/ Michael T. Kennedy
---------------------------------
Michael T. Kennedy,
President
-18-
<PAGE>
EXHIBIT 10.5
WORKING CAPITAL ESCROW AGREEMENT
--------------------------------
THIS WORKING CAPITAL ESCROW AGREEMENT (this "Agreement") dated as of
December 5, 1996, among RADNOR HOLDINGS CORPORATION, a Delaware corporation
("Buyer"), RICHARD DAVIDOVICH, an individual ("Davidovich"), and DUANE, MORRIS &
HECKSCHER, as escrow agent (the "Escrow Agent").
RECITALS
--------
WHEREAS, Buyer, Davidovich, James River Paper Company, Inc., Grupo
Industrial Hermes, S.A. de C.V., and the Rosenthal Group (as such term is
defined in the Stock Purchase Agreement) are parties to a Stock Purchase
Agreement, dated as of October 30, 1996 (the "Stock Purchase Agreement"),
pursuant to which Buyer is acquiring all of the outstanding shares of common and
preferred capital stock, and all options and warrants to purchase the common and
preferred capital stock, of SP Acquisition Co., a Delaware corporation;
WHEREAS, the Stock Purchase Agreement provides that certain monies
shall be placed into escrow as more fully described herein and that Buyer and
Davidovich execute and deliver this Escrow Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein have
the respective meanings ascribed to such terms in the Stock Purchase Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
AGREEMENT
---------
1. Escrow Fund. Buyer is depositing with the Escrow Agent, which
-----------
acknowledges receipt thereof, an amount equal to One Million Dollars
($1,000,000) in immediately available funds (as increased by any earnings
thereon and as reduced by any disbursements, the "Escrow Fund"), to be held and
disbursed by the Escrow Agent in accordance with this Agreement.
2. Disbursement of the Escrow Fund. Within ten (10) business days
-------------------------------
following the final determination of the Adjustment Amount in accordance with
Section 2.7 of the Stock Purchase Agreement, either Buyer or Davidovich shall
deliver to the Escrow Agent and to the other party a written notice (a "Notice")
(i) stating that the Adjustment Amount has been determined to be final in
accordance with Section 2.7 of the Stock Purchase Agreement, (ii) setting forth
the Adjustment Amount, and (iii) directing payment of the Escrow Fund to
1
<PAGE>
Buyer or to Davidovich on behalf of the Sellers, as the case may be, in
accordance with Section 2.7(b) of the Stock Purchase Agreement. If the Escrow
Agent has not received an objection to the Notice (an "Objection Notice") from
Buyer or Davidovich, as the case may be, delivered in accordance with Section 6
hereof within ten (10) business days of the Escrow Agent's receipt of the
Notice, the Escrow Agent shall disburse the Escrow Fund in accordance with the
Notice and the provisions of this Agreement. If the Escrow Agent receives an
Objection Notice delivered in accordance with Section 6 hereof within ten (10)
business days of its receipt of the Notice, the Escrow Agent shall not disburse
the Escrow Fund until the earlier of (i) receipt of written instructions signed
by both Buyer and Davidovich, or (ii) receipt of an order of a court directing
the Escrow Agent to disburse the Escrow Funds, which the Escrow Agent determines
is binding upon the Escrow Agent, in accordance with Section 5.4 hereof. Partial
distributions from the Escrow Fund of amounts not disputed shall be permitted in
accordance with the Stock Purchase Agreement, subject to all of the notice
requirements of this Section (except that the notice shall direct that a partial
distribution be made).
3. Investment of the Escrow Fund. The Escrow Agent shall invest the
-----------------------------
Escrow Fund in (i) interest bearing accounts in or certificates of deposit of a
commercial bank located in Philadelphia, Pennsylvania or (ii) obligations of the
United States of America maturing within seven (7) days of the date of
investment.
4. Termination of Escrow. This Agreement shall terminate at such
---------------------
time as the Escrow Agent has disbursed the Escrow Fund in full in accordance
with Section 2 hereof.
5. Escrow Agent.
------------
5.1 General. The Escrow Agent shall act as escrow agent and hold
-------
and disburse the Escrow Fund pursuant to the terms and conditions of this
Agreement. Its duties under this Agreement shall cease upon disbursement of the
Escrow Fund.
5.2 Liquidation of Investments. When necessary to provide funds
--------------------------
in order to make any payments required by Section 2, the Escrow Agent shall
liquidate any investments held by it as the Escrow Agent may, in its sole and
absolute discretion, determine. The Escrow Agent shall have no liability for
losses upon the liquidation of any such investments.
5.3 Limited Duties and Responsibilities.
-----------------------------------
(a) This Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the Escrow
Agent. The Escrow Agent, in its capacity as such, shall not be bound by the
provisions of any Agreement among the parties to this Agreement and shall have
no duty to inquire into, or to take into account its knowledge of, the terms and
conditions of any Agreement made or entered into in connection with this
2
<PAGE>
Agreement, including without limitation the Stock Purchase Agreement. The Escrow
Agent shall incur no liability whatsoever to Buyer, Davidovich or any other
Seller, except for its own bad faith or willful misconduct in its capacity as
escrow agent.
(b) The Escrow Agent's sole responsibility upon receipt of any notice
requiring any payment to Buyer or Davidovich on behalf of the Sellers pursuant
to the terms of this Agreement, is to pay the applicable Escrow Fund to Buyer
and/or Davidovich on behalf of the Sellers, as the case may be, and the Escrow
Agent shall have no duty to determine (and shall not be affected by any
knowledge concerning) the validity, authenticity or enforceability of any
specification or certification made in such notice.
5.4 Reliance on Notices; Court Orders.
---------------------------------
(a) The Escrow Agent may rely, and shall be protected in acting or
refraining from action, upon any written notice, instruction or request
furnished to it hereunder and believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent may
conclusively presume that the undersigned have full power and authority to
instruct the Escrow Agent on behalf of Buyer and Sellers, respectively.
Notwithstanding any other provisions herein contained, the Escrow Agent may at
all times act upon and in accordance with the joint written instructions of
Buyer and Davidovich, on behalf of Sellers. The Escrow Agent shall not be
liable for any act done or omitted by it in accordance with such instructions or
the exercise of its own best judgment or pursuant to the advice of counsel of
its selection.
(b) If any property subject hereto is at any time attached, garnished
or levied upon under any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or decree shall be
made or entered by any court affecting such property or any part thereof, then
and in any of such events the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which the Escrow Agent is advised by legal counsel of its own choosing is
binding upon it; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person, firm or corporation by reason of such compliance even though
such order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
5.5 Action in Good Faith. The Escrow Agent shall not be liable for any
--------------------
action taken by it in good faith and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement, and may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
5.6 Resignation; Successor Escrow Agent. The Escrow Agent may resign and
-----------------------------------
be discharged from its duties or obligations hereunder by giving 30 days advance
written
3
<PAGE>
notice of such resignation to Buyer and Davidovich, specifying a date upon which
such resignation shall take effect, whereupon a successor escrow agent shall be
appointed by Buyer and Davidovich. The Escrow Agent shall be entitled to pay the
Escrow Fund to any successor escrow agent so appointed. If no successor escrow
agent has been appointed as of the effective date specified in the Escrow
Agent's notice of resignation, the Escrow Agent shall be entitled to deliver the
Escrow Fund into federal or state court in the Commonwealth of Pennsylvania and,
upon giving notice to Buyer and Davidovich of such action, shall thereupon be
relieved of all further responsibility hereunder.
5.7 Indemnification. Buyer and Davidovich hereby jointly and
---------------
severally agree to indemnify the Escrow Agent for, and to hold it harmless
against, any loss, liability, damage or expense incurred without bad faith or
willful misconduct on the part of the Escrow Agent arising out of or in
connection with its entering into and or performing under this agreement,
including the cost and expense (including, but not limited to, attorneys' fees)
of defending itself against any claim or liability.
5.8 Escrow Agent as Counsel to Buyer. Davidovich acknowledges that
--------------------------------
he is aware that the Escrow Agent is acting as counsel to Buyer and its
affiliates in connection with the Stock Purchase Agreement, this Agreement and
other matters, and agrees that the Escrow Agent's acting under this Agreement
shall not affect its ability to act as counsel to Buyer and its affiliates in
any matter, including, but not limited to, any claim, action or proceeding with
respect to this Agreement or the disposition of or entitlement to the Escrow
Fund, provided that nothing in this Section 5.8 shall limit, modify or affect
the duties of the Escrow Agent under Section 2.
5.9 Expenses. The Escrow Agent shall be entitled to reimbursement
--------
for expenses incurred by it to employ such legal counsel and other experts as it
may deem necessary to advise it properly in connection with its obligations
hereunder and may rely on the advice of such counsel and may pay them reasonable
compensation therefor. All fees and expenses of the Escrow Agent and such legal
counsel and other experts shall be borne equally by Buyer and Davidovich.
6. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given (a) when delivered
personally, (b) when transmitted by telecopy (receipt confirmed), (c) on the
fifth (5th) business day following mailing by registered or certified mail
(return receipt requested), or (d) on the next business day following deposit
with an overnight delivery service of national reputation, to the parties at the
following addresses and telecopy numbers (or at such other address or telecopy
number for a party as may be specified by like notice):
4
<PAGE>
If to Buyer:
Benchmark Corporation of Delaware
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
Telecopy: (610) 995-2697
with a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Stephen D. Teaford, Esquire
Telecopy: (215) 979-1020
If to Davidovich:
Richard Davidovich
312 Ridgewood Road
Fort Worth, TX 76107
Telecopy: (817) 625-7337
with a copy to:
Thompson & Knight, P.C.
801 Cherry Street, Suite 1600
Fort Worth, TX 76102
Attention: Stephen Norris, Esquire
Telecopy: (817) 347-1799
If to Escrow Agent:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Stephen D. Teaford, Esquire
Telecopy: (215) 979-1020
5
<PAGE>
7. Miscellaneous.
-------------
7.1 Jurisdiction. Any action or proceeding seeking to enforce any
------------
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of Delaware, and
each of the parties hereby consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any such action or
proceeding may be served anywhere in the world, whether within or without the
State of Delaware.
7.2 Captions. The captions in this Agreement are for convenience
--------
of reference only and shall not be given any effect in the interpretation of
this Agreement.
7.3 No Waiver. The failure of a party to insist upon strict
---------
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.
7.4 Exclusive Agreement; Amendment; Assignment. This Agreement
------------------------------------------
supersedes all prior agreements among the parties with respect to its subject
matter, is intended as a complete and exclusive statement of the terms of the
Agreement among the parties with respect thereto and cannot be changed or
terminated orally. No party may assign any of its rights or delegate any of its
duties under this Agreement, but this Agreement shall be binding upon and inure
to the benefit any successor escrow agent appointed in accordance with Section
5.6.
7.5 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be considered an original, and all of which together shall
constitute the same Agreement.
7.6 Governing Law. This Agreement and all amendments hereto and
-------------
waivers and consents hereunder shall be governed by, and all disputes arising
hereunder shall be resolved in accordance with, the internal law of the State of
Delaware, without regard to conflicts of law principles.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
------------------------------
Michael T. Kennedy
Chairman
/s/ Richard Davidovich
---------------------------------
Richard Davidovich
DUANE, MORRIS & HECKSCHER
as Escrow Agent
By: [SIGNATURE APPEARS HERE]
------------------------------
a partner
7
<PAGE>
EXHIBIT 10.6
ENVIRONMENTAL ESCROW AGREEMENT
------------------------------
THIS ESCROW AGREEMENT (this "Agreement") dated as of December 5, 1996,
among RADNOR HOLDINGS CORPORATION, a Delaware corporation (the "Buyer"), RICHARD
DAVIDOVICH, an individual ("Davidovich"), and DUANE, MORRIS & HECKSCHER, as
escrow agent (the "Escrow Agent").
RECITALS
--------
WHEREAS, the Buyer, Davidovich, James River Paper Company, Inc., Grupo
Industrial Hermes, S.A. de C.V., and the Rosenthal Group (as such term is
defined in the Stock Purchase Agreement) are parties to a Stock Purchase
Agreement, dated as of October 30, 1996 (the "Stock Purchase Agreement"),
pursuant to which the Buyer is acquiring all of the outstanding shares of common
and preferred capital stock, and all options and warrants to purchase the common
and preferred capital stock, of SP Acquisition Co., a Delaware corporation;
WHEREAS, the Stock Purchase Agreement provides that certain monies shall be
placed into escrow in order to provide for the payment of potential fines and
other expenses related to, and costs incurred in the remediation of, certain
environmental conditions as more fully described herein and that the Buyer and
Davidovich execute and deliver this Environmental Escrow Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein have the
respective meanings ascribed to such terms in the Stock Purchase Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
AGREEMENT
---------
1. Creation of Escrow Fund. The Buyer is depositing with the Escrow Agent,
-----------------------
which acknowledges receipt thereof, an amount equal to One Million Three Hundred
Seventy-Five Thousand Dollars ($1,375,000) in immediately available funds (as
increased by any earnings thereon and as reduced by any disbursements, the
"Escrow Fund"), to be held and disbursed by the Escrow Agent in accordance with
this Agreement.
2. Use of Escrow Fund. The Escrow Fund shall be used by the Buyer solely
------------------
for the purposes of reimbursing the Buyer for: consulting fees; fines and
penalties; costs of process changes; costs of changes to and upgrades, purchases
and installation of equipment and/or facilities and any other capital
expenditures for fixed assets; and costs of investigation
1
<PAGE>
and remediation work, all as reasonably necessary to address and correct the
environmental conditions set forth on Exhibit A attached hereto (each a
---------
"Condition" and collectively, the "Conditions"). Buyer agrees that it will use
reasonable efforts to reduce the costs and expenses incurred in addressing and
correcting the Conditions to the extent it can reasonably do so, consistent with
compliance with applicable environmental laws and consistent with achieving
economical and efficient operations of the facilities.
3. Disbursement of Escrow Fund. In order to receive a disbursement from
---------------------------
the Escrow Fund, the Buyer shall submit to Davidovich a certificate in the form
of Exhibit B attached hereto, to be executed by Davidovich and the Buyer and
---------
submitted to the Escrow Agent (each , a "Disbursement Certificate"). Upon
receipt of a Disbursement Certificate, duly executed by Davidovich and the
Buyer, the Escrow Agent shall disburse the Escrow Fund in accordance with such
Disbursement Certificate. If Davidovich fails or refuses to execute and submit
to the Escrow Agent any Disbursement Certificate within ten (10) days after his
receipt of such Disbursement Certificate, Buyer may submit to the Escrow Agent a
certificate in the form of Exhibit C attached hereto (each, a "Buyer
---------
Certificate") and executed by the Chairman of the Buyer and by an authorized
officer of ERM-Southwest-Dallas or ERM-Ontario, the independent environmental
consultant selected and approved by the Buyer and Davidovich (the "Consultant").
Upon receipt of a Buyer Certificate, duly executed by the Buyer and the
Consultant, the Escrow Agent shall disburse the Escrow Fund in accordance with
such Buyer Certificate. Buyer shall send Davidovich a copy of each Buyer
Certificate given to the Escrow Agent pursuant to this Section concurrently with
the giving of such Buyer Certificate to the Escrow Agent. The Escrow Agent shall
not be bound or otherwise obligated with respect to any notice received from
Davidovich asserting any dispute with Buyer concerning any Buyer Certificate,
and the Escrow Agent shall disburse funds as requested in such Buyer Certificate
notwithstanding any such dispute.
4. Termination of Escrow. This Agreement shall terminate (the
---------------------
"Termination") on the earliest of: (i) the date on which the Escrow Agent has
disbursed the Escrow Fund in full in accordance with Section 3 of this
Agreement; (ii) the date on which the Buyer provides Davidovich and the Escrow
Agent with a written notice in the form of Exhibit D attached hereto (a
---------
"Termination Notice") stating that all of the Conditions have been sufficiently
addressed, and that the remaining Escrow Fund, if any, shall be disbursed to
Davidovich as he shall direct; or (iii) two years from the date of this
Agreement. Any funds remaining in the Escrow Fund upon the Termination shall be
disbursed to Davidovich on behalf of the Sellers, in the manner specified by
him, and upon receipt thereof Davidovich shall disburse the same Pro Rata to the
Sellers.
5. Investment of the Escrow Fund. The Escrow Agent shall invest the Escrow
-----------------------------
Fund in (i) interest bearing accounts in or certificates of deposit of a
commercial bank located in Philadelphia, Pennsylvania or (ii) obligations of the
United States of America maturing within seven (7) days of the date of
investment.
2
<PAGE>
6. Escrow Agent.
------------
6.1 General. The Escrow Agent shall act as escrow agent and hold and
-------
disburse the Escrow Fund pursuant to the terms and conditions of this Agreement.
Its duties under this Agreement shall cease upon disbursement of the Escrow
Fund.
6.2 Liquidation of Investments. When necessary to provide funds in
--------------------------
order to make any payments required by Sections 3 or 4, the Escrow Agent shall
liquidate any investments held by it as the Escrow Agent may, in its sole and
absolute discretion, determine. The Escrow Agent shall have no liability for
losses upon the liquidation of any such investments.
6.3 Limited Duties and Responsibilities.
-----------------------------------
(a) This Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the Escrow
Agent. The Escrow Agent, in its capacity as such, shall not be bound by the
provisions of any agreement among the parties to this Agreement and shall have
no duty to inquire into, or to take into account its knowledge of, the terms and
conditions of any agreement made or entered into in connection with this
Agreement, including without limitation the Stock Purchase Agreement. The Escrow
Agent shall incur no liability whatsoever to the Buyer, Davidovich or any other
Seller, except for its own bad faith or willful misconduct in its capacity as
escrow agent.
(b) The Escrow Agent's sole responsibility upon receipt of any
notice requiring any payment to the Buyer or Davidovich on behalf of the Sellers
pursuant to the terms of this Agreement, is to pay the applicable Escrow Fund to
the Buyer and/or Davidovich on behalf of the Sellers, as the case may be, and
the Escrow Agent shall have no duty to determine (and shall not be affected by
any knowledge concerning) the validity, accuracy, authenticity or enforceability
of any specification or certification made in such notice.
6.4 Reliance on Notices; Court Orders.
---------------------------------
(a) The Escrow Agent may rely, and shall be protected in acting or
refraining from action, upon any written notice, instruction or request
furnished to it hereunder and believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent may
conclusively presume that the undersigned have full power and authority to
instruct the Escrow Agent on behalf of the Buyer and the Sellers, respectively.
Notwithstanding any other provisions herein contained, the Escrow Agent may at
all times act upon and in accordance with the joint written instructions of the
Buyer and Davidovich. The Escrow Agent shall not be liable for any act done or
omitted by it in accordance with such instructions or the exercise of its own
best judgment or pursuant to the advice of counsel of its selection.
3
<PAGE>
(b) If any property subject hereto is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property or any part
thereof, then and in any of such events the Escrow Agent is authorized, in its
sole discretion, to rely upon and comply with any such order, writ, judgment or
decree which the Escrow Agent is advised by legal counsel of its own choosing is
binding upon it; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person, firm or corporation by reason of such compliance even though
such order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
6.5 Action in Good Faith. The Escrow Agent shall not be liable for any
--------------------
action taken by it in good faith and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement, and may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
6.6 Resignation; Successor Escrow Agent. The Escrow Agent may resign
-----------------------------------
and be discharged from its duties or obligations hereunder by giving 30 days
advance written notice of such resignation to the Buyer and Davidovich,
specifying a date upon which such resignation shall take effect, whereupon a
successor escrow agent shall be appointed by the Buyer and Davidovich. The
Escrow Agent shall be entitled to pay the Escrow Fund to any successor escrow
agent so appointed. If no successor escrow agent has been appointed as of the
effective date specified in the Escrow Agent's notice of resignation, the Escrow
Agent shall be entitled to deliver the Escrow Fund into federal or state court
in the Commonwealth of Pennsylvania and, upon giving notice to the Buyer and
Davidovich of such action, shall thereupon be relieved of all further
responsibility hereunder.
6.7 Indemnification. The Buyer and Davidovich hereby jointly and
---------------
severally agree to indemnify the Escrow Agent for, and to hold it harmless
against, any loss, liability, damage or expense incurred without bad faith or
willful misconduct on the part of the Escrow Agent arising out of or in
connection with its entering into and or performing under this agreement,
including the cost and expense (including, but not limited to, attorneys' fees)
of defending itself against any claim or liability.
6.8 Escrow Agent as Counsel to Buyer. Davidovich acknowledges that he
--------------------------------
is aware that the Escrow Agent is acting as counsel to the Buyer and its
affiliates in connection with the Stock Purchase Agreement, this Agreement and
other matters, and agrees that the Escrow Agent's acting under this Agreement
shall not affect its ability to act as counsel to the Buyer and its affiliates
in any matter, including, but not limited to, any claim, action or proceeding
with respect to this Agreement or the disposition of or entitlement to the
Escrow Fund, provided that nothing in this Section 6.8 shall limit, modify or
affect the duties of the Escrow Agent under Section 2.
4
<PAGE>
6.9 Expenses. The Escrow Agent shall be entitled to reimbursement for
--------
expenses incurred by it to employ such legal counsel and other experts as it may
deem necessary to advise it properly in connection with its obligations
hereunder and may rely on the advice of such counsel and may pay them reasonable
compensation therefor. All fees and expenses of the Escrow Agent and such legal
counsel and other experts shall be borne equally by the Buyer and Davidovich.
Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to have been duly given (a) when delivered
personally, (b) when transmitted by telecopy (receipt confirmed), (c) on the
fifth (5th) business day following mailing by registered or certified mail
(return receipt requested), or (d) on the next business day following deposit
with an overnight delivery service of national reputation, to the parties at the
following addresses and telecopy numbers (or at such other address or telecopy
number for a party as may be specified by like notice):
If to Buyer:
Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
Telecopy: (610) 995-2697
with a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Stephen D. Teaford, Esquire
Telecopy: (215) 979-1020
If to Davidovich:
Richard Davidovich
312 Ridgewood Road
Fort Worth, TX 76107
Telecopy: (817) 625-7337
with a copy to:
Thompson & Knight, P.C.
801 Cherry Street, Suite 1600
Fort Worth, TX 76102
Attention: Stephen Norris, Esquire
Telecopy: (817) 347-1799
If to Escrow Agent:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Stephen D. Teaford, Esquire
Telecopy: (215) 979-1020
5
<PAGE>
Miscellaneous.
-------------
8.1 Jurisdiction. Any action or proceeding seeking to enforce any
------------
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of Delaware, and
each of the parties hereby consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any such action or
proceeding may be served anywhere in the world, whether within or without the
State of Delaware.
8.2 Captions. The captions in this Agreement are for convenience of
--------
reference only and shall not be given any effect in the interpretation of this
Agreement.
8.3 No Waiver. The failure of a party to insist upon strict adherence
---------
to any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
8.4 Exclusive Agreement; Amendment; Assignment. This Agreement
------------------------------------------
supersedes all prior agreements among the parties with respect to its subject
matter, is intended as a complete and exclusive statement of the terms of the
Agreement among the parties with respect thereto and cannot be changed or
terminated orally. No party may assign any of its rights or delegate any of its
duties under this Agreement, but this Agreement shall be binding upon and inure
to the benefit any successor escrow agent appointed in accordance with Section
6.6.
8.5 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be considered an original, and all of which together shall
constitute the same Agreement.
8.6 Governing Law. This Agreement and all amendments hereto and
-------------
waivers and consents hereunder shall be governed by, and all disputes arising
hereunder shall be resolved in accordance with, the internal law of the State
of Delaware, without regard to conflicts of law principles.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
------------------------------
Michael T. Kennedy
Chairman
/s/ Richard Davidovich
---------------------------------
Richard Davidovich
DUANE, MORRIS & HECKSCHER
as Escrow Agent
By: /s/ Stephen D. Teaford
------------------------------
Stephen D. Teaford
Partner
7
<PAGE>
EXHIBIT A
Environmental Conditions
------------------------
1. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1989 by Weston and
Associates at the request of Scott Paper Company.
2. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1989 by Pilko & Associates
at the request of Huntsman Chemical Company.
3. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1993 by Law Engineering at
the request of Richard Davidovich.
4. Addressing compliance issues and adverse environmental conditions
identified in an environmental assessment entitled "Environmental Study of the
Scott Polymers, Ltd. Baie-d'Urfe, Quebec Plant" performed in 1993 by Spectrum
Associates.
5. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1996 by Dames & Moore at
the request of Buyer.
6. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1996 by Conestoga-Rovers &
Associates at the Request of Thompson & Knight on behalf of Styrochem
International, Inc.
7. Addressing compliance issues and adverse environmental conditions
identified in environmental assessments performed in 1996 by Technitrol Eco at
the Request of Buyer.
8. Addressing problems with air pollution control processes at the Peden
Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe Plant sites designed to
capture polystyrene crystals.
9. Investigating and remediating on-site and off-site deposits of
polystyrene crystals discharged from the Peden Road, Sylvania Avenue, Minton
Road, and Baie-d'Urfe Plant sites.
10. Obtaining a permit for the North Pond at the Peden Road Plant site and
performing design and construction work associated therewith, including but not
limited to installing a liner.
11. Closing the North Pond at the Peden Road Plant site.
A-1
<PAGE>
12. Remediating the North Pond at the Peden Road Plant site.
13. Investigating and remediating adverse impacts to soils, surface water,
and groundwater at the Peden Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe
Plant sites resulting from past activities at those sites.
14. Investigating and remediating adverse impacts to soils, surface water,
and groundwater at the Peden Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe
Plant sites resulting from surface and subsurface drainage or migration from
neighboring properties, including but not limited to the Trinity Industries
property adjacent to the Peden Road Plant site.
15. Registering the water wells at the Peden Road and Minton Road Plant
sites and installing systems to purify the water extracted from these wells, or
replacing the wells.
16. Seeking an air permit amendment so as to combine the Technology and
Development Group operations at the Peden Road Plant site with other operations
at that site.
17. Seeking an air permit, undertaking process changes, and/or
installing/modifying control equipment associated with a reopening of the Peden
Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe Plant sites' air permits
based on the failure to represent or misrepresentation of facts in the air
permit applications.
18. Seeking an air permit, undertaking process changes, and/or
installing/modifying control equipment associated with the Peden Road, Sylvania
Avenue, Minton Road, or Baie-d'Urfe Plant sites' pentane and/or particulate
collection systems.
19. Filing air emissions inventories for the Peden Road, Sylvania Avenue,
Minton Road, and Baie-d'Urfe Plant sites not previously filed or amending such
inventories to correct inaccuracies.
20. Completing the waste water quality control equipment installation
approved by the City of Ft. Worth for the Sylvania Avenue Plant site.
21. Paying surcharges or other claims associated with sewer line blockage
allegedly resulting from waste water discharges from the Sylvania Avenue Plant
site.
22. Upgrading or replacing the pentane underground storage tank at the
Sylvania Avenue Plant site so as to satisfy release detection, overfill
protection, and other applicable requirements.
23. Implementing solutions to the problems causing major upsets and/or
explosions associated with the Minton Road Plant site thermal oxidizer.
A-2
<PAGE>
24. Undertaking actions necessary to comply with the 1992 Agreed Board
Order entered into by Scott Polymers and the State of Texas relating to certain
air law violations at the Minton Road Plant site.
25. Performing corrective action associated with the former pentane
underground storage tank at the Minton Road Plant site.
26. Filing Notices of Registration for solid wastes to correctly reflect
solid waste generation practices at the Peden Road, Sylvania Avenue, and Minton
Road Plant sites.
27. Undertaking actions necessary to address the safety concerns
identified in reports prepared by White Horse Technology or to otherwise address
OSHA non-compliance at the Peden Road, Sylvania Avenue, and Minton Road Plant
site.
28. Preparing Stormwater Pollution Prevention Plans for the Peden Road,
Sylvania Avenue, and Minton Road Plant sites.
29. Undertaking process or other physical changes at the Peden Road,
Sylvania Avenue, and Minton Road Plant sites so as to comply with Stormwater
Pollution Prevention Plans for those sites.
30. Preparing Spill Prevention, Control and Countermeasure Plans for the
Peden Road, Sylvania Avenue, and Minton Road Plant sites, and performing any
work associated therewith, including installing tank secondary containment.
31. Undertaking process or other physical changes at the Peden Road,
Sylvania Avenue, and Minton Road Plant sites so as to comply with Spill
Prevention, Control and Countermeasure Plans for those sites.
32. Filing or amending SARA Title III Form Rs for the Peden Road, Sylvania
Avenue, and Minton Road Plant sites.
33. Filing SARA Title III Waste Minimization Plans for the Peden Road,
Sylvania Avenue, and Minton Road Plant sites.
34. Modifying or installing emission controls on storage tank vent systems
at the Peden Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe Plant sites so
as to render those vent systems compliant with air permits and applicable legal
requirements for those sites.
35. Implementing process changes and/or modifying or installing emission
controls at the Peden Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe Plant
sites so as to render emissions from those processes compliant with the sites'
air permits and applicable legal requirements, or obtaining a permit for such
emissions.
A-3
<PAGE>
36. Modifying processes or installing systems so as to prevent the
discharge of oil-laden air from air compressors at the Peden Road, Sylvania
Avenue, and Minton Road Plant sites, or obtaining a permit for such discharges.
37. Modifying processes or installing systems so as to prevent discharges
from steam condensate lines at the Peden Road, Sylvania Avenue, and Minton Road
Plant sites, or obtaining a permit for such discharges.
38. Modifying processes or installing systems so as to prevent fugitive
emissions associated with reactor charging at the Peden Road, Sylvania Avenue,
and Minton Road Plant sites, or obtaining a permit for such emissions.
39. Obtaining waste water discharge permits for the Peden Road and Minton
Road Plant sites, and implementing process changes and/or installing treatment
equipment associated therewith.
40. Modifying or installing emission controls associated with conveyance
of polystyrene and EPS at the Peden Road, Sylvania Avenue, Minton Road, and
Baie-d'Urfe Plant sites so as to prevent unpermitted fugitive emissions, or
obtaining a permit for such emissions.
41. Modifying or installing emission controls associated with acid-related
air emissions from batch out tanks and dryers used at the Peden Road, Sylvania
Avenue, and Minton Road Plant sites so as to prevent unpermitted fugitive
emissions, or obtaining a permit for such emissions.
42. Disposing of hazardous and solid wastes and debris present at the
Peden Road, Sylvania Avenue, Minton Road, and Baie-d'Urfe Plant sites.
43. Undertaking measures to eliminate or reduce phenol levels from waste
water at the Peden Road, Sylvania Avenue, and Minton Road Plant sites so as to
comply with applicable discharge limits.
44. Obtaining from the Ministry of Environment required certificates of
authorization for the Baie-d'Urfe Plant site addressing applicable activities
conducted at that Plant site, and undertaking measures to comply with the terms
of such certificates.
45. Obtaining or amending a Montreal Urban Community general permit for
the operation of the Baie-d'Urfe Plant site, and undertaking measures to comply
with its terms.
46. Obtaining or amending a Montreal Urban Community air permit for the
Baie-d'Urfe Plant site, and undertaking measures to comply with its terms.
A-4
<PAGE>
47. Obtaining or amending a Montreal Urban Community waste water discharge
permit for the Baie-d'Urfe Plant site, and undertaking measures to comply with
its terms.
48. Obtaining a certificate pursuant to the Petroleum Products Act for
containers and tanks containing petroleum materials at the Baie-d'Urfe Plant
site.
49. Changing chemical storage practices at the Baie-d'Urfe Plant site so
as to comply with applicable laws.
50. Implementing process changes and/or installing treatment equipment at
the Baie-d'Urfe Plant site so as to comply with applicable laws.
51. Obtaining permits and authorizations associated with storm water
collection and discharges at the Baie-d'Urfe Plant site, and performing any work
associated therewith.
52. Changing hazardous and solid waste management and storage practices at
the Baie-d'Urfe Plant site so as to comply with applicable legal requirements.
53. Changing waste stream storage and disposal practices at the Baie-
d'Urfe Plant site so as to comply with applicable legal requirements.
54. Investigating the presence of and abating asbestos containing
materials at the Baie-d'Urfe Plant site.
55. Implementing a process for waste water reuse at the Baie-d'Urfe Plant
site.
56. Monitoring noise levels at the Baie-d'Urfe Plant site.
A-5
<PAGE>
EXHIBIT B
Form of Disbursement Certificate
--------------------------------
Duane, Morris & Heckscher, as Escrow Agent
One Liberty Place
Philadelphia, PA 19103
Attn: Stephen D. Teaford, Esquire
Ladies and Gentlemen:
This Disbursement Certificate (this "Certificate") is executed and
delivered pursuant to Section 3 of the Environmental Escrow Agreement dated
December 5, 1996 (the "Escrow Agreement"), by and among Radnor Holdings
Corporation ("Radnor"), Richard Davidovich ("Davidovich"), and Duane, Morris &
Heckscher, as escrow agent (the "Escrow Agent"). All capitalized terms used
herein without definition shall have the meanings given to them in the Escrow
Agreement.
Radnor hereby requests a disbursement (the "Disbursement") from the Escrow
Fund in the amount of ________________________ Dollars ($_________________), and
certifies that the Disbursement shall be used for the following purposes
(collectively, the "Project", which are permissible uses for the Escrow Fund
pursuant to Section 2 of the Escrow Agreement:
[DESCRIBE USES OF DISBURSEMENT]
Davidovich hereby certifies that he has reviewed, and authorizes the Escrow
Agent to make, the Disbursement set forth above.
B-1
<PAGE>
This Certificate is executed on ________________, by Michael T. Kennedy,
the Chairman of Radnor, and by Richard Davidovich.
RADNOR HOLDINGS CORPORATION
By:
------------------------
Michael T. Kennedy
Chairman
---------------------------
Richard Davidovich
B-2
<PAGE>
EXHIBIT C
Form of Buyer Certificate
-------------------------
Duane, Morris & Heckscher, as Escrow Agent
One Liberty Place
Philadelphia, PA 19103
Attn: Stephen D. Teaford, Esquire
Ladies and Gentlemen:
This Buyer Certificate (this "Certificate") is executed and delivered
pursuant to Section 3 of the Environmental Escrow Agreement dated December 5,
1996 (the "Escrow Agreement"), by and among Radnor Holdings Corporation
("Radnor"), Richard Davidovich ("Davidovich"), and Duane, Morris & Heckscher, as
escrow agent (the "Escrow Agent"). All capitalized terms used herein without
definition shall have the meanings given to them in the Escrow Agreement.
Radnor hereby requests a disbursement (the "Disbursement") from the Escrow
Fund in the amount of ________________________ Dollars ($_________________), and
certifies (i) that a Disbursement Certificate in the form of Exhibit B to the
Escrow Agreement was submitted to Richard Davidovich, who has failed or refused
to execute and submit the same to the Escrow Agent within ten (10) days after
the date on which he was deemed to have received such Disbursement Certificate
pursuant to Section 7 of the Escrow Agreement; and (ii) that the Disbursement
shall be used for the following purposes (collectively, the "Project", which are
permissible uses for the Escrow Fund pursuant to Section 2 of the Escrow
Agreement:
[DESCRIBE USES OF DISBURSEMENT]
The Consultant hereby certifies that (i) it has reviewed the above request
for disbursement, and (ii) the Project is a reasonable means of addressing one
of the Conditions set forth on Exhibit A to the Escrow Agreement.
C-1
<PAGE>
This Certificate is executed on ________________, by Michael T. Kennedy,
the Chairman of Radnor, and by an authorized officer of the Consultant.
RADNOR HOLDINGS CORPORATION
By:
------------------------
Michael T. Kennedy
Chairman
[CONSULTANT]
By:
------------------------
Authorized Officer
C-2
<PAGE>
EXHIBIT D
Termination Notice
------------------
Duane, Morris & Heckscher, as Escrow Agent
One Liberty Place
Philadelphia, PA 19103
Attn: Stephen D. Teaford, Esquire
Ladies and Gentlemen:
This Termination Notice (this "Notice") is executed and delivered pursuant
to Section 4 of the Environmental Escrow Agreement dated December 5, 1996 (the
"Escrow Agreement"), by and among Radnor Holdings Corporation ("Radnor"),
Richard Davidovich ("Davidovich"), and Duane, Morris & Heckscher, as escrow
agent (the "Escrow Agent"). All capitalized terms used herein without
definition shall have the meanings given to them in the Escrow Agreement.
Radnor hereby certifies that all of the Conditions have been addressed to
its satisfaction, and directs that any remaining funds in the Escrow Fund be
disbursed to Davidovich, in accordance with his payment instructions.
This Notice is executed on ________________, 199__, by Michael T. Kennedy,
the Chairman of Radnor.
RADNOR HOLDINGS CORPORATION
By:
------------------------
Michael T. Kennedy
Chairman
D-1
<PAGE>
EXHIBIT 10.18
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (this "Agreement") is made as of December 5,
1996, by and between RADNOR HOLDINGS CORPORATION, a Delaware corporation
("Buyer"), and RICHARD DAVIDOVICH ("Davidovich").
BACKGROUND
A. Concurrently with the execution and delivery of this Agreement, Buyer
is purchasing from Seller, James River Paper Company, Inc. ("JR"), Grupo
Industrial Hermes, S.A. de C.V. ("Grupo Hermes") and the Rosenthal Group (as
such term is defined in the Stock Purchase Agreement) all of the issued and
outstanding shares (the "Shares") of common and preferred capital stock, and all
options and warrants to purchase the common and preferred capital stock
(collectively, the "Other Interests"), of SP Acquisition Co. (the "Company")
pursuant to the terms and conditions of a stock purchase agreement made as of
October 30, 1996 (the "Stock Purchase Agreement").
B. Section 2.5(a)(iii) of the Stock Purchase Agreement requires that
Davidovich execute and deliver this Agreement as a condition to the purchase of
the Shares and the Other Interests by Buyer.
C. Section 2.3 of the Stock Purchase Agreement requires Buyer to pay to
Davidovich the sum of Four Million Seven Hundred Sixty Thousand Dollars in
consideration for his entering into this Agreement.
D. Capitalized terms not expressly defined in this Agreement shall have
the meanings ascribed to them in the Stock Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and intending to be legally bound,
Buyer and Davidovich hereby agree as follows:
AGREEMENT
1. Acknowledgments by Davidovich
-----------------------------
Davidovich acknowledges that (a) he has occupied a position of trust and
confidence with the Acquired Companies prior to the date hereof and has become
familiar with the following, any and all of which constitute confidential
information of the Acquired Companies (collectively the "Confidential
Information"): (i) any and all trade secrets
-1-
<PAGE>
concerning the business and affairs of the Acquired Companies, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current and planned research and development, current and planned manufacturing
and distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures and architectures (and related
processes, formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Acquired
Companies and any other information, however documented, of the Acquired
Companies that is a trade secret within the meaning of any applicable state
trade secret law; (ii) any and all information concerning the business and
affairs of the Acquired Companies (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
and techniques and materials used by the Acquired Companies), however
documented; and (iii) any and all notes, analyses, compilations, studies,
summaries, and other material prepared by or for the Acquired Companies
containing or based, in whole or in part, on any information included in the
foregoing; (b) the products and services of the Acquired Companies are marketed
throughout the United States of America and Canada; (c) the Acquired Companies
compete with other businesses that are or could be located in any part of the
United States of America and Canada; (d) Buyer has required that Davidovich make
the covenants set forth in Sections 2 and 3 of this Agreement as a condition to
the Buyer's purchase of the Shares and the Other Interests; (e) the provisions
of Sections 2 and 3 of this Agreement are reasonable and necessary to protect
and preserve the Acquired Companies' business; and (f) the Acquired Companies
would be irreparably damaged if Davidovich were to breach the covenants set
forth in Sections 2 and 3 of this Agreement.
2. Confidential Information
------------------------
Davidovich acknowledges and agrees that all Confidential Information known
or obtained by him, whether before or after the date hereof, is the property of
the Acquired Companies. Therefore, Davidovich agrees that he will not, at any
time, disclose to any unauthorized Persons or use for his own account or for the
benefit of any third party any Confidential Information, whether Davidovich has
such information in his memory or embodied in writing or other physical form,
without Buyer's written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the public
other than as a result of Davidovich's fault or the fault of any other Person
bound by a duty of confidentiality to Buyer or the Acquired Companies.
Davidovich agrees to deliver to Buyer at the time of execution of this
Agreement, and at any other time Buyer may request, all documents, memoranda,
notes, plans, records, reports, and other documentation, models, components,
devices, or computer software, whether embodied in a disk or in other form (and
all copies of all of the foregoing), relating to the businesses, operations, or
affairs of the Acquired Companies and any other Confidential Information that
Davidovich may then possess or have under his control, except that Davidovich
may retain
-2-
<PAGE>
photocopies of documents which support or relate to the Disclosure Letter
provided by the Sellers pursuant to the Stock Purchase Agreement.
3. Noncompetition
--------------
As an inducement for Buyer to enter into the Stock Purchase Agreement and
in consideration for the amount to be paid to Davidovich under this Agreement,
Davidovich agrees that:
(a) For a period of five (5) years after the Closing:
(i) Davidovich will not, directly or indirectly, engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associate in
business with, or in any manner connected with, lend his credit to, or render
services or advice to, any business whose products or activities include the
manufacture, sale or distribution of expandable polystyrene, foam cups or
containers (hereinafter the "Business"), anywhere within the United States or
Canada; provided, however, that Davidovich may purchase or otherwise acquire up
to (but not more than) one percent (1%) of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934 and provided further that nothing herein shall prohibit Davidovich
from engaging in a block and shape business, excluding the manufacture of
expandable polystyrene. Davidovich agrees that this covenant is reasonable with
respect to its duration, geographical area, and scope;
(ii) Davidovich will not, directly or indirectly, either for himself
or any other Person, solicit the business of any Person known to Davidovich to
be a customer of an Acquired Company, whether or not Davidovich had personal
contact with such Person, with respect to products or activities which compete
in whole or in part with the products or activities of the Company.
(b) For a period of two (2) years after the Closing, Davidovich will not,
directly or indirectly, either for himself or any other Person, (A) induce or
attempt to induce any employee of an Acquired Company to leave the employ of
such Acquired Company, (B) in any way interfere with the relationship between an
Acquired Company and any employee of such Acquired Company, (C) employ, or
otherwise engage as an employee, independent contractor, or otherwise, any
employee of an Acquired Company, or (D) induce or attempt to induce any
customer, supplier, licensee, or business relation of an Acquired Company to
cease doing business with such Acquired Company, or in any way interfere with
the relationship between any customer, supplier, licensee, or business relation
of an Acquired Company.
(c) In the event of a breach by Davidovich of any covenant set forth in
Subsection
-3-
<PAGE>
3(a) of this Agreement, the term of such covenant will be extended by the period
of the duration of such breach;
(d) Davidovich will not, at any time during or after the five (5) year
period, disparage Buyer or the Acquired Companies, or any of their shareholders,
directors, officers, employees, or agents; and
(e) Davidovich will, for a period of five (5) years after the Closing,
within ten (10) days after accepting employment with any employer, advise Buyer
of the identity of such employer. Buyer or an Acquired Company may serve notice
upon each such employer that Davidovich is bound by this Agreement and may
furnish each such employer with a copy of this Agreement or relevant portions
thereof.
4. Compensation
------------
As consideration for the covenants of Davidovich in Sections 2 and 3 of
this Agreement, the Company will pay Davidovich the sum of Four Million Seven
Hundred Sixty Thousand Dollars ($4,760,000) at the Closing of the Stock Purchase
Agreement by wire transfer of immediately available funds to an account
designated by Davidovich.
5. Remedies
--------
If Davidovich breaches the covenants set forth in Sections 2 or 3 of this
Agreement, Buyer and the Acquired Companies will be entitled to the following
remedies:
(a) Damages from Davidovich; and
(b) In addition to their rights to damages and any other rights they may
have, to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 2 and 3 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate the Buyer and the Acquired Companies and would
be an inadequate remedy for such breach.
The rights and remedies of the parties to this Agreement are cumulative and not
alternative.
6. Successors and Assigns
----------------------
This Agreement will be binding upon Buyer and Davidovich and will inure to
the benefit of Buyer and the Acquired Companies and their affiliates, successors
and assigns and Davidovich and Davidovich's assigns, heirs and legal
representatives.
7. Waiver
------
The rights and remedies of the parties to this Agreement are cumulative and
not
-4-
<PAGE>
alternative. Neither the failure of, nor any delay by, any party in exercising
any right, power, or privilege under this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
8. Governing Law
-------------
This Agreement will be governed by the laws of the State of Delaware,
without regard to conflicts of laws principles.
