<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
WINCUP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3086 86-0699193
(I.R.S. EMPLOYER
(STATE OR OTHER (PRIMARY STANDARD IDENTIFICATION NUMBER)
JURISDICTION OF INDUSTRIAL
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
RADNOR CHEMICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6719 75-2524524
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
STYROCHEM U.S., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
52-1592452
TEXAS 3086
(I.R.S. EMPLOYER
(STATE OR OTHER (PRIMARY STANDARD IDENTIFICATION NUMBER)
JURISDICTION OF INDUSTRIAL
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
RADNOR MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 8741 23-2869197
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
RADNOR HOLDINGS CORPORATION
THREE RADNOR CORPORATE CENTER, SUITE 300
RADNOR, PENNSYLVANIA 19087
(610) 341-9600
(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
RADNOR, PENNSYLVANIA 19087
(610) 341-9600
(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 LLP
ONE LIBERTY PLACE, 42ND FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-7396
(215) 979-1000
(continued on next page)
<PAGE>
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: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE(1) FEE (2)
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<S> <C> <C> <C> <C>
10% Series B Senior Notes due
2003........................... $60,000,000 100.00% $60,000,000 $17,700
- -------------------------------------------------------------------------------
Guarantees of WinCup Holdings,
Inc............................ -- -- -- None(3)
- -------------------------------------------------------------------------------
Guarantees of Radnor Chemical
Corporation.................... -- -- -- None(3)
- -------------------------------------------------------------------------------
Guarantees of StyroChem U.S.,
Inc............................ -- -- -- None(3)
- -------------------------------------------------------------------------------
Guarantees of Radnor Management,
Inc............................ -- -- -- None(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(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
THE 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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 12, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING 10% SERIES B SENIOR NOTES DUE 2003
IN EXCHANGE FOR 10% SERIES B SENIOR NOTES DUE 2003,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OF
[LOGO OF RADNOR HOLDINGS CORPORATION APPEARS HERE]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., PHILADELPHIA TIME,
ON , 1998 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 $60 million of 10% Series B 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% Series B 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 , 1998 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 October 15, 1997, the Company issued $60 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 is payable semiannually on June 1 and December 1 of
each year, with interest on the Old Notes having been paid on December 1,
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 $21.0 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 $39.0
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 15 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 , 1998.
<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 and the $100.0 million of 10% Senior Notes due 2003 previously
issued by the Company (the "Prior 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 Domestic Subsidiaries (as defined)
(collectively, the "Guarantors"). The New Guarantees (as defined) 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 net proceeds therefrom, as of September 26, 1997,
the Company and its subsidiaries would have had no outstanding long-term
indebtedness other than the Old Notes, the Prior Notes and approximately $32.4
million outstanding under the Credit Agreements. In addition, the Company
would have had $5.7 million of additional borrowings available under the
Credit Agreements. See "Pro Forma Consolidated Financial Data" and
"Description of Other Company Indebtedness."
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. 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) at the time of the consummation of the Exchange Offer, it has no
arrangement or understanding with any person to participate in the
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 any of 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. 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. 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. 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. 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 or any other
2
<PAGE>
(Continued from previous page)
person subject to the prospectus delivery requirements of the Securities Act
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."
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 held in certificated form will be issued in
the form of registered definitive certificates.
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 and
"StyroChem Europe" refers to the polystyrene production and conversion
operations acquired (the "StyroChem Europe Acquisition") by Radnor from Neste
Oy. See "The Company -- The Acquisitions."
THE COMPANY
The Company manufactures and distributes worldwide a variety of disposable
foam packaging products for the foodservice industry and is a leading producer
of expandable polystyrene ("EPS") for the foodservice, insulation and packaging
industries. The Company is the second largest manufacturer of disposable foam
packaging products for the foodservice industry, with an estimated 35% share of
the U.S. foam cup and container market segment. In 1996, the Company's 14
highly automated manufacturing facilities produced 13 billion foam cups for hot
and cold drinks, foam bowls and containers and thermoformed lids and 130
million pounds of EPS. 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. EPS is consumed internally as well as
sold to third party manufacturers of foam containers, insulation products and
packaging products. For the nine months ended September 26, 1997, the Company
had net sales and income from continuing operations before interest, income tax
expense, depreciation and amortization of $170.5 million and $18.5 million,
respectively.
Through the StyroChem Europe Acquisition, the Company has become a leading
EPS producer in Northern Europe. StyroChem Europe manufactured approximately 83
million pounds of EPS and 24 million pounds of general purpose polystyrene and
high impact polystyrene ("HIPS") in 1996. Approximately one-third of the EPS
produced by StyroChem Europe is consumed internally to manufacture foam
insulation panels sold primarily in Finland and the Scandinavian countries of
Denmark, Sweden and Norway. The Company believes the StyroChem Europe
Acquisition will provide a strategic international platform for expanding
product sales into Eastern and Western Europe and will also provide enhanced
manufacturing technologies for the Company's operations. For the nine months
ended September 26, 1997, pro forma for the StyroChem Europe Acquisition, the
Company had net sales and income from continuing operations before interest,
income tax expense, depreciation and amortization of $234.1 million and $27.8
million, respectively.
Within the foodservice industry, the Company competes primarily in the
disposable cup and container market. An independent industry survey estimated
that the U.S. market had more than $2.0 billion of revenues in 1994. The use of
disposable foam cups and containers in the domestic market 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 disposable foam packaging products to more than 1,600
national, institutional and retail customers located throughout the U.S., in
Mexico and in other countries through its 64-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
4
<PAGE>
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 Company also sells
foam products for the consumer market through supermarket chains, discount
clubs and chains and other retailers. In addition, the Company sells EPS
through a dedicated sales force to manufacturers of foam packaging and
insulation products.
StyroChem Europe sells EPS, general purpose polystyrene and HIPS to more than
200 primarily mid-sized manufacturers of insulation products and packaging
products throughout Europe. Approximately two-thirds of the EPS produced by
StyroChem Europe is sold to third parties for conversion into foam insulation
products, such as roof, wall and floor panels for the building industry.
StyroChem Europe markets EPS and other polystyrene products in Europe through a
combination of its own sales force, sales agency arrangements with sales
offices and personnel of affiliates of Neste Oy and manufacturers'
representatives. The remaining one-third of StyroChem Europe's annual EPS
production is consumed internally by its foam insulation converter operations
located in Finland, Sweden and Denmark. These foam insulation products are sold
through StyroChem Europe's own direct sales force to more than 2,000 customers,
including large building supply wholesalers, such as Kesko Oy in Finland and
Utec AB in Sweden, and to residential and commercial construction companies and
distributors.