9. Jurisdiction; Service of Process
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, County of New Castle, or, if it
has or can acquire jurisdiction, in the United States District Court for the
District of Delaware, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.
10. Severability
------------
Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If
any of the covenants set forth in Section 3 of this Agreement are held to be
unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time, and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Davidovich.
11. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will
-5-
<PAGE>
be deemed to constitute one and the same agreement.
-6-
<PAGE>
12. Section Headings, Construction
------------------------------
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
13. Notices
-------
All notices other communications required or permitted under this Agreement
shall be effective if delivered in accordance with Section 11.4 of the Stock
Purchase Agreement.
14. Entire Agreement
----------------
This Agreement and the Stock Purchase Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written and oral agreements and understandings
between Buyer and Davidovich with respect to the subject matter of this
Agreement, except that Buyer shall cause Michael T. Kennedy to execute and
deliver to Davidovich at Closing the agreement attached. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
-------------------------------
Michael T. Kennedy
Chairman
/s/ Richard Davidovich
-----------------------------------
Richard Davidovich
-7-
<PAGE>
AGREEMENT
---------
Michael T. Kennedy hereby agrees that he will not, at any time during
or after the period of five (5) years after the Closing, disparage Davidovich,
provided that any breach of this agreement shall not entitle Davidovich to
terminate or otherwise be relieved of any of his obligations under the foregoing
Noncompetition Agreement, other than paragraph 3(d).
/s/ Michael T. Kennedy
_______________________________
Michael T. Kennedy
-8-
<PAGE>
EXHIBIT 10.19
CONSULTING AGREEMENT
--------------------
This Consulting Agreement (this "Agreement") is made and entered into as of
the 5th day of December, 1996, by and between RADNOR HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), and RICHARD DAVIDOVICH, an individual (the
"Consultant").
BACKGROUND
The Company and Davidovich are parties to a certain Stock Purchase Agreement
dated October 30, 1996 (the "Stock Purchase Agreement"), which requires the
Company and Davidovich to enter into this Agreement. Pursuant to the Stock
Purchase Agreement, the Company shall pay Davidovich the sum of $240,000, in the
manner specified herein, in consideration for his entering into this Agreement,
and for the services to be performed by him hereunder. Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Company hereby retains the Consultant to render consulting services,
and the Consultant hereby accepts such appointment upon the terms and conditions
hereinafter set forth:
1. Term. The term ("Term") of this Agreement shall commence on the date of
this Agreement (the "Effective Date") and shall terminate six (6) months after
the Effective Date (the "Termination Date"), unless terminated prior to the
Termination Date as hereinafter provided.
2. Duties of the Consultant. The Consultant shall be available, at
reasonable times and on reasonable notice, for consulting with the Company and
shall render services to and advise employees of the Company from time to time,
as requested by the President or the Board of Directors of the Company, provided
that the Consultant shall not be required to devote more than forty (40) hours
per month to these duties.
3. Fees and Expenses. In consideration for the Consultant's holding
himself available to act as a consultant and for the services to be rendered by
the Consultant under this Agreement, the Company shall pay the Consultant a fee
(the "Consulting Fee") in the amount of $240,000, payable in six (6) equal
consecutive monthly installments of $40,000, commencing one month after the date
hereof, or as otherwise agreed by the Consultant and the Company. The Company
shall reimburse the Consultant for reasonable out-of-pocket business expenses
incurred in connection with his duties hereunder, provided such expenses are
approved in advance by the Company.
<PAGE>
4. Early Termination. The Company shall have the right to terminate this
Agreement if the Consultant fails to perform his duties and obligations
hereunder or if he commits any acts amounting to gross negligence, willful
misconduct, fraud, disloyalty or dishonesty to the detriment of the Company,
provided that such failure or such other act shall continue or shall not be
remedied within fifteen (15) days after written notice thereof from the Company
to the Consultant.
5. Contractual Relationship.
(a) The Consultant shall at all times be an independent contractor and
not an employee of the Company, and the Consultant shall not hold himself out as
an employee of the Company. In furtherance thereof, the Company and the
Consultant covenant and agree that one is neither the employee, employer,
principal nor agent of the other, except that the Consultant is an independent
contractor of the Company. The compensation paid to the Consultant under this
Agreement is paid to the Consultant in the capacity of an independent
contractor. The Consultant shall have no authority to bind or commit the
Company to any contract.
(b) The Consultant shall be liable for his own debts, obligations, acts
and omissions, including, but not limited to, the payment or provision for
payment of all required withholding, Social Security and other taxes or benefits
incurred due to his acts or omissions.
(c) The Company shall not withhold, on behalf of the Consultant, any
sums for income tax, unemployment insurance, Social Security or other
withholding or benefit.
(d) Nothing in this Agreement is intended, and nothing herein shall be
construed, to create an employer/employee relationship, a partnership, or a
joint venture relationship between the Consultant and the Company, or to allow
the Company to exercise control or direction over the manner or method by which
the Consultant performs the services contemplated by this Agreement, except as
set forth in Section 2 hereof. The sole interest of the Company is to ensure
that the Consultant renders and performs the services in a competent, efficient
and satisfactory manner and in accordance with this Agreement.
(e) The Consultant shall be entitled to receive the same medical
insurance coverage as is provided by the Company to its employees and on the
same terms as such insurance is provided to employees of the Company.
6. Confidentiality. The Company, pursuant to the Consultant's provision of
services hereunder, will provide the Consultant access to its confidential
proprietary information developed or owned by the Company including, but not
limited to, (i) business methods and systems, (ii) techniques and methods of
operation (iii) sales plans, marketing methods, customer lists, and (iv)
product, financial and other information of or pertaining to the Company ("Trade
Secrets"), which the Consultant recognizes to be unique assets of the Company's
business. The Consultant shall not, during or at any time after the term of
this Agreement, directly or indirectly, in any manner utilize or disclose any
such Trade Secrets, to any person, firm, corporation, association or other
entity, except (i) where required by law, or (ii) in the course of his duties
hereunder. The Consultant
-2-
<PAGE>
further covenants and agrees that he will promptly deliver to the Company all
tangible evidence of any Trade Secrets prior to or at the termination of this
Agreement.
7. Compliance with Laws. The Consultant shall comply with all federal,
state and local laws applicable to the performance of his services under this
Agreement.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof, and there
are no agreements, understandings, specific restrictions, warranties or
representations relating to said subject matter between the parties other than
those set forth or provided for herein. Any amendment to this Agreement shall
be made in writing and signed by all parties hereto.
9. Successors Bound; Assignability. This Agreement shall be binding upon
the Consultant, the Company and their respective successors in interest. This
Agreement, or any rights or obligations hereunder, is not assignable by either
party hereto without the prior written consent of the other party hereto.
10. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been given if mailed by registered or
certified mail, return receipt requested, to the parties at the addresses set
forth below or such other addresses as shall be specified by notice to the other
party hereunder:
To the Company:
Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, President
With a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Stephen D. Teaford, Esquire
To the Consultant:
Richard Davidovich
312 Ridgewood Road
Fort Worth, TX 76107
-3-
<PAGE>
With a copy to:
Stephen Norris, Esquire
Thompson & Knight, P.C.
801 Cherry Street, Suite 1600
Fort Worth, TX 76102
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will take effect as an original, and all of which
shall evidence one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
------------------------------------
Michael T. Kennedy
President
/s/ Richard Davidovich
------------------------------------
Richard Davidovich
-4-
<PAGE>
Exhibit 10.20
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT ("Sublease") is made as of the 20th day of
January, 1996, between JAMES RIVER PAPER COMPANY, INC., a Virginia corporation
("Sublandlord") and WINCUP HOLDINGS, L.P., a Delaware limited partnership
("Subtenant").
A. Hunt Brothers Leasing, a partnership, d/b/a Hunt Plaza ("Landlord"),
as landlord, and Sublandlord, as tenant, entered into that certain Office
Building Lease dated as of November 8, 1989, as amended by First Addendum to
Leases of August, 1992; by Second Addendum to Lease effective April 4, 1994; by
Third Addendum to Lease effective August 24, 1994; and by Fourth Addendum to
Lease effective May 2, 1995 (as further amended, supplemented or otherwise
modified from time to time, the "Prime Lease"), whereby Landlord leased to
Sublandlord certain premises commonly known as 240 Tamal Vista Boulevard, Corte
Madera, California, as more particularly described in the Prime Lease (the
"Premises"). A copy of the Prime Lease is attached hereto as Exhibit A.
----------
B. Subtenant desires to sublease from Sublandlord, and Sublandlord is
willing to sublease to Subtenant, the Premises upon the terms and conditions set
forth in this Sublease.
AGREEMENT
---------
NOW THEREFORE, Sublandlord and Subtenant agree as follows:
1. Subleased Premises. Subject to the terms and conditions set forth
-------------------
in this Sublease, Sublandlord hereby subleases to Subtenant, and Subtenant
hereby subleases from Sublandlord, the Premises together with all easements,
rights, privileges and interests appurtenant thereto provided for under the
Prime Lease (the "Subleased Premises").
2. Term. The term of this Sublease (the "Sublease Term") shall commence
-----
on the date hereof (the "Commencement Date") and shall end on June 29, 1998 (the
day before the expiration of the Prime Lease) (the "Expiration Date"), unless
sooner terminated as set forth herein.
3. Rent.
-----
(a) Subtenant, beginning on the Commencement Date and continuing
throughout the Sublease Term, shall pay to Sublandlord a monthly rental for the
Subleased Premises in an amount equal to the monthly rent paid by Sublandlord to
Landlord for the Premises pursuant to the terms of the Prime Lease (the "Base
Monthly Rental"). Base Monthly Rental shall be paid to Sublandlord at the
address set forth in Paragraph 6 hereof on the first day of every calendar month
during the Sublease Term (each, a "Due Date") without deduction, offset, prior
notice or demand. If the Commencement Date or the Expiration Date is a day
other than the first day of a calendar month, the first payment of Base Monthly
Rental and/or the last
1
<PAGE>
payment of Base Monthly Rental shall be the pro-rata portion of such rent for
the number of days contained in such fractional month. Any payment of Base
Monthly Rental made more than seven (7) days after the Due Date with respect to
such payment shall bear interest at the rate of one and one-half percent
(1-1/2%) per month until paid.
(b) In addition to Base Monthly Rental, Subtenant shall pay to
Sublandlord as additional rent hereunder ("Additional Rent") all additional rent
and other charges payable from time to time by Sublandlord under the Prime Lease
including, without limitation, Sublandlord's obligations under Sections 22 and
27 of the Prime Lease. Payment of Additional Rent shall commence on the
Commencement Date and shall be made on the dates provided in, and in all other
respects in accordance with the terms of, the Prime Lease.
4. Inspection. Subtenant shall, at its sole expense, submit to
-----------
periodic inspections by Landlord or its agents, on reasonable notice, to assure
compliance by Subtenant with all of the terms and conditions of the Prime Lease,
including, but not limited to, all laws, ordinances and regulations applicable
to Subtenant in its operations at the Premises, and including, but not limited
to, those concerning environmental matters. Landlord, Sublandlord and Subtenant
shall be copied on all inspection reports, and, to the extent required by the
Lease, Sublandlord shall require Subtenant to promptly remedy any issues raised
by any such inspection to the satisfaction of Sublandlord in consultation with
Landlord. Subtenant shall reimburse Sublandlord within thirty (30) days of
receipt of invoice for all costs and expenses incurred by Sublandlord in
conducting said inspections, as well as causing compliance with this paragraph.
Sublandlord shall reimburse Landlord within thirty (30) days of receipt of
invoice for all costs and expenses incurred by Landlord in conducting said
inspections, as well as causing compliance with this paragraph.
5. Prime Lease.
------------
(a) This Sublease is subject and subordinate to the Prime Lease, and
to all the terms, covenants, conditions and provisions set forth in the Prime
Lease. All the terms, covenants, conditions and provisions of the Prime Lease,
except as otherwise provided by this Sublease, are incorporated herein by
reference (the incorporated terms, covenants, conditions and provisions are
hereinafter collectively referred to as the "Incorporated Provisions") with the
same force and effect as if fully set forth herein; provided, however, except as
otherwise set forth herein all references in the Incorporated Provisions to the
"Lease," the "Premises," "Landlord," and "Tenant" shall be deemed to refer to
this Sublease, the Subleased Premises, Sublandlord and Subtenant, respectively.
(b) If there shall be any inconsistency between the Incorporated
Provisions and the express provisions of this Sublease, such provisions of this
Sublease shall govern, but only as between Sublandlord and Subtenant.
Notwithstanding the foregoing, any reference to the incorporated Provisions or
to any specific provisions of the Prime Lease shall mean all terms, covenants,
conditions and provisions of the Prime Lease.
2
<PAGE>
(c) Capitalized terms not expressly defined in this Sublease shall
have the meaning given to them in the Prime Lease.
(d) Sections 1, 5, 8, 24, 29, 33 and 35 of the Prime Lease shall
not be applicable to this Sublease. In addition, notwithstanding anything in the
Prime Lease to the contrary, Subtenant shall have no right to terminate this
Sublease prior to the Expiration Date.
6. Assignment and Subletting. Subtenant shall not assign this Sublease
--------------------------
or further sublet all or any portion of the Subleased Premises without the prior
written consent of Landlord and Sublandlord, which consent Sublandlord and/or
Landlord may withhold in its sole, arbitrary and absolute discretion.
7. Notices. All notices shall be in writing and shall be given by
--------
registered or certified mail or overnight delivery service, addressed as
follows:
If to Sublandlord: James River Paper Company, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Atten: General Counsel
With a copy to: Michael J. Schewel, Esquire
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
If to Subtenant: Wincup Holdings, L.P.
c/o Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Atten: Michael T. Kennedy
With a copy to: Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
Atten: Vincent F. Garrity, Jr., Esq.
And in all cases
with a copy to: Hunt Brothers Leasing
Hunt Investment Company
240 Tamal Vista Blvd., Suite 290
Corte Madera, CA 94925
Atten: J. Patrick Hunt
or to such other address as may be designated by notice. Notices mailed shall
be deemed given or served when mailed.
3
<PAGE>
8. Broker. Sublandlord represents and warrants that it has not dealt
-------
with any broker or agent in connection with the Subleased Premises. Sublandlord
covenants and agrees to pay, hold harmless and indemnify Subtenant from and
against any and all costs, expense or liability for any compensation,
commissions and charges claimed by any broker or agent with respect to this
Sublease or the negotiation thereof with whom Subtenant had dealings.
9. Indemnity. Subtenant shall indemnify, defend and hold harmless
----------
Sublandlord and Landlord from and against any loss, damage, cost or expense,
including reasonable attorneys' fees and litigation costs, incurred by
Sublandlord or Landlord as a result of or arising in connection with (i) a
default by Subtenant under the terms of this Sublease or (ii) any act or
omission by Subtenant which constitutes a breach of or default under the Prime
Lease.
10. Surrender of Sublease Premises; Holding Over. On the Expiration
---------------------------------------------
Date, or upon the earlier termination of this Sublease pursuant to the terms
hereof, Subtenant shall surrender and deliver up the Subleased Premises to
Sublandlord in good condition and repair, reasonable wear and tear excepted, and
otherwise in the condition required by the Prime Lease. If Subtenant fails to
vacate the Subleased Premises on the Expiration Date, this Sublease shall
continue on a month-to-month basis upon the same terms and conditions set forth
herein, except that the Monthly Base Rental payable hereunder pursuant to
Paragraph 3 shall increase by 200%.
11. Miscellaneous.
--------------
(a) This Sublease constitutes the entire agreement between
Sublandlord and Subtenant with respect to the Subleased Premises and no earlier
or contemporaneous oral or written matter shall have force or effect.
(b) This Sublease may not be modified or canceled except by a
writing subscribed by both parties, and approved by Landlord. The covenants,
conditions and agreements contained in this Sublease shall bind and inure to the
benefit of the Sublandlord and Subtenant and their respective successors and
permitted assigns.
(c) If any term or provision of this Sublease shall, to any extent,
be invalid and unenforceable, the remainder of this Sublease, other than that
which is held invalid or unenforceable, shall not be affected thereby and each
term and provision of this sublease shall be valid and enforceable to the
fullest extent permitted by law.
(d) The paragraph headings and subheadings contained in this
Sublease are for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Sublease.
(e) In any instance where Sublandlord's consent is required
hereunder, Sublandlord shall be deemed reasonable in withholding such consent,
among other reasons, if Landlord's consent to such matter is also required and
Landlord has failed to grant such consent.
4
<PAGE>
12. No Changes to Prime Lease. Nothing contained herein shall change or
--------------------------
modify any of the rights or obligations of Landlord or Sublandlord under the
Prime Lease, which Prime Lease shall remain unamended and in full force and
effect.
WITNESS the following signatures:
SUBLANDLORD:
JAMES RIVER PAPER COMPANY, INC.
a Virginia corporation
By: /s/ Michael J. Allan
---------------------------------
Title: Vice President, Treasurer
Michael J. Allan
SUBTENANT:
WINCUP HOLDINGS, L.P.
a Delaware limited partnership
By: WINCUP HOLDINGS, INC.,
General Partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy
President
5
<PAGE>
EXHIBIT 10.21
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT ("Sublease") is made as of the 20th day of
January, 1996, between JAMES RIVER PAPER COMPANY, INC., a Virginia corporation
("Sublandlord") and WINCUP HOLDINGS, L.P., a Delaware limited partnership
("Subtenant").
A. Hunt Brothers Leasing, a partnership, d/b/a Hunt Plaza ("Landlord"),
as landlord, and Sublandlord, as tenant, entered into that certain Warehouse
Lease dated as of November 8, 1989, as amended by First Addendum to Leases of
August, 1992 (as further amended, supplemented or otherwise modified from time
to time, the "Prime Lease"), whereby Landlord leased to Sublandlord certain
premises commonly known as 205 Tamal Vista Boulevard, Corte Madera, California,
as more particularly described in the Prime Lease (the "Premises"). A copy of
the Prime Lease is attached hereto as Exhibit A.
----------
B. Subtenant desires to sublease from Sublandlord, and Sublandlord is
willing to sublease to Subtenant, the Premises upon the terms and conditions set
forth in this Sublease.
AGREEMENT
---------
NOW THEREFORE, Sublandlord and Subtenant agree as follows:
1. Subleased Premises. Subject to the terms and conditions set forth
-------------------
in this Sublease, Sublandlord hereby subleases to Subtenant, and Subtenant
hereby subleases from Sublandlord, the Premises together with all easements,
rights, privileges and interests appurtenant thereto provided for under the
Prime Lease (the "Subleased Premises").
2. Term. The term of this Sublease (the "Sublease Term") shall commence
-----
on the date hereof (the "Commencement Date") and shall end on June 29, 1998 (the
day before the expiration of the Prime Lease) (the "Expiration Date"), unless
sooner terminated as set forth herein.
3. Rent.
-----
(a) Subtenant, beginning on the Commencement Date and continuing
throughout the Sublease Term, shall pay to Sublandlord a monthly rental for the
Subleased Premises in an amount equal to the monthly rent paid by Sublandlord to
Landlord for the Premises pursuant to the terms of the Prime Lease (the "Base
Monthly Rental"). Base Monthly Rental shall be paid to Sublandlord at the
address set forth in Paragraph 6 hereof on the first day of every calendar month
during the Sublease Term (each, a "Due Date") without deduction, offset, prior
notice or demand. If the Commencement Date or the Expiration Date is a day
other than the first day of a calendar month, the first payment of Base Monthly
Rental and/or the last payment of Base Monthly Rental shall be the pro-rata
portion of such rent for the number of days contained in such fractional month.
Any payment of Base Monthly Rental made more than
1
<PAGE>
seven (7) days after the Due Date with respect to such payment shall bear
interest at the rate of one and one-half percent (1-1/2%) per month until paid.
(b) In addition to Base Monthly Rental, Subtenant shall pay to
Sublandlord as additional rent hereunder ("Additional Rent") all additional rent
and other charges payable from time to time by Sublandlord under the Prime Lease
including, without limitation, Sublandlord's obligations under Sections 22 and
26 of the Prime Lease. Payment of Additional Rent shall commence on the
Commencement Date and shall be made on the dates provided in, and in all other
respects in accordance with the terms of, the Prime Lease.
4. Inspection. Subtenant shall, at its sole expense, submit to
-----------
periodic inspections by Landlord or its agents, on reasonable notice, to assure
compliance by Subtenant with all of the terms and conditions of the Prime Lease,
including, but not limited to, all laws, ordinances and regulations applicable
to Subtenant in its operations at the Premises, and including, but not limited
to, those concerning environmental matters. Landlord, Sublandlord and Subtenant
shall be copied on all inspection reports, and, to the extent required by the
Lease, Sublandlord shall require Subtenant to promptly remedy any issues raised
by any such inspection to the satisfaction of Sublandlord in consultation with
Landlord. Subtenant shall reimburse Sublandlord within thirty (30) days of
receipt of invoice for all costs and expenses incurred by Sublandlord in
conducting said inspections, as well as causing compliance with this paragraph.
Sublandlord shall reimburse Landlord within thirty (30) days of receipt of
invoice for all costs and expenses incurred by Landlord in conducting said
inspections, as well as causing compliance with this paragraph.
5. Prime Lease.
------------
(a) This Sublease is subject and subordinate to the Prime Lease,
and to all the terms, covenants, conditions and provisions set forth in the
Prime Lease. All the terms, covenants, conditions and provisions of the Prime
Lease, except as otherwise provided by this Sublease, are incorporated herein by
reference (the incorporated terms, covenants, conditions and provisions are
hereinafter collectively referred to as the "Incorporated Provisions") with the
same force and effect as if fully set forth herein; provided, however, except as
otherwise set forth herein all references in the Incorporated Provisions to the
"Lease," the "Premises," "Landlord," and "Tenant" shall be deemed to refer to
this Sublease, the Subleased Premises, Sublandlord and Subtenant, respectively.
(b) If there shall be any inconsistency between the Incorporated
Provisions and the express provisions of this Sublease, such provisions of this
Sublease shall govern, but only as between Sublandlord and Subtenant.
Notwithstanding the foregoing, any reference to the incorporated Provisions or
to any specific provisions of the Prime Lease shall mean all terms, covenants,
conditions and provisions of the Prime Lease.
(c) Capitalized terms not expressly defined in this Sublease shall
have the meaning given to them in the Prime Lease.
2
<PAGE>
(d) Sections 1, 5, 8, 23, 28, 32 and 34 of the Prime Lease shall
not be applicable to this Sublease. In addition, notwithstanding anything in the
Prime Lease to the contrary, Subtenant shall have no right to terminate this
Sublease prior to the Expiration Date.
6. Assignment and Subletting. Subtenant shall not assign this Sublease
--------------------------
or further sublet all or any portion of the Subleased Premises without the prior
written consent of Landlord and Sublandlord, which consent Sublandlord and/or
Landlord may withhold in its sole, arbitrary and absolute discretion.
7. Notices. All notices shall be in writing and shall be given by
--------
registered or certified mail or overnight delivery service, addressed as
follows:
If to Sublandlord: James River Paper Company, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Atten: General Counsel
With a copy to: Michael J. Schewel, Esquire
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
If to Subtenant: Wincup Holdings, L.P.
c/o Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Atten: Michael T. Kennedy
With a copy to: Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
Atten: Vincent F. Garrity, Jr., Esq.
And in all cases with a
copy to: Hunt Brothers Leasing
Hunt Investment Company
240 Tamal Vista Blvd., Suite 290
Corte Madera, CA 94925
Atten: J. Patrick Hunt
or to such other address as may be designated by notice. Notices mailed shall
be deemed given or served when mailed.
8. Broker. Sublandlord represents and warrants that it has not dealt
-------
with any broker or agent in connection with the Subleased Premises. Sublandlord
covenants and agrees to pay, hold harmless and indemnify Subtenant from and
against any and all costs, expense or
3
<PAGE>
liability for any compensation, commissions and charges claimed by any broker or
agent with respect to this Sublease or the negotiation thereof with whom
Subtenant had dealings.
9. Indemnity. Subtenant shall indemnify, defend and hold harmless
----------
Sublandlord and Landlord from and against any loss, damage, cost or expense,
including reasonable attorneys' fees and litigation costs, incurred by
Sublandlord or Landlord as a result of or arising in connection with (i) a
default by Subtenant under the terms of this Sublease or (ii) any act or
omission by Subtenant which constitutes a breach of or default under the Prime
Lease.
10. Surrender of Sublease Premises; Holding Over. On the Expiration
---------------------------------------------
Date, or upon the earlier termination of this Sublease pursuant to the terms
hereof, Subtenant shall surrender and deliver up the Subleased Premises to
Sublandlord in good condition and repair, reasonable wear and tear excepted, and
otherwise in the condition required by the Prime Lease. If Subtenant fails to
vacate the Subleased Premises on the Expiration Date, this Sublease shall
continue on a month-to-month basis upon the same terms and conditions set forth
herein, except that the Monthly Base Rental payable hereunder pursuant to
Paragraph 3 shall increase by 200%.
11. Miscellaneous.
--------------
(a) This Sublease constitutes the entire agreement between
Sublandlord and Subtenant with respect to the Subleased Premises and no earlier
or contemporaneous oral or written matter shall have force or effect.
(b) This Sublease may not be modified or canceled except by a
writing subscribed by both parties, and approved by Landlord. The covenants,
conditions and agreements contained in this Sublease shall bind and inure to the
benefit of the Sublandlord and Subtenant and their respective successors and
permitted assigns.
(c) If any term or provision of this Sublease shall, to any
extent, be invalid and unenforceable, the remainder of this Sublease, other than
that which is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this sublease shall be valid and enforceable to the
fullest extent permitted by law.
(d) The paragraph headings and subheadings contained in this
Sublease are for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Sublease.
(e) In any instance where Sublandlord's consent is required
hereunder, Sublandlord shall be deemed reasonable in withholding such consent,
among other reasons, if Landlord's consent to such matter is also required and
Landlord has failed to grant such consent.
12. No Changes to Prime Lease. Nothing contained herein shall change or
--------------------------
modify any of the rights or obligations of Landlord or Sublandlord under the
Prime Lease, which Prime Lease shall remain unamended and in full force and
effect.
4
<PAGE>
WITNESS the following signatures:
SUBLANDLORD:
JAMES RIVER PAPER COMPANY, INC.
a Virginia corporation
By: /s/ Michael J. Allan
----------------------------------
Title: Vice President, Treasurer
-------------------------------
Michael J. Allan
SUBTENANT:
WINCUP HOLDINGS, L.P.
a Delaware limited partnership
By: WINCUP HOLDINGS, INC.,
General Partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy
President
5
<PAGE>
Exhibit 10.22
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT ("Sublease") is made as of the 20th day of
January, 1996, between JAMES RIVER PAPER COMPANY, INC., a Virginia corporation
("Sublandlord") and WINCUP HOLDINGS, L.P., a Delaware limited partnership
("Subtenant").
A. Hunt Brothers Leasing, a partnership, d/b/a Hunt Plaza ("Landlord"),
as landlord, and Sublandlord, as tenant, entered into that certain Engineering
Lease dated as of November 8, 1989, as amended by First Addendum to Leases of
August, 1992 (as further amended, supplemented or otherwise modified from time
to time, the "Prime Lease"), whereby Landlord leased to Sublandlord certain
premises commonly known as 201 Tamal Vista Boulevard, Corte Madera, California,
as more particularly described in the Prime Lease (the "Premises"). A copy of
the Prime Lease is attached hereto as Exhibit A.
----------
B. Subtenant desires to sublease from Sublandlord, and Sublandlord is
willing to sublease to Subtenant, the Premises upon the terms and conditions set
forth in this Sublease.
AGREEMENT
---------
NOW THEREFORE, Sublandlord and Subtenant agree as follows:
1. Subleased Premises. Subject to the terms and conditions set forth
-------------------
in this Sublease, Sublandlord hereby subleases to Subtenant, and Subtenant
hereby subleases from Sublandlord, the Premises together with all easements,
rights, privileges and interests appurtenant thereto provided for under the
Prime Lease (the "Subleased Premises").
2. Term. The term of this Sublease (the "Sublease Term") shall commence
-----
on the date hereof (the "Commencement Date") and shall end on June 29, 1998 (the
day before the expiration of the Prime Lease) (the "Expiration Date"), unless
sooner terminated as set forth herein.
3. Rent.
-----
(a) Subtenant, beginning on the Commencement Date and continuing
throughout the Sublease Term, shall pay to Sublandlord a monthly rental for the
Subleased Premises in an amount equal to the monthly rent paid by Sublandlord to
Landlord for the Premises pursuant to the terms of the Prime Lease (the "Base
Monthly Rental"). Base Monthly Rental shall be paid to Sublandlord at the
address set forth in Paragraph 6 hereof on the first day of every calendar month
during the Sublease Term (each, a "Due Date") without deduction, offset, prior
notice or demand. If the Commencement Date or the Expiration Date is a day
other than the first day of a calendar month, the first payment of Base Monthly
Rental and/or the last payment of Base Monthly Rental shall be the pro-rata
portion of such rent for the number of days contained in such fractional month.
Any payment of Base Monthly Rental made more than
1
<PAGE>
seven (7) days after the Due Date with respect to such payment shall bear
interest at the rate of one and one-half percent (1-1/2%) per month until paid.
(b) In addition to Base Monthly Rental, Subtenant shall pay to
Sublandlord as additional rent hereunder ("Additional Rent") all additional rent
and other charges payable from time to time by Sublandlord under the Prime Lease
including, without limitation, Sublandlord's obligations under Sections 22 and
26 of the Prime Lease. Payment of Additional Rent shall commence on the
Commencement Date and shall be made on the dates provided in, and in all other
respects in accordance with the terms of, the Prime Lease.
4. Inspection. Subtenant shall, at its sole expense, submit to
-----------
periodic inspections by Landlord or its agents, on reasonable notice, to assure
compliance by Subtenant with all of the terms and conditions of the Prime Lease,
including, but not limited to, all laws, ordinances and regulations applicable
to Subtenant in its operations at the Premises, and including, but not limited
to, those concerning environmental matters. Landlord, Sublandlord and Subtenant
shall be copied on all inspection reports, and, to the extent required by the
Lease, Sublandlord shall require Subtenant to promptly remedy any issues raised
by any such inspection to the satisfaction of Sublandlord in consultation with
Landlord. Subtenant shall reimburse Sublandlord within thirty (30) days of
receipt of invoice for all costs and expenses incurred by Sublandlord in
conducting said inspections, as well as causing compliance with this paragraph.
Sublandlord shall reimburse Landlord within thirty (30) days of receipt of
invoice for all costs and expenses incurred by Landlord in conducting said
inspections, as well as causing compliance with this paragraph.
5. Prime Lease.
------------
(a) This Sublease is subject and subordinate to the Prime Lease, and
to all the terms, covenants, conditions and provisions set forth in the Prime
Lease. All the terms, covenants, conditions and provisions of the Prime Lease,
except as otherwise provided by this Sublease, are incorporated herein by
reference (the incorporated terms, covenants, conditions and provisions are
hereinafter collectively referred to as the "Incorporated Provisions") with the
same force and effect as if fully set forth herein; provided, however, except as
otherwise set forth herein all references in the Incorporated Provisions to the
"Lease," the "Premises," "Landlord," and "Tenant" shall be deemed to refer to
this Sublease, the Subleased Premises, Sublandlord and Subtenant, respectively.
(b) If there shall be any inconsistency between the Incorporated
Provisions and the express provisions of this Sublease, such provisions of this
Sublease shall govern, but only as between Sublandlord and Subtenant.
Notwithstanding the foregoing, any reference to the incorporated Provisions or
to any specific provisions of the Prime Lease shall mean all terms, covenants,
conditions and provisions of the Prime Lease.
(c) Capitalized terms not expressly defined in this Sublease shall
have the meaning given to them in the Prime Lease.
2
<PAGE>
(d) Sections 1, 5, 8, 23, 28, 32 and 34 of the Prime Lease shall
not be applicable to this Sublease. In addition, notwithstanding anything in the
Prime Lease to the contrary, Subtenant shall have no right to terminate this
Sublease prior to the Expiration Date.
6. Assignment and Subletting. Subtenant shall not assign this Sublease
--------------------------
or further sublet all or any portion of the Subleased Premises without the prior
written consent of Landlord and Sublandlord, which consent Sublandlord and/or
Landlord may withhold in its sole, arbitrary and absolute discretion.
7. Notices. All notices shall be in writing and shall be given by
--------
registered or certified mail or overnight delivery service, addressed as
follows:
If to Sublandlord: James River Paper Company, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Atten: General Counsel
With a copy to: Michael J. Schewel, Esquire
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
If to Subtenant: Wincup Holdings, L.P.
c/o Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
With a copy to: Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
Atten: Vincent F. Garrity, Jr., Esq.
And in all cases
with a copy to: Hunt Brothers Leasing
Hunt Investment Company
240 Tamal Vista Blvd., Suite 290
Corte Madera, CA 94925
Atten: J. Patrick Hunt
or to such other address as may be designated by notice. Notices mailed shall
be deemed given or served when mailed.
8. Broker. Sublandlord represents and warrants that it has not dealt
-------
with any broker or agent in connection with the Subleased Premises. Sublandlord
covenants and agrees to pay, hold harmless and indemnify Subtenant from and
against any and all costs, expense or
3
<PAGE>
liability for any compensation, commissions and charges claimed by any broker or
agent with respect to this Sublease or the negotiation thereof with whom
Subtenant had dealings.
9. Indemnity. Subtenant shall indemnify, defend and hold harmless
----------
Sublandlord and Landlord from and against any loss, damage, cost or expense,
including reasonable attorneys' fees and litigation costs, incurred by
Sublandlord or Landlord as a result of or arising in connection with (i) a
default by Subtenant under the terms of this Sublease or (ii) any act or
omission by Subtenant which constitutes a breach of or default under the Prime
Lease.
10. Surrender of Sublease Premises; Holding Over. On the Expiration
---------------------------------------------
Date, or upon the earlier termination of this Sublease pursuant to the terms
hereof, Subtenant shall surrender and deliver up the Subleased Premises to
Sublandlord in good condition and repair, reasonable wear and tear excepted, and
otherwise in the condition required by the Prime Lease. If Subtenant fails to
vacate the Subleased Premises on the Expiration Date, this Sublease shall
continue on a month-to-month basis upon the same terms and conditions set forth
herein, except that the Monthly Base Rental payable hereunder pursuant to
Paragraph 3 shall increase by 200%.
11. Miscellaneous.
--------------
(a) This Sublease constitutes the entire agreement between
Sublandlord and Subtenant with respect to the Subleased Premises and no earlier
or contemporaneous oral or written matter shall have force or effect.
(b) This Sublease may not be modified or canceled except by a
writing subscribed by both parties, and approved by Landlord. The covenants,
conditions and agreements contained in this Sublease shall bind and inure to the
benefit of the Sublandlord and Subtenant and their respective successors and
permitted assigns.
(c) If any term or provision of this Sublease shall, to any extent,
be invalid and unenforceable, the remainder of this Sublease, other than that
which is held invalid or unenforceable, shall not be affected thereby and each
term and provision of this sublease shall be valid and enforceable to the
fullest extent permitted by law.
(d) The paragraph headings and subheadings contained in this
Sublease are for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Sublease.
(e) In any instance where Sublandlord's consent is required
hereunder, Sublandlord shall be deemed reasonable in withholding such consent,
among other reasons, if Landlord's consent to such matter is also required and
Landlord has failed to grant such consent.
12. No Changes to Prime Lease. Nothing contained herein shall change or
--------------------------
modify any of the rights or obligations of Landlord or Sublandlord under the
Prime Lease, which Prime Lease shall remain unamended and in full force and
effect.
4
<PAGE>
WITNESS the following signatures:
SUBLANDLORD:
JAMES RIVER PAPER COMPANY, INC.
a Virginia corporation
By: /s/ Michael J. Allan
--------------------------------
Title: Vice President, Treasurer
-------------------------------
Michael J. Allan
SUBTENANT:
WINCUP HOLDINGS, L.P.
a Delaware limited partnership
By: WINCUP HOLDINGS, INC.,
General Partner
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy
President
5
<PAGE>
EXHIBIT 10.23
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT ("Sublease") is made as of the 20th day of
January, 1996, between JAMES RIVER PAPER COMPANY, INC., a Virginia corporation
("Sublandlord") and WINCUP HOLDINGS, L.P., a Delaware limited partnership
("Subtenant").
A. Hunt Brothers Leasing, a partnership, d/b/a Hunt Plaza ("Landlord"),
as landlord, and Sublandlord, as tenant, entered into that certain Plant Lease
dated as of November 8, 1989, as amended by First Addendum to Leases of August,
1992 (as further amended, supplemented or otherwise modified from time to time,
the "Prime Lease"), whereby Landlord leased to Sublandlord certain premises
commonly known as 195 Tamal Vista Boulevard, Corte Madera, California, as more
particularly described in the Prime Lease (the "Premises"). A copy of the Prime
Lease is attached hereto as Exhibit A.
----------
B. Subtenant desires to sublease from Sublandlord, and Sublandlord is
willing to sublease to Subtenant, the Premises upon the terms and conditions set
forth in this Sublease.
AGREEMENT
---------
NOW THEREFORE, Sublandlord and Subtenant agree as follows:
1. Subleased Premises. Subject to the terms and conditions set forth
-------------------
in this Sublease, Sublandlord hereby subleases to Subtenant, and Subtenant
hereby subleases from Sublandlord, the Premises together with all easements,
rights, privileges and interests appurtenant thereto provided for under the
Prime Lease (the "Subleased Premises").
2. Term. The term of this Sublease (the "Sublease Term") shall commence
-----
on the date hereof (the "Commencement Date") and shall end on June 29, 1998 (the
day before the expiration of the Prime Lease) (the "Expiration Date"), unless
sooner terminated as set forth herein.
3. Rent.
-----
(a) Subtenant, beginning on the Commencement Date and continuing
throughout the Sublease Term, shall pay to Sublandlord a monthly rental for the
Subleased Premises in an amount equal to the monthly rent paid by Sublandlord to
Landlord for the Premises pursuant to the terms of the Prime Lease (the "Base
Monthly Rental"). Base Monthly Rental shall be paid to Sublandlord at the
address set forth in Paragraph 6 hereof on the first day of every calendar month
during the Sublease Term (each, a "Due Date") without deduction, offset, prior
notice or demand. If the Commencement Date or the Expiration Date is a day
other than the first day of a calendar month, the first payment of Base Monthly
Rental and/or the last payment of Base Monthly Rental shall be the pro-rata
portion of such rent for the number of days contained in such fractional month.
Any payment of Base Monthly Rental made more than
1
<PAGE>
seven (7) days after the Due Date with respect to such payment shall bear
interest at the rate of one and one-half percent (1-1/2%) per month until paid.
(b) In addition to Base Monthly Rental, Subtenant shall pay to
Sublandlord as additional rent hereunder ("Additional Rent") all additional rent
and other charges payable from time to time by Sublandlord under the Prime Lease
including, without limitation, Sublandlord's obligations under Sections 22 and
26 of the Prime Lease. Payment of Additional Rent shall commence on the
Commencement Date and shall be made on the dates provided in, and in all other
respects in accordance with the terms of, the Prime Lease.
4. Inspection. Subtenant shall, at its sole expense, submit to
-----------
periodic inspections by Landlord or its agents, on reasonable notice, to assure
compliance by Subtenant with all of the terms and conditions of the Prime Lease,
including, but not limited to, all laws, ordinances and regulations applicable
to Subtenant in its operations at the Premises, and including, but not limited
to, those concerning environmental matters. Landlord, Sublandlord and Subtenant
shall be copied on all inspection reports, and, to the extent required by the
Lease, Sublandlord shall require Subtenant to promptly remedy any issues raised
by any such inspection to the satisfaction of Sublandlord in consultation with
Landlord. Subtenant shall reimburse Sublandlord within thirty (30) days of
receipt of invoice for all costs and expenses incurred by Sublandlord in
conducting said inspections, as well as causing compliance with this paragraph.
Sublandlord shall reimburse Landlord within thirty (30) days of receipt of
invoice for all costs and expenses incurred by Landlord in conducting said
inspections, as well as causing compliance with this paragraph.
5. Prime Lease.
------------
(a) This Sublease is subject and subordinate to the Prime Lease,
and to all the terms, covenants, conditions and provisions set forth in the
Prime Lease. All the terms, covenants, conditions and provisions of the Prime
Lease, except as otherwise provided by this Sublease, are incorporated herein by
reference (the incorporated terms, covenants, conditions and provisions are
hereinafter collectively referred to as the "Incorporated Provisions") with the
same force and effect as if fully set forth herein; provided, however, except as
otherwise set forth herein all references in the Incorporated Provisions to the
"Lease," the "Premises," "Landlord," and "Tenant" shall be deemed to refer to
this Sublease, the Subleased Premises, Sublandlord and Subtenant, respectively.
(b) If there shall be any inconsistency between the Incorporated
Provisions and the express provisions of this Sublease, such provisions of this
Sublease shall govern, but only as between Sublandlord and Subtenant.
Notwithstanding the foregoing, any reference to the incorporated Provisions or
to any specific provisions of the Prime Lease shall mean all terms, covenants,
conditions and provisions of the Prime Lease.
(c) Capitalized terms not expressly defined in this Sublease shall
have the meaning given to them in the Prime Lease.
2
<PAGE>
(d) Sections 1, 5, 8, 23, 28, 32 and 34 of the Prime Lease shall
not be applicable to this Sublease. In addition, notwithstanding anything in the
Prime Lease to the contrary, Subtenant shall have no right to terminate this
Sublease prior to the Expiration Date.
6. Assignment and Subletting. Subtenant shall not assign this Sublease
--------------------------
or further sublet all or any portion of the Subleased Premises without the prior
written consent of Landlord and Sublandlord, which consent Sublandlord and/or
Landlord may withhold in its sole, arbitrary and absolute discretion.
7. Notices. All notices shall be in writing and shall be given by
--------
registered or certified mail or overnight delivery service, addressed as
follows:
If to Sublandlord: James River Paper Company, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Attn: General Counsel
With a copy to: Michael J. Schewel, Esquire
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
If to Subtenant: Wincup Holdings, L.P.
c/o Radnor Holdings Corporation
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attn: Michael T. Kennedy
With a copy to: Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
Attn: Vincent F. Garrity, Jr., Esq.
And in all cases with a
copy to: Hunt Brothers Leasing
Hunt Investment Company
240 Tamal Vista Blvd., Suite 290
Corte Madera, CA 94925
Atten: J. Patrick Hunt
or to such other address as may be designated by notice. Notices mailed shall
be deemed given or served when mailed.
8. Broker. Sublandlord represents and warrants that it has not dealt
-------
with any broker or agent in connection with the Subleased Premises. Sublandlord
covenants and agrees to pay, hold harmless and indemnify Subtenant from and
against any and all costs, expense or
3
<PAGE>
liability for any compensation, commissions and charges claimed by any broker or
agent with respect to this Sublease or the negotiation thereof with whom
Subtenant had dealings.
9. Indemnity. Subtenant shall indemnify, defend and hold harmless
----------
Sublandlord and Landlord from and against any loss, damage, cost or expense,
including reasonable attorneys' fees and litigation costs, incurred by
Sublandlord or Landlord as a result of or arising in connection with (i) a
default by Subtenant under the terms of this Sublease or (ii) any act or
omission by Subtenant which constitutes a breach of or default under the Prime
Lease.
10. Surrender of Sublease Premises; Holding Over. On the Expiration
---------------------------------------------
Date, or upon the earlier termination of this Sublease pursuant to the terms
hereof, Subtenant shall surrender and deliver up the Subleased Premises to
Sublandlord in good condition and repair, reasonable wear and tear excepted, and
otherwise in the condition required by the Prime Lease. If Subtenant fails to
vacate the Subleased Premises on the Expiration Date, this Sublease shall
continue on a month-to-month basis upon the same terms and conditions set forth
herein, except that the Monthly Base Rental payable hereunder pursuant to
Paragraph 3 shall increase by 200%.
11. Miscellaneous.
--------------
(a) This Sublease constitutes the entire agreement between
Sublandlord and Subtenant with respect to the Subleased Premises and no earlier
or contemporaneous oral or written matter shall have force or effect.
(b) This Sublease may not be modified or canceled except by a
writing subscribed by both parties, and approved by Landlord. The covenants,
conditions and agreements contained in this Sublease shall bind and inure to the
benefit of the Sublandlord and Subtenant and their respective successors and
permitted assigns.
(c) If any term or provision of this Sublease shall, to any
extent, be invalid and unenforceable, the remainder of this Sublease, other than
that which is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this sublease shall be valid and enforceable to the
fullest extent permitted by law.
(d) The paragraph headings and subheadings contained in this
Sublease are for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Sublease.
(e) In any instance where Sublandlord's consent is required
hereunder, Sublandlord shall be deemed reasonable in withholding such consent,
among other reasons, if Landlord's consent to such matter is also required and
Landlord has failed to grant such consent.
12. No Changes to Prime Lease. Nothing contained herein shall change or
--------------------------
modify any of the rights or obligations of Landlord or Sublandlord under the
Prime Lease, which Prime Lease shall remain unamended and in full force and
effect.
4
<PAGE>
WITNESS the following signatures:
SUBLANDLORD:
JAMES RIVER PAPER COMPANY, INC.
a Virginia corporation
By: /s/ Michael J. Allan
---------------------------------
Title: Vice President, Treasurer
------------------------------
Michael J. Allan
SUBTENANT:
WINCUP HOLDINGS, L.P.
a Delaware limited partnership
By: WINCUP HOLDINGS, INC.,
General Partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy
President
5
<PAGE>
EXHIBIT 10.24
December 5, 1996
WinCup Holdings, L.P.
c/o Radnor Holdings Corporation
3 Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
Dear Mr. Kennedy:
Notwithstanding any language to the contrary in those certain Sublease
Agreements (collectively, the "Subleases"), each dated as of January 20, 1996,
and entered into between James River Paper Company, Inc. ("James River"), and
WinCup Holdings, L.P. ("WinCup L.P."), with respect to the premises located
generally in Corte Madera, California, or any of the Prime Leases referred to
therein, leased from Hunt Brothers Leasing, L.L.C. ("Landlord"), the
undersigned, intending to be legally bound hereby, agrees as follows:
1. Notwithstanding any provision to the contrary in the Subleases, WinCup
L.P. shall not be deemed to have assumed, and does not assume, any liabilities
for matters disclosed by any inspections of the Subleased Premises other than as
set forth in (a) Paragraph 2 below and (b) Section 1.3(a) of that certain JR
Capital Contribution Agreement, dated as of January 20, 1996, between WinCup
L.P. and James River (the "JR Contribution Agreement").
2. WinCup L.P. shall be required to reimburse James River, within thirty
(30) days of receipt of invoice from James River, for amounts required to be
paid by James River to Landlord (as defined in the Subleases) for costs and
expenses incurred by Landlord in conducting inspections (other than (a)
environmental inspections relating to "Retained Liabilities", as hereinafter
defined, and as contemplated in Paragraph 8 of that certain Landlord's Consent
to Subleases dated as of January 23, 1996 between Landlord and James River (the
"Consent") and (b) roof inspections to the extent contemplated in Paragraph 7
below) of the Subleased Premises, as well as causing compliance with Section 4
of the Subleases.
3. To the extent any compliance with Section 4 of the Subleases relates to
liabilities or obligations which James River has retained under the JR Capital
Contribution Agreement ("Retained Liabilities"), James River shall indemnify
WinCup L.P. as provided in the JR Capital Contribution Agreement. Additionally,
James River shall bear any costs and expenses incurred by James River in
conducting any inspections of the Subleased Premises, to the extent any such
actions are taken upon James River's initiative or in response to an inspection
undertaken by Landlord or its agents for the sole purpose of investigating
Retained Liabilities.
<PAGE>
4. If WinCup L.P. fails to vacate any of the Subleased Premises (as
defined in the Subleases) on the Expiration Date (as defined in the Subleases),
the Sublease governing such Subleased Premises shall continue on a month-to-
month basis upon the terms and conditions set forth in the Holding Over
provision of the governing Prime Lease, provided, however, WinCup L.P. shall be
liable for any loss, cost, damage or expense payable by James River to Landlord
as a result of such holding over.
5. James River agrees to pay to Landlord late charges paid pursuant to
paragraph 5 of the Consent; provided, however, that such late charges result
from James River's failure timely to turn over to Landlord amounts paid timely
by WinCup L.P. to James River for the benefit of Landlord. WinCup L.P. agrees
that any rent payments or other amounts due to Landlord made to James River for
the benefit of Landlord shall be delivered to James River so as to be received
by it at least one (1) business day prior to the date such amounts are due to
Landlord.
6. Pursuant to paragraph 7 of the Consent, at the expiration of the
Subleases, James River shall take all actions required by Landlord with respect
to unauthorized alterations on the roof of the factory building, but only to the
extent such alterations are the result of James River's conduct prior to the
Closing Date (as defined in the JR Contribution Agreement).
In the event the foregoing is acceptable to you, kindly indicate your
agreement by signing and dating both copies of this side letter agreement in the
spaces provided and return one fully executed copy to James River for its files.
JAMES RIVER PAPER COMPANY, INC.
By: /s/ Michael J. Allan
--------------------------------
Name: Michael J. Allan
------------------------------
Title: Vice President, Treasurer
-----------------------------
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., its
General Partner
By: /s/ Michael T. Kennedy
--------------------------------
Name: Michael T. Kennedy
Title: Chairman
<PAGE>
EXHIBIT 10.37
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of this 20th day of January, 1996, by and
among WINCUP HOLDINGS, L.P., a Delaware limited partnership (the "Employer"),
and MICHAEL T. KENNEDY (the "Executive").
RECITAL
-------
The Employer a Delaware limited partnership which manufactures and
distributes foam cups, containers and lids and plastic cups and containers.
WinCup Holdings, Inc., a Delaware corporation ("WinCup"), is the sole general
partner of Employer and James River Paper Company, Inc., a Virginia corporation
("James River"), is the sole limited partner of Employer.
The Executive has extensive operating and financial experience in the
manufacturing and distribution businesses and has been chief executive officer
and president of WinCup since the date of its incorporation.
The parties hereto desire to enter into this Agreement to provide for
the employment of Executive by Employer and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
agree as follows:
<PAGE>
1. Employment.
----------
Employer hereby employs Executive and Executive hereby accepts
employment as President, Chief Executive Officer and Chairman of the Board of
Directors ("Board") of Employer in accordance with the terms and conditions
hereinafter set forth.
2. Term.
----
The term of this Agreement shall be five (5) years commencing on
the date hereof ("Initial Term"), unless earlier terminated pursuant to
Paragraph 7 below; provided, however, that unless earlier terminated pursuant to
Paragraph 7 below, the Initial Term of this Agreement shall thereafter be
renewed from year to year (each, a "Renewal Term") unless either party gives
written notice of termination to the other at least one hundred eighty (180)
days prior to the expiration of such Initial Term or Renewal Term, as the case
may be. The Initial Term and any Renewal Term(s) are hereinafter referred to,
collectively, as the "Term."
3. Duties.
------
Executive is engaged hereunder as President, Chief Executive
Officer and Chairman of the Board of Employer and agrees to perform such duties
and services as are customarily incident to such offices and such other duties
and services as may be assigned to him from time to time by the Board; provided,
however, that it is expressly understood that Executive will not be required to
relocate in order to perform his duties hereunder. During his employment
hereunder, Executive shall conduct himself
-2-
<PAGE>
at all times so as to advance the best interests of Employer and shall not
undertake or engage in any other business activity which interferes with the
performance of his duties hereunder without the prior written consent of
Employer. It is expressly understood that nothing in this Agreement shall
preclude Executive from owning not more than five percent (5%) of the issued and
outstanding shares of a class of securities of a corporation the securities of
which are traded on a national security exchange or in the over-the-counter
market.
4. Compensation.
------------
For all services rendered by Executive under this Agreement,
Employer shall pay Executive a base salary of not less than Three Hundred Sixty
Thousand Dollars ($360,000) per annum, payable in equal semi-monthly
installments, together with such additional compensation, including bonus, if
any, as the Board may determine from time to time in its sole discretion (the
"Salary"). The Salary shall be reviewed on or about August 1st of each year and
may be increased in the sole discretion of the Board based on corporate policy
and Executive's performance.
5. Expenses.
--------
Executive is authorized to incur reasonable expenses for
promoting Employer's business, including expenses for entertainment, travel, and
similar items. Employer will reimburse Executive for all such expenses provided
such expenses have been included in an operating plan for Employer which has
been approved by the unanimous consent of the Employer's Board
-3-
<PAGE>
("Approved Operating Plan") and provided further Executive shall have presented
to Employer appropriate vouchers itemizing such expenses in a form consistent
with Employer's policy. Notwithstanding the foregoing, Employer shall pay
directly all expenses, including but not limited to rent, staff salaries,
utilities and other reasonable expenses, incurred in the maintenance of
Executive's main office located in Northeastern Pennsylvania, provided such
expenses have been included in an Approved Operating Plan.
6. Fringe Benefits.
---------------
During the Term of this Agreement, Executive shall be entitled to
such benefits of employment with Employer as are now or may hereafter be in
effect for officers and employees of Employer including without limitation such
insurance, disability, medical, dental and other benefit plans or programs as
are now or hereafter established or maintained by Employer for its executive
officers. Executive shall be included in any profit-sharing, pension, retirement
or other employee benefit plan of Employer that may include as beneficiaries
executive officers of Employer, whether now in force or subsequently implemented
by Employer.
7. Termination of Employment. This Agreement may not be
-------------------------
terminated during the Term, other than as provided below:
(a) Death of Executive. In the event of the death of Executive
------------------
during the Term, this Agreement shall terminate and Employer shall have no
further obligation or liability hereunder except to pay to Executive's executor
or administrator, within
-4-
<PAGE>
sixty (60) days after the date of death, the portion, if any, of Executive's
Salary for the period through the date of Executive's death, unless previously
paid.
(b) Total Disability. In the event of a mental or physical
----------------
condition which in the reasonable opinion of the Board, based upon the
independent medical diagnosis of a physician engaged by Employer for that
purpose, renders Executive unable or incompetent to perform his duties hereunder
("Total Disability"), which condition continues for a period of ninety (90)
consecutive days during the Term of this Agreement, Employer shall have the
right to terminate Executive's employment hereunder by giving Executive ten (10)
days' written notice thereof and, upon expiration of such ten-day period,
Employer shall have no further obligation or liability under this Agreement
except to pay to Executive, within sixty (60) days thereafter, the portion, if
any, of Executive's Salary for the period through the date of termination which
is due and remains unpaid.
(c) Resignation. Executive may voluntarily terminate his
------------
employment under this Agreement by giving Employer no less than one hundred
eighty (180) days written notice of his intention to do so including the date
upon which such termination shall become effective, which date shall not be
sooner than one hundred eighty (180) days from the date on which such notice is
given. Following the effective date of such resignation, Executive shall have no
further obligation or liability under this Agreement and Employer shall have no
further obligation or
-5-
<PAGE>
liability under this Agreement except to pay to Executive the same amounts which
are payable under Paragraph 7(a).
(d) Termination for Cause. The Employer may terminate this
---------------------
Agreement at any time for Cause (as hereinafter defined) upon written notice to
Executive, effective upon the date of such written notice. "Cause" shall be
defined as (a) conviction of the Executive for a felony or misdemeanor involving
dishonesty, fraud or moral turpitude under the laws of the United States or any
state thereof or other jurisdiction in which Executive performs services; (b)
breach of Section 9 hereof; or (c) removal of WinCup as General Partner of
Employer pursuant to Section 8.4 of that certain Limited Partnership Agreement,
dated as of the date hereof, between WinCup and James River. In the event of
termination for Cause, the Employer shall have no further obligations or
liabilities to Executive hereunder, except that Executive shall be entitled to
receive any accrued but unpaid Salary and expense reimbursement, and to retain
all other amounts received by Executive pursuant to this Agreement prior to such
termination for Cause.
8. Non-Disclosure of Trade Secrets and Other Information.
-----------------------------------------------------
Executive agrees that he will not, during the Term of this Agreement
or at any time thereafter, use for himself or divulge to others any secret or
confidential information, knowledge, or data of Employer, developed by him or
obtained by him as a result of his employment, unless authorized by Employer in
writing. It is understood that this applies to information of
-6-
<PAGE>
either a technical or commercial nature, including secret processes, formulas,
machinery, utensils, manufacturing techniques and arts, customer lists, market
information and the like. The terms 'secret' and 'confidential' shall include
all unpublished information and all information and data known to some but not
to all members of the trade or industry to whom such information or data would
be in any manner useful.
All memoranda, notes, records, or other documents made or compiled by
Executive, or made available to Executive while employed by Employer, are
Employer's property and all copies thereof shall be delivered to Employer on
termination of Executive's employment or at any other time upon the request of
Employer.
9. Restrictive Covenant.
--------------------
(a) Non-Competition.
---------------
Executive agrees that, so long as he is employed by Employer
pursuant to this Agreement and for a period of five (5) years thereafter, he
will not, directly or indirectly, as a sole proprietor, member of a partnership,
stockholder, investor, officer or director of a corporation, or as an employee,
agent, associate or consultant of any person, partnership or corporation other
than Employer or in any other capacity:
(i) own, manage, operate, participate in, perform
services for or otherwise carry on a business which sells or manufactures one-
piece foam cups within the United States or
-7-
<PAGE>
Canada (the "Territory"); provided that ownership of not more than five percent
(5%) of the issued and outstanding shares of a class of securities of a
corporation the securities of which are traded on a national security exchange
or in the over-the-counter market shall not be deemed ownership of the issuer of
such shares for the purposes of this section;
(ii) induce or attempt to persuade any employee of
Employer or any of its affiliates to terminate such employment relationship in
order to enter into any such relationship with such person or to enter into any
such relationship on behalf of any other business organization which sells or
manufactures one-piece foam cups in the Territory;
(iii) solicit any business related to the manufacture or
sale of one-piece foam cups in the Territory from any clients, customers, or
prospective or former clients or customers of Employer or its affiliates; or
(iv) perform services of any nature for any entity
which manufactures or sells one-piece foam cups in the Territory.
(b) Injunctive Relief. Without limiting the right of Employer or
-----------------
any of its successors or permitted assigns to pursue all other legal and
equitable rights available to them for violation of the covenants set forth in
subparagraph 9(a) hereof, it is agreed that such other remedies cannot fully
compensate Employer and its successors and assigns for such a violation and
-8-
<PAGE>
that Employer and its successors and assigns shall be entitled to injunctive
relief to prevent violation or continuing violation hereof. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this covenant, any term, restriction,
covenant or promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such a court or
agency.
10. Arbitration.
-----------
Except as provided in subparagraph 9(b) hereof, any controversy
or claim arising out of or relating to this Agreement or the breach thereof
shall be settled by arbitration in Wilmington, Delaware, in accordance with the
rules of the American Arbitration Association and any decision made in
accordance with such rules shall be binding on all parties in interest, and
judgment upon any award rendered may be entered in any court having jurisdiction
thereof.
11. Waiver of Breach.
----------------
The waiver by Employer or Executive, as the case may be, of a
breach of any provision of this Agreement by Executive or Employer, as the case
may be, will not operate or be construed as a waiver of any subsequent breach by
Executive or Employer, as the case may be.
12. Entire Agreement.
----------------
This instrument contains the entire Agreement of
-9-
<PAGE>
the parties with respect to the employment of Executive by Employer. It may not
be changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
13. Severability.
------------
If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
14. Notices.
-------
All notices required or permitted to be given hereunder shall be
in writing and shall be deemed to have been given when actually received. If
such notice is mailed, it shall be deposited, registered or certified, return
receipt requested, in the United States mail, or by commercial overnight courier
such as Federal Express, addressed to the intended recipient as follows:
-10-
<PAGE>
If to the Executive:
Mr. Michael T. Kennedy
770 Parkes Run Lane
Villanova, Pennsylvania 19085
If to the Employer:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Boulevard
Chesterbrook, Pennsylvania 19087-5638
Attention: Mr. Michael T. Kennedy, President
Any party hereto may from time to time change its address for the purpose of
notice to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
parties sought to be charged with its contents.
15. Bind and Inure.
--------------
This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors in interest.
16. Governing Law.
-------------
This Agreement is made in and shall be construed in
accordance with and governed by the laws of the State of Delaware.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement on the day and year first above written.
EMPLOYER:
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., its
general partner
By: /s/ Michael T. Kennedy
------------------------
Michael T. Kennedy
President
EXECUTIVE
/s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy
-12-
<PAGE>
EXHIBIT 10.38
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
-------------------------------------------------
THIS FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT ("Amendment") is
made as of October __, 1995 between BENCHMARK CORPORATION OF DELAWARE, a
Delaware corporation (the "Company") and RICHARD HUNSINGER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and Executive are parties to a certain Executive Employment
Agreement, dated as of May 1, 1993 (as amended and/or modified, the
"Agreement");
WHEREAS, the Executive desires to continue his employment by the Company and the
Company desires to continue the employment of the Executive; and
WHEREAS, the Company and the Executive desire to amend the Agreement as more
particularly set forth herein.
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Amendments.
----------
(a) The first sentence of Section 1.1 of the Agreement is hereby amended
and restated to read in its entirety as follows:
1.1 Position and Duties. During the term of this Agreement, the
-------------------
Executive shall serve on a full-time basis as Senior Vice President of
Sales and Marketing of the Company, with such powers and
responsibilities as are customarily incident to such office.
(b) The first sentence of Section 1.3(a) of the Agreement is hereby amended
and restated to read in its entirety as follows:
(a) Subject to the termination provisions of Article II hereof, the
initial term of this Agreement shall begin on May 1, 1993 and shall
expire on November 6, 2000.
(c) Section 1.4(a) of the Agreement is hereby amended and restated to read
in its entirety as follows:
(a) Salary. During the term of this Agreement, the Company shall pay to
------
the Executive a base salary (the "Base Salary") at the rate of not less
than $145,000
<PAGE>
per annum, which shall be subject to increase as provided in the
following sentence. Every twelve months, the Base Salary shall be
reviewed and increased by an amount equal to the product obtained by
multiplying $145,000 by the percentage change in the CPI-U from the
first full calendar month of the first year of the term to the first
full calendar month of the subject year of the term. As used herein
"CPI-U" shall mean "Consumer Price Index -- Seasonally Adjusted U.S.
City Average For All Items For All Urban Consumers (1982-84 = 100),"
published monthly in the "Monthly Labor Review" of the Bureau of Labor
Statistics of the United States Department of Labor. If the base year
"(1982-84 = 100)" or other base year used in computing the CPI-U is
changed, the figures used in making the adjustment shall be changed
accordingly, so that all increases in the CPI-U are taken into account
notwithstanding any such change in the base year. In no event shall the
percentage increase in the Base Salary for any year of the term be less
than three and one-half percent (3.5%) of the Base Salary for the
previous year. The Base Salary shall be payable in semi-monthly
installments.
(d) Section 1.4(c)(ii) of the Agreement is hereby amended and restated in
its entirety as follows:
(ii) During the term of the Agreement, the Company shall provide the
Executive with an automobile at the Company's expense.
(e) A new sentence is hereby added to Section 1.5 of the Agreement to read
in its entirety as follows:
The Company shall, at its sole cost and expense, provide the Executive
with satisfactory legal counsel to defend any action, suit or
proceeding commenced against Executive during the term of this
Agreement with respect to any antitrust matters related to Executive's
employment with the Company.
(f) Section 2.3 of the Agreement is hereby amended to delete paragraphs (b)
and (e) thereof and the remaining paragraphs of Section 2.3 of the Agreement are
hereby renumbered accordingly.
2. Ratification and Confirmation. The terms and conditions of the Agreement,
-----------------------------
as amended by this Amendment, are hereby ratified and confirmed and shall
continue in full force and effect.
3. Miscellaneous. This Amendment shall have effect as of this date. This
-------------
Amendment may be executed in two or more
-2-
<PAGE>
counterparts, and by different parties on different counterparts, each of which
shall be deemed an original and in making proof of this Amendment it shall be
necessary only to produce sufficient counterparts. This Amendment and the
rights and obligations of the parties hereunder shall be construed in accordance
with and shall be governed by the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
/s/ Richard Hunsinger
------------------------------
RICHARD HUNSINGER
BENCHMARK CORPORATION OF
DELAWARE
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy
President
-3-
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
This Executive Employment Agreement ("Agreement") is made as of May 1st,
1993, by and between BENCHMARK CORPORATION OF DELAWARE (the "Company"), a
Delaware corporation, and RICHARD HUNSINGER (the "Executive").
RECITAL
-------
The purpose of this Agreement is to set forth the terms and conditions
upon which the Executive shall be employed by the Company.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound hereby, the Company and the Executive
agree as follows:
ARTICLE I
Employment Generally
--------------------
1.1. Position and Duties. During the term of this Agreement, the
-------------------
Executive shall serve on a full-time basis as Senior Vice President of Sales of
the Company, with such powers and responsibilities as are customarily incident
to such office. The Executive will diligently and competently perform such
reasonable duties in connection with the business and affairs of the Company as
may be assigned to him by the Board of Directors of the Company, which duties
and responsibilities shall be
-1-
<PAGE>
consistent with his position as Senior Vice President of Sales and Marketing.
1.2. Obligations of Executive.
------------------------
(a) The Executive shall abide by the rules, customs and usages
from time to time reasonably established by the Company, shall devote his full
business time, attention and energies to the business of the Company, and shall
not, during the term of this Agreement, be engaged in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage, except as permitted by Section 1.2(b).
(b) The terms of this Section 1.2 shall not prevent the Executive
from making passive investments of his assets in such form or manner as he
chooses; provided, however, that the Executive shall not have any personal
interest, direct or indirect, financial or otherwise, in any supplier to, buyer
from, or competitor of the Company, or in any transaction between the Company
and a supplier or buyer.
1.3 Term
----
(a) Subject to the termination provisions of Article II hereof,
the initial term of this Agreement shall begin on May 1, 1993 and shall expire
on June 30, 1996. Absent notice of termination given by either party not less
than one hundred eighty days prior to the expiration of the initial term (or any
successor term, as the case may be), this Agreement shall automatically renew
for successive terms of twelve months.
-2-
<PAGE>
1.4. Compensation and General Benefits.
---------------------------------
(a) Salary. During the term of this Agreement, the Company shall
------
pay to the Executive a base salary (the "Base Salary") at the rate of not less
than $125,000 per annum. The Base Salary shall be payable in semi-monthly
installments. The Base Salary shall be subject to review every twelve months for
increase in the sole and absolute discretion of the Company's Board of Directors
based on corporate policy and the Executive's performance.
(b) Bonus. During the term of this Agreement, the Executive shall
-----
be eligible to participate in any incentive compensation program developed by
the Company for its key employees.
(c) Benefits.
--------
(i) The Company may, in its discretion, determine to
purchase insurance on the life of the Executive, with the Company as sole
beneficiary. In such event, the Executive agrees to submit to reasonable medical
examinations and otherwise reasonably to cooperate with the Company in
connection with obtaining such insurance .
(ii) During the term of this Agreement, the Company shall,
at its own option, either: (a) provide the Executive with an automobile at the
Company's expense; or (b) reimburse the Executive a minimum amount of $600.00
per month for the costs of operating an automobile in the performance of his
duties hereunder.
-3-
<PAGE>
(iii) The Executive shall be entitled to four weeks paid
vacation during each year in which this Agreement is in effect.
(iv) The Executive shall be entitled, during the term of this
Agreement, to such other benefits of employment with the Company as are now or
may hereafter be in effect for salaried officers and employees of the Company
including without limitation such insurance, disability, medical and dental and
other benefit plans or programs as are now or hereafter established or
maintained by the Company for employees with duties comparable to those of the
Executive.
1.5. Expenses. The Executive shall be reimbursed for the business, travel
--------
and other expenses reasonably incurred by him in connection with the performance
of his duties hereunder.
ARTICLE II
Termination
-----------
2.1. Disability.
----------
(a) In the event that the Executive is unable substantially to
perform his duties and responsibilities hereunder by reason of physical or
mental illness, injury or incapacity ("Disability") for three (3) consecutive
months or for an aggregate of more than six (6) months in any twelve (12) month
period, during which time he shall continue to be compensated as provided in
Section 1.4 hereof, this Agreement may be terminated by the Company in
accordance with the provisions of this Section 2.1. Upon such termination, the
Company shall have no further
-4-
<PAGE>
liability or obligation to the Executive for compensation hereunder except for
the payment of any amount to which the Executive may be entitled because of his
participation in any incentive compensation program developed by the Company. In
the event of a termination pursuant to this Section 2.1, the Executive will
continue to be entitled to receive any payments prescribed under any of the
Company's disability benefits plans under which he is covered. Termination of
the Executive's employment pursuant to this Section 2.1 shall be effective
thirty (30) days after the Company's written notice of termination by reason of
Disability to the Executive. The Executive's Base Salary shall be paid through
the effective date of termination.
(b) If the Executive shall resume his duties within ninety (90) days
after receipt of a notice of termination pursuant to Section 2.1(a) and continue
to perform such duties for eight (8) consecutive weeks thereafter, this
Agreement shall continue in full force and effect, without any reduction in
salary or other benefits, and the notice of termination shall be considered null
and void and of no effect.
2.2. Death. This Agreement shall terminate upon the death of the Executive
-----
and thereafter the Company shall have no liability or obligation to the
Executive's estate hereunder, except for salary and other compensation earned by
the Executive but not paid.
2.3. Cause. Notwithstanding any other provision of this Agreement, the
-----
Board of Directors of the Company may terminate
-5-
<PAGE>
this Agreement at any time for "Cause". For the purpose of this Agreement the
term "Cause" shall mean with respect to the Executive: (a) a breach of the
provisions of Section 3.1 or 3.2 of this Agreement; (b) any fraudulent or
dishonest conduct; (c) conviction of a crime involving moral turpitude;
(d) chronic alcoholism or drug addiction; (e) indictment by a grand jury for
commission of a felony unless such indictment is dismissed within sixty (60)
days of its issuance; or (f) the refusal, for a period of time exceeding sixty
(60) days, to substantially perform the Executive's duties as set forth in
Section 1.1 of this Agreement after a demand for substantial performance has
been delivered to the Executive by written notice of the Board of Directors of
the Company which specifically identifies the manner in which the Board believes
that the Executive has not substantially performed his duties.
ARTICLE III
Noncompetition; Confidentiality
-------------------------------
3.1. Noncompetition.
--------------
(a) During the term of this Agreement including any renewals
hereto and for a period of two (2) years immediately following the termination
of this Agreement, the Executive shall not, without the prior written consent of
the Company, engage directly or indirectly in any business (either financially
or as a shareholder, employee, officer, partner, independent contractor or
owner, or in any other capacity calling for the rendition of personal services
or acts of management, operation or control)
- 6 -
<PAGE>
which is competitive with the business of the Company in any geographical area
in which such entity engages in business. Furthermore, the Executive agrees
that for so long as this Agreement is in effect and for a period of two (2)
years following the termination of this Agreement for any reason whatsoever, the
Executive shall not hire, as employee, consultant, agent or otherwise, nor shall
he solicit the participation in any business activity that is competitive with
the business of the Company (as owner, part-owner, shareholder, partner,
director, officer, trustee, employee, agent or consultant or in any other
capacity) of any person who is an employee, consultant or agent of the Company,
or who was such an employee, consultant or agent within one year preceding the
date of the termination of the Executive's employment with the Company.
3.2 Non-Disclosure. The Executive recognizes and acknowledges that he
--------------
will have access to certain confidential information of the Company and that
such information constitutes valuable, special and unique property of the
Company. The Executive agrees that he will not, for any reason or purpose
whatsoever, during or after the term of this Agreement, disclose any of such
confidential information to any party without the express authorization of the
Company except as necessary in the ordinary course of performing his duties
hereunder. The Executive acknowledges and agrees that all papers, documents,
writings and other materials produced by him or coming into his
- 7 -
<PAGE>
possession during his employment hereunder will at all times remain the property
of the Company and upon termination of this Agreement the Executive shall
surrender all such materials to the Company.
3.3 Injunctive Relief; Consideration for Enforcement.
------------------------------------------------
The Executive acknowledges that his compliance with the agreements in
Sections 3.1 and 3.2 hereof is necessary to protect the goodwill and other
proprietary interests of the Company and that during the performance of his
duties under this Agreement he will become conversant with the affairs, trade
secrets, customers and other proprietary information of the Company. The
Executive acknowledges that a breach of his agreement in Sections 3.1 and 3.2
hereof will result in irreparable and continuing damage to the Company for which
there will be no adequate remedy at law; and the Executive agrees that in the
event of any breach of the aforesaid agreements, the Company and its successors
and assigns shall be entitled to injunctive relief and to such other and further
relief as may be proper; provided, however, that the Company shall not be
entitled to enforce the Executive's agreements in Section 3.1 hereof unless the
Company shall first notify the Executive in writing of its intention to do so
and, in consideration for the obligations of the Executive not to compete as
provided in Section 3.1 hereof, the Company shall pay the Executive his Base
Salary in accordance with the terms of Section 1.4(a) hereof for the period
during which the Company elects to enforce the Executive's
- 8 -
<PAGE>
compliance with Section 3.1, which period shall not exceed two (2) years
immediately following the termination of the Agreement. If the Company
materially fails to comply with the payment obligation required by the
preceding sentence as consideration for the Executive's agreement not to
compete, then the Executive shall be entitled to compete.
3.4. Severability. If any term or provision of this Article III shall be
------------
determined by a court of competent jurisdiction to be unenforceable because of
the scope or duration thereof or the geographic area included therein, the
parties hereto hereby expressly agree that the court making such determination
shall have the power to reduce the scope and duration and restrict the
geographical area of such term or provision which the court shall deem necessary
to permit enforcement of such term or provision.
3.5. Survival. The provisions of this Article III shall survive the
--------
termination of this Agreement.
ARTICLE IV
Miscellaneous General Provisions
--------------------------------
4.1. Notices. Any notices, requests, demands and other communications
-------
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he had filed
in writing with the Company or, in the case of the Company, at its principal
executive offices.
-9-
<PAGE>
4.2. Non-Alienation. The Executive shall not pledge, hypothecate,
--------------
anticipate or in any way create a lien upon any amounts provided under this
Agreement; and no benefits payable hereunder shall be assignable in anticipation
of payment either by voluntary acts, or by operations of law.
4.3. Waivers. No claim or right arising out of a breach or default under
-------
this Agreement shall be discharged in whole or in part by a waiver of that claim
or right unless the waiver is supported by consideration and is in writing and
executed by the aggrieved party hereto or his or its duly authorized agent.
A waiver by any party hereto of a breach or default by the other party hereto
of any provision of this Agreement shall not be deemed a waiver of future
compliance therewith, and such provision shall remain in full force and effect.
4.4. Governing Law. The provisions of this Agreement shall be construed in
-------------
accordance with the internal laws of the Commonwealth of Pennsylvania, without
consideration of conflict of laws principles.
4.5. Arbitration of All Disputes. Except as provided in Article III, any
---------------------------
controversy or claim arising out of or relating to this Agreement or the breach
thereof shall be settled by arbitration in Philadelphia, Pennsylvania, in
accordance with the rules then obtaining of the American Arbitration Association
and any decision made in accordance with such rules shall be binding
-10-
<PAGE>
on all parties in interest, and judgment upon any award rendered may be entered
in any court having jurisdiction thereof.
4.6. Amendment. Any amendment to this Agreement shall be effective only if
---------
in writing and signed by the parties hereto.
4.7. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of the Executive and his personal representatives, the Company and any
persons or entities which succeed to all or substantially all of the business or
property of the Company, by merger, consolidation, acquisition of assets or
otherwise, including by operation of law.
4.8. Headings. The section headings have been included herein for
--------
convenience only and shall not be considered in interpreting this Agreement.
4.9. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties on separate
-11-
<PAGE>
counterparts, and each such counterpart shall be deemed to be an original but
all such counterparts shall together constitute one and the same agreement.
4.10. Entire Agreement.
----------------
This Agreement constitutes the full and complete understanding and
agreement of the Executive and the Company respecting the subject matter hereof,
and supersedes all prior understandings and agreements, oral or written, express
or implied.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed by a duly authorized officer,
all as of the day and year first above written.
/s/ Richard Hunsinger
--------------------------
RICHARD HUNSINGER
BENCHMARK CORPORATION OF
DELAWARE
By: /s/ Michael T. Kennedy
--------------------------
MICHAEL T. KENNEDY,
Chairman
-12-
<PAGE>
EXHIBIT 10.51
JUNIOR SUBORDINATED PROMISSORY NOTE
$1,100,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited partnership
(the "Maker") hereby promises to pay to the order of WINCUP HOLDINGS, INC., a
Delaware corporation (the "Payee") the principal sum of ONE MILLION ONE HUNDRED
THOUSAND DOLLARS ($1,100,000) and interest thereon according to the terms
hereof.
1. Payment of Principal and Interest. Interest shall accrue on the
---------------------------------
outstanding principal hereunder at an annual rate of ten percent (10%) for the
first two (2) years and twelve percent (12%) thereafter. For the first two (2)
years, accrued interest shall be compounded quarterly and added to the principal
on the first day of each July, October, January and April. Thereafter, accrued
interest (not including interest accrued during the first two (2) years) shall
be paid to Payee quarterly, on the first day of each July, October, January and
April, but only to the extent that (i) all sums due and owing under that certain
Senior Promissory Note, dated the date hereof, issued by Maker in favor of James
River Paper Company, Inc. ("JR") in the original principal amount of Seven
Million Dollars ($7,000,000) (the "JR $7,000,000 Note") shall have been
satisfied in full; (ii) all sums due and owing under that certain Subordinated
Promissory Note, dated the date hereof, issued by Maker in favor of Payee in the
original principal amount of One Million Eight Hundred Thousand Dollars (the
"WinCup $1,800,000 Note") shall have been satisfied in full; (iii) all sums due
and owing under that certain Senior Subordinated Promissory Note, dated the date
hereof, issued by Maker in favor of JR, in the original principal amount of Four
Million Four Hundred Thousand Dollars ($4,400,000) (the "JR $4,400,000 Note")
shall have been satisfied in full; (iv) all sums due and owing under those
certain Subordinated Promissory Notes, dated the date hereof, executed by Maker
in favor of JR and Scott Paper Company ("Scott"), each in the original principal
amount of Three Hundred Thousand Dollars ($300,000) (the "JR $300,000 Note" and
the "Scott $300,000 Note" respectively) shall have been satisfied in full; (v)
all sums due and owing under that certain Subordinated Promissory Note, dated
the date hereof, issued by Maker in favor of Payee in the original principal
amount of One Million Dollars ($1,00,000) (the "WinCup $1,000,000 Note") shall
have been satisfied in full; (vi) all sums due and owing under that certain
Subordinated Promissory Note, dated the date hereof, issued by Maker in favor of
JR in the original principal amount of Five Million Seven Hundred Thousand
Dollars ($5,700,000) (the "JR $5,700,000 Note") shall
<PAGE>
have been satisfied in full; (vii) all sums due and owing under that certain
Subordinated Note in favor of Scott, dated the date hereof, issued by Maker in
favor of Scott in the original principal amount of Two Million Seven Hundred
Thousand Dollars ($2,700,000) (the "Scott $2,700,000 Note") shall have been
satisfied in full; and (viii) all sums due and owing to JR under that certain
Subordinated Promissory Note, dated the date hereof, executed by Maker in favor
of JR in the original principal amount of Three Hundred Thousand Dollars
($300,000) (the "JR $300,000 Note") shall have been satisfied in full. On the
day following the date on which all sums due and owing under the JR $7,000,000
Note, the WinCup $1,800,000 Note, the JR $4,400,000 Note, the Scott $300,000
Note, the JR $300,000 Note, the WinCup $1,000,000 Note, the JR $5,700,000 Note,
the Scott $2,700,000 Note and the JR $300,000 Note have been satisfied in full,
but in no event earlier than the fifth anniversary of the date hereof, the Maker
shall make a principal payment to the Payee in the amount of One Million One
Hundred Thousand Dollars ($1,100,000). Subject to the terms of the
Subordination Agreements (as hereinafter defined), this Note may be prepaid at
any time without penalty or prepayment charge.
2. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 11 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
3. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance with
the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between Payee and JR (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought; and
-2-
<PAGE>
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
4. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise);
(a) the Maker defaults in the payment when due of any principal or
interest or other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Maker, or if any
petition for any such relief shall be filed against the Maker, and such order or
petition shall not be dismissed within sixty (60) days; or
-3-
<PAGE>
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the transactions contemplated hereby shall prove to have
been false or incorrect or breached in any material respect on the date as of
which made;
then, subject to the terms of the Subordination Agreements,
automatically upon the occurrence of any Event of Default described in
subparagraph (b) and (c), or in the sole discretion of the Payee upon any other
Event of Default, (i) the unpaid principal amount of, and the unpaid interest
on, this Note shall become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by the Maker, and (ii) the Payee may exercise a right of set-
off against all property of the Maker in the Payee's possession at the time of
the occurrence of the Event of Default and thereafter.
5. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
6. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996,
AMONG THE MAKER, THE PAYEE, JR AND SCOTT (THE "PARTNERSHIP SUBORDINATION
AGREEMENT"; AND TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT, THE
"SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS
HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT
OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
7. No Waiver. Neither the failure of the Payee nor any delay on the
---------
part of the Payee in the exercise of any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
-4-
<PAGE>
8. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
9. Payment Due On Holidays. If the principal of or interest on this
-----------------------
Note or any fee due hereunder falls due on a Saturday, Sunday or legal holiday
at the place of payment, such payment shall be made on the next succeeding
business day and such extended time shall be included in computing interest.
10. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
11. Notices. Every notice and communication under this Note shall be
-------
in writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
With a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, Pennsylvania 19103
Attn: Vincent F. Garrity, Esquire
Telecopy Number: (215) 979-1020
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by
-5-
<PAGE>
mail shall be deemed to have been given and received three (3) calendar days
after the date first deposited in the United States Mail. Notice by hand
delivery shall be deemed to have been given and received upon delivery.
A party may change its address by giving written notice to the other
party as specified herein.
12. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
13. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successors and assigns, provided that Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
14. Waiver of Demand, Presentment, etc. The Maker waives the
-----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices of any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy,
Chairman
-6-
<PAGE>
EXHIBIT 10.52
SUBORDINATED PROMISSORY NOTE
$300,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of JAMES RIVER
PAPER COMPANY, INC. (the "Payee") the principal sum of THREE HUNDRED THOUSAND
DOLLARS ($300,000), without interest, according to the terms hereof.
1. Defined Terms. All terms capitalized herein but not defined shall
-------------
have the meanings ascribed to them in that certain Revolving Credit, Term Loan
and Security Agreement, dated as of the date hereof, among Maker, WinCup
Holdings, Inc. ("WinCup"), The Bank of New York Commercial Corporation (as
Agent)("Agent") and The Bank of New York Commercial Corporation and Nations Bank
(as Lenders)(the "Loan Agreement").
2. Payment of Principal. The principal sum due hereunder shall be
--------------------
due and payable from time to time as provided below upon satisfaction of each of
the following conditions or to the extent of satisfaction of such conditions:
(a) all sums due and owing under that certain Senior Promissory Note,
dated the date hereof, executed by the Maker in favor of Payee in the original
principal amount of Seven Million Dollars ($7,000,000) have been satisfied in
full;
(b) all sums due and owing under that certain Subordinated Promissory
Note, dated the date hereof, executed by the Maker in favor of WinCup in the
original principal amount of One Million Eight Hundred Thousand Dollars
($1,800,000) have been satisfied in full;
(c) all sums due and owing under that certain Senior Subordinated
Promissory Note, dated as of the date hereof, issued by Maker in favor of Payee
in the original principal amount of Four Million Four Hundred Thousand Dollars
($4,400,000) shall have been satisfied in full;
(d) Agent has received Maker's audited annual financial statements for
the fiscal year or portion thereof ending December 31, 1996, which financial
statements are required to be delivered to Agent pursuant to Section 9.7 of the
Loan Agreement;
(e) the Maker's Fixed Charge Coverage was at least 1.5 to 1.0 for the
previous fiscal quarter; and
(f) no Default or Event of Default has occurred and is continuing
under the Loan Agreement;
then,
<PAGE>
(i) fifty percent (50%) of the Excess Cash Flow shall be paid by
Maker to Agent pursuant to Section 2.14(a) of the Loan Agreement;
and
(ii) fifty percent (50%) of the Excess Cash Flow shall be paid as
principal hereunder to the Payee, provided that after giving
effect to such payment there is Undrawn Availability of at least
$3,000,000.
The principal sum or any portion thereof due hereunder shall be due and payable
as soon as and to the extent that the conditions set forth above have been met,
and the conditions, including the financial covenants under the Loan Agreement
set forth herein, shall be determined on at least a quarterly basis, so that the
principal sum or any portion thereof due hereunder shall be paid as soon as
possible; provided, however, all sums paid hereunder shall be paid equally and
ratably with any payments made to Scott Paper Company ("Scott") under that
certain Subordinated Promissory Note, dated the date hereof, executed by Maker
in favor of Scott in the original principal amount of Three Hundred Thousand
Dollars ($300,000). Subject to the terms of the Subordination Agreements (as
hereinafter defined), this Note may be prepaid at any time without penalty or
prepayment charge.
3. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 12 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
4. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance with
the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between Payee and WinCup (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought; and
-2-
<PAGE>
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
5. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise):
(a) the Maker defaults in the payment when due of any principal or
other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Maker, or if any
petition for any such relief shall be filed against the Maker, and such order or
petition shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the
-3-
<PAGE>
transactions contemplated hereby shall prove to have been false or incorrect or
breached in any material respect on the date as of which made;
then, subject to the terms of the Subordination Agreements, automatically
upon the occurrence of any Event of Default described in subparagraph (b) and
(c), or in the sole discretion of the Payee upon any other Event of Default, (i)
the unpaid principal amount of this Note shall become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Maker, and (ii) the Payee may
exercise a right of set-off against all property of the Maker in the Payee's
possession at the time of the occurrence of the Event of Default and thereafter.
6. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
7. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996,
AMONG THE MAKER, WINCUP, THE PAYEE AND SCOTT (THE "PARTNERSHIP SUBORDINATION
AGREEMENT"; AND TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT, THE
"SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS
HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT
OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
8. No Waiver. Neither the failure of the Payee nor any delay on the part
---------
of the Payee in the exercise of any right, power or privilege under this Note
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
-4-
<PAGE>
9. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
10. Payment Due On Holidays. If the principal on this Note or any fee due
-----------------------
hereunder falls due on a Saturday, Sunday or legal holiday at the place of
payment, such payment shall be made on the next succeeding business day.
11. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
12. Notices. Every notice and communication under this Note shall be in
-------
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
James River Paper Company, Inc.
P.O. Box 2218
Tredegar Street
Richmond, Virginia 23217
Attn: General Counsel
Telecopy Number: (804) 629-4281
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attn: Michael J. Schewel, Esquire
Telecopy Number: (804) 775-1061
-5-
<PAGE>
Notice given by telecopy or other means of electronic transmission shall
be deemed to have been given and received when sent. Notice by overnight courier
shall be deemed to have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been given and received three
(3) calendar days after the date first deposited in the United States Mail.
Notice by hand delivery shall be deemed to have been given and received upon
delivery.
A party may change its address by giving written notice to the other party
as specified herein.
13. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
14. Successors and Assigns. This Note shall be binding upon the Maker and
----------------------
its successors and assigns, and shall inure to the benefit of the Payee and its
successors and assigns, provided that Maker may not assign any of its rights or
obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
15. Waiver of Demand, Presentment, etc. The Maker waives the requirements
-----------------------------------
of demand, presentment, protest, notice of protest and dishonor and all other
demands or notices of any kind in connection with the delivery, acceptance,
performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy,
Chairman
-6-
<PAGE>
EXHIBIT 10.53
SUBORDINATED PROMISSORY NOTE
$2,700,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of SCOTT PAPER
COMPANY, a Pennsylvania corporation (the "Payee") the principal sum of TWO
MILLION SEVEN HUNDRED THOUSAND DOLLARS ($2,700,000) and interest thereon
according to the terms hereof.