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 "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, auto-
case packaging machines and customized EPS formulations that further enhance
manufacturing efficiencies and specific product features. The Company believes
that it will be able to enhance StyroChem Europe's one-step manufacturing
process to improve production efficiency for its North American EPS facilities
and the StyroChem Europe facilities.
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.
5
<PAGE>
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.
The acquisition of StyroChem Europe, a manufacturer of EPS since 1972, has
improved the Company's competitive position in the EPS market. Over the years,
StyroChem Europe has focused on improving its EPS technologies through internal
process development as well as closely working with recognized industry
experts. This, combined with a polystyrene products sales force that is well-
educated and technically oriented, has enhanced customer relationships by
providing consistent improvements in product quality, service and reliability.
As a leading supplier of foam insulation products in Finland and Sweden since
the mid-1980's, StyroChem Europe's converter operations have had success
attracting and maintaining customers. New and specialized foam insulation
products, such as metal and foam sandwich building panels and ship insulation
panels, have been well-received by customers.
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. 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.
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 existing 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 existing suppliers and customers regarding further expansion
in these markets.
Integrated manufacturing process. By manufacturing its own EPS, the Company
has integrated its manufacturing process, thereby reducing the Company's cost
of raw materials and mitigating the impact of raw material price fluctuations.
Control over EPS manufacturing provides more reliable, consistently high-
quality EPS, improving the Company's overall manufacturing efficiencies. The
Company obtains substantially all of its EPS requirements internally.
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 domestic and international
strategic acquisitions, joint ventures and alliances that may broaden the
Company's product lines.
6
<PAGE>
THE ACQUISITIONS
In October 1997, the Company acquired StyroChem Europe, which is a leading
EPS producer in Northern Europe and has produced EPS since 1972. In addition,
StyroChem Europe converts approximately one-third of the EPS that it produces
into foam insulation materials, for which it controls a significant market
share in Finland and Scandinavia. StyroChem Europe operates two EPS production
facilities in Finland and six conversion facilities located in Finland, Denmark
and Sweden. The Company believes that the StyroChem Europe Acquisition provides
a strategic international platform for expanding product sales into Eastern and
Western Europe and also provides enhanced manufacturing technologies for the
Company's operations. On a pro forma basis, StyroChem Europe represented 26.4%
and 27.1% of the Company's consolidated sales for the year ended December 27,
1996 and for the nine months ended September 26, 1997, respectively. See "The
Company--The Acquisitions" and "Pro Forma Consolidated Financial Data."
In December 1996, the Company acquired (the "StyroChem Acquisition") Radnor
Chemical Corporation, formerly known as SP Acquisition Co., and its
subsidiaries ("StyroChem"), one of the five largest producers of EPS in the
U.S. In November 1995, the Company sold its cutlery, straws and plastic cup
operations to James River Paper Company, Inc. ("James River"). Following this
divestiture, effective in January 1996, the Company acquired (the "J.R. Cup
Acquisition") the U.S. foam cup and container operations of James River ("J.R.
Cup"). See "Pro Forma Consolidated Financial Data." The J.R. Cup Acquisition,
the StyroChem Acquisition and the StyroChem Europe Acquisition are collectively
referred to herein as the "Acquisitions."
7
<PAGE>
THE EXCHANGE OFFER
On October 15, 1997, the Company issued $60 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. Bear, Stearns & Co. Inc., NatWest Capital
Markets Limited and BT Alex. Brown Incorporated (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 $60 million aggregate principal amount of
the Company's 10% Series B 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
October 15, 1997, among the Company, the
Guarantors 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 , 1998 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
CONSEQUENCES................ The exchange pursuant to the Exchange Offer
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.
8
<PAGE>
SHELF REGISTRATION
STATEMENT................... Under certain circumstances described in the
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 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
OFFER....................... The Exchange Offer is not conditioned on any
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 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) at the time of the consummation of the
Exchange Offer, it has no arrangement or understanding with any person to
participate in the 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 any of 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
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. See "Plan of Distribution." In addition, to comply
with the securities laws of certain jurisdictions, it may be necessary to
qualify for offer or 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."
9
<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 March 14, 1998, 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. 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. 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.
SUMMARY DESCRIPTION OF THE NEW NOTES
SECURITIES OFFERED.......... $60 million aggregate principal amount of 10%
Series B Senior Notes due 2003.
MATURITY.................... December 1, 2003.
INTEREST.................... The New Notes will bear interest at the rate of
10% per annum, payable semi-annually in arrears
on June 1 and December 1 of each year, commencing
on June 1, 1998.
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 Domestic Subsidiaries (as defined). 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."
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 and the Prior 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 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, 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 and the application of the
net proceeds therefrom, as of September 26, 1997,
the Company and its subsidiaries would have had
no outstanding long-term indebtedness other than
the Old Notes, the Prior Notes and approximately
$5.7 million outstanding under
10
<PAGE>
the Credit Agreements. In addition, the Company
would have had $32.4 million of additional
borrowings available under the Credit Agreements.
See "Capitalization," "Pro Forma Consolidated
Financial Data" and "Description of Other Company
Indebtedness."
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 $21.0
million aggregate principal amount of the New
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 $39.0 million in aggregate
principal amount of the New 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.
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 lease back
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
11
<PAGE>
effective, the Shelf Registration Statement. If
the Shelf Registration Statement is not filed or
declared effective or ceases to be effective
within the applicable time period 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."
RISK FACTORS
Prospective purchasers of New Notes should carefully consider the matters set
forth under "Risk Factors," as well as the other information and financial
statements and data included in this Prospectus, prior to making an investment
in the New Notes.