1. Payment of Principal and Interest. Interest shall accrue on the
---------------------------------
outstanding principal hereunder at an annual rate of ten percent (10%) for the
first two (2) years and twelve percent (12%) thereafter. For the first two (2)
years, accrued interest shall be compounded quarterly and added to the principal
on the first day of each July, October, January and April. Thereafter, but only
to the extent (i) all sums due and owing under that certain Senior Promissory
Note, dated the date hereof, issued by Maker in favor of James River Paper
Company, Inc. ("JR") in the original principal amount of Seven Million Dollars
($7,000,000) (the "JR $7,000,000 Note") shall have been satisfied in full; (ii)
all sums due and owing under that certain Subordinated Promissory Note, dated
the date hereof, issued by Maker in favor of WinCup Holdings, Inc. ("WinCup"),
in the original principal amount of One Million Eight Hundred Thousand Dollars
($1,800,000) (the "WinCup $1,800,000 Note") shall have been satisfied in full;
(iii) all sums due and owing under that certain Subordinated Note, dated the
date hereof, issued by Maker in favor of JR, in the original principal amount of
Four Million Four Hundred Thousand Dollars ($4,400,000) (the "JR $4,400,000
Note") shall have been satisfied in full; (iv) all sums due and owing under
those certain Subordinated Promissory Notes, dated the date hereof, executed by
Maker in favor of Payee and JR, each in the original principal amount of Three
Hundred Thousand Dollars ($300,000) (the "Scott $300,000 Note" and the "JR
$300,000 Note", respectively) shall have been satisfied in full; and (v) all
sums due and owing under that certain Subordinated Promissory Note, dated the
date hereof, issued by Maker in favor of WinCup, in the original principal
amount of One Million Dollars ($1,000,000) (the "WinCup $1,000,000 Note") shall
have been satisfied in full, accrued interest (not including interest accrued
during the first two (2) years) shall be paid to Payee quarterly, on the first
day of each July, October, January and April; provided, however, to the extent
there are insufficient funds available to pay in full the interest payment due
hereunder and the interest payment due under that certain Subordinated Note,
dated the date hereof, executed by Maker in favor of JR, in
<PAGE>
the original principal amount of Five Million Seven Hundred Thousand Dollars
($5,700,000) (the "JR $5,700,000 Note"), the interest payment made hereunder
shall be ratably reduced to an amount equal to (1) the ratio of (a) the
scheduled interest payment due hereunder relative to (b) the aggregate of the
scheduled interest payment due hereunder plus the scheduled interest payment due
under the JR $5,700,000 Note, multiplied by (2) the funds available to make such
interest payment. Commencing on the first day of the month after all sums due
and owing under the JR $7,000,000 Note, the WinCup $1,800,000 Note, the JR
$4,400,000 Note, the Scott $300,000 Note, the JR $300,000 Note, and the WinCup
$1,000,000 Note shall have been satisfied in full, but in no event earlier than
the third anniversary of the date hereof, and on the first day of each third
month thereafter, the Maker shall make principal payments to the Payee in the
amount of One Hundred Sixty-Eight Thousand Seven Hundred Fifty Dollars
($168,750) each, with a final payment on the fifth anniversary hereof in an
amount equal to the remaining unpaid principal balance and all accrued interest
thereon; provided, however, to the extent there are insufficient funds available
to pay in full any scheduled principal payment due hereunder (other than the
final payment) and the principal payment due on the same date under the JR
$5,700,000 Note, such scheduled principal payment due hereunder shall be ratably
reduced to an amount equal to (1) the ratio of (a) the scheduled principal
payment due hereunder relative to (b) the aggregate of the scheduled principal
payment due hereunder and the scheduled principal payment due under the JR
$5,700,000 Note, multiplied by (2) the funds available to make such principal
payment. Subject to the terms of the Subordination Agreements (as hereinafter
defined), this Note may be prepaid at any time without penalty or prepayment
charge.
2. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee by wire transfer in accordance
with instruction given at least two business days prior to any scheduled payment
date in accordance with the notice provision set forth in paragraph 11 hereof,
or at such other address of which the Payee shall give written notice to the
Maker.
3. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance
with the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date
-2-
<PAGE>
hereof between WinCup and JR (the "Partnership Agreement"), or otherwise to
authorize the approval, execution and consummation of the transactions
contemplated by this Note. This Note is a valid and binding obligation of
Maker, enforceable against Maker in accordance with its terms, except (i) as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights and (ii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefore may be brought;
and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
4. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise);
(a) the Maker defaults in the payment when due of any principal or
interest or other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall
-3-
<PAGE>
be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Maker, or if any petition for any such relief shall be filed against the Maker,
and such order or petition shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the transactions contemplated hereby shall prove to have
been false or incorrect or breached in any material respect on the date as of
which made;
then, subject to the terms of the Subordination Agreements, automatically
upon the occurrence of any Event of Default described in subparagraph (b) and
(c), or in the sole discretion of the Payee upon any other Event of Default, (i)
the unpaid principal amount of, and the unpaid interest on, this Note shall
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Maker, and (ii) the Payee may exercise a right of set-off against all property
of the Maker in the Payee's possession at the time of the occurrence of the
Event of Default and thereafter.
5. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
6. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996, AMONG THE MAKER,
WINCUP, JR AND PAYEE (THE "PARTNERSHIP SUBORDINATION AGREEMENT"; AND TOGETHER
WITH THE LENDER SUBORDINATION AGREEMENT, THE "SUBORDINATION AGREEMENTS"), UNDER
WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
-4-
<PAGE>
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OTHER OBLIGATIONS OF THE MAKER.
7. No Waiver. Neither the failure of the Payee nor any delay on the part
---------
of the Payee in the exercise of any right, power or privilege under this Note
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
8. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
9. Payment Due On Holidays. If the principal of or interest on this
-----------------------
Note or any fee due hereunder falls due on a Saturday, Sunday or legal holiday
at the place of payment, such payment shall be made on the next succeeding
business day and such extended time shall be included in computing interest.
10. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
11. Notices. Every notice and communication under this Note shall be in
-------
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
Scott Paper Company
c/o Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: Treasurer
-5-
<PAGE>
With a copy to:
Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: David Dolan, Esq.
and
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York l0lll
Attention: Karen C. Wiedemann, Esquire
Notice given by telecopy or other means of electronic transmission shall
be deemed to have been given and received when sent. Notice by overnight courier
shall be deemed to have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been given and received three
(3) calendar days after the date first deposited in the United States Mail.
Notice by hand delivery shall be deemed to have been given and received upon
delivery.
A party may change its address by giving written notice to the other
party as specified herein.
12. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
13. Successors and Assigns. This Note shall be binding upon the Maker and
----------------------
its successors and assigns, and shall inure to the benefit of the Payee and its
successors and assigns, provided that Maker may not assign any of its rights or
obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
14. Waiver of Demand, Presentment, etc. The Maker waives the requirements
----------------------------------
of demand, presentment, protest, notice of protest and dishonor and all other
demands or notices of any kind in connection with the delivery, acceptance,
performance, default, dishonor or enforcement of this Note.
-6-
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy,
Chairman
-7-
<PAGE>
EXHIBIT 10.54
SUBORDINATED PROMISSORY NOTE
$5,700,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited partnership
(the "Maker") hereby promises to pay to the order of JAMES RIVER PAPER COMPANY,
INC., a Virginia corporation (the "Payee") the principal sum of FIVE MILLION
SEVEN HUNDRED THOUSAND DOLLARS ($5,700,000) and interest thereon according to
the terms hereof.
1. Payment of Principal and Interest. Interest shall accrue on the
---------------------------------
outstanding principal hereunder at an annual rate of ten percent (10%) for the
first two (2) years and twelve percent (12%) thereafter. For the first two (2)
years, accrued interest shall be compounded quarterly and added to the principal
on the first day of each July, October, January and April. Thereafter, but only
to the extent that (i) all sums due and owing under that certain Senior
Promissory Note, dated the date hereof, issued by Maker in favor of Payee, in
the original principal amount of Seven Million Dollars ($7,000,000) (the "JR
$7,000,000 Note") shall have been satisfied in full; (ii) all sums due and owing
under that certain Subordinated Promissory Note, dated the date hereof, issued
by Maker in favor of WinCup Holdings, Inc. ("WinCup"), in the original principal
amount of One Million Eight Hundred Thousand Dollars ($1,800,000) (the "WinCup
$1,800,000 Note") shall have been satisfied in full; (iii) all sums due and
owing under that certain Senior Subordinated Promissory Note, dated the date
hereof, issued by Maker in favor of Payee in the original principal amount of
Four Million Four Hundred Thousand Dollars ($4,400,000) (the "JR $4,400,000
Note") shall have been satisfied in full; (iv) all sums due and owing under
those certain Subordinated Promissory Notes, dated the date hereof, executed by
Maker in favor of Scott Paper Company ("Scott") and Payee, each in the original
principal amount of Three Hundred Thousand Dollars ($300,000) (the "Scott
$300,000 Note" and the "JR $300,000 Note", respectively) shall have been
satisfied in full; and (v) all sums due and owing under that certain
Subordinated Promissory Note, dated the date hereof, issued by Maker in favor of
WinCup, in the original principal amount of One Million Dollars ($1,000,000)
(the "Wincup $1,000,000 Note") shall have been satisfied in full, accrued
interest payments (not including interest accrued during the first two (2)
years) shall be paid to Payee quarterly, on the first day of each July, October,
January and April; provided, however, to the extent there are insufficient funds
available to pay in full the interest payment due hereunder and the interest
payment due under that certain Subordinated Note, dated the date hereof,
executed
<PAGE>
by Maker in favor of Scott, in the original principal amount of Two Million
Seven Hundred Thousand Dollars ($2,700,000) (the "Scott $2,700,000 Note"), the
interest payment made hereunder shall be ratably reduced to an amount equal to
(1) the ratio of (a) the scheduled interest payment due hereunder relative to
(b) the aggregate of the scheduled interest payment due hereunder plus the
scheduled interest payment due under the $2,700,000 Note, multiplied by (2) the
funds available to make such interest payment. Commencing on the first day of
the month after all sums due and owing under the JR $7,000,000 Note, the WinCup
$1,800,000 Note, the JR $4,400,000 Note, the Scott $300,000 Note, the JR
$300,000 Note and the WinCup $1,000,000 Note have been satisfied in full, but in
no event earlier than the third anniversary of the date hereof, and on the first
day of each third month thereafter, the Maker shall make principal payments to
the Payee in the amount of Four Hundred Fifteen Thousand Six Hundred Twenty-Five
Dollars ($415,625) each, with a final payment on the fifth anniversary hereof in
an amount equal to the remaining unpaid principal balance and all accrued
interest thereon; provided, however, to the extent there are insufficient funds
available to pay in full any scheduled principal payment due hereunder (other
than the final payment) and the principal payment due on the same date under the
Scott $2,700,000 Note, such scheduled principal payment due hereunder shall be
ratably reduced to an amount equal to (1) the ratio of (a) the scheduled
principal payment due hereunder relative to (b) the aggregate of the scheduled
principal payment due hereunder plus the scheduled principal payment due under
the Scott $2,700,000 Note, multiplied by (2) the funds available to make such
principal payment. Subject to the terms of the Subordination Agreements (as
hereinafter defined), this Note may be prepaid at any time without penalty or
prepayment charge.
2. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 11 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
3. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance with
the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between Payee and WinCup (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation
- 2 -
<PAGE>
of the transactions contemplated by this Note. This Note is a valid and binding
obligation of Maker, enforceable against Maker in accordance with its terms,
except (i) as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought; and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
4. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise);
(a) the Maker defaults in the payment when due of any principal or
interest or other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy
- 3 -
<PAGE>
or insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the Maker, or if any petition for any such relief shall be
filed against the Maker, and such order or petition shall not be dismissed
within sixty (60) days; or
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the transactions contemplated hereby shall prove to have
been false or incorrect or breached in any material respect on the date as of
which made;
then, subject to the terms of the Subordination Agreements, automatically
upon the occurrence of any Event of Default described in subparagraph (b) and
(c), or in the sole discretion of the Payee upon any other Event of Default,
(i) the unpaid principal amount of, and the unpaid interest on, this Note shall
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Maker, and (ii) the Payee may exercise a right of set-off against all property
of the Maker in the Payee's possession at the time of the occurrence of the
Event of Default and thereafter.
5. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
6. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996,
AMONG THE MAKER, THE PAYEE, WINCUP HOLDINGS, INC. AND SCOTT PAPER COMPANY (THE
"PARTNERSHIP SUBORDINATION AGREEMENT"; AND TOGETHER WITH THE LENDER
SUBORDINATION AGREEMENT, THE "SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE
AND THE MAKER'S OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH
THEREIN TO THE PRIOR PAYMENT OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
- 4 -
<PAGE>
7. No Waiver. Neither the failure of the Payee nor any delay on the part
---------
of the Payee in the exercise of any right, power or privilege under this Note
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
8. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
9. Payment Due On Holidays. If the principal of or interest on this Note
-----------------------
or any fee due hereunder falls due on a Saturday, Sunday or legal holiday at the
place of payment, such payment shall be made on the next succeeding business day
and such extended time shall be included in computing interest.
10. Applicable Law. The construction, interpretation and enforcement of
--------------
this Note shall be governed by the laws of the State of Delaware.
11. Notices. Every notice and communication under this Note shall be in
-------
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
James River Paper Company, Inc.
P.O. Box 2218
Tredegar Street
Richmond, Virginia 23217
Attn: General Counsel
Telecopy Number: (804) 629-4281
- 5 -
<PAGE>
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attn: Michael J. Schewel, Esquire
Telecopy Number: (804) 775-1061
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery.
A party may change its address by giving written notice to the other
party as specified herein.
12. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
13. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successors and assigns, provided that Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
14. Waiver of Demand, Presentment, etc. The Maker waives the
-----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices of any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
- 6 -
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
------------------------
Michael T. Kennedy,
Chairman
- 7 -
<PAGE>
EXHIBIT 10.55
SUBORDINATED PROMISSORY NOTE
$300,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of SCOTT PAPER
COMPANY (the "Payee") the principal sum of THREE HUNDRED THOUSAND DOLLARS
($300,000), without interest, according to the terms hereof.
1. Defined Terms. All terms capitalized herein but not defined shall
-------------
have the meanings ascribed to them in that certain Revolving Credit, Term Loan
and Security Agreement, dated as of the date hereof, among Maker, WinCup
Holdings, Inc. ("WinCup"), The Bank of New York Commercial Corporation (as
Agent)("Agent") and The Bank of New York Commercial Corporation and Nations Bank
(as Lenders)(the "Loan Agreement").
2. Payment of Principal. The principal sum due hereunder shall be
--------------------
due and payable from time to time as provided below upon satisfaction of each of
the following conditions or to the extent of satisfaction of such conditions:
(a) all sums due and owing under that certain Senior Promissory Note,
dated the date hereof, executed by the Maker in favor of James
River Paper Company, Inc. ("James River") in the original
principal amount of Seven Million Dollars ($7,000,000) have been
satisfied in full;
(b) all sums due and owing under that certain Subordinated Promissory
Note, dated the date hereof, executed by the Maker in favor of
WinCup in the original principal amount of One Million Eight
Hundred Thousand Dollars ($1,800,000) have been satisfied in full;
(c) all sums due and owing under that certain Senior Subordinated
Promissory Note, dated as of the date hereof, issued by Maker in
favor of James River in the original principal amount of Four
Million Four Hundred Thousand Dollars ($4,400,000) have been
satisfied in full;
(d) Agent has received Maker's audited annual financial statements for
the fiscal year or portion thereof ending December 31, 1996, which
financial statements are required to be delivered to Agent
pursuant to Section 9.7 of the Loan Agreement;
(e) the Maker's Fixed Charge Coverage was at least 1.5 to 1.0 for the
previous fiscal quarter; and
(f) no Default or Event of Default has occurred and is continuing
under the Loan Agreement;
<PAGE>
then,
(i) fifty percent (50%) of the Excess Cash Flow shall be paid by Maker
to Agent pursuant to Section 2.14(a) of the Loan Agreement; and
(ii) fifty percent (50%) of the Excess Cash Flow shall be paid as
principal hereunder to the Payee, provided that after giving
effect to such payment there is Undrawn Availability of at least
$3,000,000.
The principal sum or any portion thereof due hereunder shall be due and payable
as soon as and to the extent that the conditions set forth above have been met,
and the conditions, including the financial covenants under the Loan Agreement
set forth herein, shall be determined on at least a quarterly basis, so that the
principal sum or any portion thereof due hereunder shall be paid as soon as
possible; provided, however, all sums paid hereunder shall be paid equally and
ratably with any payments made to James River under that certain Subordinated
Promissory Note, dated the date hereof, executed by Maker in favor of James
River in the original principal amount of Three Hundred Thousand Dollars
($300,000). Subject to the terms of the Subordination Agreements (as
hereinafter defined), this Note may be prepaid at any time without penalty or
prepayment charge.
3. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee by wire transfer in accordance
with instructions given at least two business days prior to any scheduled
payment dated in accordance with the notice provisions set forth in paragraph 12
hereof, or at such other address of which the Payee shall give written notice to
the Maker.
4. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance with
the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between WinCup and James River
(the "Partnership Agreement"), or otherwise to authorize the approval, execution
and consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of
- 2 -
<PAGE>
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought; and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
5. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise):
(a) the Maker defaults in the payment when due of any principal
or other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise
to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, (ii) make an
assignment for the benefit of its creditors, (iii) consent to the appointment of
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (iv) be
adjudicated insolvent or be liquidated, or (v) take appropriate action for the
purpose of any of the foregoing;
(c) a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Maker, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Maker, or if any petition for any such relief shall be filed against the Maker,
and such order or petition shall not be dismissed within sixty (60) days; or
- 3 -
<PAGE>
(d) any material representation or warranty heretofore or
hereafter made by or on behalf of the Maker herein or in any certificate or
other writing delivered under or pursuant to this Note or in connection with any
provision hereof or related to the transactions contemplated hereby shall prove
to have been false or incorrect or breached in any material respect on the date
as of which made;
then, subject to the terms of the Subordination Agreements,
automatically upon the occurrence of any Event of Default described in
subparagraph (b) and (c), or in the sole discretion of the Payee upon any other
Event of Default, (i) the unpaid principal amount of this Note shall become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the Maker,
and (ii) the Payee may exercise a right of set-off against all property of the
Maker in the Payee's possession at the time of the occurrence of the Event of
Default and thereafter.
6. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
7. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996, AMONG THE MAKER, THE
PAYEE, JAMES RIVER AND WINCUP (THE "PARTNERSHIP SUBORDINATION AGREEMENT"; AND
TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT, THE "SUBORDINATION
AGREEMENTS"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OTHER OBLIGATIONS OF THE MAKER.
8. No Waiver. Neither the failure of the Payee nor any delay on the
---------
part of the Payee in the exercise of any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
- 4 -
<PAGE>
9. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
10. Payment Due On Holidays. If the principal on this Note or any
-----------------------
fee due hereunder falls due on a Saturday, Sunday or legal holiday at the place
of payment, such payment shall be made on the next succeeding business day.
11. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
12. Notices. Every notice and communication under this Note shall be
-------
in writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
Scott Paper Company
c/o Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: Treasurer
With a copy to:
Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: David Dolan, Esq.
and
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
- 5 -
<PAGE>
Attention: Karen C. Wiedemann, Esquire
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery.
A party may change its address by giving written notice to the other
party as specified herein.
13. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
14. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successors and assigns, provided that Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
15. Waiver of Demand, Presentment, etc. The Maker waives the
----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices of any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy,
Chairman
- 6 -
<PAGE>
EXHIBIT 10.56
SENIOR SUBORDINATED PROMISSORY NOTE
$4,400,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited partnership
(the "Maker") hereby promises to pay to the order of JAMES RIVER PAPER COMPANY,
INC. (the "Payee") the principal sum of FOUR MILLION FOUR HUNDRED THOUSAND
DOLLARS ($4,400,000), without interest, according to the terms hereof.
1. Defined Terms. All terms capitalized herein but not defined shall have the
-------------
meanings ascribed to them in that certain Revolving Credit, Term Loan and
Security Agreement, dated as of the date hereof, among Maker, WinCup Holdings,
Inc. ("WinCup"), The Bank of New York Commercial Corporation (as Agent)("Agent")
and The Bank of New York Commercial Corporation and Nations Bank (as Lenders)
(the "Loan Agreement").
2. Payment of Principal. The principal sum due hereunder shall be
--------------------
due and payable from time to time as provided below upon satisfaction of each of
the following conditions or to the extent of satisfaction of such conditions:
(a) all sums due and owing under that certain Senior Promissory Note, dated
the date hereof, executed by the Maker in favor of the Payee in the
original principal amount of Seven Million Dollars ($7,000,000) have
been satisfied in full;
(b) all sums due and owing under that certain Subordinated Promissory Note,
dated the date hereof, executed by the Maker in favor of WinCup in the
original principal amount of One Million Eight Hundred Thousand Dollars
($1,800,000) have been satisfied in full.
(c) Agent has received Maker's audited annual financial statements for the
fiscal year or portion thereof ending December 31, 1996, which
financial statements are required to be delivered to Agent pursuant to
Section 9.7 of the Loan Agreement;
(d) the Maker's Fixed Charge Coverage was at least 1.5 to 1.0 for the
previous fiscal quarter; and
(e) no Default or Event of Default has occurred and is continuing under the
Loan Agreement;
then,
(i) fifty percent (50%) of the Excess Cash Flow shall be paid by Maker
to Agent pursuant to Section 2.14(a) of the Loan Agreement; and
(ii) fifty percent (50%) of the Excess Cash Flow shall be paid as
principal hereunder to the Payee,
<PAGE>
provided that after giving effect to such payment there is Undrawn
Availability of at least $3,000,000.
The principal sum or any portion thereof due hereunder shall be due and payable
as soon as and to the extent that the conditions set forth above have been met,
and the conditions, including the financial covenants under the Loan Agreement
set forth herein, shall be determined on at least a quarterly basis, so that the
principal sum or any portion thereof due hereunder shall be paid as soon as
possible. Subject to the terms of the Subordination Agreements (as hereinafter
defined), this Note may be prepaid at any time without penalty or prepayment
charge.
3. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 12 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
4. Representations and Warranties of Maker. The Maker represents
---------------------------------------
and warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance
with the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between WinCup and Payee (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought; and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
- 2 -
<PAGE>
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
5. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise):
(a) the Maker defaults in the payment when due of any principal or
other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Maker, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Maker, or if any petition for any such relief shall be filed against the Maker,
and such order or petition shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or
hereafter made by or on behalf of the Maker herein or in any certificate or
other writing delivered under or pursuant to this Note or in connection with any
provision hereof or related to the transactions contemplated hereby shall prove
to have been false or incorrect or breached in any material respect on the date
as of which made;
then, subject to the terms of the Subordination Agreements,
automatically upon the occurrence of any Event of Default described in
subparagraph (b) and (c), or in the sole discretion of the Payee upon any other
Event of Default, (i) the unpaid principal amount of this Note shall become
immediately due and payable, without presentment, demand, protest or other
- 3 -
<PAGE>
requirements of any kind, all of which are hereby expressly waived by the Maker,
and (ii) the Payee may exercise a right of set-off against all property of the
Maker in the Payee's possession at the time of the occurrence of the Event of
Default and thereafter.
6. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
7. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE
BANK OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996,
AMONG THE MAKER, THE PAYEE, WINCUP AND SCOTT PAPER COMPANY (THE "PARTNERSHIP
SUBORDINATION AGREEMENT"; AND TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT,
THE "SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE AND THE MAKER'S
OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE
PRIOR PAYMENT OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
8. No Waiver. Neither the failure of the Payee nor any delay on the
---------
part of the Payee in the exercise of any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
9. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
10. Payment Due On Holidays. If the principal on this Note or any
-----------------------
fee due hereunder falls due on a Saturday, Sunday or legal holiday at the place
of payment, such payment shall be made on the next succeeding business day.
- 4 -
<PAGE>
11. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
12. Notices. Every notice and communication under this Note shall be
-------
in writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
James River Paper Company, Inc.
P.O. Box 2218
Tredegar Street
Richmond, Virginia 23217
Attn: General Counsel
Telecopy Number: (804) 629-4281
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attn: Michael J. Schewel, Esquire
Telecopy Number: (804) 775-1061
Notice given by telecopy or other means of electronic
transmission shall be deemed to have been given and received when sent. Notice
by overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery.
A party may change its address by giving written notice to the
other party as specified herein.
- 5 -
<PAGE>
13. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
14. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successors and assigns, provided that Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
15. Waiver of Demand, Presentment, etc. The Maker waives the
-----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices of any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy,
Chairman
- 6 -
<PAGE>
EXHIBIT 10.57
SUBORDINATED PROMISSORY NOTE
$1,800,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of WINCUP
HOLDINGS, INC. (the "Payee") the principal sum of ONE MILLION EIGHT HUNDRED
THOUSAND DOLLARS ($1,800,000), without interest, according to the terms hereof.
1. Defined Terms. All terms capitalized herein but not defined shall
-------------
have the meanings ascribed to them in that certain Revolving Credit, Term Loan
and Security Agreement, dated as of the date hereof, among Maker, Payee, The
Bank of New York Commercial Corporation (as Agent)("Agent") and The Bank of New
York Commercial Corporation and Nations Bank (as Lenders)(the "Loan Agreement").
2. Payment of Principal. The principal sum due hereunder shall be
--------------------
due and payable on demand from and after sixty (60) days from the date hereof,
but only if and to the extent (i) all sums due and owing under that certain
Senior Promissory Note, dated the date hereof, executed by the Maker in favor of
James River Paper Company, Inc. ("James River") in the original principal amount
of Seven Million Dollars ($7,000,000) are satisfied in full; and (ii) there
exists Undrawn Availability in excess of Three Million Dollars ($3,000,000)
after giving effect to such payment. Subject to the terms of the Subordination
Agreements (as hereinafter defined), this Note may be prepaid at any time
without penalty or prepayment charge.
3. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 12 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
4. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance
with the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date
<PAGE>
hereof between Payee and James River (the "Partnership Agreement"), or otherwise
to authorize the approval, execution and consummation of the transactions
contemplated by this Note. This Note is a valid and binding obligation of Maker,
enforceable against Maker in accordance with its terms, except (i) as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights and (ii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefore may be brought;
and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
5. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise):
(a) the Maker defaults in the payment when due of any principal or
other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Maker, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any
- 2 -
<PAGE>
substantial part of its property, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Maker, or if any petition for
any such relief shall be filed against the Maker, and such order or petition
shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or
hereafter made by or on behalf of the Maker herein or in any certificate or
other writing delivered under or pursuant to this Note or in connection with any
provision hereof or related to the transactions contemplated hereby shall prove
to have been false or incorrect or breached in any material respect on the date
as of which made;
then, subject to the terms of the Subordination Agreements,
automatically upon the occurrence of any Event of Default described in
subparagraph (b) and (c), or in the sole discretion of the Payee upon any other
Event of Default, (i) the unpaid principal amount of this Note shall become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the Maker,
and (ii) the Payee may exercise a right of set-off against all property of the
Maker in the Payee's possession at the time of the occurrence of the Event of
Default and thereafter.
6. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
7. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANAURY 20, 1996, AMONG
THE MAKER, THE PAYEE, JAMES RIVER AND SCOTT PAPER COMPANY (THE "PARTNERSHIP
SUBORDINATION AGREEMENT"; AND TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT,
THE "SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE AND THE
- 3 -
<PAGE>
MAKER'S OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN
TO THE PRIOR PAYMENT OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
8. No Waiver. Neither the failure of the Payee nor any delay on the
---------
part of the Payee in the exercise of any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
9. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
10. Payment Due On Holidays. If the principal on this Note or any
-----------------------
fee due hereunder falls due on a Saturday, Sunday or legal holiday at the place
of payment, such payment shall be made on the next succeeding business day.
11. Applicable Law. The construction, interpretation and enforcement
--------------
of this Note shall be governed by the laws of the State of Delaware.
12. Notices. Every notice and communication under this Note shall be
-------
in writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
- 4 -
<PAGE>
With a copy to:
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, Pennsylvania 19103
Attn: Vincent F. Garrity, Esquire
Telecopy Number: (215) 979-1020
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when sent. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery.
A party may change its address by giving written notice to the other
party as specified herein.
- 5 -
<PAGE>
13. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
14. Successors and Assigns. This Note shall be binding upon the Maker
----------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successors and assigns, provided that Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
15. Waiver of Demand, Presentment, etc. The Maker waives the
----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices of any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy,
Chairman
- 6 -
<PAGE>
EXHIBIT 10.58
SENIOR PROMISSORY NOTE
$7,000,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of JAMES RIVER
PAPER COMPANY, INC., a Virginia corporation (the "Payee") the principal sum of
SEVEN MILLION DOLLARS ($7,000,000) and interest thereon according to the terms
hereof.
1. Defined Terms. All terms capitalized herein but not defined shall
-------------
have the meanings ascribed to them in that certain Revolving Credit, Term Loan
and Security Agreement, dated as of the date hereof, among Maker, Wincup
Holdings, Inc. ("Wincup"), The Bank of New York Commercial Corporation (as
Agent)("Agent") and The Bank of New York Commercial Corporation and Nations Bank
(as Lenders)(the "Loan Agreement").
2. Payment of Principal and Interest. Interest shall accrue on the
---------------------------------
outstanding principal hereunder at an annual rate of ten percent (10%). Accrued
interest shall be compounded monthly and added to the principal on the first day
of each month. The principal sum and all interest accrued hereon shall be due
and payable on demand after sixty (60) days from the date hereof; provided that
no payment may be made to Payee hereunder unless after giving effect to any such
payment (i) Undrawn Availability shall be in an amount not less than the sum of
(x) the outstanding balance of Wincup's accounts payable as of such payment
date, and (y) One Million Dollars ($1,000,000), and (ii) no Default or Event of
Default shall have occurred and be continuing under the Loan Agreement. Subject
to the terms of the Subordination Agreement (as hereinafter defined), this Note
may be prepaid at ant time without penalty or prepayment charge. Subject to the
terms of the Agreements (as hereinafter defined), this Note may be prepaid at
any time without penalty or prepayment charge.
3. Place of Payment. All amounts payable to the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 12 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
4. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance
with the laws of the state of Delaware with all
<PAGE>
necessary powers to own its properties and operate its business as now owned and
operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between Wincup and Payee (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought; and
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
5. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise);
(a) the Maker fails to pay any principal, interest or other payment
payable under this Note within forty-five (45) days of the date due;
(b) the Maker shall (i) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent
-2-
<PAGE>
or be liquidated, or (v) take appropriate action for the purpose of any of the
foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Maker, or if any
petition for any such relief shall be filed against the Maker, and such order or
petition shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the transactions contemplated hereby shall prove to have
been false or incorrect or breached in any material respect on the date as of
which made;
then, subject to the terms of the Agreements, automatically upon the
occurrence of any Event of Default described in subparagraph (b) and (c), or in
the sole discretion of the Payee upon any other Event of Default, (i) the unpaid
principal amount of, and the unpaid interest on, this Note shall become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which is hereby expressly waived by the Maker,
and (ii) the Payee may exercise a right of set-off against all property of the
Maker in the Payee's possession at the time of the occurrence of the Event of
Default and thereafter.
6. Additional Remedies. Subject to the terms of the Agreements, if any
-------------------
Event of Default shall have occurred and be continuing, the Payee may proceed to
protect and enforce its rights under this Note by exercising such remedies as
are available to the Payee in respect thereof under that certain Pledge
Agreement, dated as of the date hereof, between WinCup Holdings, Inc. and Payee
and under applicable law, either by suit in equity or by action at law, or both,
whether for specific performance of any agreement contained in this Note or in
aid of the exercise of any power granted in this Note. No remedy is intended to
be exclusive and each such remedy shall be cumulative.
7. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION,
- 3 -
<PAGE>
AS AGENT (THE "LENDER SUBORDINATION AGREEMENT"), UNDER WHICH THIS NOTE AND THE
MAKER'S OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN
TO THE PRIOR PAYMENT OF CERTAIN OBLIGATIONS TO THE HOLDERS OF SENIOR
INDEBTEDNESS AS DEFINED THEREIN; AND (B) THE INTERCREDITOR AND SUBORDINATION
AGREEMENT, DATED AS OF JANUARY 20, 1996, AMONG THE MAKER, THE PAYEE, WINCUP AND
SCOTT PAPER COMPANY (THE "PARTNERSHIP SUBORDINATION AGREEMENT"; AND TOGETHER
WITH THE LENDER SUBORDINATION AGREEMENT, THE "SUBORDINATION AGREEMENTS"), UNDER
WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE
MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN OTHER OBLIGATIONS OF
THE MAKER.
8. No Waiver. Neither the failure of the Payee nor any delay on the part
---------
of the Payee in the exercise of any right, power of privilege under this Note
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
9. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
10. Payment Due On Holidays. If the principal of or interest on this Note
-----------------------
or any fee due hereunder falls due on a Saturday, Sunday or legal holiday at the
place of payment, such payment shall be made on the next succeeding business day
and such extended time shall be included in computing interest.
11. Applicable Law. The construction, interpretation and enforcement of
--------------
this Note shall be governed by the laws of the State of Delaware.
12. Notices. Every notice and communication under this Note shall be in
-------
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
- 4 -
<PAGE>
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
James River Paper Company, Inc.
P.O. Box 2218
Tredegar Street
Richmond, Virginia 23217
Attn: General Counsel
Telecopy Number: (804) 629-4281
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attn: Michael J. Schewel, Esquire
Telecopy Number: (804) 775-1061
Notice given by telecopy or other means of electronic transmission
shall be deemed to have been given and received when send. Notice by overnight
courier shall be deemed to have been given and received on the date scheduled
for delivery. Notice by mail shall be deemed to have been given and received
three (3) calendar days after the date first deposited in the United States
Mail. Notice by hand delivery shall be deemed to have been given and received
upon delivery.
A party may change its address by giving written notice to the other
party as specified herein.
13. Severability. If any provision in this NOte shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
14. Successor and Assigns. This Note shall be binding upon the Maker
---------------------
and its successors and assigns, and shall inure to the benefit of the Payee and
its successor and assigns, provided the Maker may not assign any of its rights
or obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest
-5-
<PAGE>
herein without restriction, and upon written notice being given to Maker of such
assignment, the assignee shall be deemed to be the Payee for all purposes
hereunder.
15. Waiver of Demand, Presentment, etc. The Maker waives the
-----------------------------------
requirements of demand, presentment, protest, notice of protest and dishonor and
all other demands or notices or any kind in connection with the delivery,
acceptance, performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy,
Chairman
-6-
<PAGE>
EXHIBIT 10.59
SUBORDINATED PROMISSORY NOTE
$300,000 As of January 20, 1996
FOR VALUE RECEIVED, WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Maker") hereby promises to pay to the order of JAMES RIVER
PAPER COMPANY, INC., a Virginia corporation (the "Payee") the principal sum of
THREE HUNDRED THOUSAND ($300,000) and interest thereon according to the terms
hereof.
1. Payment of Principal and Interest. Interest shall accrue on the
---------------------------------
outstanding principal hereunder at an annual rate of ten percent (10%) for the
first two (2) years and twelve percent (12%) thereafter. For the first two (2)
years, accrued interest shall be compounded quarterly and added to the principal
on the first day of each July, October, January and April. Thereafter, but only
to the extent that (i) all sums due and owing under that certain Senior
Promissory Note, dated the date hereof, issued by Maker in favor of Payee, in
the original principal amount of Seven Million Dollars ($7,000,000) (the "JR
$7,000,000 Note") shall have been satisfied in full; (ii) all sums due and owing
under that certain Subordinated Promissory Note, dated the date hereof, issued
by Maker in favor of WinCup Holdings, Inc. ("WinCup"), in the original principal
amount of One Million Eight Hundred Thousand Dollars ($1,800,000) (the "WinCup
$1,800,000 Note") shall have been satisfied in full; (iii) all sums due and
owing under that certain Senior Subordinated Promissory Note, dated the date
hereof, issued by Maker in favor of Payee in the original principal amount of
Four Million Four Hundred Thousand Dollars ($4,400,000) (the "JR $4,400,000
Note") shall have been satisfied in full; (iv) all sums due and owing under
those certain Subordinated Promissory Notes, dated the date hereof, executed by
Maker in favor of Scott Paper Company ("Scott") and Payee, each in the original
principal amount of Three Hundred Thousand Dollars ($300,000) (the "Scott
$300,000 Note" and the "JR $300,000 Note", respectively) shall have been
satisfied in full; (v) all sums due and owing under that certain Subordinated
Promissory Note, dated the date hereof, issued by Maker in favor of WinCup, in
the original principal amount of One Million Dollars ($1,000,000)(the "Wincup
$1,000,000 Note") shall have been satisfied in full; and (vii) all principal,
interest and other sums due and owing to (a) Scott at the time of such payment
under that certain Subordinated Promissory Note, dated the date hereof, issued
by Maker in favor of Scott in the original principal amount of Two Million Seven
Hundred Thousand Dollars ($2,700,000) (the "Scott $2,700,000 Note") and (b)
Payee at the time of such payment under that certain Subordinated Promissory
Note, dated the date hereof,
<PAGE>
executed by Maker in favor of Payee in the original principal amount of Five
Million Seven Hundred Thousand Dollars ($5,700,000) (the "JR $5,700,000 Note")
have been paid, accrued interest payments (not including interest accrued during
the first two (2) years) shall be paid to Payee quarterly, on the first day of
each July, October, January and April. Commencing on the first day of the month
after all sums due and owing under the JR $7,000,000 Note, the WinCup $1,800,000
Note, the JR $4,400,000 Note, the Scott $300,000 Note, the JR $300,000 Note and
the WinCup $1,000,000 Note have been satisfied in full, and provided all
principal, interest and other sums due and owing at the time of such payment
under the JR $5,700,000 Note and the Scott $2,700,000 Note have been paid, but
in no event earlier than the third anniversary of the date hereof, and on the
first day of each third month thereafter, the Maker shall make principal
payments to the Payee in the amount of One Hundred Thousand Dollars ($100,000)
each, with a final payment on the fifth anniversary hereof in an amount equal to
the remaining unpaid principal balance and all accrued interest thereon. Subject
to the terms of the Subordination Agreements (as hereinafter defined), this Note
may be prepaid at any time without penalty or prepayment charge.
2. Place of Payment. All amounts payable by the Maker to the Payee
----------------
hereunder shall be paid directly to the Payee at its address as set forth in
paragraph 11 hereof, or at such other address of which the Payee shall give
written notice to the Maker.
3. Representations and Warranties of Maker. The Maker represents and
---------------------------------------
warrants that as of the date hereof:
(a) Maker is a limited partnership duly organized in accordance with
the laws of the state of Delaware with all necessary powers to own its
properties and operate its business as now owned and operated by it;
(b) Maker has full power and authority to enter into this Note and
Maker has taken or caused to be taken all actions required by law, its
partnership agreement dated as of the date hereof between Payee and WinCup (the
"Partnership Agreement"), or otherwise to authorize the approval, execution and
consummation of the transactions contemplated by this Note. This Note is a
valid and binding obligation of Maker, enforceable against Maker in accordance
with its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought; and
- 2 -
<PAGE>
(c) Neither the execution and delivery of this Note, nor the
consummation of the transactions contemplated hereby, will (i) violate any
provision of the Partnership Agreement of Maker, (ii) violate, or be in conflict
with, or constitute a default under, or permit the termination of, or cause the
acceleration of the maturity of any debt or obligation of Maker, (iii) require
the consent of any other party, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Maker under any agreement or commitment to which Maker is a party or by which
Maker is bound, or (iv) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority to which Maker
is subject.
4. Events of Default; Remedies. If any of the following events of
---------------------------
default ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise);
(a) the Maker defaults in the payment when due of any principal or
interest or other sum payable under this Note;
(b) the Maker shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take appropriate action for the purpose of
any of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Maker, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Maker, or if any
petition for any such relief shall be filed against the Maker, and such order or
petition shall not be dismissed within sixty (60) days; or
(d) any material representation or warranty heretofore or hereafter
made by or on behalf of the Maker herein or in any certificate or other writing
delivered under or pursuant to this Note or in connection with any provision
hereof or related to the
- 3 -
<PAGE>
transactions contemplated hereby shall prove to have been false or incorrect or
breached in any material respect on the date as of which made;
then, subject to the terms of the Subordination Agreements, automatically
upon the occurrence of any Event of Default described in subparagraph (b) and
(c), or in the sole discretion of the Payee upon any other Event of Default, (i)
the unpaid principal amount of, and the unpaid interest on, this Note shall
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Maker, and (ii) the Payee may exercise a right of set-off against all property
of the Maker in the Payee's possession at the time of the occurrence of the
Event of Default and thereafter.
5. Additional Remedies. Subject to the terms of the Subordination
-------------------
Agreements, if any Event of Default shall have occurred and be continuing, the
Payee may proceed to protect and enforce its rights under this Note by
exercising such remedies as are available to the Payee in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any agreement contained in this Note or in aid of
the exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
6. SUBORDINATION. THIS NOTE IS SUBJECT TO (A) THE SUBORDINATION
-------------
AGREEMENT, DATED AS OF JANUARY 22, 1996, AMONG THE MAKER, THE PAYEE AND THE BANK
OF NEW YORK COMMERCIAL CORPORATION, AS AGENT (THE "LENDER SUBORDINATION
AGREEMENT"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS HEREUNDER ARE
SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN; AND (B)
THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED AS OF JANUARY 20, 1996,
AMONG THE MAKER, THE PAYEE, WINCUP AND SCOTT (THE "PARTNERSHIP SUBORDINATION
AGREEMENT"; AND TOGETHER WITH THE LENDER SUBORDINATION AGREEMENT, THE
"SUBORDINATION AGREEMENTS"), UNDER WHICH THIS NOTE AND THE MAKER'S OBLIGATIONS
HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR PAYMENT
OF CERTAIN OTHER OBLIGATIONS OF THE MAKER.
7. No Waiver. Neither the failure of the Payee nor any delay on the
---------
part of the Payee in the exercise of any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial exercise
by the Payee of any right, power, or privilege preclude any other or further
exercise of that or any other right, power or privilege.
- 4 -
<PAGE>
8. Expenses. The Maker shall reimburse the Payee promptly for all
--------
reasonable counsel fees, costs and other expenses incurred by the Payee in
connection with the enforcement and collection of this Note.
9. Payment Due On Holidays. If the principal of or interest on this Note
-----------------------
or any fee due hereunder falls due on a Saturday, Sunday or legal holiday at the
place of payment, such payment shall be made on the next succeeding business day
and such extended time shall be included in computing interest.
10. Applicable Law. The construction, interpretation and enforcement of
--------------
this Note shall be governed by the laws of the State of Delaware.
11. Notices. Every notice and communication under this Note shall be in
-------
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
If to the Maker:
WinCup Holdings, L.P.
c/o WinCup Holdings, Inc.
735 Chesterbrook Blvd.
Chesterbrook, Pennsylvania 19087-5638
Attn: Michael T. Kennedy, Chairman
Telecopy Number: (610) 640-2619
If to the Payee:
James River Paper Company, Inc.
P.O. Box 2218
Tredegar Street
Richmond, Virginia 23217
Attn: General Counsel
Telecopy Number: (804) 629-4281
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attn: Michael J. Schewel, Esquire
Telecopy Number: (804) 775-1061
- 5 -
<PAGE>
Notice given by telecopy or other means of electronic transmission shall be
deemed to have been given and received when sent. Notice by overnight courier
shall be deemed to have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been given and received three
(3) calendar days after the date first deposited in the United States Mail.
Notice by hand delivery shall be deemed to have been given and received upon
delivery.
A party may change its address by giving written notice to the other party
as specified herein.
12. Severability. If any provision in this Note shall be held invalid
------------
under any applicable law, such invalidity shall not effect any other provision
of this Note that can be given effect without the invalid provision and, to this
end, the provisions hereof are severable.
13. Successors and Assigns. This Note shall be binding upon the Maker and
----------------------
its successors and assigns, and shall inure to the benefit of the Payee and its
successors and assigns, provided that Maker may not assign any of its rights or
obligations hereunder or any interest herein without the written consent of
Payee. Payee may assign this Note or any interest herein without restriction,
and upon written notice being given to Maker of such assignment, the assignee
shall be deemed to be the Payee for all purposes hereunder.
14. Waiver of Demand, Presentment, etc. The Maker waives the requirements
-----------------------------------
of demand, presentment, protest, notice of protest and dishonor and all other
demands or notices of any kind in connection with the delivery, acceptance,
performance, default, dishonor or enforcement of this Note.
IN WITNESS WHEREOF, and intending to be legally bound hereby, WinCup
Holdings, L.P. has caused this Note to be executed and delivered by its proper
and duly authorized officer as of the date first above written.
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
its general partner
By: /s/ Michael T. Kennedy
------------------------
Michael T. Kennedy,
Chairman
- 6 -
<PAGE>
EXHIBIT 10.60
PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT ("Agreement") is made this
_____ day of December, 1996, between and among WINCUP HOLDINGS, INC., a Delaware
corporation ("WINCUP"), RADNOR HOLDINGS CORPORATION, a Delaware corporation
("Radnor"), WINCUP HOLDINGS, L.P. ("the "Partnership") and JAMES RIVER PAPER
COMPANY, INC., a Virginia corporation ("James River").
W I T N E S S E T H:
-------------------
WHEREAS, WinCup, as general partner, and James River, as limited partner,
are parties to that certain Limited Partnership Agreement of the Partnership,
dated as of January 20, 1996 (the "Partnership Agreement");
WHEREAS, Section 10.1 of the Partnership Agreement provides WinCup with an
option to acquire the limited partnership interest of James River (the "JR
Partnership Interest") pursuant to certain terms and conditions (the "General
Partner Option"); and
WHEREAS, WinCup has advised James River of its intention to assign to
Radnor the right of WinCup to exercise the General Partner Option;
NOW, THEREFORE, in consideration of their respective covenants, agreements,
representations and warranties herein contained, and intending to be legally
bound, the parties hereto hereby agree as follows:
1. SALE AND PURCHASE OF JR PARTNERSHIP INTEREST
(a) Assignment of Right to Purchase JR Partnership Interest.
-------------------------------------------------------
If and when the Closing occurs, WinCup hereby assigns to Radnor its right
to exercise the General Partner Option. If and when the Closing occurs, James
River hereby consents to the assignment of the General Partner Option by WinCup
to Radnor.
(b) Transfer of JR Partnership Interest.
-----------------------------------
Subject to the terms and conditions of this Agreement, at the Closing (as
hereinafter defined), James River shall sell, assign and transfer to Radnor and
Radnor shall purchase from James River, the JR Partnership Interest, free and
clear of any and all claims, liens and encumbrances.
<PAGE>
(3) Excluded Rights. The JR Partnership Interest shall exclude any rights
---------------
and obligations of the parties concerning indemnification and limitation of
liability set forth in the Partnership Agreement to the extent the claims
thereunder arise from events prior to the Closing.
2. PURCHASE PRICE
(a) Purchase Price. The purchase price ("Purchase Price")
--------------
payable to James River for the JR Partnership Interest
shall be as follows:
(i) If the Closing occurs prior to or on December 31,
1996, the Purchase Price shall be the aggregate sum of
(i) $16,125,000; (ii) $300,000; and (iii) an amount
equal to 50% of the applicable Per Diem Increment (as
hereinafter defined) multiplied by the number of days
between September 30, 1996 and the Closing Date (as
hereinafter defined).
(ii) If the Closing occurs after December 31, 1996, the
Purchase Price shall be the aggregate sum of (i) the
applicable Call Exercise Price (as set forth in
Schedule 10.1 of the Partnership Agreement) for the
Call Date (as set forth in Schedule 10.1 of the
Partnership Agreement) occurring on or immediately
prior to the Closing Date; (ii) $300,000; and (iii) an
amount equal to 100% of the applicable Per Diem
Increment multiplied by the number of days, if any,
between the Call Date occurring immediately prior to
the Closing Date and the Closing Date. The formula for
the determination of the Purchase Price for a Closing
occurring after December 31, 1996 is more fully
described in Exhibit II(1)(b) hereto.
(iii) For purposes of this Section II(1), the "Per Diem
Increment" shall be equal to the difference between (i)
the Call Exercise Price for the Call Date occurring
immediately following the Call Date of the Closing and
(ii) the applicable Call Exercise Price (as described
in Subsection II(1)(b)(i) hereof) divided by ninety
(90) days. For purposes of Subsection II(1)(a) only,
the "Per
2
<PAGE>
Diem Increment" is equal to Four Thousand One Hundred
Sixty-Six Dollars and Sixty-Seven Cents ($4,166.67),
which such sum is the amount resulting from the
division of $375,000 [$16,500,000 (the 12/31/96 Call
Exercise Price) less $16,125,000 (the 9/30/96 Call
Exercise Price)] by 90 days.
(b) Payment of Purchase Price. On the Closing Date, Radnor
-------------------------
shall pay to James River the entire Purchase Price, by
cash, certified or banker's check or wire transfer.
3. CLOSING
(a) Place and Time of Closing. The closing and settlement
-------------------------
of this transaction ("Closing") shall take place at the
offices of Duane, Morris & Heckscher at 4200 One Liberty
Place, Philadelphia, Pennsylvania, commencing at 10:00 a.m.
or at such other place and time as the parties may agree.
(b) Closing Date. The Closing shall take place on the date
------------
(the "Closing Date") that is concurrent with the closing of
the offering by Radnor of $100,000,000 of its Senior Notes
or such other date as the parties may agree to in writing.
4. REDEMPTION OF NOTES
(a) Payment of Outstanding Principal Balance. Concurrently
----------------------------------------
with the closing of Radnor's acquisition of the JR
Partnership Interest, the Partnership shall pay to James
River (in the same manner as provided in Subsection II(2)
hereof) the outstanding principal balance, subject to
Subsection IV(3) hereof, of the following promissory notes:
(i) that certain Senior Subordinated Promissory Note,
dated as of 1/20/96 made by the Partnership, as Maker,
to James River, as Payee, in the original principal sum
of Four Million Four Hundred Thousand Dollars
($4,400,000);
3
<PAGE>
(ii) that certain Subordinated Promissory Note, dated as
of 1/20/96 made by the Partnership, as Maker, to
James River, as Payee, in the original principal sum
of Three Hundred Thousand Dollars ($300,000);
(iii) that certain Subordinated Promissory Note, dated as
of 1/20/96 made by the Partnership, as Maker, to
James River, as Payee, in the original principal sum
of Five Million Seven Hundred Thousand Dollars
($5,700,000) (the "$5,700,000 Note"); and
(iv) that certain Subordinated Promissory Note, dated as
of 1/20/96 made by the Partnership, as Maker, to
James River, as Payee, in the original principal sum
of Three Hundred Thousand Dollars ($300,000) (the
"$300,000 Note").
(b) Payment of Interest.
-------------------
(i) If the Closing shall occur prior to or on January 20,
1998, all interest which shall have accrued on the
$5,700,000 Note and the $300,000 Note shall be
forgiven and shall not be due and payable.
(ii) If the Closing shall occur after January 20, 1998,
all interest which shall have accrued on the
$5,700,000 Note and the $300,000 Note shall be due
and payable, in accordance with the terms of such
notes.
(c) Discount. If the Closing shall occur on or before
--------
April 20, 1997, the Partnership shall pay to James River, in
full satisfaction and discharge thereof, an amount equal to
seventy-five percent (75%) of the original principal amount
of the $5,700,000 Note and the $300,000 Note, respectively.
4
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF JAMES RIVER
James River makes the following representations and warranties to WinCup,
Radnor and the Partnership, which representations and warranties are true and
correct as of the date of this Agreement, and shall be true and correct at and
as of the Closing Date in all respects as though such representations and
warranties were made both on and as of the date of this Agreement and on and as
of the Closing Date.
(a) Corporate Existence and Organization. James River is a
------------------------------------
corporation duly organized, validly existing, and in good standing under
the laws of Virginia.
(b) Corporate Authorization. The execution, delivery and
-----------------------
performance by James River of this Agreement, and the consummation by James
River of the transactions contemplated by this Agreement, are within the
corporate power and authority of James River and have been duly authorized
by all necessary corporate action. This Agreement has been duly and validly
authorized, executed and delivered by James River and constitutes a valid
and binding obligation of James River enforceable against James River in
accordance with its terms.
(c) Governmental Authorization. The execution, delivery and
--------------------------
performance by James River of this Agreement, and the consummation of the
transactions contemplated by this Agreement by James River do not and will
not require any consent, approval or action by or in respect of, or any
declaration, filing or registration with, any governmental or regulatory
body, court, agency, official or authority (each, a "Governmental
Authority"), except that the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 expired on November 10, 1996, pursuant
to that certain letter from the Federal Trade Commission dated October 17,
1996.
(d) Litigation. There is no action, suit or proceeding
----------
(collectively, "Litigation") pending against or, to the best knowledge of
James River, threatened against James River before any court or any
Governmental Authority, seeking to enjoin the consummation of the
transactions contemplated under this Agreement, except as set forth on
Exhibit V(4) hereto.
5
<PAGE>
(e) Compliance with Laws; No Defaults. James River is not
---------------------------------
in violation of, and since January 20, 1996 has not
violated, any applicable provisions of law, statute,
ordinance, regulation, judgment, order, injunction, permit,
license, certificate or other authorization, or its
governing instruments, which violation, individually or in
the aggregate, is reasonably likely to prevent the parties'
consummation of the transactions contemplated by this
Agreement.
(f) Non-Contravention. The execution, delivery and
-----------------
performance by James River of this Agreement, and the
consummation of the transactions contemplated by this
Agreement by James River, do not and will not, with or
without the giving of notice, the lapse of time or both:
(i) contravene or conflict with the certificates of
incorporation or by-laws of James River; (ii) contravene or
conflict with or constitute a violation of any provision of
any judgment, injunction, order or decree binding upon or
applicable to James River; or (iii) require any consent,
approval or other action by any person.
6. REPRESENTATIONS AND WARRANTIES OF WINCUP, RADNOR AND THE PARTNERSHIP
WinCup, Radnor and the Partnership make the following representations and
warranties to James River, which representations and warranties are true and
correct as of the date of this Agreement, and shall be true and correct at and
as of the Closing Date in all respects as though such representations and
warranties were made both on and as of the date of this Agreement and on and as
of the Closing Date:
(a) Existence and Organization. WinCup is a corporation
--------------------------
duly organized, validly existing and in good standing under
the laws of Delaware. Radnor is a corporation duly
organized, validly existing and in good standing under the
laws of Delaware. The Partnership is a limited partnership
duly organized, validly existing and in good standing under
the laws of Delaware.
(b) Authorization. The execution, delivery and
-------------
performance by WinCup, Radnor and the Partnership of
this Agreement, and the consummation by WinCup, Radnor
and the Partnership of the transactions contemplated by
this Agreement, are within the corporate power
6
<PAGE>
and authority of WinCup and Radnor and the
partnership power and authority of the Partnership
and have been duly authorized by all necessary
corporate and partnership action. This Agreement has
been duly and validly authorized, executed and
delivered by WinCup, Radnor and the Partnership and
constitutes a valid and binding obligation of
WinCup, Radnor and the Partnership enforceable
against WinCup, Radnor and the Partnership in
accordance with its terms.
(c) Governmental Authorization. The execution, delivery
--------------------------
and performance by WinCup, Radnor and the Partnership
of this Agreement, and the consummation of the
transactions contemplated by this Agreement by WinCup,
Radnor and the Partnership, do not and will not require
any consent, approval or action by or in respect of, or
any declaration, filing or registration with, any
Governmental Authority, except that the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 expired on November 10, 1996, pursuant to that
certain letter from the Federal Trade Commission dated
October 17, 1996.
(d) Litigation. There is no Litigation pending against
----------
or, to the best knowledge of WinCup, Radnor or the
Partnership, threatened against WinCup, Radnor or the
Partnership before any court or any Governmental
Authority, seeking to enjoin the consummation of the
transactions contemplated under this Agreement, except
as set forth on Exhibit VI(4) hereto.
(e) Compliance with Laws; No Defaults. WinCup, Radnor
---------------------------------
and the Partnership are not in violation of, and since
January 20, 1996 have not violated, any applicable
provisions of law, statute, ordinance, regulation,
judgment, order, injunction, permit, license,
certificate or other authorization, or its governing
instruments, which violation, individually or in the
aggregate, is reasonably likely to prevent the parties'
consummation of the transactions contemplated by this
Agreement.
(f) Non-Contravention. The execution, delivery and
-----------------
performance by WinCup, Radnor and the Partnership of
this Agreement, and the consummation of the
transactions
7
<PAGE>
contemplated by this Agreement by WinCup, Radnor and
the Partnership do not and will not, with or without
the giving of notice, the lapse of time or both: (i)
contravene or conflict with the certificates of
incorporation or by-laws of WinCup or Radnor; (ii)
contravene or conflict with the limited partnership
agreement of the Partnership; (iii) contravene or
conflict with or constitute a violation of any
provision of any judgment, injunction, order or decree
binding upon or applicable to WinCup, Radnor or the
Partnership; or (iv) require any consent, approval or
other action by any person.
7. CONDITIONS PRECEDENT TO PERFORMANCE BY WINCUP, RADNOR AND THE
PARTNERSHIP
The obligations of WinCup, Radnor and the Partnership to consummate the
Closing of the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions in this Article
VII. WinCup, Radnor and the Partnership may waive any or all of these
conditions in whole or in part without prior written notice.
(a) Accuracy of Representations. All representations and
---------------------------
warranties by James River in this Agreement or in any
written statement that shall be delivered to WinCup, Radnor
and the Partnership shall be true on and as of the Closing
Date as though made at that time.
(b) Performance of Other Party. James River shall have
--------------------------
performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed,
satisfied or complied with by it on or before the Closing
Date.
(c) Absence of Litigation. No Litigation before any court
---------------------
or any Governmental Authority, seeking to enjoin the
consummation of the transactions contemplated by this
Agreement, shall have been instituted or, to the best
knowledge of James River, threatened on or before the
Closing Date, and such condition has not been waived by
WinCup, Radnor and the Partnership or remedied by James
River on or before the Closing Date.
(d) Extension Agreements. The Partnership and James River
--------------------
shall have executed (i) the Sales Agent Extension and
Modification Agreement in the form
8
<PAGE>
attached hereto as Exhibit VII(4)(i); (ii) the License
Extension and Modification Agreement in the form attached
hereto as Exhibit VII(4)(ii); and (iii) the Equipment Use
Extension and Modification Agreement in the form attached
hereto as Exhibit VII(4)(iii) (collectively, the "Extension
Agreements"), which such Extension Agreements extend the
terms of that certain Sales Agent Agreement dated as of
January 20, 1996, that certain License Agreement dated as
of January 20, 1996 and that certain Equipment Use
Agreement dated as of January 20, 1996, respectively, to
January 20, 2002.
(e) Sublease Agreements. The Partnership and James River
-------------------
shall have executed four (4) subleases in connection with
the Corte Madera, California facilities currently leased by
James River from Hunt Brothers Leasing, L.L.C. ("Hunt
Brothers") and occupied by the Partnership under four (4)
leases (the "James River Leases"), in the form consented to
by Hunt Brothers and attached hereto as Exhibit VII(5)(A).
The form of such consent by Hunt Brothers is attached
hereto as Exhibit VII(5)(B). The Partnership and James
River shall have also executed a side letter regarding such
subleases, in the form attached hereto as Exhibit
VII(5)(C).
(f) Operating Expenses. At or prior to the Closing Date,
------------------
James River shall continue to pay certain operating
expenses of the Partnership, which such expenses shall
include rental payments, operating bills and utility
sharing costs.
8. CONDITIONS PRECEDENT TO JAMES RIVER'S PERFORMANCE
The obligations of James River to consummate the Closing of the
transactions contemplated by this Agreement are subject to the satisfaction at
or before the Closing, of all the conditions in this Article VIII. James River
may waive any or all of these conditions in whole or in part without prior
notice.
(a) Accuracy of Representations. All representations and
---------------------------
warranties by WinCup, Radnor and the Partnership in this
Agreement or in any written statement that shall be
delivered to James River shall be true on and as of the
Closing Date as though made at that time.
9
<PAGE>
(b) Performance of Other Parties. WinCup, Radnor and the
----------------------------
Partnership shall have performed, satisfied and complied
with all covenants and agreements required by this
Agreement to be performed, satisfied or complied with by it
on or before the Closing Date.
(c) Absence of Litigation. No Litigation before any court
---------------------
or any Governmental Authority, seeking to enjoin the
consummation of the transactions contemplated by this
Agreement, shall have been instituted or, to the best
knowledge of James River, threatened on or before the
Closing Date, which has not been waived by James River or
remedied by WinCup, Radnor or the Partnership on or before
the Closing Date.
(d) Extension Agreements. The Partnership and James River
--------------------
shall have executed (i) the Sales Agent Extension and
Modification Agreement in the form attached hereto as
Exhibit VII(4)(i); (ii) the License Extension and
Modification Agreement in the form attached hereto as
Exhibit VII(4)(ii); and (iii) the Equipment Use Extension
and Modification Agreement in the form attached hereto as
Exhibit VII(4)(iii) (collectively, the "Extension
Agreements"), which such Extension Agreements extend the
terms of that certain Sales Agent Agreement dated as of
January 20, 1996, that certain License Agreement dated as
of January 20, 1996 and that certain Equipment Use
Agreement dated as of January 20, 1996, respectively, to
January 20, 2002.
(e) Sublease Agreements. The Partnership and James River
-------------------
shall have executed four (4) subleases in connection with
the Corte Madera, California facilities currently leased by
James River from Hunt Brothers and occupied by the
Partnership under the James River Leases, in the form
consented to by Hunt Brothers and attached hereto as
Exhibit VII(5)(A). The form of such consent by Hunt
Brothers is attached hereto as Exhibit VII(5)(B). The
Partnership and James River shall have also executed a side
letter regarding such subleases, in the form attached
hereto as Exhibit VII(5)(C).
(f) Security Deposit. The Partnership shall have paid to
----------------
James River the sum of Eighty Three Thousand Four Hundred
Seven Dollars ($83,407) as reimbursement for a
10
<PAGE>
security deposit made by James River as lessee under the
James River Leases for the Corte Madera, California
facilities.
(g) Other Payments. At or prior to the Closing Date, WinCup
--------------
shall pay to James River, by cash or certified or banker's
check, all sums due to James River for operating expenses
of the Partnership, which such expenses shall include
rental payments, operating bills and utility sharing costs.
9. COVENANTS OF PARTIES AFTER CLOSING DATE
(a) James River Leases. The Partnership agrees to use
------------------
reasonable efforts to negotiate direct leases between Hunt
Brothers and the Partnership for the Corte Madera,
California facilities so that the James River Leases may be
canceled prior to their expiration date of June 30, 1998.
(b) Disability Payments. In connection with the disability
-------------------
claims, including long and short term disability, medical
and dental benefits and life insurance and life insurance
premium benefits ("Disability Claims") asserted by the
employees listed on Exhibit IX(2) hereto, the Partnership
agrees to reimburse James River for the first Five Hundred
Thousand Dollars ($500,000) of Disability Claims paid by
James River to or on behalf of the eleven (11) disabled
employees of James River, identified as Category I
Employees on Exhibit IX(2) hereto (the "Category I
Payments"). The Partnership agrees to reimburse James River
for Disability Claims (estimated to be $50,000 in the
aggregate, which such estimate is only an estimate and is
not intended to limit the amount the Partnership agrees to
reimburse James River) paid by James River to or on behalf
of the six (6) employees of James River, as identified as
Category II Employees on Exhibit IX(2) hereto (the
"Category II Payments"). The Partnership agrees to pay to
James River the Category I Payments and the Category II
Payments within fifteen (15) days of the Partnership's
receipt from James River of reasonably detailed written
substantiation of such Disability Claims (a "Submission").
Interest at the rate of twelve percent (12%) on such
amounts shall accrue and become payable by the Partnership
commencing on the
11
<PAGE>
thirtieth day following the Partnership's receipt of a
Submission.
(c) StyroChem Litigation Indemnification. The Partnership
------------------------------------
shall continue to indemnify James River with respect to a
complaint filed by StyroChem International, Inc. against
James River Corporation, Inc., Civil Action Number 496-CV-
4714 (N.D. Tex. - Fort Worth Division).
(d) Confidentiality Agreement. The parties hereto shall,
-------------------------
within thirty (30) days after the Closing Date, enter into
an extension of that certain Confidentiality Agreement,
dated as of January 20, 1996 between and among the
Partnership, WinCup and James River.
(e) Retention of Books and Records. The Partnership will
------------------------------
retain and maintain, in an organized and retrievable
manner, all documents and records pertaining to the periods
before the Closing Date in accordance with the James
River's Record Management Policy dated September 1, 1992 (a
copy of which is attached hereto as Exhibit IX(5)) as it
may from time to time be amended, including requesting
authorization from James River's Corporate Tax Services
prior to destruction of any items requiring such approval,
as outlined in the Record Management Policy. The
Partnership will retain and maintain all machine-sensible
records, such as computer tapes, disks, diskettes, etc.,
which are considered books and records within the meaning
of Internal Revenue Code Section 6001, in accordance with
Internal Revenue Procedure 91-59 or such amending or
superseding guidance as issued by the Internal Revenue
Service. The Partnership will make available such documents
and records, machine sensible records, computer time, and
assistance from the Partnership's personnel as may be
requested by James River in order to expeditiously comply
with all pertinent requests from the Internal Revenue
Service and state taxing authorities which relate to
periods prior to the Closing Date.
10. OTHER AGREEMENTS
(a) Public Announcements. The parties hereto will consult
--------------------
with each other before issuing, and provide each other the
opportunity to review, comment upon and
12
<PAGE>
concur with, any press release or other public statement
with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or
make any such public statement prior to such consultation
and concurrence, except as may be required by applicable
law, court process or by obligations pursuant to any
listing agreement with any national market system.
(b) Specific Performance.
--------------------
(i) Notwithstanding anything herein to the contrary, in
the event the closing of the transactions contemplated
herein has not occurred on or before the Closing Date
as a result of any breach by James River hereunder,
including without limitation, the failure or refusal of
James River to satisfy any of the conditions precedent
to the obligations of WinCup, Radnor or the Partnership
hereunder, then WinCup, Radnor or the Partnership shall
have the right to obtain specific performance of the
obligations of James River hereunder.
(ii) Notwithstanding anything herein to the contrary, in
the event the closing of the transactions contemplated
herein has not occurred on or before the Closing Date
as a result of any breach by WinCup, Radnor or the
Partnership hereunder, including without limitation,
the failure or refusal of WinCup, Radnor or the
Partnership to satisfy any of the conditions precedent
to the obligations of James River hereunder, then James
River shall have the right to obtain specific
performance of the obligations of WinCup, Radnor or the
Partnership hereunder.
11. INDEMNIFICATION
(a) Indemnification By James River. James River hereby
------------------------------
agrees to indemnify and hold harmless WinCup, Radnor and
the Partnership from and against:
(a) Any loss, claim, obligation, damage or deficiency arising out of
or resulting from any misrepresentation, breach of warranty or nonfulfillment of
a covenant by James River; and
13
<PAGE>
(b) Any actions, judgments, costs and expenses (including reasonable
actual fees of attorneys and all other expenses incurred in investigating,
preparing or defending any litigation or proceeding, commenced or threatened)
incident to any of the foregoing subparagraph (a) of this Section XI(1) or the
enforcement of this Section.
(b) Indemnification by WinCup, Radnor and the Partnership.
-----------------------------------------------------
WinCup, Radnor and the Partnership hereby agree to
indemnify and hold harmless James River from and against:
(a) Any loss, claim, obligation, damage or deficiency arising out of
or resulting from any misrepresentation, breach of warranty or nonfulfillment of
a covenant by WinCup, Radnor or the Partnership; and
(b) Any actions, judgments, costs and expenses (including reasonable
actual attorneys fees and all other expenses incurred in investigating,
preparing or defending any litigation or proceeding, commenced or threatened)
incident to any of the foregoing subparagraph (a) of this Section XI(2) or the
enforcement of this Section.
(c) Indemnification Procedure. The party seeking
-------------------------
indemnification hereunder (the "Indemnified Party") shall
give prompt written notice from the date of any
indemnification claim to the indemnifying party (the
"Indemnifying Party") of its indemnification claims
hereunder, specifying the amount and nature of the claim,
and giving the Indemnifying Party the right to contest any
such claim. If any such claim is made hereunder by the
Indemnified Party, and the Indemnifying Party does not
elect to undertake the defense thereof by written notice
within thirty (30) days after receipt of the original
notice from the Indemnified Party, the Indemnified Party
shall be entitled to indemnity hereunder to the extent of
its payment in respect of such claim. To the extent that
the Indemnifying Party undertakes the defense of such claim
in good faith by proceeding diligently at its expense, and
without materially impairing the financial conditions or
operations of the Indemnified Party, the Indemnified Party
shall be entitled to indemnity hereunder only if, and to
the extent that, such defense is unsuccessful as determined
by a final judgment of a court of competent jurisdiction or
is settled with the consent of the Indemnifying Party. The
Indemnified Party shall have the right to participate in
the defense of such claim at its cost and expense.
14
<PAGE>
(d) Duration.
--------
(a) The rights of the parties to such indemnification under this
Article XI for breach of any representation or warranty set forth in this
Agreement shall terminate on the first anniversary of the date hereof, except as
to those claims which shall have been duly given prior to such termination date.
All other rights to indemnification hereunder shall survive without limitation.
(b) Notwithstanding anything contained herein to the contrary, James
River's execution of this Agreement shall not be deemed to waive any of James
River's rights to indemnification (i) by the Partnership pursuant to the JR
Capital Contribution Agreement dated as of January 20, 1996 between James River
and the Partnership, or (ii) by WinCup pursuant to the letter agreement of
indemnification dated as of January 20, 1996 executed in favor of James River
regarding claims by StyroChem International, Inc. or Richard Davidovich.
12. NOTICES
(a) Notices. All notices, requests, demands and other
-------
communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of
service if served personally or by telephone facsimile on
the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is
to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed:
(a) if to James River, addressed to it at:
James River Paper Company, Inc.
120 Tredegar Street
P.O. Box 2218
Richmond, VA 23218
Attention: Treasurer
with a copy to:
James River Corporation
120 Tredegar Street
P.O. Box 2218
Richmond, VA 23218
Attention: General Counsel
15
<PAGE>
(b) if to WinCup, Radnor or the Partnership,
addressed to them at:
WinCup Holdings, Inc.
Radnor Holdings Corporation
WinCup Holdings, L.P.
Three Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy
with a copy to:
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
Attention: Vincent F. Garrity, Jr., Esquire
Any party may change its address for purposes of this section by giving the
other party written notice of the new address in the manner set forth above.
13. FEES AND EXPENSES
(a) Transaction Costs. Each of the parties shall pay their
-----------------
own respective costs and expenses incurred or to be
incurred by it in negotiation and preparation of this
Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
14. GENERAL PROVISIONS
(a) Successors and Assigns; Assignment. This Agreement
-----------------------------------
shall be binding on, and shall inure to the benefit of the
parties to it and their respective heirs, legal
representatives, successors, and assigns. Either party may
assign this Agreement to an Affiliate of such party without
the consent of the other party, provided that such assignee
assumes all of the Partnership's rights, obligations and
liabilities under this Agreement and the assignor shall
remain primarily obligated for the performance by such
assignee of all of its rights, obligations and liabilities
under this Agreement. For purposes of this Section XIV(1),
"Affiliate" shall mean
16
<PAGE>
any person, corporation, partnership, association, joint
stock company, trust or unincorporated organization which,
directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with
the assignor.
(b) Headings. The subject headings of the articles and
--------
sections of this Agreement are included for purposes of
convenience only, and shall not affect the construction of
interpretation of any of its provisions.
(c) Modification; Waiver. No supplement, modification, or
--------------------
amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of
the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
(d) Counterparts. This Agreement may be executed
------------
simultaneously in one or more counterparts, each of which
shall be deemed an original, but all of which together
shall constitute one and the same instrument.
(e) Invalidity. If any provision of this Agreement shall be
----------
held invalid, the same shall not affect in any respect
whatsoever the validity of the remainder of this Agreement.
(f) Complete Agreement. This Agreement and the documents
------------------
contemplated by this Agreement set forth the entire
understanding of the parties with respect to the subject
matter hereof. Any previous agreements or understanding of
the parties regarding the subject matter hereto are merged
into and superseded by this Agreement.
(g) Further Assurances. The parties hereto agree that they
------------------
will cooperate with each other and will execute and
deliver, or cause to be delivered, all such other
instruments and will take all such other actions, as any
party hereto may reasonably request from time to time, in
order to effectuate the provisions and purposes hereof.
17
<PAGE>
(h) Governing Law. This Agreement shall be construed in
-------------
accordance with, and governed by, the laws of the State of
Delaware, conflict of laws provisions notwithstanding.
18
<PAGE>
IN WITNESS WHEREOF, the parties to this Partnership Interest Purchase
Agreement have duly executed it on the day and year first above written.
WINCUP HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Name:
Title:
JAMES RIVER PAPER COMPANY, INC.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Name:
Title:
RADNOR HOLDINGS CORPORATION
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Name:
Title:
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc., its general
partner
By: [SIGNATURE APPEARS HERE]
------------------------------
Name
Title:
19
<PAGE>
EXHIBIT II(1)(b)
Calculation of Purchase Price
An example of the Purchase Price for a Closing occurring after December 31,
1996 would be as follows:
1. Closing Date -- July 15, 1997
2. Applicable Call Exercise Price -- $17,737,500 (Call Date =
June 30, 1997)
3. Calculation of applicable Per Diem Increment:
a. $18,356,250 - $17,737,500 = $618,750 (September 30, 1997 Call
Exercise Price less June 30, 1997 Call Exercise Price)
b. Per Diem Increment: $618,750 / 90 days = $6,875
c. Number of days between Closing Date (July 15, 1997) and Date of
Applicable Call Exercise Price (June 30, 1997) = 15
d. $6,875 X 15 days = $103,125
4. Aggregate Purchase Price for July 15, 1996 Closing = $18,140,625
($17,737,500 + $300,000 + $103,125)
20
<PAGE>
EXHIBIT V(4)
Litigation
Complaint filed by Jackson National Life Insurance Company and Benchmark
Holdings, Inc. against Michael T. Kennedy, Benchmark Corporation of Delaware,
WinCup Holdings, Inc., WinCup Holdings, L.P., James River Corporation of
Virginia and James River Paper Company, Inc., Case No. 96CH0012923, Circuit
Court of Cook County, Illinois County Department, Chancery Division.
21
<PAGE>
EXHIBIT VI(4)
Litigation
Complaint filed by Jackson National Life Insurance Company and Benchmark
Holdings, Inc. against Michael T. Kennedy, Benchmark Corporation of Delaware,
WinCup Holdings, Inc., WinCup Holdings, L.P., James River Corporation of
Virginia and James River Paper Company, Inc., Case No. 96CH0012923, Circuit
Court of Cook County, Illinois County Department, Chancery Division.
22
<PAGE>
[EXHIBIT 10.60]
EXHIBIT VII(4)(i)
SALES AGENT EXTENSION AND MODIFICATION AGREEMENT
This SALES AGENT EXTENSION AND MODIFICATION AGREEMENT ("Agreement") is made
as of December ___, 1996 by and between WINCUP HOLDINGS, L.P., a Delaware
limited partnership (the "Partnership") and JAMES RIVER PAPER COMPANY, INC., a
Virginia corporation ("JR").
BACKGROUND
----------
a. The Partnership, WinCup Holdings, Inc. ("WinCup"), Radnor Holdings
Corporation ("Radnor") and JR intend to enter into a Partnership
Interest Purchase Agreement pursuant to which Radnor shall purchase the
entire limited partnership interest of JR in the Partnership, as such
interest is described in the Limited Partnership Agreement between
WinCup and JR dated as of January 20, 1996.
b. The Partnership and JR are parties to that certain Sales Agent
Agreement, dated as of January 20, 1996 (the "Agent Agreement"), which
such agreement appoints JR to serve as sales agent of the Partnership
to Sam's Club, a division of Wal-Mart Stores, Inc. ("Sam's Club") and
permits the Partnership to use certain packaging materials carrying
JR's trademarks in connection with the products manufactured by the
Partnership and sold to Sam's Club.
c. JR and James River Corporation of Virginia (collectively, the
"Licensor") and the Partnership are parties to that certain License
Agreement dated as of January 20, 1996 (the "License Agreement"), as
amended by that certain License Extension and Modification Agreement
made by and between the Partnership and JR, dated the date hereof.
d. The Partnership and JR have determined that it would be in each of
their best interests to enter into an extension and modification of the
Agent Agreement, in order to extend the term of the Agent Agreement.
e. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Agent Agreement.
NOW THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
i. Extension Period. Section 1 (a) of the Agent Agreement is
----------------
deleted in its entirety and is replaced with:
"The Term of this Agreement shall expire on January 20, 2002."
ii. Sales Agent. Pursuant and subject to the terms and conditions
-----------
of the Agent Agreement, JR shall act as sales agent for WinCup in
connection with Sam's Club during the Term, as extended by this
Agreement.
iii. Collection of Receivables and Payment to the Partnership.
--------------------------------------------------------
(1) The following is inserted as the third sentence of the first
paragraph of Section 6 of the Agent Agreement:
"All such JR payments shall be made by electronic funds transfer to the
Partnership, in accordance with the instructions attached hereto as Exhibit
E. Interest at the annual rate of twelve percent (12%) on such amounts due
to the Partnership shall accrue, and shall be payable by JR, commencing on
the sixth working day following the end of each JR fiscal period."
(2) Exhibit E to the Agent Agreement, containing the Partnership
wiring instructions, is attached hereto as Exhibit E.
iv. Assignment of Agent Agreement. The Partnership shall have the
-----------------------------
right to assign the Agent Agreement to any Affiliate of the
Partnership without the consent of James River, provided that such
assignee assumes all of the Partnership's rights, obligations and
liabilities in connection with the Agent Agreement and this
Agreement in writing and the Partnership shall remain primarily
obligated for the performance by such assignee of all of its rights,
obligations and liabilities under the Agent Agreement and this
Agreement. For purposes of this Paragraph 3, "Affiliate" shall mean
any person, corporation, partnership, association, joint stock
company, trust or unincorporated organization which, directly or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Partnership.
v. Effect of Amendment. Except as hereby expressly extended,
-------------------
amended and modified, all of the terms, conditions, provisions and
covenants of the Agent Agreement shall continue in full force and
effect.
Sales Agent Extension Agreement-2
<PAGE>
vi. Successors and Assigns. This Agreement shall bind and enure to
----------------------
the benefit of the parties to the Agent Agreement and their
respective successors and assigns.
vii. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws or choice of law rules.
viii. Counterparts. This Agreement may be executed in as many
------------
counterparts as may be deemed necessary or convenient, and by the
different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an original, but all of which such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
JAMES RIVER PAPER COMPANY,
INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Name:
Title:
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc., its general
partner
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
Sales Agent Extension Agreement-3
<PAGE>
EXHIBIT E
WIRING INSTRUCTIONS OF WINCUP HOLDINGS, L.P.
Account Name: WinCup Holdings, L.P.
Account Number: 3750081282
Bank: Nations Bank
Dallas, Texas
ABA#: 11100012
Sales Agent Extension Agreement-4
<PAGE>
[EXHIBIT 10.60]
EXHIBIT VII(4)(ii)
LICENSE EXTENSION AND MODIFICATION AGREEMENT
This LICENSE EXTENSION AND MODIFICATION AGREEMENT ("Agreement") is made as
of December ___, 1996 by and between WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Partnership"), JAMES RIVER PAPER COMPANY, INC., a Virginia
corporation ("JR") and JAMES RIVER CORPORATION OF VIRGINIA ("James River").
BACKGROUND
----------
a. The Partnership, WinCup Holdings, Inc. ("WinCup"), Radnor Holdings
Corporation ("Radnor") and JR intend to enter into a Partnership
Interest Purchase Agreement ("Purchase Agreement") pursuant to which
Radnor shall purchase the entire limited partnership interest of JR in
the Partnership, as such interest is described in the Limited
Partnership Agreement between WinCup and JR, dated as of January 20,
1996.
b. JR and James River (collectively, the "Licensor") and the
Partnership are parties to that certain License Agreement, dated as of
January 20, 1996 (the "License Agreement"), which such agreement
permits the Partnership to use certain of JR's trademark rights, molds
and packaging materials for the production and distribution of plastic
drinking cups and lids.
c. The Partnership and JR are parties to that certain Sales Agent
Agreement dated as of January 20, 1996, (the "Sales Agent Agreement"),
as amended by that certain Sales Agent Extension and Modification
Agreement made by and between the Partnership and JR, dated the date
hereof.
d. The Partnership and Licensor have determined that it would be in
each of their best interests to enter into a modification of the
License Agreement in order to extend the term of the License
Agreement.
e. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the License Agreement.
NOW THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
i. Extension Period. Pursuant and subject to the terms and conditions
----------------
of the License Agreement, the Partnership and Licensor agree to enter
into an extension of the License Agreement.
(1) Section 4.1 of the License Agreement is deleted in its
entirety and is replaced with:
"a. This License Agreement shall be effective for a term commencing on the
date of closing of the purchase transaction as set forth in the
Purchase Agreement (the "Closing") and ending on January 20, 2002 (the
"Termination Date"), as to the licenses granted in Sections 2.1 and
2.2 hereof, provided that WinCup may not use the DIXIE trademark
described in Section 1.1(c) except in connection with the production
of Licensed Plastic Drinking Cups and Lids and the use of Licensed
Corrugated Boxes and Packaging Materials for Sam's Club. The right to
use the DIXIE trademark in connection with Sam's Club shall expire on
the date the Sales Agent Agreement expires.
"b. The license granted under Section 2.3 hereof shall expire upon
exhaustion of the supply of Licensed Corrugated Boxes and Packaging
Material in existence as of the date of the Closing, except in
connection with Sam's Club which shall terminate as set forth in
Section 2.4.
"c. The license granted under Section 2.4 hereof shall expire upon the
expiration of the Sales Agent Agreement."
ii. Licenses Granted.
----------------
a. Section 2.1(ii) is deleted in its entirety and is replaced with "(ii)
until the Termination Date hereof, which ever occurs first."
b. Section 2.5(ii) is deleted in its entirety and is replaced with "(ii)
upon the Termination Date hereof, whichever occurs first."
c. The last sentence of Section 2.7 is deleted in its entirety and is
replaced with "Upon completion of the removal of the trademarks
included in Trademark Rights from the molds, the licenses granted
pursuant to Sections 2.1 and 2.2 hereof shall terminate on the
Termination Date hereof."
iii. Licensed Corrugated Boxes and Packaging Material.
------------------------------------------------
(1) Section 1.3 is hereby deleted in its entirety and is
replaced with:
License Extension Agreement - 2
<PAGE>
"1.3 The term "Licensed Corrugated Boxes and Packaging Material" shall
mean all corrugated boxes and packaging material used by Licensee on
which appear any of LICENSOR's Trademark Rights."
iv. Assignment of License Agreement. The Partnership shall have the
-------------------------------
right to assign the License Agreement to any Affiliate of the
Partnership without the consent of James River; provided that such
assignee assumes all of the Partnership's rights, obligations and
liabilities in connection with the License Agreement and this
Agreement in writing and the Partnership shall remain primarily
obligated for the performance by such assignee of all of its rights,
obligations and liabilities under the License Agreement and this
Agreement. For purposes of this Paragraph 4, "Affiliate" shall mean
any person, corporation, partnership, association, joint stock
company, trust or unincorporated organization which directly or
indirectly through one or more intermediaries, controls, is controlled
by or is under common control with the Partnership.
v. Effect of Modification. Except as hereby expressly extended,
----------------------
amended and modified, all of the terms, conditions, provisions and
covenants of the License Agreement shall continue in full force and
effect.
vi. Successors and Assigns. This Agreement shall bind and enure to
----------------------
the benefit of the parties to the License Agreement and their
respective successors and assigns.
vii. Governing Law. This Agreement shall be construed and the legal
-------------
relations between the paries determined in accordance with the laws of
the State of Delaware, excluding any choice of law rules which may
direct the application of the laws of any other jurisdiction.
viii. Counterparts. This Agreement may be executed in as many
------------
counterparts as may be deemed necessary or convenient, and by the
different parties hereto on separate counterparts, each of which, when
so executed, shall be deemed an original, but all of which such
counterparts shall constitute but one and the same instrument.
License Extension Agreement - 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
JAMES RIVER PAPER COMPANY,
INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
JAMES RIVER CORPORATION OF
VIRGINIA
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc., its general
partner
By: [SIGNATURE APPEARS HERE]
-------------------------
Name:
Title:
License Extension Agreement - 4
<PAGE>
[EXHIBIT 10.60]
EXHIBIT VII(4)(iii)
EQUIPMENT USE EXTENSION AND MODIFICATION AGREEMENT
This EQUIPMENT USE EXTENSION AND MODIFICATION AGREEMENT ("Agreement") is
made as of December ____, 1996 by and between WINCUP HOLDINGS, L.P., a Delaware
limited partnership (the "Partnership") and JAMES RIVER PAPER COMPANY, INC., a
Virginia corporation ("JR").
BACKGROUND
----------
a. The Partnership, WinCup Holdings, Inc., ("WinCup"), Radnor
Holdings Corporation ("Radnor") and JR intend to enter into a
Partnership Interest Purchase Agreement pursuant to which Radnor
shall purchase the entire limited partnership interest of JR in the
Partnership, as such interest is described in the Limited Partnership
Agreement between WinCup and JR, dated as of January 20, 1996 (the
"Purchase Transaction").
b. The Partnership and JR are parties to that certain Equipment
Use Agreement, dated as of January 20, 1996 (the "Equipment
Agreement"), which such agreement terminates upon JR's removal of
certain of its equipment from the Partnership's West Chicago,
Illinois facility (the "Facility").
c. The Partnership and JR have determined that it would be in
each of their best interests to enter into a modification of the
Equipment Agreement in order to extend the term of the Equipment
Agreement.
d. All capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Equipment Agreement.
NOW THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
i. Extension Period. Pursuant and subject to the terms and
----------------
conditions of the Equipment Agreement, the Partnership and JR
agree to enter into an extension of the Equipment Agreement.
(1) Paragraph 2 (Term of Agreement) of the Equipment
Agreement is deleted in its entirety and is replaced
with:
<PAGE>
"This Equipment Agreement shall be effective for a Term commencing on
the date of closing of the Purchase Transaction and ending on
January 20, 2002 (the"Termination Date").
(2) Paragraph 3 (Termination) of the Equipment
Agreement is deleted in its entirety and is replaced
with:
"JR may not remove the Former Equipment or the Extruder Equipment
prior to the Termination Date."
(3) Schedule B to the Equipment Agreement is hereby
deleted in its entirety and replaced with the attached
Schedule B.
ii. Effect of Modification. Except as hereby expressly
----------------------
extended, amended and modified, all of the terms, conditions,
provisions and covenants of the Equipment Agreement shall
continue in full force and effect.
iii. Assignment of Equipment Agreement. The Partnership
---------------------------------
shall have the right to assign the Equipment Agreement to any
Affiliate of the Partnership without the consent of James
River, provided that such assignee assumes all of the
Partnership's rights, obligations and liabilities in
connection with the Equipment Agreement and this Agreement in
writing and the Partnership shall remain primarily obligated
for the performance by such assignee of all of its rights,
obligations and liabilities under the Equipment Agreement and
this Agreement. For purposes of this Paragraph 3, "Affiliate"
shall mean any person, corporation, partnership, association,
joint stock company, trust or unincorporated organization
which, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common
control with the Partnership.
iv. Successors and Assigns. This Agreement shall bind and
----------------------
enure to the benefit of the parties to the Equipment Agreement
and their respective successors and assigns.
v. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of
Delaware, without regard to its conflict of laws or choice of
law rules.
vi. Counterparts. This Agreement may be executed in as many
------------
counterparts as may be deemed necessary or convenient, and by
the
Equipment Use Extension Agreement-2
<PAGE>
different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all
of which such counterparts shall constitute but one and the
same instrument.
Equipment Use Extension Agreement-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
JAMES RIVER PAPER COMPANY,
INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc., its general
partner
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
Equipment Use Extension Agreement-4
<PAGE>
Schedule B
Variable Product Costs
The Partnership's Variable Product Costs will be based on the following formula.