12
<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"), and the StyroChem Europe Financial
Statements (as defined), 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 Prior Notes and the Notes as if they had occurred on December 30,
1995. The pro forma consolidated balance sheet data reflect the StyroChem
Europe Acquisition and the sale of the Notes as if they had occurred on
September 26, 1997. 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 Prior Notes and 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 in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL(1) PRO FORMA
-------------------------------------------------- -------------------
NINE
YEAR ENDED NINE MONTHS ENDED YEAR MONTHS
---------------------------- -------------------- ENDED ENDED
DEC. 30, DEC. 29, DEC. 27, SEPT. 27, SEPT. 26, DEC. 27, SEPT. 26,
1994 1995 1996 1996(2) 1997(2) 1996 1997
-------- -------- -------- --------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales............... $80,850 $ 86,239 $177,395 $128,052 $170,545 $317,125 $234,072
Cost of goods sold...... 64,078 75,690 135,982 98,660 127,730 233,083 167,268
------- -------- -------- -------- -------- -------- --------
Gross profit............ 16,772 10,549 41,413 29,392 42,815 84,042 66,804
Distribution expense.... 5,584 6,027 14,099 10,223 12,569 22,402 17,282
Selling, general and
administrative
expenses............... 8,209 9,051 18,676 13,538 17,747 40,145 30,400
Restructuring charges... -- -- 910 855 -- 910 --
------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations............. 2,979 (4,529) 7,728 4,776 12,499 20,585 19,122
Interest(3)............. 3,001 2,822 4,496 3,346 8,781 16,240 12,758
Other (income) expense,
net.................... 290 526 374 153 (94) 93 (201)
------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before taxes and
minority interest...... (312) (7,877) 2,858 1,277 3,812 4,252 6,565
Income tax expense(4)... -- -- 121 -- 323 646 422
------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before minority
interest............... (312) (7,877) 2,737 1,277 3,489 3,606 6,143
Minority interest in
income................. -- -- 1,348 731 -- -- --
------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations.. $ (312) $ (7,877) $ 1,389 $ 546 $ 3,489 $ 3,606 $ 6,143
======= ======== ======== ======== ======== ======== ========
OTHER FINANCIAL AND
OPERATING DATA:
Ratio of earnings to
fixed charges(5)....... 1.49x 1.30x 1.38x 1.24x 1.46x
Deficiency of earnings
available to cover
fixed
charges(5)............. $ (312) $ (7,877)
Capital expenditures.... $ 1,645 $ 5,491 $ 4,944 $ 2,629 $ 10,312 $ 8,439 $ 11,362
Depreciation and
amortization........... $ 1,303 $ 2,380 $ 4,844 $ 3,350 $ 5,907 $ 12,485 $ 8,514
M Units shipped (in
thousands)(6).......... 12,959 9,899
EPS, pounds produced (in
millions).............. 212 161
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPT. 26, 1997
----------------------
ACTUAL(2) PRO FORMA
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 14,947 $ 24,695
Total assets............................................ 181,908 245,541
Total debt (including current portion).................. 115,867 168,172
Stockholders' equity.................................... 14,788 14,788
</TABLE>
13
<PAGE>
- --------
(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 27, 1996 and as of and for the nine
months ended September 27, 1996 and September 26, 1997. The Company's
discontinued operations were the cutlery, straws and plastic cup
operations, which were sold in 1995. Prior to January 20, 1996 and December
5, 1996, the Company's results from continuing operations do not include
the results of J.R. Cup and StyroChem, respectively, which were acquired on
those respective dates.
(2) The historical financial data as of September 26, 1997 and for the nine
months ended September 27, 1996 and September 26, 1997 are unaudited but in
the opinion of the Company reflect all adjustments (which include only
normal recurring adjustments) required for a fair statement of financial
position, results of operations and cash flows for such periods.
(3) Interest includes amortization of debt issuance costs related to the Credit
Agreements, the Prior Notes and the Notes and amortization of premium
related to the Notes of $232 and $817 for the historical and pro forma
years ended December 27, 1996, respectively, and $464 and $498 for the
historical and pro forma nine months ended September 26, 1997,
respectively. The interest rate on the Notes and the Prior Notes is 10%.
The assumed interest rate on the Credit Agreements for the pro forma year
ended December 27, 1996 and the pro forma nine months ended September 26,
1997 is approximately 7.5%. The premium on the Notes of 3.67% is amortized
over the life of the Notes.
(4) The Company recorded no federal income tax expense during the periods prior
to the StyroChem Acquisition due to the incurrence of operating losses or
the utilization of net operating loss carryforwards during those periods.
As of December 27, 1996, the Company had approximately $14.0 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2010. Since 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, a valuation allowance was provided for
substantially all of the loss carryforward tax benefit at December 27,
1996. In 1997 a portion of the valuation allowance has been eliminated and
a tax benefit reflected in the 1997 financial statements.
(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.
(6) Each M Unit consists of 1,000 foam cups, containers or lids.
14
<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 unless requested by
the holders of Old Notes who are not eligible to participate in the Exchange
Offer. 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)
at the time of the consummation of the Exchange Offer, it has no arrangement
or understanding with any person to participate in the 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
any of 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.
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 or any other person subject to the prospectus delivery requirements of
the Securities Act 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 offer or sale in such jurisdictions
or an 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
15
<PAGE>
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 Notes and the
application of the net proceeds therefrom, the Company's total debt would have
been $168.2 million as of September 26, 1997, the Company's pro forma ratio of
earnings to fixed charges would have been 1.46 to 1 for the nine months ended
September 26, 1997 and the Company and the Guarantors would have had, subject
to certain restrictions (including borrowing base limitations), the ability to
draw up to $32.4 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 will be limited by covenants contained in the Indenture
governing the Prior Notes (the "Prior Indenture" and, collectively with the
Indenture, the "Indentures"), the Indenture and the Credit Agreements. Among
other things, these covenants will 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 Other Company Indebtedness" 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, which is 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 for its
own consumption. Prices for styrene monomer will fluctuate, principally due to
fluctuations in petrochemical feedstock prices, but also because of supply and
demand in the styrene monomer market.
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.
The Company believes that the StyroChem Acquisition and its long-term supply
agreement with Chevron Chemical Company ("Chevron") for the purchase of
styrene monomer have mitigated, and the Chevron agreement and the StyroChem
Europe Acquisition and its long-term supply agreement with Elf Atochem SA
16
<PAGE>
("Elf Atochem") for the purchase of styrene monomer will continue to mitigate,
the Company's exposure to fluctuations in styrene monomer prices through a
guaranteed supply of styrene monomer at or below market prices. However, the
Company will still be exposed to fluctuations in styrene monomer prices to the
extent that its supply agreements do not satisfy its needs for styrene
monomer. See "Business--Raw Materials."
OPERATING LOSSES
The Company had income from continuing operations for the year ended
December 27, 1996 and the nine months ended September 26, 1997 of $1.4 million
and $3.5 million, respectively. 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 $0.3 million
and $7.9 million for 1994 and 1995, respectively. The losses in 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 for the Acquisitions, the Company would have had income from
continuing operations of $3.6 million and $6.1 million for the year ended
December 27, 1996 and the nine months ended September 26, 1997, 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. StyroChem Europe operates
primarily in the more fragmented European EPS market, where it competes with
numerous other suppliers, many of which are larger and have significantly
greater resources than StyroChem Europe and the Company. 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 6.3% of the Company's net sales for 1996. In
addition, the five largest accounts represented approximately 21.6% of the
Company's pro forma net sales for 1996. 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. The Company will face significant challenges in
integrating the StyroChem Europe Acquisition because it is the Company's first
overseas acquisition. 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. The Company
intends to incur capital expenditures in connection with introducing its
products into the European market, for which there can be no assurance of
market acceptance.