For each lid produced on James River's equipment, the Variable Product Costs
will be the estimated standard costs listed below. Resin and carton costs
listed below will be revised monthly based on the Partnership's current contract
net of rebates and discounts over the term of the Equipment Use Agreement. All
other variable costs will remain over the term of the Equipment Use Agreement at
the cost listed below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SKU 9140054 92050052 9538 DT 9540 DT 9542 DT
Case Count 2400 lids 2400 lids 1000 lids 1000 lids 1000 lids
<CAPTION>
Costs Per 1000 lids
<S> <C> <C> <C> <C> <C>
Resin $ 2.330 $ 1.987 [$2.909 [$3.020 [$3.131
Carton 0.332 0.304 0.378 0.417 0.395
Bag 0.149 0.167 0.216 0.216 0.216
Direct Labor 0.739 0.739 0.814 0.814 0.814
Var. Operating Supplies 0.013 0.013 0.032 0.032 0.032
Utilities 0.048 0.048 0.070 0.070 0.070
Repair Labor & Material 0.350 0.508 0.508 0.508 0.508
-------- -------- -------- -------- --------
Variable Product Cost $ 3.961 $ 3.608 $ 4.919 $ 5.077 $ 5.166
-------- -------- -------- -------- --------
Cost Per Case $ 9.51 $ 8.66 $4.92] $5.08] $5.17]
======== ======= ======== ======== ========
</TABLE>
Additional Products
The parties hereby agree to the addition of the following products, at such
prices to be mutually agreed upon by the parties within five (5) business days
of the closing of the Purchase Transaction:
<TABLE>
<CAPTION>
SKU Description PK Size
- --- ----------- -------
<S> <C> <C>
9538DTHPC Hot Lid - PCLUB 0.5M
</TABLE>
Equipment Use Extension Agreement-5
<PAGE>
<TABLE>
<S> <C> <C>
9540DTHPC Hot Lid - PCLUB 0.5M
9542DTHPC Hot Lid - PCLUB 0.5M
9538DTSS Hot Lid - SAMS 1.0M
9542DTSS Hot Lid - SAMS 1.0M
9542DTSSB Hot Lid - SAMS 0.5M
9540DTSS Hot Lid - SAMS 0.5M
914D0012 HARDEE Lid 2.0M
920D0001 HARDEE Lid 2.4M
</TABLE>
The parties hereby acknowledge and agree that JR may require lids in
addition to those described on this Schedule B, and the Partnership agrees to
produce such lids for James River on such pricing as the parties shall mutually
agree.
Equipment Use Extension Agreement-6
<PAGE>
[EXHIBIT 10.60]
EXHIBIT VII(5)(C)
December ____, 1996
WinCup Holdings, L.P.
c/o Radnor Holdings Corporation
3 Radnor Corporate Center, Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Michael T. Kennedy, Chairman
Dear Mr. Kennedy:
Notwithstanding any language to the contrary in those certain Sublease
Agreements (collectively, the "Subleases"), each dated as of January 20, 1996,
and entered into between James River Paper Company, Inc. ("James River"), and
WinCup Holdings, L.P. ("WinCup L.P."), with respect to the premises located
generally in Corte Madera, California, or any of the Prime Leases referred to
therein, leased from Hunt Brothers Leasing, L.L.C. ("Landlord"), the
undersigned, intending to be legally bound hereby, agrees as follows:
1. Notwithstanding any provision to the contrary in the Subleases, WinCup
L.P. shall not be deemed to have assumed, and does not assume, any liabilities
for matters disclosed by any inspections of the Subleased Premises other than as
set forth in (a) Paragraph 2 below and (b) Section 1.3(a) of that certain JR
Capital Contribution Agreement, dated as of January 20, 1996, between WinCup
L.P. and James River (the "JR Contribution Agreement").
2. WinCup L.P. shall be required to reimburse James River, within thirty
(30) days of receipt of invoice from James River, for amounts required to be
paid by James River to Landlord (as defined in the Subleases) for costs and
expenses incurred by Landlord in conducting inspections (other than
(a) environmental inspections relating to "Retained Liabilities", as hereinafter
defined, and as contemplated in Paragraph 8 of that certain Landlord's Consent
to Subleases dated as of January 23, 1996 between Landlord and James River (the
"Consent") and (b) roof inspections to the extent contemplated in Paragraph 7
below) of the Subleased Premises, as well as causing compliance with Section 4
of the Subleases.
3. To the extent any compliance with Section 4 of the Subleases relates
to liabilities or obligations which James River has retained under the JR
Capital Contribution Agreement ("Retained Liabilities"), James River shall
indemnify WinCup L.P. as provided in the JR Capital Contribution Agreement.
Additionally, James River shall bear any costs and expenses incurred by James
River in conducting any inspections of the Subleased Premises, to the extent any
such actions are taken upon James River's initiative or in response to an
inspection undertaken by Landlord or its agents for the sole purpose of
investigating Retained Liabilities.
<PAGE>
4. If WinCup L.P. fails to vacate any of the Subleased Premises (as
defined in the Subleases) on the Expiration Date (as defined in the Subleases),
the Sublease governing such Subleased Premises shall continue on a month-to-
month basis upon the terms and conditions set forth in the Holding Over
provision of the governing Prime Lease, provided, however, WinCup L.P. shall be
liable for any loss, cost, damage or expense payable by James River to Landlord
as a result of such holding over.
5. James River agrees to pay to Landlord late charges paid pursuant to
paragraph 5 of the Consent; provided, however, that such late charges result
from James River's failure timely to turn over to Landlord amounts paid timely
by WinCup L.P. to James River for the benefit of Landlord. WinCup L.P. agrees
that any rent payments or other amounts due to Landlord made to James River for
the benefit of Landlord shall be delivered to James River so as to be received
by it at least one (1) business day prior to the date such amounts are due to
Landlord.
6. Pursuant to paragraph 7 of the Consent, at the expiration of the
Subleases, James River shall take all actions required by Landlord with respect
to unauthorized alterations on the roof of the factory building, but only to the
extent such alterations are the result of James River's conduct prior to the
Closing Date (as defined in the JR Contribution Agreement).
In the event the foregoing is acceptable to you, kindly indicate your
agreement by signing and dating both copies of this side letter agreement in the
spaces provided and return one fully executed copy to James River for its files.
JAMES RIVER PAPER COMPANY, INC.
By: [SIGNATURE APPEARS HERE]
-------------------------------
Name:
-----------------------------
Title:
----------------------------
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., its
General Partner
By: /s/ Michael T. Kennedy
-------------------------------
Name: Michael T. Kennedy
Title: Chairman
Sublease Side Letter-2
<PAGE>
EXHIBIT VIII(5)(A)
Corte Madera Subleases
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT VII(5)(B)
LANDLORD'S CONSENT TO SUBLEASES
THIS AGREEMENT IS MADE as of the 23rd day of January, 1996, between JAMES
RIVER PAPER CO., INC., a Virginia corporation ("Tenant") and HUNT BROTHERS
LEASING, L.L.C., successor in interest to HUNT BROTHERS LEASING, a partnership
("Landlord").
WHEREAS, Tenant is entering into a joint venture with WinCup Holdings,
L.P., a Delaware limited partnership; and
WHEREAS, in connection therewith, it is necessary for Tenant to enter into
certain subleasing transactions, which require Landlord's consent, all as more
hereinafter described and set forth; and
WHEREAS, Landlord is willing to consent to Tenant's entering to said
subleases, but only upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Consent to Subleasing. In connection with that certain Office
---------------------
Building Lease, Plant Lease, Warehouse Lease, and Engineering Lease
(collectively, the "Leases"), all dated November 8, 1989, as subsequently
amended and pertaining to premises commonly known as 240 Tamal Vista Boulevard,
195 Tamal Vista Boulevard, 205 Tamal Vista Boulevard, and 201 Tamal Vista
Boulevard, respectively, all located in Corte Madera, California, Landlord
hereby consents to Tenant's subleasing the premises to WinCup Holdings, L.P., a
Delaware limited partnership, pursuant to the terms and conditions to those
certain Sublease Agreements dated January 20, 1996, copies of which are attached
hereto as Exhibit A and incorporated herein for all purposes.
2. No Changes to Leases. Notwithstanding Landlord's consent to the
--------------------
hereinabove described subleasing transactions, except as hereinafter
specifically set forth, all of the rights and/or obligations of Landlord and
Tenant under the Leases shall remain unamended and in full and effect and
Landlord's consent to the subleasing described herein shall not constitute
consent to any subsequent assignment or subleasing without Landlord's prior
written consent and approval.
3. Insurance Throughout the Term of the Sublease. All insurance
---------------------------------------------
currently provided by Tenant shall continue to be provided by Tenant throughout
the term of the subleases (with the same quality of provider and scope of
coverage). Landlord shall be provided with at least thirty (30) days' written
notice prior to the change of any insurance currently in effect.
40
<PAGE>
4. Security Deposit. Upon Tenant's execution hereof, Tenant shall
----------------
deposit with Landlord a sum equal to one (1) month's current rent under the
Leases as security for Tenant's and Subtenant's faithful performance of their
obligations under the Leases. Landlord and Tenant agree that the security
deposit may be commingled with funds of Landlord and Landlord shall have no
obligation or liability for payment of interest on such deposit. Tenant shall
not mortgage, assign, transfer, or encumber the security deposit and any attempt
by Tenant to do so shall be void, without force or effect and shall not be
binding upon Landlord.
If Tenant fails to pay any amount when due and payable under the Leases, or
fails to perform any of the terms and conditions of the Leases or the additional
terms and conditions as set forth herein, Landlord may appropriate and apply or
use all or any portion of the security deposit to cure the default, and Landlord
may so apply or use the deposit without prejudice to any other remedy Landlord
may have on account of Tenant's default or breach. If Landlord so uses any of
the security deposit, Tenant shall, within ten (10) days after written demand
therefor, restore the security deposit to the full amount originally deposited;
Tenant's failure to do so shall constitute an act of default under the Leases.
Within fifteen (15) days after the term of the Leases has expired and Tenant has
vacated the Premises, provided Tenant is not then in default on any of its
obligations thereunder, Landlord shall return the security deposit to Tenant.
5. Late Charge. If Tenant shall fail to pay within ten (10) days from
-----------
when due and payable any rent or other amounts or charges which Tenant is
obligated to pay under the Leases, Tenant shall pay a late charge equal to ten
percent (10%) of such amount that is due. Tenant acknowledges that any late
payments will cause Landlord to incur costs and expenses not contemplated under
the Leases, including, but not limited to, administrative and collection costs
in processing any accounting expenses, the exact amount of which is extremely
difficult to fix. Therefore, Tenant agrees that the late charge described
herein represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered by such non-timely payment.
Acceptance of any late charge will not constitute a waiver of Tenant's default
with respect to such non-payment by Tenant or prevent Landlord from exercising
any rights or remedies available to Landlord under the Leases.
6. Pending Environmental Matters. On or before June 1, 1996, Tenant
-----------------------------
shall obtain final governmental closure both for the storm drain and the
underground storage tank, as described in Patrick McHugh's letter to John Jang
of the California Regional Quality Control Board dated October 16, 1995. Any
storm drain work associated therewith shall be completed by Tenant at its sole
cost and expense on or before February 1, 1997. Copies of any correspondence
sent or received by Tenant or subtenant in connection with the matters described
in this paragraph shall be immediately delivered to Landlord.
2
<PAGE>
7. Unauthorized Alterations. Tenant acknowledges that it has made
------------------------
numerous alterations, including the installation of pollution equipment, on the
roof of the factory building, without Landlord's knowledge or prior approval as
was required by the Leases. Landlord shall assess all such work at the
expiration of the Leases, and Tenant shall take such measures as Landlord may
request, to remove said alterations and/or correct any damage occasioned
thereby.
8. Environmental Inspection. As set forth in the subleases, Landlord
------------------------
shall have the right to have environmental inspections performed upon the
Premises. The costs of such inspections shall be paid for by Tenant and any
work recommended thereunder shall be performed in a prompt and timely manner, as
an obligation of Tenant at Tenant's sole cost and expense.
9. Financial Statements. Tenant shall provide Landlord with Subtenant's
--------------------
quarterly financial statements throughout the term of the subleases.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
HUNT BROTHERS LEASING, L.L.C.
By:
--------------------------------
JAMES RIVER PAPER CO., INC.
By:
---------------------------------
---------------------------------
Title
3
<PAGE>
EXHIBIT VIII(5)(C)
Sublease Side Letter
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT IX (2)
Disabled Employees
Category I:
1. Ruth Ayala
2. Eugene Dodd
3. Harold Merlander
4. Belinda Parrales
5. Francisca Villalobos
6. Adam Thogode
7. Kenneth Barnhill
8. Vi Tang
9. Rafael Sanchez
10. Maria Castro
11. Alex Glickman
Category II:
1. Maria Flores
2. Dennis Crafton
3. Sam Pusateri
4. Timothy Sheehan
5. Nirmal Athwal
6. Gabriel Bautista
29
<PAGE>
TABLE OF CONTENTS
Policy Statement.............................................. I
Overview...................................................... II
Contracts and Agreements...................................... III
Environmental................................................. IV
Financial, Corporate, Tax, Property and Transportation........ V
Human Resources............................................... VI
Insurance and Risk Management................................. VII
Leases, Deeds, Timber Purchases and Other Real Estate......... VIII
Marketing..................................................... IX
Product Development, Research and Testing..................... X
Public, Governmental and Investor Relations................... XI
Safety and Health............................................. XII
Sales and Distribution........................................ XIII
Additional Interpretive Guidelines............................ XIV
Forms......................................................... XV
VI-1
<PAGE>
JAMES RIVER CORPORATION
-----------------------
RECORDS MANAGEMENT POLICY
-------------------------
RECORDS CREATION, RETENTION AND DISTRIBUTION
--------------------------------------------
PURPOSE: To establish a uniform James River policy for creating,
distributing, retrieving, preserving, protecting, storing and disposing of
company records.
SCOPE: The policy enunciated in this Policy Statement is applicable to
corporate headquarters and all business groups, plants and offices in the United
States, and it should apply to all James River records, whether maintained in
central files, offices or homes, regardless of form (e.g., hard copy, microfilm
----
or electronic format).
POLICY GOAL: To eliminate the cost of unnecessary records.
POLICY APPROACH: Only records expressly and regularly required by
business needs or legal obligations shall be maintained, and then only for the
periods of time actually required. All other records shall be discarded
immediately after use.
POLICY COMPONENTS: This purpose will be accomplished by:
A. Limiting the records created within James River to those necessary
for James River's ongoing business;
B. Encouraging James River personnel to strive for accuracy and brevity
in writings;
C. Limiting the circulation of documents to people who genuinely need
the information;
D. Encouraging the immediate disposal of routine, irrelevant or
marginally useful documents;
E. Discouraging the creation and retention of large numbers of personal
files;
F. Maintaining truly important records in accessible central files or
organized records storage areas; and
G. Establishing and following timetables for the timely disposal of all
records.
VI-2
<PAGE>
BACKGROUND
----------
Modern businesses generate and retain large volumes of records with
inadequate thought to their clarity or ultimate usefulness. Frequently these
records are distributed to people who cannot practically use the information.
The cost of such practices, including reading, filing and storing
originals and multiple copies, is enormous.
Further complications arise because records often outlast the
recollections of their authors or recipients. Poorly worded documents require
expensive research to clarify ambiguities, and the outcome of lawsuits sometimes
hinges on uncertainties caused by innocent but unclear writings.
These costs and risks are best addressed by a records management program
which establishes guidelines for the creation and circulation of documents,
encourages quick disposal of routine and marginally relevant records and
provides for careful organization and retention of truly important records in
central, readily available files. It is the purpose of this policy to create,
implement and maintain such a program.
VI-3
<PAGE>
OVERVIEW
--------
1. RECORD CREATION AND CIRCULATION
A. Purpose
-------
The legitimate purposes of any record, whether in paper or electronic
format, are to communicate facts or positions or maintain a record of facts or
positions.
Written documents and other records are expensive to create and maintain.
Where the purpose of a document is to communicate, you should first ask
whether you can use less expensive methods, such as telephone or face-to-face
meetings.
Where the purpose is to preserve factual understandings or positions,
consider whether that purpose justifies a writing.
Create written records only when necessary.
B. Methods
-------
When a written record does become necessary, you must understand that your
writing may remain in some file long after it has served its usefulness, and it
may be read by someone with no knowledge of the immediate circumstances. To
avoid later misreadings of your intentions, do not impute bad motives to others,
overstate a position, exaggerate dangers or otherwise write in a way that would
mislead a later reader (in-jokes, posturing, and cryptic messages are best left
to voice communications, if at all).
When writing, focus on the facts or company position required to be
----- ----------------
communicated or preserved. Strive for accuracy and clarity. Whenever possible,
recheck factual statements for accuracy or qualify as necessary.
Clear writing also demands that you reread your work to ensure that it is
clear of ambiguities and possible misunderstandings.
C. Circulation
-----------
Circulate your writings only to people who have a genuine need to know the
facts or positions stated. Addressees should not further distribute documents
unless the
VI-4
<PAGE>
potential recipient meets the test of the original addressee, i.e., a person
with a genuine need to know the facts or positions stated.
2. RECORD RETENTION
A. Purpose
-------
The purpose of a Records Management Program is to effect an orderly
transition of records from creation to disposal. The goal is to create only
necessary records and keep those records only as required for operations or
legal compliance. Because a record might be useful at some unspecified future
-----
time does not, when multiplied by a million records created each year within
James River, justify keeping it.
When a record is not legally required to be kept and there is serious doubt
about a record's future usefulness, discard or recycle it.
B. Methods
-------
This Program addresses the specific problems and policies applicable to
different functional categories within James River and the records typically
handled within those functions. This Program establishes retention practices
applicable to each record category, regardless of the form in which it is
maintained (e.g., hard copy, computer tape, disk or hard drive, microfiche or
----
film, laser disk or by means of any other technology).
Consistent adherence to these practices is a major step toward properly
managing James River's records.
C. Retention Times
---------------
Each functional category addresses specific record categories and assigns a
retention period to each.
Any period stated in years (e.g., "3 years") refers to fiscal years. Thus, a
----
record with a three year period created during 1991 should be discarded for
recycling at the end of the third full fiscal year after its creation (e.g.,
----
December 31, 1994).
"Current", "discard after completion" and similar terms mean that there are
no legal retention requirements and that the record should be discarded when it
is no longer being actively used, unless there are unresolved issues, such as
dissatisfaction on the part of the customer, supplier or James River that may
lead to legal claims.
VI-5
<PAGE>
D. Decision Making
---------------
1) Author
The author should normally determine whether a record should be
retained, unless it was created at someone else's express directions, in
which case that person must determine whether (and where) to retain that
record.
2) Recipients of James River Records
Recipients of James River records (unless created at the recipient's
request) should assume that the author will take responsibility for
retaining the record.
3) Recipients of Non-James River Records
The addressee or first recipient of a record from outside of James River
should determine whether (and, if so, where) to retain the record.
Since this category would include "junk mail" and large quantities of
routine correspondence without any lasting importance, much can be disposed
of after reading. Discretion must be used, and no document legally required
to be kept (see below) or which states a legal or factual position likely to
be contradictory to or confirmatory of a James River position or
understanding should be summarily discarded, i..e., documents that might be
received from a supplier, customer or contractor relating to prices, quality
or other contract or warranty claims.
E. Government Inquiries and Investigations; Litigation
---------------------------------------------------
Any document which comes from a court or governmental agency must be treated
as one required to be kept. Unless the document is a type which is routinely
received and handled within a location (such as garnishments or subpoenaes for
an employee's earnings), a copy should be immediately forwarded to the James
River Legal Department, outside lawyers already working on the matter, or a
James River task force or group already working on the matter (e.g., tax
----
returns, confirmations of environmental filings, etc.).
VI-6
<PAGE>
When James River receives notice of any legal matter, including a subpoena
---
of James River files, lawsuit, government investigation, a government charge or
threatened action, immediately use the Records Retention Suspension Notice form
to suspend routine disposal of documents relating to that matter, notify the
Legal Department immediately and follow the attorneys' specific recommendations
regarding the management of the affected records.
F. Confidentiality
---------------
Every author, recipient or record custodian must consider the sensitive
nature of the documents in his possession and act accordingly. For example,
highly confidential, proprietary records may require limited access storage and
secure disposal. The law will usually grant no greater protection to a company's
records than the company itself takes, and some courts have held that records
left in public areas or discarded intact in trash are not legally protected.
G. Drafts
------
Except in rare cases, such as contract negotiations, drafts should not be
retained. The final version alone has operative force, and no purpose is served
by keeping drafts.
H. Copies
------
Copies should be made sparingly and seldom retained. If the author fulfills
his responsibility of filing the original in a central file, it will be
available as necessary. Accordingly, retain copies only in special situations,
such as retaining a copy as a format sample or guide, for ready reference on an
active matter (see 3[C]) or when two locations must have ready reference.
---
Except in these special circumstances, the recipient or holder of a copy
should read and discard.
3. RECORD LOCATION
A. Central Files
-------------
VI-7
<PAGE>
The most efficient filing systems use central files in locations accessible
to all who need the information. On occasions, there may be a temporary need for
a desk or personal file, such as when a specific matter is receiving a high
level of attention, but as soon as the matter is resolved or becomes routine,
documents required to be kept should be merged into the central file and
duplicates and other unnecessary documents discarded for recycling.
B. Personal Files
--------------
In one sense, there are no "personal" files relating to James River's
business. Even files kept in employees' homes may be considered company files
that must be produced to government investigators and courts.
Moreover, personal files usually duplicate central files and increase
difficulty and cost of locating all relevant files.
Accordingly, no file relating to James River's business should be considered
personal, and desk or "personal" files should be created only when necessary and
merged with the central files when the immediate need has ended (see 3[A]).
---
C. Computer Files and Purchased Software
-------------------------------------
Information stored or produced on personal computers are "records" covered
by the Records Management Program. When the records have been downloaded to
floppy disks or long-term storage medium, the medium itself should be either
discarded or reformatted at the end of the applicable retention period. When
records have been retained on hard drives, they should be erased or reformatted
as appropriate unless more specific instructions are subsequently issued.
The Records Management Committee will issue specific instructions applicable
to records maintained on central computers or in central long-term storage.
Purchased Software Packages contain a License Agreement specifying the terms
and conditions in which you must comply in order to legally use the product. In
regard to product upgrades, upon receipt of a new release of the software, all
prior releases should be destroyed within 90 days.
VI-8
<PAGE>
D. Duplicate Files
---------------
Rarely is it necessary to have full duplicate files unless one is a backup
while the primary file is unavailable (for example, during tax audits). It may,
however, be necessary for different files to contain some duplication. This
should not be done thoughtlessly, but especially with financial and personnel
matters and information required by government regulations, it may occasionally
be more efficient to have some duplication. (Adherence to the retention periods
will help reduce the volume and search time.)
4. OTHER MATTERS
A. Exemptions
----------
Where there is a genuine need to retain documents beyond the retention
period, an exemption may be granted by the James River Records Management
Committee. Requests must be made on the appropriate form. The exemption, if
granted, will be in writing and must be attached to the applicable records. If
the exemption establishes a revised retention date, it must be followed.
B. Contractual Requirements
------------------------
Bond and trust agreements and documents related to mergers, asset sales and
acquisitions occasionally impose special record-keeping requirements.
In order for James River to apply this Program without compromising its
contractual undertakings, anyone aware of current contractual commitments or who
has responsibility for such contractual undertakings in the future must
immediately notify the Records Management Committee and include copies of the
pertinent contractual provisions.
The Committee will provide guidance and, where necessary, the appropriate
written exemption from the Program.
C. Record Types Not Addressed
--------------------------
Because of the pervasive nature of government regulations, some locations
may generate highly specialized documents subject to national, state or even
local government retention requirements, which are not addressed by this
Program.
VI-9
<PAGE>
If you are aware of laws or regulations applicable to any James River
operations and which impose special retention requirements not addressed in this
Program, notify the Records Management Committee at once and include a copy or
reference to the law or regulation (if possible). The Committee will promptly
address your request and, if necessary, amend the Program.
VI-10
<PAGE>
CONTRACTS AND AGREEMENTS
------------------------
1. SCOPE
As used in the James River Records Management Program, "contracts" and
"agreements" are used interchangeably to describe legal arrangements between
James River and other parties for the sale, lease or exchange of goods or
services. The arrangements may be identified as distributorship agreements,
broker contracts, supply agreements, leases, advertising contracts, consulting
agreements, license agreements, secrecy or confidentiality agreements, purchase
orders, sales orders, order acknowledgments, and confirmations, to name only a
few.
Agreements and contracts include not only formal documents signed by all
parties, such as long-term supply agreements, but also informal writings that
confirm, reflect or contain terms of an oral contract or that explain, amend,
extend or terminate contracts.
This section addresses the retention periods for all James River contracts
and agreements except for those related to the sale or leasing of real property
or timber (see "Leases, Deeds, Timber Purchases and Other Real Estate"),
individual non-compete, confidentiality, employment or consulting agreements
(see "Human Resources"), and routine sales of James River products (see "Sales
and Distribution").
2. PURPOSE
The purposes of this section are, first, to ensure that James River enters
into, amends and enforces such agreements consciously and carefully and, second,
to ensure that there exists a single file containing all documents reflecting
the formation, interpretation and administration of each James River contract.
3. CONSIDERATIONS
Since contracts create legal rights and obligations, James River must retain
all documents which contain contract terms, interpretations, and performance.
VI-11
<PAGE>
Due to the changing and sometimes informal nature of business relationships,
contracts may be made on the basis of a handshake, be modified by
correspondence, orders or "redi memos", and be changed if one party knowingly
allows the other to alter without challenge the nature or extent of performance
required by the express terms of the contract.
4. MANDATORY RECORDS
Except in the case of routine sales or specialized documents, such as real
estate transactions, every location or department actively involved in creating
or administering a contract should maintain a file for each contract which
contains all documents required to be kept.
A. Documents to Be Kept
--------------------
1) Documents formally designated as legally binding (these are usually
negotiated by the parties and signed by each party's representatives);
2) Purchase orders, invoices, correspondence and similar documents
exchanged by James River and a vendor or customer which contain or reflect the
terms of a contract (for example, a letter suggesting a consulting relationship
and a purchase order would constitute a contract);
3) Documents exchanged between James River and a third party which
interpret a contract (this would include letters explaining the terms of earlier
documents or adding to or relaxing contract terms); and
4) Documents which reflect the other party's performance or
nonperformance. (In this category, discretion is necessary. For example, if
the contract is an elaborate construction agreement, detailed administrative
records reflecting performance, including deadlines, changes, extras and the
like, must be kept. If the contract is a distributor agreement, routine
invoices and shipping records kept by the Financial Department need not be
kept in the distributor file.)*
- ---------------------------------
*Note: If the distributor (or customer) sends a purchase order, confirmation
or other writing that attempts to change the terms of the order or limitations
in James River's invoice, this writing could change the terms of sale. Such
documents must be
VI-12
<PAGE>
B. Retention Period
----------------
All nonduplicative documents described above should be kept for six years
after the contract has been completed.
5. DOCUMENTS TO BE RETAINED ONLY IN LIMITED CIRCUMSTANCES
A. Proposals That Do Not Ripen Into A Contract
-------------------------------------------
Routine preprinted or form proposals should be discarded so long as no
action has been taken to accept them.
Proposals that grow out of discussions with vendors or customers may be
discarded if they do not ripen into a contract, provided all parties
--------
acknowledged that there are no further obligations. If the words or actions of
the other party suggest it believes that James River has either made an oral
agreement or has some continuing obligations related to the proposals, you
should retain the file intact and seek guidance from the James River Legal
Department.
B. Drafts
------
The final document is the only one with legal authority. Drafts exchanged
between parties are useful only as they reflect the intent or goal of one of the
parties, the meaning of a particular phrase or the additional terms, or if the
--
contract fails to include language that the written contract is the final
agreement which supersedes all discussions and negotiations. Only in these
cases should drafts or proposals received from the other parties be kept as
required by 4(A). Drafts created by James River and only circulated internally
should be promptly discarded.
- --------------------------------------------------------------------------------
promptly and closely examined and, if appropriate, brought to the attention of
the James River Legal Department.
VI-13
<PAGE>
ENVIRONMENTAL
-------------
1. SCOPE
James River generates, collects and maintains numerous documents relating to
the possible impact of its operations on the physical environment, including
operations of environmental control equipment and production equipment and
disposal of manufacturing by-products. This Program is directed to those
functions and records.
2. CONSIDERATIONS
Federal and state government agencies have enacted numerous environmental
requirements which control manufacturing and disposal activities and impose
numerous record-keeping and reporting requirements. These requirements are
strictly enforced.
There is an enforcement trend toward seeking criminal sanctions or severe
civil sanctions for alleged violations believed to be "willful" or "knowing",
and liability often depends on either repeated activities or documents which
seem to reveal an illegal corporate "state of mind". To maintain its position as
an environmentally sensitive company, James River will continue to emphasize
strict compliance with all laws and create and retain required environmental
records in accordance with this Program.
This Program is not intended to identify every record required to be created
and maintained. Rather, the purpose of this Program is to identify those records
which have identifiable minimum retention periods or which James River should
maintain beyond minimum retention periods.
The minimum retention periods expressed in this Program reflect primarily
federal considerations. On occasions, state or local retention requirements may
exceed the retention periods stated for these records. It is the responsibility
of each facility to determine state and local requirements and notify the
Records Management Committee of those requirements.
While there are minimum legal retention times for certain documents, James
River should retain certain specific records indefinitely to address issues of
future liability or establish baselines for future permits or decisions.
Examples of records which should be kept indefinitely are those related to waste
disposal. Examples of
VI-14
<PAGE>
records which should be kept longer than the statutory period are those that
serve as a baseline for pollution prevention measurements or for future permits.
3. MANDATORY RECORDS
Retention Periods
(years after close
of fiscal year)
---------------
A. Air Pollution Control
---------------------
All monitoring records, including, for example,
continuous emission monitoring records.......... Permanent (post 1985)
Asset records indicating date of installation of
process equipment generating air emissions...... Permanent
Records of the occurrence and duration
of startup, shutdown, or malfunction of
any air pollution control equipment;
periods during which a continuous emission
monitoring system is inoperative; and files
of all monitoring and performance test
measurements ................................... Permanent
Records relating to steam-generating facilities,
including operating conditions, fuel records,
capacity measurements, and monitoring records... Permanent
B. Water Pollution Control
-----------------------
Records relating to oil pollution prevention
and inspection.................................. Three years
Records relating to NPDES permits and data for
discharge monitoring reports; audits............ Permanent (post 1985)
Records relating to dredge and fill permits under
Section 404 of the Clean Water Act.............. Three years
C. Solid and Hazardous Waste
-------------------------
CERCLA initial reports of suspected waste sites Fifty years
Hazardous waste facility operating records...... Permanent
VI-15
<PAGE>
Hazardous waste facility reports.................. Permanent
Hazardous waste manifests, Biennial Reports and
Exception Reports, and test results and analyses.. Permanent
Records relating to landfill operation............ Permanent
D. Underground Storage Tanks
-------------------------
Closure records................................... Permanent
Records demonstrating compliance with technical
standards......................................... Permanent
Repair records.................................... Permanent
E. Community Right-to-Know Records
-------------------------------
All records supporting or relating to toxic
chemical release reporting (Form R)............... Permanent
F. PCBs
----
PCB cleanup record................................ Permanent
PCB waste manifests............................... Permanent
Transformer inspection records.................... Three years after
disposal or conversion of
the last transformer on
the site
G. Permits
-------
Environmental permits, approvals, monitoring,
and compliance issues............................. Five years following
expiration of permit or
until any information
gathered as result of
monitoring under prior
permit has been used in
issuance of new permit
Permit applications and supporting materials...... Duration of permit and
where necessary, through
permit renewal process
VI-16
<PAGE>
4. GENERAL RULE
All records not identified above should be discarded when no longer used
unless a particular facility identifies a specific need to retain records beyond
the identified time.
Superseded abatement plans should be discarded when replaced. Drafts and
surveys should be discarded when the contents have been transferred to reports.
Any records that relate to a matter in litigation should be retained
permanently. If a document may be involved in litigation, contact the James
River Legal Department for guidance.
VI-17
<PAGE>
FINANCIAL, CORPORATE, TAX, PROPERTY
-----------------------------------
AND TRANSPORTATION
-------------------
1. SCOPE
James River generates, collects and maintains numerous financial records of
financial and related activities of the company. Financial records, in addition
to recording all revenue and payment actions, are necessary to:
A. Ensure accurate recording of all transactions in accordance with
generally accepted accounting principles, sound internal controls and
proper business practices;
B. Allow the company to meet external reporting requirements;
C. Assist management in making business decisions based upon economic
facts;
D. Allow management to interpret business performance in light of business
plans and controls; and
E. Minimize the company's tax burden through preparation of accurate tax
returns and successful defense of audits.
This section is directed to all activities relating to or supporting
financial activities except for specific categories such as "Contracts and
Agreements", "Sales and Distribution", and "Leases, Deeds and Other Real
Estate".
2. CONSIDERATIONS
The financial activities of the company are governed by numerous federal
and state agencies. They are also regulated by generally accepted accounting
principles and the Financial Accounting Standards Board (FASB), which
establishes rules regarding the recordation, presentation and disclosure of
financial events. The company also has expressed and implied fiduciary
responsibilities to control and protect the assets of the company and to
properly document all financial transactions.
In order to comply with these laws and standards, James River will maintain
all financial and supporting documentation as required.
VI-18
<PAGE>
3. MANDATORY RECORDS
The following sections list the records which must be maintained and the
applicable retention periods:
Retention Periods
(years after close
of fiscal year)
---------------
A. Accounting
----------
Accounts Payable Invoices and Credits -
Paid Voucher File including copies of the
voucher check, vendor's invoices, and related
correspondence....................................... Six years*
Accounts Payable Ledgers and Schedules............... Permanent
Accounts Receivable Ledger Cards and
Statements, Trial Balances and Aging Schedules
(after date of payment).............................. Three years
Accounts Receivable Ledgers and Schedules............ Five years
Amortization and Depreciation Records
(financial Reporting or "Book")
(after disposal of asset)............................ Four years
Annual Reports (also see Corporate Records).......... Permanent
---- ---
Audit Reports (Internal and Management Letters;
also see Administrative Records)..................... Ten years
- ---- ---
Audit Work Papers (Internal)......................... Three years
Balance Sheets....................................... Permanent
Bank Deposit Slips (duplicates)...................... Two years
Bank Statements and Reconciliations.................. Three years
Bonds................................................ One year after series
is retired
- --------------------
*Absent a current "Audit Status" report from Corporate Tax Services, confirm
with Corporate Tax Services the absence of pending audits.
(C) 1992 James River Corporation VI-19 September 1,1992
<PAGE>
Books of Original Entry, such as Cash Receipts
Journal, Cash Disbursements Journal, Sales
Journal, Returns and Allowances Journal, Voucher
Register and General Journal Entries................. Six years*
Budgets (Final Approved, Financial and Capital)...... Four years
Capital Appropriation Records........................ Three years after
completion of
expenditure*
Capital Assets Records............................... Four years after
disposal of assets
Cash Receipts Records................................ Six years
Check Register....................................... Permanent
Checks, Cancelled (Dividends)........................ Six years
Checks, Cancelled (General Disbursements)............ Six years*
Claim Files.......................................... See "Insurance
and Risk Management"
Cost Accounting Records.............................. See Inventory
and Cost
Estimates, Projections (unless provided to
outsiders; then, see "Investor and Public
---
Relations").......................................... One year
Expense Analyses..................................... Six years
Expense Reports...................................... Six years*
Financial Statements, Certified...................... Permanent
Financial Statements, Periodic (Internal)............ Permanent
- --------------------
*Absent a current "Audit Status" report from Corporate Tax Services, confirm
with Corporate Tax Services the absence of pending audits.
(C) 1992 James River Corporation VI-20 September 1, 1992
<PAGE>
General Ledger Records............................... Permanent
Note Register........................................ Two years after
series is retired
Payrolls............................................. See Payrolls and
Related Records
Petty Cash Records................................... Three years
Purchase Orders, Requisitions........................ See "Contracts
and Agreements"
Records of Entertainment, Gifts and
Gratuities........................................... Six years*
Sales Invoices and Credit Memos...................... Six years
Salesman Commission Reports.......................... Three years
Tax Returns and Working Papers....................... See Taxation
Trial Balances (Periodic)............................ Six years
Working Papers....................................... Two years
Year-End Closing Packages............................ Five years
B. Credit and Collection
---------------------
Application for Credit............................... Current
Collection File...................................... Current
Credit Authorization Records......................... Current
Credit Files, Commercial Reports, Financial
Statements or Letters of Reference................... Current
- --------------------
*Absent a current "Audit Status" report from Corporate Tax Services, confirm
with Corporate Tax Services the absence of pending audits.
VI-21
<PAGE>
Time Payment Contracts and Promissory Notes.......... Three years after
payment
Uncollectible Accounts - records and reports
regarding uncollectible accounts, including
authorization for writing off........................ Six years*
C. Inventory and Cost
------------------
Cost Production and Job Summary Records.............. Four years
Cost Reports and Statements.......................... Four years
Cost Sheets.......................................... Four years
Labor Distribution Records........................... Four years
Price Records........................................ Four years
Quotations........................................... Four years
Valuation Computations............................... Four years
D. Payroll and Related Records
---------------------------
Assignments, Attachments and Garnishments
(after settlement or termination).................... Two years
Bond Delivery Receipts and Issuing Records
(purchase made by employees through company)......... Two years
Individual Employee Earnings Records................. Six years
Payments and Reports to Government - includes
state and municipal authorities covering payment
and reports relating to Income Tax Withholding,
FICA contributions, State Unemployment, Workmen's
Compensation, reports on earnings, etc............... Six years
Payroll Registers.................................... Six years
Retirement and Pension Plan Records, including
earnings records of vested employees................. Permanent
Time Cards and Time Sheets........................... See "Human Resources"
VI-22
<PAGE>
Unclaimed Wage Records............................... Two years
E. Taxation
--------
Annuity or Deferred Payment Plan..................... Permanent
Depreciation Schedules............................... Permanent
Dividend Register.................................... Permanent
Excise Exemption Certificate......................... Four years
Excise Reports (Manufacturing)....................... Four years
Excise Reports (Retail).............................. Four years
Inventory Reports.................................... Permanent
Tax Bills and Statements............................. Permanent
Tax Returns.......................................... Permanent
F. Corporate Records
-----------------
Annual Reports....................................... Permanent
Authority to Issue Securities........................ Permanent
Bonds, Surety........................................ Three years
Capital Stock Ledger................................. Permanent
Charters, Constitutions, Bylaws...................... Permanent
Contracts............................................ See "Contracts and
Agreements"
Corporate Election Records........................... Permanent
Debt Transfer-Noteholder Records..................... Two years after series
is retired
Hart/Scott/Rodino Filings (Original)................. Five years
VI-23
<PAGE>
Hart/Scott/Rodino Filings (Supplemental)............. Ten years
Incorporation Records................................ Permanent
Licenses (Federal, State, Local)..................... Discard after termination
Minutes of Shareholder, Board of Directors
and Committee Meetings............................... Permanent
Stock Option, Stock Purchase, SAR,
Deferred Compensation and Similar
Agreements........................................... Five years after
expiration
Stock Transfer and Stockholder Records............... Permanent
G. Manufacturing Records (also see "Product
--------------------- ---- ---
Development, Research and Testing")
Bills of Material.................................... Two years
Drafting Records..................................... Permanent
Drawings of Machinery Sold by James River............ Six years after expected
life of product,
including rebuilds
Materials Issuing Records............................ Three years
Memos, Production.................................... Discard after completion
of job or contract
Production Reports, including Quality Records........ Three years
Tool Control......................................... Three years
Work Orders.......................................... Three years
Work Status Reports.................................. Discard after completion
of job or contract
H. Plant and Property Records
--------------------------
Acquisition and Disposition Work Papers
(asset evaluations).................................. The longer of six years
VI-24
<PAGE>
after creation of two
years after disposition
of property
Fixed Asset Inventory Records........................ Permanent
Maintenance and Repair, Building..................... Ten years
Maintenance and Repair, Machinery.................... Five years
Office Equipment Records............................. Five years
Property Records, including Costs, Depreciation
Reserves, Year-End Trial Balances, Depreciation
Schedules, Blueprints and Plans...................... Permanent
I. Traffic and Transportation Records
----------------------------------
Bills of Lading, Waybills............................ Five years
Claims............................................... Two years
Common Carrier Tarriffs.............................. Five Years
Delivery Reports..................................... Five years
Export Declarations.................................. Four years
Freight Bills and Statements......................... Five years
Motor Transportation Agreements...................... Five Years
Railroad Contracts and Exempt Quotes................. Five Years
Receipts for Registered Mail......................... Current
Receipts for Express Packages........................ One Year
Receiving Reports and Shipping Reports............... Five years
4. GENERAL RULE
VI-25
<PAGE>
Absent exceptions, all documents not listed above should be discarded
immediately upon their last use.
VI-26
<PAGE>
HUMAN RESOURCES
---------------
1. SCOPE
The Human Resources Department generates and maintains personnel records
necessary to process employment actions and implement personnel procedures,
including hiring, promotions, layoffs, transfers, payroll transactions and
withholding obligations. The Human Resources Department also manages and
administers James River's pension and welfare plans. It is to persons involved
in these procedures and processes that this section is directed, whether they
are Human Resources or Industrial/Employee Relations personnel.
2. CONSIDERATIONS
Employment and labor matters are heavily regulated. Federal, state and,
sometimes, local government agencies enforce a wide range of laws and
regulations affecting wages and hours, equal employment, employee organizational
activities, workplace health and safety, and employee benefits. Many of these
regulations also impose record-keeping and reporting requirements. (See
---
Appendix A.) State common law may also create various contractual rights for
employees and provide remedies for such employment-related conduct as wrongful
discharge, defamation and infliction of emotional distress./1/
Compliance within these many laws and regulations is often established
through records created or maintained by the Human Resources group. Thus,
thoughtful adherence to the following guidelines is essential.
With few exceptions (noted below), government regulations do not dictate
the manner in which required information is to be organized and stored.
Similarly, James River has not created a single, organized records system for
each Human Resources office, and the current organizational arrangement at each
location reflects the history
- --------------------
/1/Federal statutes and regulations are the primary sources of legal
requirements for the retention of employment-related records and are the focus
of these guidelines. State laws in this area tend to parallel corresponding
federal laws. If you are aware of state or local requirements that may be
different from those listed in this Program, immediately notify the Records
Management Committee using the Form on Page XIV-1.
VI-27
<PAGE>
of that location, the make-up of the work force and the individual programs in
place (which may often be affected by the presence of one or more unions). This
Program, therefore, addresses Human Resources record keeping from a functional
point of view. It does assume, however, that each Human Resources office will
maintain separate files on each current and former employee ("personnel files")
which will contain a large amount of the required information. Timecards,
arbitration files, job postings, required reports and other matters of general
applicability are usually kept separate, but the form and arrangements of such
files may be determined by each office's needs. Records of EAP referrals,
medical records, and I-9s must be kept separately in files with limited
accessibility.
Some general files will duplicate information in personnel files, and the
general rule against having more than one copy can be relaxed where it is
necessary to access information both by general categories and by employee name
or position. Extensive use of multiple copies, however, makes it more difficult
to follow retention schedules and defeats a purpose of the Records Management
Program.
3. MANDATORY RECORDS/2/
The retention periods listed below are separated by the stage of employment
for ease of application. The use of these categories does not imply that a Human
Resources office must keep information in separate files by the particular
----
heading (e.g., exit interviews).
----
Retention Periods
(years after close
of fiscal year)
---------------
A. Pre-employment
--------------
- --------------------
/2/In addition to the foregoing, disposal of affected record categories
must cease once James River receives (i) notice of a scheduled Office of Federal
Contract Compliance Programs ("OFCCP") or Wage and Hour Division ("W&H") audit;
(ii) notice of a charge filed with the National Labor Relations Board ("NLRB"),
the Equal Employment Opportunity Commission ("EEOC") or similar state or local
agency; (iii) notice of a lawsuit; or (iv) James River becomes aware of an
actual or threatened investigation or other legal action. In all such cases, you
must immediately suspend disposal of any records relating to the matter and
contact the James River Legal Department for further guidance.
VI-28
<PAGE>
Applications/3/, resumes/4/, and correspondence
with applicants:
- Unsuccessful applicants....................... One year Note: Special
rules apply if your
location must file AAPs;
see C
- Employees..................................... Term of employment plus
six years Note: Special
rules apply if your
location must file AAPs;
see C
Contracts and correspondence with employment
agencies............................................. See "Contracts and
Agreements"
Job advertisements and other material soliciting
applications or inviting referral sources............ One year Note: Special
rules apply if your
location must file AAPs;
see C
Pre-employment tests and related records
(including interview notes):
- Unsuccessful.................................. One year applicants Note:
Special rules apply if
your location must file
AAPs; see C
- Employees..................................... Four years unless
- --------------------
/3/Application process should include an invitation to declare handicapped
or veteran status.
/4/It is generally unwise and unnecessary to accept unsolicited resumes.
When an unsolicited contact is made by resume, respond by letter returning the
resume and stating that the company is not currently accepting applications and
has not, therefore, considered the resume. Keep the letter for one year but do
not copy the resume.
VI-29
<PAGE>
facility's policy
is to use this
information in
subsequent
employment
decisions (e.g.,
----
promotions)
B. Employment
----------
Employment Eligibility Verification Forms (I-9s)..... Longer of three
years after hire
or one year after
termination
Individual employment contracts or consulting
agreements, confidentiality, non-compete, and
patent assignment agreements, etc.................... Period of
employment plus
six years
Receipt for handbook and records of orientation...... Period of
employment plus
six years
Withholding Exemption Certificate and Withholding
Agreements........................................... Two years after
replaced or
four years after
termination
VI-30
<PAGE>
C. Employment Administration (Excluding Health and Benefit
-------------------------------------------------------
Administration)
---------------
Affirmative Action Plans and supporting
documentation (e.g., all applications,
----
job offers, etc.)(NOTE: The supporting
documentation for the current Plan is
from the preceding Plan year)........................ Period of
--------- effectiveness
of Plan/5/
Attendance records................................... Three years
Changes in Withholding Exemption Certificates
and Withholding Agreements........................... Two years after
replaced or
four years after
termination
COBRA notices required by changes in marital
status, etc.......................................... Period of
employment plus
four years
EEO-1 forms.......................................... Two years
Employee performance evaluations..................... Three years
General payroll records showing name, SSN,
hours worked per day, total hours worked per
week, wage rate, deductions and additions,
straight time and overtime earnings, date of
payment and applicable pay period (these
may be in summary form).............................. Four years
General records of personnel actions (e.g.,
summary or periodic reports of promotions,
discipline, demotions, transfers,
layoffs, training selection, recall, etc.;
- --------------------
/5/Do not discard the prior Affirmative Action Plan until completion of the
succeeding Plan since the old Plan is needed to prepare the new Plan. The
supporting documentation for the Plan, however, need not be retained beyond the
end of the Plan year unless the Company has received notice of a proposed OFCCP
audit. Before discarding, confirm with Richmond Human Resources that no OFCCP
audit has been scheduled.
VI-31
<PAGE>
for individual actions, see Personnel file).......... Two years
Job or position descriptions......................... Period of
effectiveness
plus two years
Merit pay system description......................... Period of
effectiveness
plus two years
Original timesheets and time cards................... Two years
Personnel file, including employment application,
records of personnel action (e.g., promotions,
----
demotions, transfers, layoffs, pay increases,
disciplinary actions), etc........................... Period of
employment plus
six years
Records of Accommodations............................ Term of
employment plus
six years
Seniority system..................................... Period of
effectiveness
plus two years
Training records..................................... Four years
Wage rate tables, work schedules..................... Period of
effectiveness
plus three years
Workers Compensation records (including accident
reports, claims responses and adjudication).......... Longer of six
years after file
is closed or
period during
which claim can
be reopened under
state law
VI-32
<PAGE>
D. Termination of Employment
-------------------------
In all cases, existing personnel files, exit
interviews, COBRA notices, correspondence, executed
documents reflecting notice to employee of post-
termination restrictions (confidentiality agreements,
noncompete, etc. - if applicable), etc. ...................... Six years
AND
If disciplinary termination, all written records
supporting or relating to the termination decision,
post-termination memoranda, unemployment
compensation files, etc. ..................................... Six years
If termination was involuntary but not disciplinary,
a copy of WARN notice (if applicable), selection
documents, unemployment compensation files, etc. ............. Six years
If termination was voluntary due to retirement,
voluntariness documents, etc. ................................ Six years
If termination was negotiated, voluntariness
documents, contracts, etc. ................................... Six years
If termination was voluntary and unrelated to
retirement, resignation notice, letter, etc. ................. Six years
E. Union/Collective Bargaining Administration
------------------------------------------
Arbitration decisions and grievance settlements
(unless expressly settled without prejudice) ................. Permanent
Labor agreements ............................................. Permanent
NLRB certification or Amendment of Certification
of collective bargaining representative or unit .............. Permanent
Notes of collective bargaining negotiations and
documents exchanged during negotiations ..................... Permanent
VI-33
<PAGE>
F. Benefit Administration*
----------------------
Annual reports (Form 5500) and summary annual
reports ....................................................... Six years
Benefit claims, including records relating to
eligibility, the amount of benefits, disposition
and supporting records ........................................ Permanent
Correspondence relating to plan amendments and
administration (other than claims for benefits) ............... Permanent
DOL Plan Registration Filings (e.g., filings
----
for top hat plans) ............................................ Six years
IRS Determination Applications, Filings
and Letters ................................................... Permanent
PBGC filings (defined benefit pension plans,
including participant records and actuarial data
that validate the premium payments) ........................... Six years
Pension Plan documents (including amendments,
restatements, summary plan descriptions, and summaries
of material modifications) .................................... Permanent
Records relating to plan participation and
benefit calculations ......................................... Permanent
Welfare Plan documents (including amendments,
insurance policies, summary plan descriptions,
summaries of material modifications, and other
employee communications) ...................................... Permanent
- ---------------------------
*Depending on the particular organizational scheme, many, if not most, of
these benefit records will be maintained in Richmond. Those records categories
in which central files are maintained in Richmond for centralized administration
need not be retained elsewhere when they are no longer immediately useful in
administering claims.
VI-34
<PAGE>
4. DOCUMENTS TO BE RETAINED ONLY IN LIMITED SITUATIONS
There are special programs which have record-keeping requirements that may
be applicable at specific locations. Listed below are some of the more common
programs and the documents required to be kept.
A. Learner's Certificate
---------------------
Records showing learner designation, special
learner certificates, statement of experience
acquired in the industry three years prior to
employment (including dates of employment;
names and addresses of employer; occupations
engaged in; types of products worked upon;
training in schools and dates of attendance
or signed statement that learner has no applicable
experience or training; and records relating to
filing and cancellation of job orders) .............. Three years after
last effective date
of certificate
B. Handicapped
-----------
Certificate authorizing employment of physically
and mentally handicapped persons .................... Three years after
effective date of
certificate
C. Public Contracts Acts
---------------------
Records showing employee's current classification;
employees who worked on government contract work;
rates of contribution or cost anticipated for
medical and hospital care; pension, retirement
or death benefit; insurance cost to provide for
job related injuries or illnesses and unemployment
benefit; costs of life, disability, and sickness or
accident insurance; vacation and holiday pay; and
other bona fide fringe benefit programs ............. Three years
VI-35
<PAGE>
5. GENERAL RULE
Absent exceptions, all documents not listed above should be discarded
immediately upon their last use.
VI-36
<PAGE>
APPENDIX A
The most significant federal laws and regulations affecting human resources
(personnel) records are the following:
A. Fair Labor Standards Act ("FLSA") - establishes overtime and minimum
wage requirements. The FLSA requires retention of payroll records, labor
contracts, employment contracts, wage rate schedules, work schedules, time cards
and the like. The Department of Labor's Wage and Hour Division enforces the FLSA
regulations in this area found at 29 CFR 516.
B. Equal Pay Act - prohibits discrimination in wages between male and
female employees performing the same work. FLSA record-keeping requirements
apply. In addition, employers must retain any records explaining wage
differentials for employees of the opposite sex.
C. Federal Insurance Contribution Act ("FICA") and Federal Unemployment
Tax Act ("FUTA") - regulations implementing these statutes require retention of
records related to Social Security contributions and unemployment tax payments,
respectively. The record-keeping requirements are enforced by the Internal
Revenue Service and are found at 26 CFR 31.6001-1 and 31.6001-4.
D. Title VII of the Civil Rights Act of 1964 ("Title VII") - prohibits
employment discrimination based on race, sex, religion and national origin.
Regulations implemented by the Equal Employment Opportunity Commission ("EEOC")
require retention of various personnel documents, including applications,
training and selection materials (29 CFR 1627).
E. The Age Discrimination in Employment Act ("ADEA") - prohibits
workplace discrimination on the basis of age (over 40). EEOC regulations under
the ADEA require retention of records pertaining to such areas as promotions,
advertisements, and payroll information.
VI-37
<PAGE>
F. Americans with Disabilities Act ("ADA") - effective July 26, 1992 for
employers of 25 or more employees and effective July 26, 1994 for employers of
15 or more employees, Title I of the ADA prohibits employment discrimination
against persons with disabilities. The EEOC has proposed to amend its
regulations on record-keeping and reporting under Title VII to add record-
keeping and reporting requirements under the ADA. The EEOC has said that the
public record-keeping burden will not increase as a result of the amendments
because all employers affected by them are already required to retain these
records for the same time periods under Title VII.
G. Rehabilitation Act of 1973* - prohibits discrimination against
individuals with handicaps by employers with federal contracts over $2,500.
H. Executive Order 11246* - requires federal contractors to take
affirmative action to prevent discrimination against employees on the basis of
race, sex, religion, color or national origin.
I. Vietnam-Era Veterans' Readjustment Assistance Act of 1974* - requires
employers with federal contracts in excess of $10,000 to take affirmative action
in hiring and promoting Vietnam-era and disabled veterans.
J. Employee Retirement Income Security Act ("ERISA") - establishes a
comprehensive statutory framework regulating retirement and welfare benefit
programs, establishes the Pension Benefit Guaranty Corporation to insure
benefits under defined benefit plans, and imposes extensive disclosure and
reporting requirements on employers maintaining such plans. Records relative to
complying with ERISA must be retained by statute a minimum of six years.
The record retention requirements of the employment statutes cited above
overlap in many respects. The longest retention period specified by any single
regulation or statute is what is required by the James River Program.
- --------------------
*Although statute requires affirmative action by all covered employers, only
those with 50 or more employees and federal contracts of at least $50,000 are
required to maintain written affirmative action programs. These statutes are
enforced by the U.S. Department of Labor's Office of Federal Contract Compliance
Programs ("OFCCP").
VII-1
<PAGE>
INSURANCE AND RISK MANAGEMENT
-----------------------------
1. SCOPE
As used in the James River Records Management Program, "insurance and risk
management" includes all formal insurance, reinsurance and risk management
programs which either attempt systematically to reduce the risk of third party
losses or provide for third party claims management, defense or payment.
Insurance and risk management do not include employee claims related to working
conditions (see "Human Resources" and "Safety and Health"), product research,
---
design and manufacturing (see "Product Development, Research and Testing"), or
---
environmental claims growing out of manufacturing processes that may impact the
environment, unless such claims are covered by insurance policies (see
---
"Environmental").
2. PURPOSE
The purposes of this section are to insure that James River retains the
originals of all insurance policies (unless the transfer or disposal has been
specifically directed by the James River Legal Department) and to provide for
the organization and resolution of claims and the retention of records important
to the investigation and resolution of subsequent claims.
3. CONSIDERATIONS
Insurance contracts represent legal protection that James River has
purchased, and contracts often include reciprocal obligations of the company.
Because of these obligations, the long potential useful life of some equipment
and the lengthening of time in which certain classes of claims may be asserted,
James River must exercise particular care to retain the originals of all
insurance contracts and correspondence relating to coverage for the required
periods. Moreover, due to the sometimes cumulative nature of certain product- or
conduct-related claims, ready access to previous files may expedite the
investigation and resolution of subsequent claims. Accordingly, it is important
to keep files related to the insurance contracts themselves, their
interpretation and amendments, and the resolution of potentially recurring
claims.
VII-2
<PAGE>
4. MANDATORY RECORDS
Retention Periods
(years after close
of fiscal year
-----------------
A. Documents to Be Kept
--------------------
Claims relating to James River products ......... See Product
Development, Research
& Testing,
(S) 3(i) & 3(j)*
Claims summaries as provided
by insurer on large claims (G.L., A.L.
& W.C.) ......................................... Permanent
Correspondence and other writings relating
to the formation, interpretation or termination
of insurance coverage; agreements or disputes
over coverage; and claims paid or rejected ...... Permanent
Loss runs (retention of printouts is
not necessary as long as sufficiently
secure computer storage provides the ability
to reproduce them) .............................. Permanent
Original liability policies written on a
"claims made" basis ............................. Five years after
. termination of last
policy with
continuity of
coverage**
Original liability policies written on an
"occurrence" basis .............................. Permanent
Original property policies ...................... Three years**
- -------------------------
*Insurers should be requested to transfer closed product liability claims
files to James River for review for compliance with this section.
**Any policy with an open claim pending will be maintained until the claim
is resolved and the claim file discarded.
XIV-1
<PAGE>
LEASES, DEEDS, TIMBER PURCHASES
-------------------------------
AND OTHER REAL ESTATE
---------------------
1. SCOPE
As used in the James River Records Management Program, "real property
documents" are documents that evidence or establish James River's rights or
obligations related to real estate and related property, including land,
buildings and improvements, water and riparian rights, and timber and timber-
cutting rights. It does not include equipment, furniture, and other items that
are readily movable without damaging the affected land or building. These rights
or obligations can include the ownership, occupation, management, use,
acquisition or disposition of such property interests.
2. CONSIDERATIONS
Documents that evidence or establish James River's rights or obligations
with respect to property typically have long-lasting or permanent effects and as
a general rule should be retained permanently.
3. RECORDATION
Documents that meet the requirements for being recorded or filed in local
land records offices (which usually include, at a minimum, notarized documents)
must be recorded whenever recordation is necessary to secure James River's
interest (such as deeds and lease memoranda).*
4. MANDATORY RECORDS
A file should be maintained for each piece of property in which James River
claims an interest or bears any obligation. (If two or more property interests
are affected by the same real estate documents [such as parcels of land that
came into James River's ownership by separate deeds, but that were subsequently
made the subjects of the same leases or operating agreements], it may be
practical to maintain one comprehensive file that covers the consolidated
property interests.)
- ----------------------
*If there is any doubt regarding whether a document should be recorded,
contact the James River Legal Department.
XIV-2
<PAGE>
Property files must be retained for the period during which James River has
rights or obligations plus seven years, and they may thereafter be discarded
with the approval of the James River Legal Department.
Each file should contain the following:
A. Original documents that establish the interest or obligation. This
category includes original deeds, original leases, nondisturbance or recognition
agreements (establishing direct relationships between mortgagees and tenants or
between landlords and subtenants), maintenance agreements, easement agreements
(agreements that create perpetual property interests, other than ownership
interests--such as right-of-way agreements) and license agreements (usually
temporary or revocable agreements, often requiring periodic fee payments but
which technically may not create real property interests under applicable state
law). If the original is unavailable, the file should contain the best copy
available together with a notation of the location of the original and any
recording information.
B. The agreements pursuant to which the property was purchased or sold
and related correspondence.
C. Documents that evidence James River's expenditures or receipts with
respect to the property interest or obligation, such as settlement statements,
recordation receipts and costs of capital improvements.
D. Original policies of title insurance.
E. Documents that describe or identify the real property, such as plats,
maps, surveys or legal descriptions. Information identifying the preparer of
plats or surveys should be retained as well, since professional surveyors often
retain permanent files that include field notes.
F. Documents that evidence or establish value, such as appraisals
(including those made for purposes of tax contests and those made with a view
toward acquisition or disposition) and tax assessment notices.
5. DUPLICATES
XIV-3
<PAGE>
There may be a legitimate need to retain multiple copies of some documents.
For example, it might be practical to maintain one file containing copies of all
leases and deeds for real estate used in a particular operation or business
unit.
6. DOCUMENTS TO BE RETAINED ONLY IN LIMITED CIRCUMSTANCES
Retention Periods
(years after close
of fiscal year)
---------------
Proposals or offers that are not accepted ....... See "Contracts
and Agreements"
5(A)
7. MISCELLANEOUS
A. In some cases James River may elect to keep copies of leases and
similar agreements for precedential value when dealing with the same contracting
party in the future.
B. Drafts, the contents of which have been fully incorporated into final
documents, should be promptly discarded.
XIV-4
<PAGE>
MARKETING
---------
1. SCOPE
As used in the James River Records Management Program, "marketing" includes
all efforts to identify and develop a market for James River's products,
including identifying markets for current and potential products, assessing the
current state of the market (including competitive prices and strategies),
product advertising, assessing competitive alternatives and devising sales and
marketing strategies. Marketing effectively fills the functional area between
manufacturing (see "Product Development, Research and Testing") and sales and
---
distribution (see "Sales and Distribution"). It does not include institutional
---
advertising (see "Public, Governmental and Investor Relations"). This section is
---
directed to persons and records associated with marketing.
2. CONSIDERATIONS
James River's markets are dynamic and fast-moving. Out-of-date marketing
information is seldom useful and infrequently used. Accordingly, except in
special circumstances described below, keep only current marketing data, plans
and projections and contractual documents indicated below.
3. MANDATORY RECORDS
To the extent that the marketing function is involved in the creation of
the following records, they must be retained as follows:
A. Contracts and Agreements
------------------------
Records relating to contracts for market research or with consultants and
other third party contractors who undertake marketing or related work for James
River are records that must be retained as specified in "Contracts and
Agreements".
B. Product Descriptions
--------------------
Written or pictorial representations of the characteristics or performance
of products manufactured or sold by James River which may have been distributed
outside of James River to potential purchasers or users must be retained as
specified in "Sales
XIV-5
<PAGE>
and Distribution". Records supporting product or performance representations
must be kept as specified in "Product Development, Research and Testing".
4. DOCUMENTS TO BE RETAINED ONLY IN LIMITED SITUATIONS
A. Field or Sales Reports
----------------------
Routine sales reports should be read and discarded within 90 days unless
------
they contain specific information describing the performance or creditworthiness
of a distributor or customer or contain competitive market information.
Distributor or customer information should be maintained in the dealer files or
by the Credit Department (see "Sales and Distribution" and "Financial Records").
---
Information about and materials created by competitors, such as product
descriptions, prices, price lists, trade programs and similar information, must
be obtained only from customers, distributors, suppliers, and similar sources.
Immediately initial, date and identify such information by source (e.g.,
-----
"Received 6/12/__ from XYZ Supplier, Atlanta, GA. JEC"). Except when such
information is used to support a reduced price or enhanced service to meet a
competitive offer, these materials should be discarded when no longer used (see
---
Meeting Competition Documents in "Sales and Distribution").
B. Market Analysis
---------------
James River records which assess market shares or attempt to identify
competitors' strategies, prices or support programs should be discarded when no
longer current unless they become Meeting Competition Documents (see above) or
------
were used to justify significant changes in prices, programs or practices (these
records should be kept for four years).
C. Annual, Five-Year, etc. Marketing Plans
---------------------------------------
Keep only the current plan. Upon adoption of a plan, all drafts and
supporting research should be discarded (the final thoughts and goals are
embodied in the plan), and copies of previous plans should similarly be disposed
of since they have been replaced by the new plan.
D. Sales Projections
-----------------
Handle as Annual Marketing Plans (see above).
XIV-6
<PAGE>
PRODUCT DEVELOPMENT, RESEARCH AND TESTING
-----------------------------------------
1. SCOPE
As used in the James River Records Management Program, "product
development, research and testing" includes all efforts to design, engineer and
manufacture James River's current and potential products, as well as its ongoing
quality and safety evaluations of these products. It does not cover patent and
intellectual property files maintained by or under the supervision of the James
River Patent Department.
2. CONSIDERATIONS
The purpose of this section is to ensure that James River retains for an
appropriate period records which substantiate the history and development of its
products, the care exercised in product testing and manufacture, the
consideration given to product warnings and related communications, and to
document the component materials utilized by James River in product manufacture.
This information could be relevant to product liability claims or consumer
advisory matters.
3. MANDATORY RECORDS
James River markets products with varying periods of useful life. For the
purposes of this Records Management Program, James River's products may be
divided into four categories: (1) chemically inert consumables, such as towels,
tissues, and business papers;* (2) machinery; (3) products subject to FDA
requirements; and (4) chemically active products.
For chemically inert consumables and machines, the product-related records
listed below should be retained six years beyond the foreseeable commercially
useful life of these products. Example: Documents relating to a tissue
production run should be retained for six years after the fiscal year in which
the tissue was produced. Documents relating to a machine with an expected
useful life of 10 years (including
- -------------------------
*Note: Any product that contains a measurable quantity of any chemical
listed by EPA, FDA or OSHA must be treated as "chemically active" for the
purpose of this Records Management Program.
XIV-7
<PAGE>
rebuilds) should be kept for 16 years after the fiscal year in which the machine
was manufactured.
For products and processes representing potentially patentable inventions,
the product-related records listed below, especially research and development
log books, should be maintained for fifteen years.
For products subject to FDA requirements, product-related records listed
below should be retained for ten years, except that FDA guarantee letters should
be retained for fifteen years after their expiration.
For chemically active products, product-related records should be retained
permanently.
The required product-related records are as follows:
a. Design manuals
b. Documents noting compliance with industry, voluntary and governmental
manufacturing and safety standards
c. Engineering change orders, including reasons for changes
d. Engineering drawings and blueprints
e. Finished product inspection reports
f. Instrument or equipment calibration and inspection records
g. Manufacturing specifications, including work orders, quality control
and inspection records, etc.
h. Packaging requirements
i. Positive and negative feedback concerning the product
j. Product testing data, including tests by outside laboratories
k. Purchase order specifications
l. Quality control manuals
m. Records concerning product serial numbers, data codes, etc.
n. Records concerning components utilized in the manufacturing process,
including vendor purchase orders, component specifications, etc.
o. Research and development log books
XIV-8
<PAGE>
p. Warranties, warnings, any instructions issued with products, and
advertising copy referring to product safety or performance
Note: Except when different, longer periods are specified elsewhere (e.g.,
-----
"Financial Records"), after five years, mandatory records can be transferred to
microfilm, computer output microfilm, electronic imaging or similar recording
system, provided that the system documentation is followed.
--------
4. GENERAL RULE
All other documents concerning product development, research and testing,
not listed above, should be discarded upon their last use. Research and testing
files relating to potential products, which were rejected before being marketed
commercially, can be discarded as the projects are abandoned.
XIV-9
<PAGE>
PUBLIC, GOVERNMENTAL AND INVESTOR RELATIONS
-------------------------------------------
1. SCOPE
James River generates numerous documents and records relating to its
activities involving the general public, governments and James River's equity
and debt investors.
This section is directed to all non-litigation activities relating to
relations and communications with the public, governments and investors, except
for specific categories such as "Environmental", "Human Resources", "Product
Development, Research and Testing", and "Safety and Health".
Retention and dissemination of such materials and information are
frequently mandated by law, such as the securities laws, and also may be
required by contractual arrangements with holders of debt or equity securities
of the company.
2. CONSIDERATIONS
Proper record-keeping is necessary to establish compliance with statutory,
regulatory and contractual requirements; allow management to prepare additional
documents or update documents based upon previously prepared materials; and
allow management to interpret business performance and to make business
decisions based upon the public's response to company actions. In addition,
retaining public documents provides a useful record of James River's history and
assists the company in responding to future inquiries.
3. MANDATORY RECORDS
The following is a list of the records that must be maintained and the
applicable retention periods. Except in rare cases, drafts should not be
retained. The final version alone has operative force, and no useful purpose is
served by keeping drafts.
<TABLE>
<CAPTION>
Retention Periods
(years after close
of fiscal year)
--------------
<S> <C>
Annual Meeting of Shareholders
(minutes, script, handouts and videos)........... Seven years
Annual Reports to shareholders................... Permanent
</TABLE>
XIV-10
<PAGE>
<TABLE>
<S> <C>
Charters and Bylaws.............................. Permanent
Checks (cancelled, dividend)..................... Six years
Community and civic affairs records.............. Seven years
Contributions documentation...................... Seven years
Corporate election and proxy records............. Seven years
Correspondence to and from investors,
and other investor contact reports............... Seven years
Debt compliance reports.......................... Permanent
Debt transfer and debtholder records............. Two years after
series is retired
Incorporation records............................ Permanent
Lobbying reports................................. Seven years
Mailing lists.................................... Review annually
Mailings to investors............................ Seven years
Photographs...................................... Current
Press releases................................... Seven years
Proxy Statements................................. Permanent
Public information activities.................... Seven years
Quarterly Reports to Shareholders................ Permanent
SEC filings (includes 10-K, 10-Q, 8-K, Section
16 filings, Registration Statements, Proxy
Statements and all other related materials)...... Permanent
Shareholder proposals............................ Seven years
Speeches (general, non-investor)................. Two years
</TABLE>
XIV-11
<PAGE>
<TABLE>
<S> <C>
Stock Transfer and Stockholder Records........... Permanent
Videos (general, non-investor)................... Two years
</TABLE>
4. GENERAL RULE
Absent exceptions, all documents not listed above should be discarded
immediately upon their last use.
XIV-12
<PAGE>
SAFETY AND HEALTH
-----------------
1. SCOPE
The Occupational Safety and Health Administration (OSHA) has statutory
authority to regulate workplace safety. Employer obligations include the
collection and retention of specific safety and health information. This Program
is directed to these obligations.
2. CONSIDERATIONS
Penalties under the Occupational Safety and Health Act are increasing
markedly as a result of legislative and enforcement changes. OSHA has also
reemphasized record-keeping requirements and frequently cites employers for
"willful" OSHA violations and violations of other criminal laws.
3. SPECIFIC MANDATORY RECORDS
<TABLE>
<CAPTION>
Retention Periods
(years after close
of fiscal year)
---------------
<S> <C>
A. Accident and Time Lost Records ((S) 1904.2)
-------------------------------------------
OSHA Form No. 200 (log and summary of
occupational injuries and illnesses)............... Five years
B. Hazard Communication ((S) 1910.1200)
------------------------------------
Written hazard communication program, material
safety data sheets, training records............... Current
C. Hazardous Waste Operations ((S) 1910.120)
-----------------------------------------
Medical surveillance records of covered employees.. Thirty years
D. Ionizing Radiation ((S) 1910.96)
--------------------------------
Exposure records................................... Permanent
E. Noise ((S) 1910.95)
-------------------
Noise exposure measurements........................ Two years
</TABLE>
XIV-13
<PAGE>
<TABLE>
<S> <C>
Audiometric test records........................... Duration of tested
employee's
employment
</TABLE>
4. GENERAL MANDATORY RECORDS
General records of employee exposure and medical records ((S) 1910.20) must
be retained for a period of thirty years. In addition to this general
requirement, there are more specific requirements associated with chemical-
specific standards - i.e., the lead standard (29 C.F.R. (S) 1910.1025). If your
----
employees are exposed or potentially exposed to chemicals for which OSHA has
issued a specific standard, the record-keeping requirements for that standard
must be reviewed and followed. Specific questions regarding specific standards
or requirements should be directed to James River Corporate Safety and Health or
James River Legal Departments.
5. DOCUMENTS TO BE RETAINED ONLY IN LIMITED SITUATIONS
Non-mandatory safety and health records relating to non-employment-related
medical claims should be kept for two years after the matters are resolved.
Workers Compensation claims should be kept for the longer of three years after
all claims are resolved or the time limit in your state for reopening claims.
6. GENERAL RULE
All records not identified above should be discarded when no longer used.
Superseded abatement plans should be discarded when replaced. Drafts and
surveys should be discarded when the contents have been transferred to reports.
Any records that relate to a matter in litigation should be retained
permanently. If a document may be involved in litigation, contact the James
River Legal Department for guidance.
XIV-14
<PAGE>
SALES AND DISTRIBUTION
----------------------
1. SCOPE
As used in the James River Records Management Program, "sales" includes all
efforts to identify and sell a particular product to a customer for consumption
by the customer, resale in modified form or resale in combination with other
products. "Distribution" includes marketing a product to or through a customer,
which resells or distributes it relatively intact. In this section, dealer and
distributor will be used interchangeably.
2. CONSIDERATIONS
Because sales and distribution directly affect James River's products and
customers, they are key components in James River's external relations. Thus,
documents which either make representations about a product's performance or
define James River's legal or other obligations regarding a product or a
customer should be carefully maintained for the specified periods.
Documents which describe, interpret or alter distributor agreements should
also be maintained. If there is no single document which constitutes the
distributor agreement, all documents which define James River's obligations and
the distributor's performance should be maintained.
3. MANDATORY RECORDS
A. Product Descriptions
--------------------
Written or pictorial representations of the characteristics or performance
of products manufactured or sold by James River should be dated and retained for
six years after the useful life of the product (including rebuilds). Documents
supporting product characteristics or performance claimed by James River should
be retained for the same period (see "Product Development, Research and
---
Testing").
B. Contracts
---------
Copies of all current distributor agreements and all letters and other
external correspondence which interpret, explain or apply the current agreement
should be maintained for six years after the agreement is replaced by a new
agreement or
XIV-15
<PAGE>
otherwise terminated. If the agreement contains a warranty or limitation of
rights or remedies against James River, it should be kept for the longer of six
years after the useful life of the product (including rebuilds) or six years
after the agreement is replaced by a new agreement.
Where no single document constitutes the distributor agreement, the
distributor's file should contain all records describing or referring in any way
to the dealer's obligations and limitations on the dealer for the greater of two
years after James River issues the dealer a new agreement or six years after
James River terminates or declines to renew the agreement.
C. Dealer Performance
------------------
All documents which contain specific information evaluating or reporting on
the dealer's performance should be kept for two years after James River issues
the dealer a new agreement and six years after James River terminates or
declines to renew the agreement.
Where there is no written dealer agreement, all documents which contain
specific information on the dealer's performance should be kept for six years.
D. Other Contracts
---------------
Non-dealer contracts relating to sales and distribution services must be
retained as described in "Contracts and Agreements".
4. DOCUMENTS TO BE RETAINED ONLY IN LIMITED SITUATIONS
A. Routine Sales Reports
---------------------
Routine sales reports should be read and discarded within 90 days unless
------
they contain specific competitive information or information on the performance
or creditworthiness of a dealer or a customer or record specific conversations
with a dealer or customer regarding legal relations, contract meaning or
performance. Such documents dealing with the dealer or contract should be
maintained in the dealer files (see 3[C]). Competitive information should be
---
maintained as Competitive Information (see below).
B. Competitive Information
-----------------------
XIV-16
<PAGE>
General information received from customers or similar sources (but never
directly from competitors) should immediately be identified by the source and
date received. Such information should be kept while current, unless it is used
to justify a lower price in order to meet competition (see Meeting Competition
---
Materials).
Materials created by competitors, such as product descriptions, price lists
and the like, should be obtained only from customers, distributors, suppliers,
and similar sources. Such information should be immediately initialed, dated and
identified by source (e.g., "Received 6/12/__ from XYZ Supplier, Atlanta, GA.
----
JEC"). Except when such information becomes Meeting Competition Materials (see
below), these materials should be discarded when no longer used.
C. Meeting Competition Materials
-----------------------------
Antitrust laws permit a company to charge competing customers different
prices for several reasons, including good faith attempts to meet competing
prices from competitors. This is called "good faith meeting competition".
Where James River offers a customer better terms in a good faith effort to
meet competition, reports of competitive activity and other information
describing the offer being met or offering a basis for believing the customer's
report of such offer are "Meeting Competition Materials". Meeting Competition
Materials should be kept for a period of five years following the customer's
acceptance of James River's competitive offer. (If the customer rejects the
James River offer, discard the information when it is no longer useful.)
D. Annual, Five-Year, etc. Sales Plans or Projections
--------------------------------------------------
Keep only the current plan. Upon adoption of a plan, all drafts and
supporting documentation should be discarded (the final thoughts and goals are
embodied in the plan), and copies of previous plans should be similarly
discarded since they have been replaced by the new plan.
XIV-17
<PAGE>
JAMES RIVER RECORDS MANAGEMENT COMMITTEE
REQUEST FOR GUIDANCE/EXEMPTION
TO: RECORDS MANAGEMENT COMMITTEE
c/o: Cliff Cutchins
Richmond Headquarters Date:
-------------------
FROM:
-------------------------------- -----------------------------------
(Name) (Location and Extension)
PURPOSE: [ ] Explanation/Answer [ ] Guidance for Record
to Question Type Not Addressed
[ ] Exemption [ ] For Committee's
Information
Please describe the issue, type of record and requested outcome (if applicable).
If requesting an exemption, state the reasons supporting the request. If
requesting guidance, please describe the manner, frequency and time frame within
which James River uses the record and any legal restriction (including local or
state) of which you are aware. If possible, attach record samples.
RESPONSE:
XIV-18
<PAGE>
RECORDS RETENTION SUSPENSION NOTICE!
------------------------------------
The records in this
---------------------------------------------------
(cabinet, drawer, file, etc.)
may be responsive to the following lawsuit/investigation/subpoena
( ). Do not discard or remove
-------------------------------------------
permanently any document without specific authority from
(Ext. ).
- --------------------------------------------- -------
---------------------------------
Signature
---------------------------------
Date
cc:
XIV-19
<PAGE>
ADDITIONAL INTERPRETIVE GUIDELINES
----------------------------------
The Records Management Committee has addressed numerous requests for
guidance since the adoption of the Policy. While the Policy is not intended to
identify every record to be created and maintained, the Committee has deemed
that it would be useful to periodically publish Guidelines documenting its
interpretations regarding specific record retention questions.
<TABLE>
<CAPTION>
Retention Periods
(years after close
of fiscal year)
------------------
ENVIRONMENTAL
-------------
<S> <C>
A. Air Pollution Control
---------------------
Records of the occurence and duration
of startup, shutdown, or malfunction of
any air pollution control equipment;.................... Permanent
Also include:
- -------------
Asset records pertaining to the installation
of process equipment potential of generating
air emissions.
C. Solid and Hazardous Waste
-------------------------
Records relating to landfill operations................. Permanent
Also include:
- -------------
Routine groundwater monitoring results, special
groundwater studies meeting state requirements,
landfill construction documents, real estate
environmental property assessments
Hazardous waste facility reports........................ Permanent
Also include:
- -------------
Site cleanup records, state notifications of completed
cleanup, audit of waste facilities, nuclear device
disposition records
</TABLE>
FINANCIAL, CORPORATE, TAX, PROPERTY AND TRANSPORATION
-----------------------------------------------------
3. MANDATORY RECORDS
XIV-20
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
A. Accounting
----------
Amortization and Depreciation Records................... Four Years
Also include:
- -------------
M&D fixed assets reports
Books of Original Entry, such as Cash Receipts
Journal, Cash Disbursements Journal, Sales
Journal, Returns and Allowances Journal,................ Six years
Also include:
- -------------
Finished goods inventory
Related inventory tags.................................. Two Years
E. Taxation
--------
Sales & Use Tax Internal Reports & State Returns........ Six Years
</TABLE>
<PAGE>
EXHIBIT 10.61
REDEMPTION AND RELEASE AGREEMENT
This Redemption and Release Agreement (the "Agreement") is made this 5th
day of December, 1996 by and among Radnor Holdings Corporation, a Delaware
corporation formerly known as Benchmark Corporation of Delaware (the "Company"),
WinCup Holdings, Inc., a Delaware corporation ("WinCup"), WinCup Holdings, L.P.,
a Delaware limited partnership (the "Partnership") and Kimberly-Clark Tissue
Company, a Pennsylvania corporation ("KCTC").
WHEREAS, KCTC owns 2,000 shares of the Company's Series A Convertible
Preferred Stock, par value $.10 per share (the "Preferred Stock"), which
represents all of the authorized, issued and outstanding shares of the Company's
Series A Convertible Preferred Stock; and
WHEREAS, KCTC also owns the Company's Warrant No. BCD-2 dated February 28,
1992, as amended December 31, 1992 and January 20, 1996 (the "1992 Warrant") to
purchase shares of the Company's Nonvoting Common Stock, par value $.10 per
share (the "Nonvoting Common Stock"), representing up to 20% of the outstanding
capital stock of the Company on the date of exercise on a fully diluted basis;
and
WHEREAS, KCTC also owns the Company's Warrant No. BCD-3 dated February 28,
1994, as amended January 20, 1996 (the "1994 Warrant") to purchase 150 shares of
the Company's Nonvoting Common Stock; and
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WHEREAS, KCTC holds the following promissory notes (collectively, the
"Notes"): (a) a Subordinated Promissory Note dated as of January 20, 1996 by the
Partnership in the original principal amount of $300,000 (the "$300,000 Note");
(b) a Subordinated Promissory Note dated as of January 20, 1996 by the
Partnership in the original principal amount of $2,700,000 (the "$2.7 Million
Note") and (c) a Negotiable Secured Note, dated February 24, 1992 as amended by
a First Amendment to Negotiated Note dated November 30, 1993, and an Allonge to
Negotiable Secured Note dated as of January 20, 1996 made by WinCup (formerly
known as Scott Container Products Group, Inc.) and the Partnership in the
original principal amount of $5 million (the "Mortgage Note"); and
WHEREAS, the Company has entered into a Stock Purchase Agreement (the
"StyroChem Purchase Agreement") with certain persons to acquire all of the
issued and outstanding shares of common and preferred capital stock, and all
options and warrants to purchase common or preferred capital stock of SP
Acquisition Co., a Delaware corporation ("StyroChem"); and
WHEREAS, StyroChem and Scott were parties to an Acquisition Agreement
pursuant to which StyroChem acquired from Scott, directly or indirectly by
merger, all of the outstanding capital stock of Scott Polymers, Inc. and Scott
Polymers, Ltd., now known as StyroChem International, Inc. and StyroChem
International, Ltd., respectively, (the "StyroChem Sale Agreement"); and
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<PAGE>
WHEREAS, the Company is preparing to commence a private placement of senior
notes with anticipated gross proceeds of approximately $100 million (the "Senior
Note Offering"); and
WHEREAS, in connection with the consummation of the Senior Notes Offering,
the Company desires to redeem the 1992 Warrant and the 1994 Warrant
(collectively, the "Warrants") and the Preferred Stock, cause the Notes to be
paid in full and resolve certain disputes between Scott and StyroChem arising
out of the StyroChem Sale Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Redemption of Securities. Subject to the terms and conditions hereof,
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at Closing (as defined in Section 2 hereof), the Company shall redeem from KCTC,
and KCTC shall sell to the Company:
1.1 the Preferred Stock for a redemption price of $2 million; and
1.2 the Warrants for a redemption price of $1 million.
2. Closing. The consummation of the redemption contemplated hereby (the
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"Closing") shall take place at the office of the Company's counsel, Duane,
Morris & Heckscher, One Liberty Place, Philadelphia, Pennsylvania 19103
simultaneously with the closing under the StyroChem Purchase Agreement and the
Senior Note Offering, or at such other time and place as the parties may agree
(the "Closing Date"). At the Closing:
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2.1 The Company will deliver or cause to be delivered to KCTC:
(a) $3 million in immediately available funds in payment of the
redemption price for the Preferred Stock and the Warrants (collectively, the
"Securities");
(b) payment in full in immediately available funds of the entire
outstanding principal balance of, and accrued interest on, the Notes;
(c) a release executed by the Company, the Partnership, WinCup and
StyroChem substantially in the form of Exhibit 2.1(c) attached hereto; and
(d) a certificate executed by each of the Company, WinCup and the
Partnership representing and warranting to KCTC that such party's
representations and warranties in this Agreement are true and correct in all
respects as of the Closing Date as if made on the Closing Date.
2.2 KCTC will deliver to the Company:
(a) the certificate(s) representing the Preferred Stock, duly endorsed
for transfer to the Company;
(b) the original Warrants, duly endorsed for transfer to the Company;
(c) the original Notes, marked paid in full;
(d) such UCC termination statements or mortgage satisfaction documents
as the Company reasonably requests for filing by the Company to terminate the
security interests securing the Mortgage Note;
(e) a release executed by KCTC substantially in the form of Exhibit
2.2(e) attached hereto; and
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<PAGE>
(f) a certificate executed by KCTC representing and warranting to the
Company, WinCup and the Partnership that KCTC's representations and warranties
in this Agreement are true and correct in all respects as of the Closing Date as
if made on the Closing Date.
3. Representations and Warranties of KCTC. In order to induce the
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Company, WinCup and the Partnership to enter into this Agreement and to
consummate the transactions contemplated hereby, KCTC hereby represents and
warrants to the Company, WinCup and the Partnership as follows:
3.1 Corporate Organization; Authority. KCTC is a corporation duly
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incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. KCTC has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. No further action on the part of KCTC of any nature whatsoever is
necessary to authorize the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by KCTC and, assuming the due execution and delivery
hereof by the Company, WinCup and the Partnership, constitutes the valid and
binding obligation of KCTC, enforceable against KCTC in accordance with its
terms.
3.2 No Violation. The execution and delivery of this Agreement and
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the consummation of the transactions contemplated hereby do not contravene,
conflict with or result (with or without notice or the lapse of time or both) in
a violation of (a) the Articles of Incorporation or Bylaws of KCTC, (b) any
resolution adopted by the Board of Directors or
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<PAGE>
shareholders of KCTC, (c) any laws, regulations, court order, settlement
agreement, judgment or decree binding upon or applicable to KCTC or by which the
Securities or the Notes are affected or (d) any contract, understanding,
agreement, lease, indenture, loan or instrument of any nature whatsoever to
which KCTC is a party or by which KCTC or the Securities or the Notes are bound.
3.3 Good Title. KCTC has good and valid title, and is the record and
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beneficial owner, of the Securities and has complete and unrestricted power to
sell, assign, transfer and deliver the Securities to the Company, free and clear
of any lien, encumbrance or other restriction of any kind.
3.4 Access to Information. KCTC and its representatives and agents
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have been given the opportunity to ask questions of and to receive answers from
officers of the Company regarding the business and operations of the Company and
its subsidiaries, and affiliates. KCTC acknowledges having received and reviewed
the Company's Offering Memorandum dated November 12, 1996 as supplemented by a
Supplement dated November 26, 1996 being used in connection with the Senior
Notes Offering.
4. Representations and Warranties of the Company, WinCup and the
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Partnership. In order to induce KCTC to enter into this Agreement and to
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consummate the transactions contemplated hereby, each of the Company, WinCup and
the Partnership hereby represents and warrants to KCTC as follows:
4.1 Organization; Authority. Each of the Company, WinCup and the
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Partnership is a corporation or limited partnership duly organized, validly
existing and in
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<PAGE>
good standing under the laws of the State of Delaware, with full corporate or
partnership power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. No further action on the part of the
Company, WinCup or the Partnership of any nature whatsoever is necessary to
authorize the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company, WinCup and the Partnership and, assuming the due
execution and delivery hereof by KCTC, constitutes the valid and binding
obligation each of the Company, WinCup and the Partnership, enforceable against
the each of them in accordance with its terms.
4.2 No Violation. The execution and delivery of this Agreement and
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the consummation of the transactions contemplated hereby do not contravene,
conflict with or result (with or without notice or the lapse of time) in a
violation of (a) the Certificate of Incorporation or Bylaws of the Company or
WinCup, (b) the Limited Partnership Agreement of the Partnership, (c) any
resolution adopted by the Board of Directors, stockholders or partners of the
Company, WinCup and the Partnership, (d) any law, regulation, court order,
settlement agreement, judgment or decree binding upon or applicable to the
Company, WinCup or the Partnership or (e) any contract, understanding,
agreement, lease, indenture, loan or instrument of any nature whatsoever to
which the Company, WinCup or the Partnership is a party or by which any of them
is bound.
4.3 Offering Memorandum. The Offering Memorandum does not contain any
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untrue statement of a material fact or omit to state a material fact necessary
in order to
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make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
5. Indemnification.
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5.1 By KCTC. KCTC hereby agrees to indemnify, defend and hold
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harmless the Company, WinCup and the Partnership from and against all demands,
claims, actions, assessments, losses, damages, liabilities, costs and expenses,
including without limitation attorney's fees and expenses, arising out of or
related to the breach or inaccuracy of any representation or warranty made by
KCTC herein.
5.2 By the Company. The Company hereby agrees to indemnify, defend and
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hold harmless KCTC from and against all demands, claims, actions, assessments,
losses, damages, liabilities, costs and expenses, including without limitation
attorney's fees and expenses, arising out of or related to the breach or
inaccuracy of any representation or warranty made by the Company, WinCup or the
Partnership herein.