17
<PAGE>
INTERNATIONAL OPERATIONS
As a result of the StyroChem Europe Acquisition, a significant portion of
the Company's operations are now conducted in foreign countries, and are
subject to risks that are inherent in operating abroad, including governmental
regulation, changes in import duties, trade restrictions, work stoppages,
currency restrictions and other restraints and burdensome taxes.
The Company's international operations and the products it sells are subject
to numerous governmental regulations and inspections. Although the Company
believes it is able to substantially comply with such regulations, changes in
legislation or regulations and actions by regulators, including changes in
administration and enforcement policies, may from time to time require
operational improvements or modifications at various locations or the payment
of fines and penalties, or both.
The Company is subject to a variety of governmental regulations in the
countries where it markets its products, including import quotas, tariffs and
taxes. For example, distributions of earnings and other payments (including
interest) received from the Company's foreign subsidiaries may be subject to
withholding taxes imposed by the jurisdiction in which such entities are
formed or operating, which will reduce the amount of after-tax cash the
Company can receive. In general, a U.S. corporation may claim a foreign tax
credit against its federal income tax expense for such foreign withholding
taxes and for foreign income taxes paid directly by foreign corporate entities
in which the Company owns 10% or more of the voting stock. The ability to
claim such foreign tax credits and to utilize net foreign losses is, however,
subject to numerous limitations, and the Company may incur incremental tax
costs as a result of these limitations or because the Company is not in a tax-
paying position in the United States. The Company may also be required to
include in its income for U.S. federal income tax purposes its proportionate
share of certain earnings of those foreign subsidiaries that are classified as
"controlled foreign corporations" without regard to whether distributions have
been actually received from such subsidiaries.
The Company's financial results will depend on the economies of the markets
in which it has operations and other interests. These markets are in countries
with economies in various stages of development or structural reform, some of
which are subject to rapid fluctuations in terms of consumer prices,
employment levels, gross domestic product and interest and foreign exchange
rates. The Company is subject to such fluctuation in the local economies in
which it has significant operations.
The Company's international operations involve transactions in a variety of
currencies. The Company's financial results may be significantly affected by
fluctuations of currency exchange rates. Such fluctuations are significant to
the Company's international operations because many of the costs related to
those operations are incurred in currencies different from those that are
received from the sale of its products in foreign markets, and there is
normally a time lag between the incurrence of such costs and collection of the
related sales proceeds. Although it does not currently do so, the Company
plans to engage from time to time in various currency hedging activities to
minimize potential losses on cash flows originating in foreign currencies. To
the extent that foreign subsidiaries distribute dividends in local currencies
in the future, the amount of cash to be received by the Company and,
consequently, the amount of cash available to make payments for principal of
and interest on the Notes, will be affected by fluctuations in exchange rates,
and there can be no assurance that shifts in the currency exchange rates will
not have a material adverse effect on the Company.
A number of the Company's agreements are governed by the laws of, and
subject to dispute resolution in the courts of, or through arbitration
proceedings in, the country or region in which the operations are located. The
Company cannot accurately predict whether such forum will provide it with an
effective and efficient means of resolving disputes that may arise in the
future. Even if the Company is able to obtain a satisfactory decision through
arbitration or a court proceeding, it could have difficulty enforcing any
award or judgment on a timely basis. The Company's ability to obtain or
enforce relief in the United States is uncertain.
18
<PAGE>
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 material adverse effect on the
Company's business. The Company is also dependent on the management experience
of the key StyroChem Europe employees who have joined the Company as part of
the StyroChem Europe Acquisition. 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 a director of
the Company, beneficially owns 80.0% 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 was placed in
escrow and may be used by the Company to offset certain costs associated with
specified environmental matters relating to the Company's Texas and Quebec
facilities. However, there can be no assurance that the escrowed funds will be
sufficient to offset all costs 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, both domestic and
international, and other risks that may be described from time to time in the
reports that the Company files with the SEC. The Company cautions potential
investors not to place undue reliance on any such forward-looking statements.
CHANGE OF CONTROL; POSSIBLE INABILITY TO SATISFY REDEMPTION OBLIGATIONS
Upon the occurrence of a Change of Control, each holder of Notes, as well as
holders of Prior Notes, may require the Company to repurchase all or a portion
of such holder's Notes or Prior Notes, as applicable. 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 and Prior 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
19
<PAGE>
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 Agreements. See "Description
of Other Company Indebtedness." 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 and
Prior 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 and Prior
Notes. In such case, the Company's failure to purchase tendered Notes or Prior
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, including the Prior Indenture, 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 and the Prior 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 to the Company and certain of
its U.S. subsidiaries 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 such U.S. subsidiaries, and loans
to the Company's European subsidiaries under a supplement to the Amended
Credit Agreement dated October 15, 1997, as amended to date, are secured by
similar assets of certain of its European subsidiaries and are guaranteed by
the Company and certain of 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 Prior Indenture and the Indenture,
the Company is permitted, in each case upon the satisfaction of certain
conditions, to incur additional secured indebtedness. See "Description of
Other Company Indebtedness," "Description of the Notes--Ranking" and "--
Certain Covenants."
AMENDMENT, SUPPLEMENT AND WAIVER OF INDENTURE PROVISIONS
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. 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.
Consequently, so long as the Holders of requisite principal amount of the
Notes consent, certain provisions of the Indenture may be amended,
supplemented or waived without the consent of a Holder of Notes.
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 is 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 and certain restrictions contained in the Credit
Agreements that limit the ability of the Company to receive loans, dividends
or other distributions from its subsidiaries.
20
<PAGE>
The Company's obligations on the New Notes will be, and the Company's
obligations on the Olds 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 of 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 StyroChem Europe Acquisition, 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 New Guarantees or the Old 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 StyroChem
Europe Acquisition, 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 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 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 will 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 October 15, 1997 to qualified institutional buyers and
are eligible for trading in the National Association of Securities Dealers'
Private Offering, Resales and Trading through Automated Linkages ("PORTAL")
market, 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
21
<PAGE>
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. The Initial Purchasers have
advised the Company that they currently intend to make a market in the New
Notes. The Initial Purchasers are not obliged 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 also be no assurance that the markets 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.
22
<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 KCTC. In November 1995, the Company sold its cutlery, straws
and plastic cup operations to James River. 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 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.
StyroChem Europe is a leading EPS producer in Northern Europe and has
produced EPS since 1972. StyroChem Europe converts approximately one-third of
the EPS that it produces into foam insulation materials, for which it controls
a significant market share in Finland and Scandinavia. StyroChem Europe
operates two EPS production facilities in Finland and six conversion
facilities located in Finland, Denmark and Sweden.
THE ACQUISITIONS
The StyroChem Europe Acquisition
In October 1997, the Company and Neste Oy consummated the transactions
contemplated under a September 1997 agreement (the "Acquisition Agreement")
whereby certain newly-formed foreign subsidiaries of the Company (StyroChem
Finland Oy, ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark
ApS) agreed to acquire substantially all of the tangible and intangible assets
and long-term investments of StyroChem Europe. The purchase price for
StyroChem Europe was 213.0 million Finnish markkas (approximately $40.8
million as of the date of closing) plus the value of the net working capital,
which includes accounts receivable, inventory, trade accounts payable and
accrued liabilities. The net working capital was estimated to be 60.0 million
Finnish markkas (approximately $11.5 million as of the date of closing), of
which 16.5 million Finnish markkas was placed in an escrow account at closing.
The purchase price will be adjusted following an audit of net working capital.
The Company also obtained an option to acquire the StyroChem Europe assets
located in Russia for a price of 2.0 million Finnish markkas, which the
Company does not anticipate exercising. The Company believes that the
StyroChem Europe Acquisition provides a strategic international platform for
expanding product sales into Eastern and Western Europe and also provides
enhanced manufacturing technologies for the Company's operations.
In connection with the closing of the StyroChem Europe Acquisition, the
Company entered into certain other arrangements with Neste Oy, including: (i)
a Land Lease Agreement; (ii) a Utilities Supply Agreement; (iii) a Neste
Service Agreement; (iv) a Sales and Marketing Agreement and (v) a Personnel
Agreement. The Land Lease Agreement relates to the land on which StyroChem
Europe's principal EPS manufacturing facility in Porvoo, Finland is located
and extends for a period of 30 years for a nominal rent, with an option for
the Company to extend the lease or acquire the leased property following the
initial term of the lease under certain limited conditions. Through the
Utilities Supply Agreement, which extends for a ten-year term and thereafter
continues for five-year periods unless 24 months' prior written notice of
termination is provided by one of the parties in which event the agreement
terminates at the end of such initial or renewal term, the Company purchases
electricity, nitrogen, steam, drinking water and salt-free water from Neste
Oy. Pursuant to the Neste Service Agreements, Neste Oy provides certain site
services at the Porvoo industrial complex to the Company. The agreement
initially extends for a period of one year and thereafter continues for
additional one-year periods, with specific services subject to termination
upon written notice provided by either party in accordance with the
23
<PAGE>
agreement. The Sales and Marketing Agreement pertains to the employment by the
Company of certain polystyrene products sales persons and brokerage services
to be provided by affiliates of Neste Oy in certain European countries. This
agreement also grants the Company an option to maintain offices and utilize
certain office services at five sales offices of affiliates of Neste Oy
throughout Europe and Russia. The Personnel Agreement separately relates to
the transfer of certain of StyroChem Europe's employees to the Company. The
Company also entered into a Styrene Monomer Supply Agreement and certain
services agreements with Norlatex pursuant to which the Company supplies
styrene monomer and other site services to Norlatex at cost. This agreement
initially extends for a period of ten years and thereafter continues for
additional one-year periods, subject to termination at the end of any term
upon written notice provided by either party at least six months prior to the
end of the term.
The 1996 Acquisitions
In December 1996, the Company acquired StyroChem for an aggregate cash
purchase price of $30.1 million, including certain noncompete payments, plus
$0.9 million of assumed indebtedness and consulting payments. The purchase
price was 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. The adjustment resulted in a reduction in
the purchase price of approximately $1.5 million. In addition, approximately
$1.4 million of the purchase price was placed in a separate escrow account,
and may be used by the Company to offset costs associated with specified
environmental matters relating to StyroChem's Texas and Quebec facilities. See
"Business--Environmental Matters." As part of the acquisition, StyroChem's
former 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.
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. ("WinCup
L.P."). The Company used a portion of the proceeds of the sale of the Prior
Notes to acquire the minority interest and repay obligations and certain
subordinated notes issued to James River related to the J.R. Cup Acquisition.
See Note 1 to the Radnor Financial Statements. In connection with the purchase
of the minority interest, 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."
GENERAL
The Company's executive offices are located at Three Radnor Corporate
Center, Suite 300, Radnor, Pennsylvania 19087, and its telephone number is
(610) 341-9600.
24
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company as
of September 26, 1997 and the pro forma capitalization of the Company on such
date after giving effect to the StyroChem Europe Acquisition, 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 26, 1997
---------------------------
ACTUAL PRO FORMA
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion
Credit Agreements(1)........................... $ 15,573 $ 5,675
Term Notes..................................... 294 294
Senior Notes due 2003.......................... 100,000 100,000
Series B Senior Notes due 2003................. -- 62,203(2)
------------ ------------
Total long-term debt........................... 115,867 168,172
------------ ------------
Stockholders' equity
Common stock and additional paid-in capital.... 17,721 17,721
Cumulative translation adjustment.............. (2) (2)
Accumulated deficit............................ (2,931) (2,931)
------------ ------------
Total stockholders' equity................... 14,788 14,788
------------ ------------
Total capitalization....................... $ 130,655 $ 182,960
============ ============
</TABLE>
- --------
(1) At September 26, 1997, on a pro forma basis after giving effect to the
StyroChem Europe Acquisition and the issuance and sale of the Old Notes,
the Company would have been able to borrow an additional $32.4 million of
revolving credit under the Credit Agreements, net of outstanding letters
of credit of $2.0 million, and would have had no outstanding long-term
indebtedness other than the Old Notes, the Prior Notes and approximately
$5.7 million outstanding under the Credit Agreements.
(2) The amount shown reflects a premium of approximately $2.2 million
associated with the issuance of the Notes.