5.3 Procedure. A party seeking indemnification hereunder (the
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"Indemnified Party") shall give the other party (the "Indemnifying Party")
prompt notice of any claim for indemnity hereunder, and the Indemnifying Party
shall thereafter undertake the defense, settlement or compromise thereof by
representatives chosen by it. The failure of the Indemnified Party to promptly
notify the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder unless such failure adversely prejudices the Indemnifying
Party's ability to defend such claim. If the Indemnifying Party, within a
reasonable time after notice of any such claim, fails to defend, the Indemnified
Party will (upon further notice to the Indemnifying Party) have the right to
undertake the defense,
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<PAGE>
compromise or settlement of such claim on behalf of, and for the account and
risk of, the Indemnifying Party, subject to the right of the Indemnifying Party
to assume the defense of such claim at anytime prior to settlement, compromise
or final determination thereof. Notwithstanding the foregoing, (a) if there is a
reasonable probability that a claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other money
payments, the Indemnified Party shall have the right, at the Indemnifying
Party's cost and expense, to defend, compromise or settle such claims and (b)
the Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
which does not include as an unconditional term thereof a release of the
Indemnified Party from all liability in respect of such claim.
6. Miscellaneous.
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6.1 Expenses. Each party to this Agreement shall be responsible for
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all expenses and fees incurred by such party in connection with this Agreement.
6.2 Notices. All notices and other communications required or
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permitted hereunder shall be in writing and shall be deemed to have been given
if delivered by hand or mailed, certified or registered mail, postage prepaid,
and addressed as follows:
If to KCTC:
Kimberly-Clark Tissue Company
351 Phelps Drive
Irving, TX 75038
Attention: Mr. W. Robert Ross
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<PAGE>
with a copy to:
Reboul, MacMurray, Hewitt,
Maynard & Kristol
45 Rockefeller Center
New York, NY 10111
Attention: Karen C. Wiedemann, Esquire
If to the Company, WinCup or the Partnership:
Radnor Holdings Corp.
Three Radnor Corporate Center
Suite 300
100 Matsonford Road
Radnor, PA 19087
Attention: Mr. Michael T. Kennedy, Chairman
with a copy to:
Duane Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Attention: Vincent F. Garrity, Jr., Esquire
6.3 Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the Commonwealth of Pennsylvania.
6.4 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
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Michael T. Kennedy, Chairman
WINCUP HOLDINGS, INC.
By: /s/ Michael T. Kennedy
--------------------------------
Michael T. Kennedy, Chairman
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC., general partner
By: /s/ Michael T. Kennedy
--------------------------------
Michael T. Kennedy, Chairman
KIMBERLY-CLARK TISSUE COMPANY
By: /s/ John W. Donehoven
--------------------------------
John W. Donehoven,
Senior Vice President and
Chief Financial Officer
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<PAGE>
Exhibit 2.1(c)
FORM OF RADNOR RELEASE
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For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, in order to induce
Kimberly-Clark Tissue Company ("KCTC") to enter into and to consummate the
transactions contemplated by the Redemption and Release Agreement dated as of
December 5, 1996 among Radnor Holdings Corporation (the "Company"), WinCup
Holdings, Inc. ("WinCup") and WinCup Holdings, L.P. (the "Partnership") and KCTC
(the "Agreement"), each of the Company, WinCup, the Partnership, StyroChem
International, Inc., StyroChem International, Ltd. and SP Acquisition Co.
(individually, a "WinCup Party" and collectively, the "WinCup Parties"), on its
own behalf and on behalf of its respective officers, directors, shareholders,
partners and affiliates (the "Related Persons"), hereby releases and forever
discharges KCTC and each of its Related Persons (individually, a "Releasee" and
collectively, "Releasees") from any and all claims, demands, proceedings, causes
of action, orders, obligations, contracts, agreements, debts and liabilities
whatsoever, whether known or unknown, suspected or unsuspected, both at law and
in equity, which any of the WinCup Parties or any of their respective Related
Persons now has, has ever had or may hereafter have against the respective
Releasees arising contemporaneously with or prior to the date hereof or on
account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the date hereof, including, but not limited
to, any rights to indemnification or reimbursement from KCTC, whether or not
relating to claims pending on, or asserted after, the date hereof and further
including specifically, without limiting the generality of this Release, any
claims that any WinCup Party may have against any of the Releasees with respect
to the matters described in that certain letter dated February 22, 1996 from
Richard Davidovich, President of SP Acquisition Co. to KCTC (formerly known as
Scott Paper Company); provided, however, that nothing contained herein shall
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operate to release any obligations of KCTC arising under the Agreement.
Each WinCup Party hereby irrevocably covenants to refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each WinCup Party shall, jointly and severally,
indemnify and hold harmless each Releasee from and against all loss, liability,
claim, damage (including incidental and consequential damages) or expense
(including costs of investigation and defense and reasonable attorney's fees)
whether or not involving third party claims, arising directly or indirectly from
or in connection with (i) the assertion by or on behalf of any of the WinCup
Parties or any of their respective Related Persons of any claim or other matter
purported to be released pursuant to this Release and (ii) the assertion by any
third party of any claim or demand against any Releasee which claim or demand
arises directly or indirectly from, or in connection with, any assertion by or
on behalf of any of the WinCup Parties or any of their respective Related
Persons against such third party of any claims or other matters purported to be
released pursuant to this Release.
<PAGE>
If any provision of this Release is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Release
as of this 5th day of December, 1996.
SP ACQUISITION CO. RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy By: /s/ Michael T. Kennedy
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Michael T. Kennedy, Chairman Michael T. Kennedy, Chairman
STYROCHEM INTERNATIONAL, INC. STYROCHEM INTERNATIONAL, LTD
By: /s/ Michael T. Kennedy By: /s/ Michael T. Kennedy
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Michael T. Kennedy, Chairman Michael T. Kennedy, Chairman
WINCUP HOLDINGS, INC. WINCUP HOLDINGS, L.P.
By: /s/ Michael T. Kennedy By: WINCUP HOLDINGS, INC.,
--------------------------- its general partner
Michael T. Kennedy, Chairman
By: /s/ Michael T. Kennedy
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Michael T. Kennedy,
Chairman
<PAGE>
Exhibit 2.2(e)
FORM OF KCTC RELEASE
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For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound, in order to induce
Radnor Holdings Corporation (the "Company"), WinCup Holdings, Inc. ("WinCup")
and WinCup Holdings, L.P. (the "Partnership") to enter into and to consummate
the transactions contemplated by the Redemption and Release Agreement dated as
of December , 1996 (the "Agreement") among the Company, WinCup, the Partnership
and Kimberly-Clark Tissue Company ("KCTC"), KCTC, on its own behalf and on
behalf of its officers, directors, shareholders, agents, employees and
affiliates (the "Related Persons"), hereby releases and forever discharges each
of the Company, WinCup, the Partnership, StyroChem International, Inc.,
StyroChem International, Ltd. and SP Acquisition Co. (individually, a "WinCup
Party" and collectively, the "WinCup Parties") and each of their respective
officers, directors, shareholders, partners, agents, employees and affiliates
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which KCTC or any of its
Related Persons now has, has ever had or may hereafter have against the
respective Releasees arising contemporaneously with or prior to the date hereof
or on account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the date hereof, including, but not limited
to, any rights to indemnification or reimbursement from any Releasee, whether or
not relating to claims pending on, or asserted after, the date hereof and
further including specifically, without limiting the generality of this Release,
any claims that KCTC may have against any of the Releasees with respect to the
payment of any balance of the purchase price alleged to be due and payable
pursuant to that certain Acquisition Agreement dated January 25, 1994 between
KCTC (formerly known as Scott Paper Company) and SP Acquisition Co.; provided,
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however, that nothing contained herein shall operate to release any obligations
of any Releasee arising under the Agreement.
KCTC hereby irrevocably covenants to refrain from, directly or indirectly,
asserting any claim or demand, or commencing, instituting or causing to be
commenced, any proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, KCTC shall indemnify and hold harmless each Releasee
from and against all loss, liability, claim, damage (including incidental and
consequential damages) or expense (including costs of investigation and defense
and reasonable attorney's fees) whether or not involving third party claims,
arising directly or indirectly from or in connection with (i) the assertion by
or on behalf of KCTC or any of its Related Persons of any claim or other matter
purported to be released pursuant to this Release and (ii) the assertion by any
third party of any claim or demand against any Releasee which claim or demand
arises directly or indirectly from, or in connection with, any assertion by or
on behalf of KCTC or any of its Related Persons against such third party of any
claims or other matters purported to be released pursuant to this Release.
<PAGE>
If any provision of this Release is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Release
as of this 5th day of December, 1996.
KIMBERLY-CLARK TISSUE COMPANY
By: /s/ John W. Donehoven
--------------------------------
John W. Donehoven,
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 10.62
ASSUMPTION AND MODIFICATION AGREEMENT
THIS ASSUMPTION AND MODIFICATION AGREEMENT (this "Agreement") dated as
of January 20, 1996 is by and among WINCUP HOLDINGS, INC. ("Transferor"), a
Delaware corporation, with offices at 735 Chesterbrook Boulevard, Wayne, PA
19087; WINCUP HOLDINGS, L.P., a Delaware limited partnership with offices at
735 Chesterbrook Boulevard, Wayne, PA 19087 ("Transferee"); and SCOTT PAPER
COMPANY, a Pennsylvania corporation with offices at 351 Phelps Drive, Irving,
Texas 75038 ("Noteholder").
BACKGROUND
A. Transferor intends to transfer to Transferee certain premises
located in El Campo, Texas; Shreveport, Louisiana; Mount Sterling, Ohio; and
Higginsville, Missouri (collectively, the "Mortgaged Property") under and
subject to the outstanding obligations of Transferor to Noteholder under the
Negotiable Secured Note, dated February 24, 1992 as amended by a First Amendment
to Negotiable Secured Note (the "Note"), made by Scott Container Products Group,
Inc., a Delaware corporation, in favor of Noteholder, in the original principal
amount of FIVE MILLION DOLLARS (the "Indebtedness"). Initially capitalized terms
used and not otherwise defined in this Agreement shall have the respective
meanings given to those terms in the Note.
B. The Note is secured by the following Mortgages (collectively, with
the Note, this Agreement and with all amendments, modifications, replacements,
extensions hereof and thereof and any other documents evidencing or securing the
obligations described therein whether now or hereafter made, the "Loan
Documents"):
1. Deed of Trust and Security Agreement, dated February 24, 1992,
recorded in Wharton County, Texas Deed Records;
2. Mortgage and Security Agreement, dated February 24, 1992,
recorded in Caddo Parish, Louisiana;
3. Mortgage and Security Agreement, dated February 24, 1992,
recorded in Madison County, Ohio; and
4. Deed of Trust and Security Agreement, dated February 24, 1992,
filed for record in the Office of Recorder of Deeds, Lafayette
County, Missouri.
C. The parties are entering into this Agreement to evidence the
consent of Noteholder to the transfer of the Mortgaged Property to Transferee
and certain modifications of the Note described in this Agreement, to be
effective as of the date of transfer of the Mortgaged Property from Transferor
to Transferee (the "Effective Date").
<PAGE>
TERMS AND PROVISIONS
1. Assumption. Effective on the Effective Date, Transferee shall
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assume and hereby agrees from and after the Effective Date to pay, as and when
due and payable, the outstanding principal amount of the Indebtedness, together
with interest, fees, and expenses now or hereafter becoming due under the Loan
Documents and any renewals, extensions and modifications thereof (all of the
foregoing obligations being hereinafter collectively referred to as the
"Obligations").
2. Modification. From and after the Effective Date, and subject to
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the provisions of Section 4 of the Note, the outstanding principal balance of
the Indebtedness shall bear interest at a rate equal to 100 basis points higher
than the rate set forth in the Term Loan Notes by the Transferee as maker
delivered pursuant to the Revolving Credit, Term Loan and Security Agreement
dated as of the date hereof among Transferee, Transferor, NationsBank, N.A. and
Bank of New York Commercial Corporation, as lender and as agent (the "Term
Notes"), as such rate is adjusted from time to time as set forth in such Term
Notes; provided, however, that if the Transferee and Transferor satisfy their
obligations in full under the Term Notes at any time while there remains any
principal outstanding under the Note, such unpaid principal shall bear interest
at an annual rate equal to the prime rate, as published in The Wall Street
Journal three business days prior to the last day of each calendar quarter, plus
200 basis points. Such interest shall be payable as follows:
(a) Interest. Interest accrued on the Indebtedness through the
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last day of each calendar quarter shall be due and payable by wire transfer on
the tenth day of the succeeding calendar quarter.
(b) Principal. The outstanding principal of the Indebtedness,
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which was $4,816,457 as of December 31, 1995 and with respect to which a
$200,000 principal payment has since been made by Transferor, shall be repaid in
one installment on the fifth anniversary of the Effective Date (the "Maturity
Date"). Transferee further agrees that such payment shall be made prior to the
Transferor making any payment to James River Paper Company, Inc. or any
successor thereto or any person or entity to whom James River Paper Company,
Inc. may assign its interest in Transferee (James River Paper Company, Inc. or
any such successor or assignee being hereinafter referred to as "JR") in
connection with either (i) the exercise by JR of its right to require Transferor
to redeem all of JR's interest in Transferee commencing five years from the
Effective Date or on such earlier date as Transferor may permit JR to exercise
such right, as set forth in Transferee's Agreement of Limited Partnership dated
as of the Effective Date between Transferor and JR (the "Partnership Agreement)
or (ii) the exercise by Transferor of its right to acquire all of JR's interest
in Transferee under the Partnership Agreement.
The foregoing terms shall be set forth in an allonge to be affixed to
the Note.
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3. Notices, Etc.
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(a) The address for notices to Maker, under (Paragraph)6 of the
Note is hereby amended as follows:
To Maker as follows:
Wincup Holdings, L.P.
735 Chesterbrook Boulevard
Wayne, PA 19087
(b) The address for notices to Noteholder under (Paragraph)6 of
the Note is hereby amended as follows:
If to Payee:
Scott Paper Company
c/o Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: Treasurer
With a copy to:
Kimberly Clark Corporation
351 Phelps Drive
Irving, TX 75038
Attention: David Dolan, Esq.
and
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York l0lll
Attention: Karen C. Wiedemann, Esquire
4. Acknowledgment. Transferor hereby acknowledges its liability, as
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contemplated by the Subrogation Agreement dated February 28, l992 among
Noteholder, Continental Bank, N.A. and Transferor, to reimburse Noteholder for
an aggregate $3,000,000, plus "Damages" (as described in said Subrogation
Agreement) in respect thereof in connection with drawdowns under the Letter of
Credit furnished by Noteholder as contemplated by the Subrogation Agreement.
Transferor hereby assigns to Noteholder, in full satisfaction of such liability,
Transferor's right to receive (i) $300,000 in original principal amount of
Transferee's Subordinated Promissory Notes and (ii) $2.7 million in original
principal amount of Transferee's Junior Subordinated Notes, and Transferor
hereby directs Transferee to issue such notes directly to Noteholder, and
Noteholder hereby accepts the issuance of such notes by Transferee to Noteholder
as full satisfaction of Transferor's liability under such Subrogation Agreement.
<PAGE>
5. Miscellaneous.
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(a) This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto with respect to the subject matter hereof. No
amendment of any provision of this Agreement shall be effective unless it is in
writing and signed by Noteholder and the Obligor against whom enforcement is
sought, no waiver of any provision of this Agreement and no waiver or consent to
any departure by any Obligor therefrom, shall be effective unless it is in
writing and signed by Noteholder and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate such provision to the extent it is not
prohibited or unenforceable in any other jurisdiction, nor invalidate the
remaining provisions hereof or thereof.
(c) This Agreement shall i) be binding on Transferor, Transferee
and their respective successors and assigns, and ii) inure, together with all
rights and remedies of Noteholder hereunder, to the benefit of Noteholder and
its successors, transferees and assigns. Without limiting the generality of the
foregoing clause (ii), Noteholder may assign or otherwise transfer any note held
by it, and Noteholder may assign or otherwise transfer its rights under other
Loan Document to any other person, and such other person shall thereupon become
vested with all of the benefits in respect thereof granted to Noteholder under
this Agreement or otherwise.
(d) This Agreement shall be governed by and construed in
accordance with the internal laws, and not the law of conflicts, of the
Commonwealth of Pennsylvania.
(e) The paragraph headings used herein are for convenience only
and do not affect or modify the terms and conditions hereof.
(f) The parties acknowledge and agree that the assumption by
Transferee of the Obligations pursuant to this Agreement shall not affect the
Transferor's liability for such Obligations as set forth in the Note, as
modified hereby.
(g) Transferee agrees to pay the actual fees and expenses of
Reboul, MacMurray, Hewitt, Maynard & Kristol incurred on behalf of Noteholder in
connection with the transactions contemplated hereby, such fees and expenses to
be paid upon consummation of the transactions contemplated hereby based on
reasonable documentation thereof.
(h) Transferor shall deliver to Noteholder, within two business
days after the consummation of the transactions contemplated hereby, a true and
correct copy of the confirmation by Transferor's senior lender prior to the date
hereof relating to the satisfaction of all obligations owed by Transferor to
such lender.
<PAGE>
IN WITNESS WHEREOF, Transferor, Transferee and Noteholder have
caused this Assumption and Modification Agreement to be executed by an officer
thereunto duly authorized, as of the date first above written.
WINCUP HOLDINGS, INC.,
a Delaware corporation
By: /s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy, President
WINCUP HOLDINGS, L.P.,
by its sole general partner
WINCUP HOLDINGS, INC.,
a Delaware corporation
By: /s/ Michael T. Kennedy
----------------------------
Michael T. Kennedy, President
SCOTT PAPER COMPANY,
a Pennsylvania corporation
By: /s/ W. Robert Ross
----------------------------
W. Robert Ross
Assistant Treasurer
-5-
<PAGE>
EXHIBIT 10.64
StyroChem International, Ltd.
19250 Clark Graham
Baie d'Urfe, Quebec
H9X 3R8
December 5, 1996
Bank of Montreal
Kirkland
2867 St. Charles Boulevard
Kirkland, Quebec
H9H 385
Attention: Mr. Yvon Longpre
Ladies and Gentlemen:
Reference is hereby made to that certain Agreement Respecting a Term Loan
and other Credit Facilities between the Bank of Montreal (the "Bank") and
StyroChem International, Ltd. ("StyroChem") dated February 25, 1994 (as amended
to date, the "Credit Agreement"). Capitalized terms used herein but not defined
shall have the meanings ascribed to them in the Credit Agreement.
The undersigned hereby covenant that, during the term of the Credit
Agreement, StyroChem will not, and Radnor Holdings Corporation ("Radnor") will
not permit StyroChem to declare or pay any dividend, or make any distribution of
cash or property, including without limitation bonuses, administration fees, or
interest paid on intercompany loans, to Radnor without the prior written consent
of the Bank; provided that StyroChem may declare and may pay Radnor dividends
--------
not exceeding $25,000 during any fiscal year.
Sincerely,
STYROCHEM INTERNATIONAL, LTD.
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy
President
RADNOR HOLDINGS CORPORATION
By: /s/ Michael T. Kennedy
---------------------------
Michael T. Kennedy
President
<PAGE>
EXHIBIT 10.66
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of this 5th day of April, 1996, by and among
WINCUP HOLDINGS, INC., a Delaware corporation (the "Employer"), and R. RADCLIFFE
HASTINGS (the "Executive").
RECITAL
-------
The Employer is the sole general partner of WinCup Holdings, L.P.
("WinCup L.P."), a Delaware limited partnership which manufactures and
distributes foam cups, containers and lids and plastic cups and containers.
The parties hereto desire to enter into this Agreement to provide for
the employment of Executive by Employer and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment.
----------
Employer hereby employs Executive and Executive hereby accepts
employment as Vice President and Treasurer of Employer in accordance with the
terms and conditions hereinafter set forth.
2. Term.
----
The term of this Agreement shall be three (3) years commencing on
April 22, 1996, ("Initial Term"), unless earlier terminated pursuant to
Paragraph 7 below; provided, however, that unless earlier terminated pursuant to
Paragraph 7 below, the
<PAGE>
Initial Term of this Agreement shall thereafter be renewed from year to year
(each, a "Renewal Term") unless either party gives written notice of termination
to the other at least ninety (90) days prior to the expiration of such Initial
Term or Renewal Term, as the case may be. The Initial Term and any Renewal
Term(s) are hereinafter referred to, collectively, as the "Term."
3. Duties.
------
Executive is engaged hereunder as Vice President and Treasurer of
Employer and agrees to perform such duties and services as are customarily
incident to such offices and such other duties and services as may be assigned
to him from time to time by the Board. During his employment hereunder,
Executive shall conduct himself at all times so as to advance the best interests
of Employer; and shall not undertake or engage in any other business activity
which interferes with the performance of his duties without the prior written
consent of Employer, except as stated in Paragraph 9(a)(v) below.
4. Compensation.
------------
For all services rendered by Executive under this Agreement,
Employer shall pay Executive (collectively, the "Compensation") (a) a bonus of
Sixty Four Thousand Dollars ($64,000), payable immediately upon the execution of
this Agreement by all the parties hereto, (b) a base salary of One Hundred
Twenty Five Thousand Dollars ($125,000) per annum, payable in equal semi-monthly
installments (the "Base Salary"), and (c) such additional compensation,
including bonus, if any, as
-2-
<PAGE>
the Board may determine from time to time in its sole discretion. The Base
Salary shall be reviewed annually during the Term and may be increased in the
sole and absolute discretion of the Board based on corporate policy and
Executive's performance.
5. Expenses.
--------
Executive is authorized to incur reasonable expenses for promoting
Employer's business, including expenses for entertainment, travel, and similar
items. Employer will reimburse Executive for all such expenses upon
presentation by Executive of appropriate vouchers itemizing such expenditures in
a form consistent with Employers' policy.
6. Fringe Benefits.
---------------
a. During the Term of this Agreement, Executive shall be
entitled to such benefits of employment with Employer as are now or may
hereafter be in effect for salaried officers and employees of Employer including
without limitation such insurance, disability, medical, dental and other benefit
plans or programs as are now or hereafter established or maintained by Employer
for employees with duties comparable to those of Executive. Executive shall be
included in any profit-sharing, pension, retirement or other employee benefit
plan of Employer that may include as beneficiaries executive officers of
Employer, whether now in force or subsequently implemented by Employer.
-3-
<PAGE>
b. Executive shall also be entitled to reimbursement for all
reasonable moving expenses and relocation costs arising on account of any
relocation of Executive's residence within the first year of this contract.
Moving expenses and relocation costs include, but are not limited to, moving or
cartage company charges, hotel charges and meal costs. Relocation costs include,
but are not limited to, broker's commissions, loan closing costs, discount
points and other costs incident to the sale of Executive's current residence and
the purchase of a new residence.
7. Termination of Employment.
-------------------------
a. Death of Executive. In the event of the death of Executive
------------------
during the Term, this Agreement shall terminate and Employer shall have no
further obligation or liability hereunder except to pay to Executive's executor
or administrator the portion, if any, of the Compensation earned by Executive
for the period through the date of Executive's death, unless previously paid.
b. Total Disability. In the event of a mental or physical
----------------
condition which in the reasonable opinion of the Board, based upon the
independent medical diagnosis of a physician engaged by Employer for that
purpose, renders Executive unable or incompetent to perform his duties hereunder
("Total Disability"), which condition continues for a period of ninety (90)
consecutive days during the Term of this Agreement, Employer shall have the
right to terminate Executive's employment hereunder by giving
-4-
<PAGE>
Executive ten (10) days' written notice thereof and, upon expiration of such
ten-day period, Employer shall have no further obligation or liability under
this Agreement except to pay to Executive the portion, if any, of Executive's
Compensation for the period through the date of termination which is due and
remains unpaid.
c. Resignation. Executive may voluntarily terminate his
-----------
employment under this Agreement by giving Employer written notice effective at
the end of the current Term, not less than ninety (90) days prior to the
expiration thereof. Following the effective date of such resignation, Employer
shall have no further obligation or liability under this Agreement except to pay
to Executive the unpaid portion, if any, of the Executive's Compensation for the
period through the effective date of Executive's resignation which is due and
remains unpaid.
d. Discharge for Cause. The Employer may discharge Executive
-------------------
and thereby immediately terminate his employment under this Agreement at any
time for Cause (as hereinafter defined). "Cause" shall be defined as (a) gross
negligence of Executive; (ii) willful failure by the Executive to perform his
duties under this Agreement or material breach of any agreement made by
Executive herein which breach continues uncured for a period of thirty (30) days
after Executive has received written notice thereof; (iii) embezzlement or
conversion by Executive to his own use of any funds of Employer or any client of
Employer; (iv) destruction or conversion to his own use by
-5-
<PAGE>
Executive of any property of Employer, without Employer's consent; (v)
Executive's conviction of a felony; (vi) Executive's adjudication as an
incompetent; (vii) Executive's habitual intoxication; or (viii) Executive's drug
addiction. Employer's determination that Cause for termination of Executive's
employment hereunder exists shall be made in good faith by a majority of its
directors (other than Executive in the event Executive shall be a director of
Employer) based upon reasonable evidence presented to such directors. In the
event of termination for Cause, the Employer shall have no further obligations
or liabilities to Executive hereunder, except to pay to Executive, subject to
any claim which Employer may have against Executive for damages, the portion, if
any, of Executive's Compensation for the period through the date of termination
which is due and remains unpaid.
8. Non-Disclosure of Trade Secrets and Other Information.
-----------------------------------------------------
Executive agrees that he will not, during the Term of this
Agreement or at any time thereafter, use for himself or divulge to others any
secret or confidential information, knowledge, or data of Employer, developed by
him or obtained by him as a result of his employment, unless authorized by
Employer in writing. It is understood that this applies to information of either
a technical or commercial nature, including secret processes, formulas,
machinery, utensils, manufacturing techniques and arts, customer lists, market
information and the like. The terms 'secret' and 'confidential' shall include
all
-6-
<PAGE>
unpublished information and all information and data known to some but not to
all members of the trade or industry to whom such information or data would be
in any manner useful, but not information which Executive obtained, knew or
developed prior to commencing employment with Employer, whether published or
not.
All memoranda, notes, records, or other documents made or compiled
by Executive, or made available to Executive while employed by Employer, are
Employer's property and all copies thereof shall be delivered to Employer on
termination of Executive's employment or at any other time upon the request of
Employer.
9. Restrictive Covenant.
--------------------
a. Non-Competition.
---------------
Executive agrees that, so long as he is employed by Employer
pursuant to this Agreement, he will not, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder, investor, officer or director
of a corporation, or as an employee, agent, associate or consultant of any
person, partnership or corporation other than Employer or in any other capacity
except as provided in Paragraph 9(a)(v) below:
(i) own, manage, operate, participate in, perform services
for or otherwise carry on a business similar to or competitive with the business
of Employer within the United States; provided that ownership of not more than
five percent (5%) of the issued and outstanding shares of a class of securities
of a corporation the securities of which are traded on
-7-
<PAGE>
a national security exchange or in the over-the-counter market shall not be
deemed ownership of the issuer of such shares for the purposes of this section;
(ii) induce or attempt to persuade any employee of Employer
or any of its affiliates to terminate such employment relationship in order to
enter into any such relationship with such person or to enter into any such
relationship on behalf of any other business organization in competition with
Employer or any of its affiliates;
(iii) solicit any business related to the business conducted
by Employer from any clients, customers, or prospective or former clients or
customers of Employer or its affiliates; or
(iv) perform services of any nature for any entity which
engages in or conducts any business that competes with, restricts or interferes
with the business of Employer.
(v) Nothing in this Paragraph 9(a) shall be construed to
prevent the Executive from taking advantage or developing corporate
opportunities which have first been presented to Employer for development, but
which Employer elects not to pursue.
-8-
<PAGE>
b. Injunctive Relief. Without limiting the right of Employer or
-----------------
any of its successors or permitted assigns to pursue all other legal and
equitable rights available to it for violation of the covenants set forth in
subparagraph 9(a) hereof, it is agreed that such other remedies cannot fully
compensate Employer and its successors and assigns for such a violation and that
Employer and its successors and assigns shall be entitled to injunctive relief
to prevent violation or continuing violation hereof. It is the intent and
understanding of each party hereto that if, in any action before any court or
agency legally empowered to enforce this covenant, any term, restriction,
covenant or promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such a court or
agency.
10. Arbitration.
-----------
Except as provided in subparagraph 9(b) hereof, any controversy or
claim arising out of or relating to this Agreement or the breach thereof shall
be settled by arbitration in Philadelphia, Pennsylvania, in accordance with the
rules of the American Arbitration Association and any decision made in
accordance with such rules shall be binding on all parties in interest, and
judgment upon any award rendered may be entered in any court having jurisdiction
thereof.
-9-
<PAGE>
11. Waiver of Breach.
----------------
The waiver by Employer or Executive, as the case may be, of a
breach of any provision of this Agreement by Executive or Employer, as the case
may be, will not operate or be construed as a waiver of any subsequent breach by
Executive or Employer, as the case may be.
12. Entire Agreement.
----------------
This instrument contains the entire Agreement of the parties with
respect to the employment of Executive by Employer. It may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
13. Severability.
------------
If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
-10-
<PAGE>
14. Notices.
-------
All notices required or permitted to be given hereunder shall be
in writing and shall be deemed to have been given when actually received. If
such notice is mailed, it shall be deposited, registered or certified, return
receipt requested, in the United States mail, or by commercial overnight courier
such as Federal Express, addressed to the intended recipient as follows:
If to the Executive:
Mr. R. Radcliffe Hastings
426 Linden Street
Winnetka, Illinois 60093
If to the Employer:
WinCup Holdings, Inc.
735 Chesterbrook Boulevard
Chesterbrook, Pennsylvania 19087-5638
Attention: Michael T. Kennedy, Chairman
Any party hereto may from time to time change its address for the purpose of
notice to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
parties sought to be charged with its contents.
15. Bind and Inure.
--------------
This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors in interest.
-11-
<PAGE>
16. Governing Law.
-------------
This Agreement is made in and shall be construed in accordance
with and governed by the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement on the day and year first above written.
EMPLOYER:
WINCUP HOLDINGS, INC.
By: /s/ Michael T. Kennedy
------------------------------
Michael T. Kennedy
Chairman
EXECUTIVE
/s/ R. Radcliffe Hastings
---------------------------------
R. Radcliffe Hastings
-12-
<PAGE>
Exhibit 12.1
Computation of Ratios
(Dollars in Thousands)
<TABLE>
<CAPTION>
Predecessor Radnor
---------------------------- ---------------------------------------------------------
Year Ended January 1,- February 29,-
December 31, February 28, December 31, Year Ended December 31,
------------- ------------- ------------- ------------------------------------------
1991 1992 1992 1993 1994 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings from continuing
operations before income
taxes and extraordinary
gains (16,955) (4,258) (3,836) (4,718) (312) (7,877)
Fixed Charges N/A N/A N/A N/A N/A N/A
------------- ------------- ------------- ------------- ------------- -------------
Earnings (1) N/A N/A N/A N/A N/A N/A
============= ============= ============= ============= ============= =============
Fixed Charges
Interest Expense N/A N/A N/A N/A N/A N/A
Amortization of financing cost N/A N/A N/A N/A N/A N/A
Imputed interest on operating N/A N/A N/A N/A N/A N/A
lease obligations
------------- ------------- ------------- ------------- ------------- -------------
Fixed Charges (2) N/A N/A N/A N/A N/A N/A
============= ============= ============= ============= ============= =============
Ratio of earnings to fixed charges (1)/(2) N/A N/A N/A N/A N/A N/A
============= ============= ============= ============= ============= =============
Deficiency of earnings available to
cover fixed charges (16,955) (4,258) (3,836) (4,718) (312) (7,877)
============= ============= ============= ============= ============= =============
<CAPTION>
Radnor
--------------------------------------------------------
Year Ended Nine Months Ended
December 31, September 30,
------------- -----------------------------------------
Pro Froma Pro Forma
1995 1995 1996 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings:
Earnings from continuing
operations before income
taxes and extraordinary
gains (2,338) (3,414) 2,782 4,132
Fixed Charges N/A N/A 4,450 9,554
------------- ------------- ------------- -------------
Earnings (1) N/A N/A 7,232 13,686
============= ============= ============= =============
Fixed Charges
Interest Expense N/A N/A 3,346 8,008
Amortization of financing cost N/A N/A 194 569
Imputed interest on operating N/A N/A
lease obligations 910 977
------------- ------------- ------------- -------------
Fixed Charges (2) N/A N/A 4,450 9,554
============= ============= ============= =============
Ratio of earnings to fixed charges (1)/(2) N/A N/A 1.63x 1.43x
============= ============= ============= =============
Deficiency of earnings available to
cover fixed charges (2,338) (3,414) - -
============= ============= ============= =============
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
STATE OR JURISDICTION OF NAMES UNDER WHICH
NAME OF SUBSIDIARY INCORPORATION OR ORGANIZATION SUBSIDIARY DOES BUSINESS
- ------------------ ----------------------------- ------------------------
<S> <C> <C>
WinCup Holdings, Delaware WinCup Holdings, Inc.
Inc. (1) WinCup Holdings of Texas, Inc.
WinCup Holdings,
L.P. (2) Delaware WinCup Holdings, L.P.
SP Acquisition
Co. (1) Delaware SP Acquisition Co.
StyroChem
International,
Inc. (3) Texas StyroChem International, Inc.
StyroChem
International,
Ltd. (3) Quebec StyroChem International, Ltd.
Radnor
Management, Inc. (1) Delaware Radnor Management, Inc.
</TABLE>
- ------------------
(1) Owned 100% by Radnor Holdings Corporation.
(2) Owned 45% by Radnor Holdings Corporation and 55% by WinCup Holdings, Inc.
(3) Owned 100% by SP Acquisition Co.
1
<PAGE>
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this
registration statement.
Arthur Andersen LLP
Philadelphia, Pennsylvania
January 8, 1997
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Radnor Holdings
Corporation on Form S-4 of our report on the consolidated financial statements
of SP Acquisition Co. and subsidiaries dated October 18, 1996 (October 30, 1996
as to Note 16). appearing in the Prospectus, which is part of this Registration
Statement, and to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Dallas, Texas
January 8, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
FIRST UNION NATIONAL BANK
(Exact Name of Trustee as Specified in its Charter)
22-1147033
(I.R.S. Employer Identification No.)
101 NORTHSIDE PLAZA, ELKTON, MARYLAND
(Address of Principal Executive Offices)
21921
(Zip Code)
FIRST UNION NATIONAL BANK
123 SOUTH BROAD STREET
PHILADELPHIA, PA 19109
ATTENTION: CORPORATE TRUST ADMINISTRATION
(215) 985-6000
(Name, address and telephone number of Agent for Service)
RADNOR HOLDINGS CORPORATION
(Exact Name of Obligor as Specified in its Charter)
DELAWARE
(State or other jurisdiction of Incorporation or Organization)
23-2674715
(I.R.S. Employer Identification No.)
THREE RADNOR CORPORATE CENTER
SUITE 300
100 MATSONFORD ROAD
RADNOR,PA
(address of Principal Executive Offices)
19087
(Zip Code)
DEBT SECURITIES
<PAGE>
10% SENIOR NOTES DUE 2003
1. General information.
Furnish the following information as to the trustee:
a) Name and address of each examining or supervisory authority to which it
is subject:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
Not applicable - see answer to Item 13.
4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
Not applicable - see answer to Item 13.
5. Interlocking directorates and similar relationships with the obligor
or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the nature
of each such connection.
Not applicable - see answer to Item 13.
<PAGE>
6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
Not applicable - see answer to Item 13.
7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
Not applicable - see answer to Item 13.
8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by
the trustee:
Not applicable - see answer to Item 13.
9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge
of the trustee (1) owns 10 percent or more of the voting stock of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such
person:
Not applicable - see answer to Item 13.
11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of
the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such person any of which are so owned or held by the trustee:
Not applicable - see answer to Item 13.
<PAGE>
12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
Not applicable - see answer to Item 13.
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there
has been a default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such default.
None.
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable - see answer to Item 13.
15. Foreign trustee.
Identify the order or rule pursuant to which the trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under
the Act.
Not applicable - trustee is a national banking association organized
under the laws of the United States.
16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
__ 1. Copy of Articles of Association of the trustee as now in
effect.**
__ 2. Copy of the Certificate of the Comptroller of the Currency date
dated January 11, 1994, evidencing the authority of the trustee to
transact business.*
__ 3. Copy of the Certification of Fiduciary Powers of the trustee by
the Office of the Comptroller of the Currency dated July 24, 1992.*
__ 4. Copy of existing by-laws of the trustee.**
__ 5. Copy of each indenture referred to in Item 4, if the obligor is
in default.
-Not Applicable.
X 6. Consent of the trustee required by Section 321(b) of the Act.
--
<PAGE>
X 7. Copy of report of condition of the trustee at the close of
--
business on September 30, 1996, published pursuant to the
requirements of its supervising authority.
__ 8. Copy of any order pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to
be qualified under the Act.
- Not Applicable
__ 9. Consent to service of process required of foreign trustees
pursuant to Rule 10a-4 under the Act.
- Not Applicable
---------------------
*Previously filed with the Securities Exchange Commission on
February 11, 1994 as an Exhibit to Form T-1 in connection with Registration
Statement Number 22-73340 and ** previously filed with the Securities
Exchange Commission on March 6,1996 with Registration Statement Number 333-
1102 and incorporated herein by reference
NOTE
The trustee disclaims responsibility for the accuracy or completeness
of information contained in this Statement of Eligibility and Qualification
not known to the trustee and not obtainable by it through reasonable
investigation and as to which information it has obtained from the obligor
and has had to rely or will obtain from the principal underwriters and will
have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, a national banking association
organized and existing under the laws of the United States of America, has
duly caused this Statement of Eligibility and Qualification to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City
of Philadelphia and Commonwealth of Pennsylvania, on the 7TH day of
January, 1997.
FIRST UNION NATIONAL BANK
By:/s/ Alan G. Finn
Alan G. Finn
Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, and in connection with the issue of Radnor Holdings Corporation, 10%
Senior Notes due 2003, First Union National Bank, hereby consents that reports
of examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
FIRST UNION NATIONAL BANK
By: /s/ Alan G. Finn
Alan G. Finn
Assistant Vice President
Philadelphia, Pennsylvania
January 7, 1997
<PAGE>
REPORT OF CONDITION EXHIBIT 7
Consolidating domestic and foreign subsidiaries of the First Union National Bank
of Elkton in the state of Maryland, at the close of business on September 30,
1996 published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161. Charter Number 33869 Comptroller of
the Currency Northeastern District.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin......... 1,744,126
Interest-bearing balances.................................. 32,119
Securities................................................... /////////
Hold-to-maturity securities................................ 471,801
Available-for-sale securities.............................. 2,420,442
Federal funds sold and securities purchased under agreements//////////
to resell in domestic offices of the bank and of it //////////
Edge and Agreement subsidiaries, and in IBFs: //////////
Federal funds sold......................................... 1,543,706
Securities purchased under agreements to resell............ 324,410
Loans and lease financing receivables:
Loan and leases, net of unearned income..........19,124,413
LESS: Allowance for loan and lease losses...........28,4428
LESS: Allocated transfer risk reserve.....................0
Loans and leases, net of unearned income, allowance, and
reserve..................................................... 18,843,971
Assets held in trading accounts.............................. 0
Premises and fixed assets (including capitalized leases)..... 398,122
Other real estate owned...................................... 45,179
Investment in unconsolidated subsidiaries and associated //////////
companies.................................................... 25,832
Customer's liability to this bank on acceptances outstanding. 54,463
Intangible assets........................................... 405,536
Other assets................................................ 736,026
Total assets............................................... 27,045,733
LIABILITIES
Deposits:
In domestic offices................................... 21,878,186
Noninterest-bearing........................4,706,658
Interest-bearing..........................17,171,528
In foreign offices, Edge and Agreement
subsidiaries, and IBFs................................ 228,345
Noninterest-bearing............................... 702
Interest-bearing.................................227,713
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and IBFs
Federal fund purchased............................ 92,227
Securities sold under agreements to repurchase.... 1,010,374
Demand notes issued to the U.S. Treasury............. 99,359
Trading liabilities........................................ 0
Other borrowed money:...................................... /////////
With original maturity of one year or less............ 53,992
With original maturity of more than one year.......... 10,453
Mortgage indebtedness and obligations under capitalized leases 6,268
Bank's liability on acceptances executed and outstanding..... 54,756
Subordinated notes and debentures............................ 175,000
Other liabilities............................................ 688,684
Total liabilities............................................24,297,644
Limited-life preferred stock and related surplus............. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus................ 160,540
Common Stock................................................. 452,156
Surplus...................................................... 1,300,080
Undivided profits and capital reserves....................... 861,789
Net unrealized holding gains (losses) on available-for-sale /////////
securities................................................. (26,476)
Cumulative foreign currency translation adjustments.......... 0
Total equity capital......................................... 2,748,089
Total liabilities, limited-life preferred stock and equity... /////////
capital....................................................27,045,733
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RADNOR
HOLDINGS CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001029893
<NAME> RADNOR HOLDINGS CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 5 21
<SECURITIES> 0 0
<RECEIVABLES> 8,898 15,359
<ALLOWANCES> 496 498
<INVENTORY> 6,494 15,432
<CURRENT-ASSETS> 17,660 32,863
<PP&E> 28,304 75,551
<DEPRECIATION> 4,690 2,948
<TOTAL-ASSETS> 41,828 106,829
<CURRENT-LIABILITIES> 28,022 27,478
<BONDS> 7,252 51,567
3,000 3,000
0 0
<COMMON> 1 1
<OTHER-SE> 3,553 7,045
<TOTAL-LIABILITY-AND-EQUITY> 41,828 106,829
<SALES> 86,239 128,052
<TOTAL-REVENUES> 86,239 128,052
<CGS> 75,690 98,534
<TOTAL-COSTS> 75,690 98,534
<OTHER-EXPENSES> 15,708 23,237
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,822 3,346
<INCOME-PRETAX> (7,877) 2,782
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (7,877) 2,782
<DISCONTINUED> 2,572 0
<EXTRAORDINARY> 23,828 710
<CHANGES> 0 0
<NET-INCOME> 18,523 3,492
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SP
ACQUISITION CO. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001030196
<NAME> SP ACQUISITION CO. AND SUBSIDIARIES
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> MAR-30-1996 MAR-31-1997
<PERIOD-START> APR-02-1995 MAR-31-1996
<PERIOD-END> MAR-30-1996 SEP-28-1996
<CASH> 73,342 27,608
<SECURITIES> 0 0
<RECEIVABLES> 11,680,811 12,784,764
<ALLOWANCES> 85,000 256,000
<INVENTORY> 6,794,310 7,521,240
<CURRENT-ASSETS> 20,251,971 21,687,027
<PP&E> 8,119,002 8,859,002
<DEPRECIATION> 727,124 1,531,985
<TOTAL-ASSETS> 30,966,537 31,945,421
<CURRENT-LIABILITIES> 18,999,902 19,272,517
<BONDS> 6,318,873 4,981,782
0 0
223 223
<COMMON> 652 652
<OTHER-SE> 5,646,887 7,690,247
<TOTAL-LIABILITY-AND-EQUITY> 30,966,537 31,945,421
<SALES> 76,221,366 37,357,553
<TOTAL-REVENUES> 76,221,366 37,357,553
<CGS> 68,121,794 30,605,998
<TOTAL-COSTS> 68,121,794 30,605,998
<OTHER-EXPENSES> 5,705,453 3,448,223
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 798,928 361,384
<INCOME-PRETAX> 2,185,021 3,022,348
<INCOME-TAX> 954,093 959,000
<INCOME-CONTINUING> 1,230,928 2,063,348
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,230,928 2,063,348
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM J.R. CUP
FOAM CONTAINER OPERATIONS OF JAMES RIVER PAPER COMPANY, INC. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 1-YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 4,901
<ALLOWANCES> 0
<INVENTORY> 7,543
<CURRENT-ASSETS> 12,668
<PP&E> 47,699
<DEPRECIATION> 30,717
<TOTAL-ASSETS> 29,720
<CURRENT-LIABILITIES> 11,765
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,174
<TOTAL-LIABILITY-AND-EQUITY> 29,720
<SALES> 98,680
<TOTAL-REVENUES> 98,680
<CGS> 80,359
<TOTAL-COSTS> 80,359
<OTHER-EXPENSES> 22,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,581)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,581)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