25
<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"), the consolidated financial statements of StyroChem,
including the notes thereto (the "StyroChem Financial Statements") and the
financial statements of the Neste Oy Polystyrene Upstream Business in Porvoo
and Kokemaki, Isora Oy, Neste Cellplast AB, and Neste Thermisol A/S, including
the notes thereto (collectively, the "StyroChem Europe Financial Statements"),
all of which are included elsewhere herein. The Radnor Financial Statements,
the J.R. Cup Financial Statements, the StyroChem Financial Statements and the
StyroChem Europe 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 Prior Notes and the Notes as if
they had occurred on December 30, 1995. The pro forma consolidated balance
sheet reflects the StyroChem Europe Acquisition and the sale of the Notes as
if they had occurred on September 26, 1997. 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
Prior Notes and 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
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 27, 1996
--------------------------------------------------------------------
1996
RADNOR ACQUISITION RADNOR STYROCHEM PRO FORMA PRO
ACTUAL ADJUSTMENTS(1) PRO FORMA EUROPE(2) ADJUSTMENTS FORMA
-------- -------------- --------- --------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales............... $177,395 $56,112 $233,507 $83,618 $ -- $317,125
Cost of goods sold...... 135,982 44,915 180,897 53,648 (1,462)(/3/) 233,083
-------- ------- -------- ------- ------- --------
Gross profit............ 41,413 11,197 52,610 29,970 1,462 84,042
Distribution expense.... 14,099 2,461 16,560 5,842 22,402
Selling, general and
administrative
expenses............... 18,676 4,311 22,987 18,807 (1,649)(/4/) 40,145
Restructuring charges... 910 -- 910 -- -- 910
-------- ------- -------- ------- ------- --------
Income (loss) from
operations............. 7,728 4,425 12,153 5,321 3,111 20,585
Interest................ 4,496 6,443 10,939 142 5,159 (/5/) 16,240
Other (income) expense,
net.................... 374 (89) 285 (192) -- 93
-------- ------- -------- ------- ------- --------
Income (loss) from
continuing operations
before income taxes and
minority interest...... 2,858 (1,929) 929 5,371 (2,048) 4,252
Income tax expense
(benefit).............. 121 178 299 1,043 (696)(/6/) 646
-------- ------- -------- ------- ------- --------
Income from continuing
operations before
minority interest...... 2,737 (2,107) 630 4,328 (1,352) 3,606
Minority interest in
income................. 1,348 (1,348) -- -- -- --
-------- ------- -------- ------- ------- --------
Income (loss) from
continuing operations.. $ 1,389 $ (759) $ 630 $ 4,328 $(1,352) $ 3,606
======== ======= ======== ======= ======= ========
</TABLE>
26
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 27, 1996
(UNAUDITED)
(IN THOUSANDS)
(1) Reflects the historical results of operations and purchase price and pro
forma adjustments of the J.R. Cup Acquisition and StyroChem Acquisition
as if they had occurred on December 30, 1995 until their respective dates
of acquisition.
(2) These amounts have been derived from the StyroChem Europe Combining
Statement of Operations for the year ended December 31, 1996 on page F-
85.
(3) Reflects savings (cost) of $1,462 related to the StyroChem Europe
Acquisition as follows:
<TABLE>
<S> <C>
Reduction of cost of goods sold to reflect provisions of new raw
material purchase contract to be entered into as a condition of
the Acquisition Agreement........................................ $ 2,126
Elimination of sick leave and disability payments made to
employees who are not part of StyroChem Europe; liability is
retained by the seller........................................... 100
Additional depreciation as a result of the step-up in StyroChem
Europe asset value............................................... (764)
-------
$ 1,462
=======
(4) Reflects savings of $1,649 related to the Acquisitions as follows:
Reduction of specific administrative cost allocations from parent
company pursuant to the new Neste Service Agreement entered into
as part of Acquisition Agreement, including training, personnel
services, environmental and security, accounting, procurement,
and other administrative services (see "The Company--The
Acquisitions")................................................... $ 1,297
Reduction of insurance expense as a result of terminating Neste Oy
captive insurance arrangement pursuant to the Acquisition
Agreement and instituting a stand-alone coverage program......... 352
-------
$ 1,649
=======
(5)Adjustment for interest is comprised of the following:
Interest on the Notes............................................. $ 6,000
Amortization of premium on the Notes.............................. (290)
Elimination of interest on debt repaid............................ (884)
Amortization of deferred financing costs related to the offering
of the Notes..................................................... 333
-------
$ 5,159
=======
</TABLE>
The interest rate on the Notes is 10%. The premium on the Notes is
calculated at 3.67% of the principal of the Notes and is amortized using
the effective interest rate method. The assumed interest rate on the Credit
Agreements is approximately 7.5%.
(6) Reduction of income tax provision due to reduction in taxable income from
pro forma adjustments.
27
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 26, 1997
--------------------------------------------
RADNOR STYROCHEM PRO FORMA PRO
ACTUAL EUROPE(1) ADJUSTMENTS FORMA
-------- --------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales........................ $170,545 $63,527 $ -- $234,072
Cost of goods sold............... 127,730 40,823 (1,285)(/2/) 167,268
-------- ------- ------- --------
Gross profit..................... 42,815 22,704 1,285 66,804
Distribution expense............. 12,569 4,713 17,282
Selling, general and
administrative expenses......... 17,747 13,546 (893)(/3/) 30,400
-------- ------- ------- --------
Income (loss) from operations.... 12,499 4,445 2,178 19,122
Interest......................... 8,781 76 3,901 (/4/) 12,758
Other (income) expense, net...... (94) (107) (201)
-------- ------- ------- --------
Income (loss) from continuing
operations before income taxes
and minority interest........... 3,812 4,476 (1,723) 6,565
Income tax expense (benefit)..... 323 685 (586)(/5/) 422
-------- ------- ------- --------
Income (loss) from continuing
operations...................... $ 3,489 $ 3,791 $(1,137) $ 6,143
======== ======= ======= ========
</TABLE>
28
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 26, 1997
(UNAUDITED)
(IN THOUSANDS)
(1) These amounts have been derived from the StyroChem Europe Combining
Statement of Operations for the nine months ended September 30, 1997 on
page F-86.
(2) Reflects savings (cost) of $1,285 related to the StyroChem Europe
Acquisition as follows:
<TABLE>
<S> <C>
Reduction of cost of goods sold to reflect provisions of new raw
material purchase contract to be entered into as a condition of
the Acquisition Agreement......................................... $1,782
Elimination of sick leave and disability payments made to employees
who are not part of StyroChem Europe; liability is retained by the
seller............................................................ 76
Additional depreciation as a result of a step-up in StyroChem
Europe asset value................................................ (573)
------
$1,285
======
(3) Reflects savings of $893 related to the Acquisitions as follows:
Reduction of specific administrative cost allocations from parent
company pursuant to the new Neste Service Agreement entered into
as part of Acquisition Agreement, including training, personnel
services, environmental and security, accounting, procurement, and
other administrative services (see "The Company--The
Acquisitions").................................................... $ 480
Reduction of insurance expense as a result of terminating Neste Oy
captive insurance arrangement pursuant to the Acquisition
Agreement and instituting a stand-alone coverage program.......... 213
Elimination of payments made to former owners of Radnor Chemical
Corporation in connection with the acquisition of StyroChem....... 200
------
$ 893
======
</TABLE>
(4) Adjustment for interest is comprised of the following:
<TABLE>
<S> <C>
Interest on the Notes.............................................. $4,500
Amortization of premium on the Notes............................... (216)
Elimination of interest on debt repaid............................. (633)
Amortization of deferred financing fees related to the offering of
the Notes......................................................... 250
------
$3,901
======
</TABLE>
The interest rate on the Notes is 10%. The premium on the Notes is
calculated at 3.67% of the Notes and is amortized using the effective interest
rate method. The assumed interest rate on the Credit Agreements is
approximately 7.5%.
(5) Elimination of income tax provision due to reduction in taxable income
from pro forma adjustments.
29
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 26, 1997
---------------------------------------------
STYROCHEM PRO FORMA
RADNOR EUROPE(1) ADJUSTMENTS(2) PRO FORMA
-------- --------- -------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash............................ $ 1,303 $ 6,597 $(6,597)(3) $ 1,303
Accounts receivable, net........ 20,194 11,693 31,887
Inventory....................... 25,386 7,866 (600)(3) 32,652
Deferred tax asset.............. 2,378 -- 2,378
Prepaid expenses and other...... 5,438 2,117 7,555
-------- ------- --------
Total current assets.......... 54,699 28,273 75,775
Property, plant and equipment,
net.............................. 116,889 29,100 11,457 (3) 157,446
Other assets...................... 10,320 518 1,482 (4) 12,320
-------- ------- --------
Total assets.................. $181,908 $57,891 $245,541
======== ======= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities
Accounts payable................ $ 25,681 $ 5,442 $ 31,123
Accrued liabilities............. 13,836 4,865 800 (3) 19,501
Other current liabilities....... -- 221 221
Current portion of long-term
debt........................... 235 -- 235
-------- ------- --------
Total current liabilities..... 39,752 10,528 51,080
Credit Agreements................. 15,573 -- (9,898)(5) 5,675
Term Notes........................ 59 -- 59
Series B Senior Notes due 2003.... -- -- 62,203 (6) 62,203
Senior Notes due 2003............. 100,000 -- 100,000
-------- ------- --------
Total long-term debt.......... 115,632 -- 167,937
Deferred income taxes............. 11,286 36 (36)(3) 11,286
Other noncurrent liabilities...... 450 2,300 (2,300)(3) 450
Commitments and contingencies
Stockholders' equity
Common stock.................... 1 6,635 (6,635)(3) 1
Additional paid-in capital...... 17,720 -- 17,720
Division equity................. -- 32,950 (32,950)(3) --
Foreign currency translation
adjustment..................... (2) (922) 922 (3) (2)
Retained earnings (deficit)..... (2,931) 6,364 (6,364)(3) (2,931)
-------- ------- --------
Total stockholders' equity.... 14,788 45,027 14,788
-------- ------- --------
Total liabilities and
stockholders' equity....... $181,908 $57,891 $245,541
======== ======= ========
</TABLE>
- --------
(1) These amounts have been derived from the StyroChem Europe Combining
Balance Sheet as of September 30, 1997 on page F-87.
(2) A final valuation of StyroChem Europe's assets and liabilities has not
been completed. Upon completion of such valuation, the purchase price will
be allocated to StyroChem Europe's assets and liabilities, both tangible
and intangible. Management expects that, based on such allocation,
additional purchase accounting adjustments will be made to assets and
liabilities and, among other adjustments, property, plant and equipment
will increase.
(3) Purchase accounting adjustments related to the acquisition of StyroChem
Europe.
(4) Transaction costs of $2.0 million, net of purchase accounting adjustments
of $0.5 million related to assets not being acquired in connection with
the acquisition of StyroChem Europe.
(5) Repayment of debt outstanding under the Credit Agreements.
(6) Gross proceeds from the issuance of the Notes. The proceeds include the
premium on the Notes, which is calculated at 3.67% of the principal of the
Notes.
30
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of December 29,
1995 and December 27, 1996, and for each of the three years in the period
ended December 27, 1996, 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, 1993 and December 30, 1994
and for the year ended December 31, 1993 have been derived from Radnor's
audited consolidated financial statements not included herein. The selected
consolidated financial data presented below as of and for the year ended
January 1, 1993 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 27, 1996 and September 26, 1997
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 year ended
December 27, 1996 are not fully comparable to any of the prior periods, which
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 and
the StyroChem Acquisition. Financial results for the nine months ended
September 26, 1997 are not fully comparable to the nine months ended September
27, 1996 because of the December 1996 StyroChem Acquisition and the January
1996 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)
-------------- ------------------------------------------------------------------------
FISCAL YEAR ENDED NINE MONTHS ENDED
------------------------------------- -------------------
DEC. 29, 1991- FEB. 29, 1992- DEC.31, DEC. 30, DEC. 29, DEC. 27, SEPT. 27, SEPT. 26,
FEB. 28, 1992 JAN. 1, 1993 1993 1994 1995 1996(2) 1996 1997(2)
-------------- -------------- ------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............... $12,883 $67,904 $83,569 $80,850 $ 86,239 $177,395 $128,052 $170,545
Cost of goods sold...... 12,878 57,231 68,454 64,078 75,690 135,982 98,660 127,730
------- ------- ------- ------- -------- -------- -------- --------
Gross profit............ 5 10,673 15,115 16,772 10,549 41,413 29,392 42,815
Distribution expense.... 1,018 4,427 6,599 5,584 6,027 14,099 10,223 12,569
Selling, general and
administrative
expenses............... 3,245 8,298 10,330 8,209 9,051 18,676 13,538 17,747
Restructuring charges... -- -- -- -- -- 910 855 --
------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
operations............. (4,258) (2,052) (1,814) 2,979 (4,529) 7,728 4,776 12,499
Interest................ -- 1,562 2,518 3,001 2,822 4,496 3,346 8,781
Other (income) expense,
net.................... 222 386 290 526 374 153 (94)
------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes and
minority interest...... (4,258) (3,836) (4,718) (312) (7,877) 2,858 1,277 3,812
Income tax expense(3)... -- -- -- -- -- 121 -- 323
------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
continuing operations
before minority
interest............... (4,258) (3,836) (4,718) (312) (7,877) 2,737 1,277 3,489
Minority interest in
income................. -- -- -- -- -- 1,348 731 --
------- ------- ------- ------- -------- -------- -------- --------
Income (loss) from
continuing operations.. $(4,258) $(3,836) $(4,718) $ (312) $ (7,877) $ 1,389 $ 546 $ 3,489
======= ======= ======= ======= ======== ======== ======== ========
Ratio of earnings to
fixed charges.......... 1.49x 1.30x 1.38x
Deficiency of earnings
available to cover
fixed charges.......... $(4,258) $(3,836) $(4,718) $ (312) $ (7,877)
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital......... $ (647) $ (112) $ 1,620 $(10,362) $ 8,684 $ 4,023 $ 14,947
Total assets............ 48,851 36,650 43,033 46,588 172,369 106,023 181,908
Total debt (including
current portion)....... 26,446 31,531 35,410 16,252 104,599 54,484 115,867
Stockholders' equity
(deficit).............. 5,751 (6,575) (11,969) 6,554 14,329 4,810 14,788
</TABLE>
31
<PAGE>
- --------
(1) The historical financial data for the period prior to February 29, 1992
include only the results of operations 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 year
ended December 27, 1996 and as of and for the nine months ended September
26, 1997. Prior to January 20, 1996 and December 5, 1996, the Company's
results from continuing operations do not include the results of J.R. Cup
and StyroChem, respectively, which were acquired on those respective
dates.
(3) The Company recorded no federal income tax expense during the periods
prior to the acquisition of StyroChem due to the incurrence of operating
losses or the utilization of net operating loss carryforwards during
those periods. As of December 27, 1996, the Company had approximately
$14.0 million of net operating loss carryforwards for federal income tax
purposes, which expire through 2010. Since 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, a valuation
allowance was provided for substantially all of the loss carryforward tax
benefit at December 27, 1996. In 1997 a portion of the valuation
allowance has been eliminated and a tax benefit reflected in the 1997
financial statements.
(4) 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.
32
<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 an agreement with James River, which
resulted in the acquisition of its J.R. Cup business. In December 1996, the
Company purchased the outstanding capital stock of and other equity interests
in StyroChem. StyroChem supplies the Company with approximately 50% of the EPS
used in its manufacture of foam products. In October 1997, the Company
acquired StyroChem Europe through certain foreign subsidiaries. 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 or decline
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 0.5%, 0.9%, 1.3% and 1.7% in 1994, 1995, and 1996 and
for the nine months ended September 26, 1997, 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.
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 expensed and paid during the year ended December 27, 1996.
33
<PAGE>
Net operating loss carryforwards
As of December 27, 1996, the Company had approximately $14.0 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2010. Since 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, a valuation allowance was provided for substantially
all of the loss carryforward tax benefit at December 27, 1996. In 1997, a
portion of the valuation allowance has been eliminated and a tax benefit
reflected in the 1997 financial statements.
Pending accounting changes
In July 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income," and Statement No. 131, "Disclosures About Segments of an Enterprise
and Related Information." Statement No. 130 establishes standards for
reporting comprehensive income in financial statements. Statement No. 131
expands certain reporting and disclosure requirements for segments from
current requirements. The Company is not required to adopt these Statements
until 1998 and does not expect the adoption of these new standards to result
in material changes to previously reported amounts or disclosures.
COMPARABILITY OF PERIODS
Financial results for 1996 and for the nine months ended September 26, 1997
are not fully comparable to 1992, 1993, 1994, 1995 and the nine months ended
September 27, 1996 because of the January 1996 acquisition of the J.R. Cup
business and the December 1996 acquisition of StyroChem. Fiscal years 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 or the StyroChem Acquisition. The nine months ended September 27,
1996 includes adjustments for the period from January 20, 1996 through
September 27, 1996 to reflect the J.R. Cup Acquisition but does not include
any such adjustments to reflect the StyroChem Acquisition.
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
------------------------------------------------
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------- -------------------
DEC. 30, DEC. 29, DEC. 27, SEPT. 27, SEPT. 26,
1994 1995 1996 1996 1997
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold........... 79.3 87.8 76.6 77.0 74.9
----- ----- ----- ----- -----
Gross profit................. 20.7 12.2 23.4 23.0 25.1
Distribution expense......... 6.9 7.0 8.0 8.0 7.4
Selling, general and
administrative expenses..... 10.1 10.5 10.5 10.6 10.4
Restructuring charges........ -- -- 0.5 0.7 --
----- ----- ----- ----- -----
Income (loss) from
operations.................. 3.7 (5.3) 4.4 3.7 7.3
Interest..................... 3.7 3.3 2.5 2.6 5.1
Minority interest in income.. -- -- 0.8 0.6 --
Income (loss) from continuing
operations.................. (0.4)% (9.1)% 0.8% 0.4% 2.0%
===== ===== ===== ===== =====
</TABLE>
34
<PAGE>
NINE MONTHS ENDED SEPTEMBER 26, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
27, 1996
Net sales increased to $170.5 million for the nine months ended September
26, 1997 from $128.1 million for the same period in 1996, an increase of $42.4
million or 33.1%. The increase was due primarily to the J.R. Cup Acquisition
on January 20, 1996 and the StyroChem Acquisition on December 5, 1996 as well
as overall growth in the foam packaging market.
Cost of goods sold as a percentage of net sales decreased to 74.9% for the
nine months ended September 26, 1997, from 77.0% for the same period in 1996.
This decrease was due to a decline in raw material prices resulting from
improved market conditions and reductions in manufacturing overhead as a
percentage of net sales resulting from the J.R. Cup Acquisition and the
StyroChem Acquisition.
Gross profit increased to $42.8 million or 25.1% of net sales for the nine
months ended September 26, 1997, from $29.4 million or 23.0% of net sales for
the same period in 1996.
Distribution expense as a percentage of net sales decreased to 7.4% for the
nine months ended September 26, 1997, from 8.0% of net sales for the same
period in 1996. This decline in distribution expense as a percentage of net
sales was due primarily to the StyroChem Acquisition, because StyroChem's
distribution expense was 3.4% of net sales.
Selling, general and administrative expenses as a percentage of net sales
decreased marginally to 10.4% for the nine months ended September 26, 1997,
from 10.6% of net sales for the same period in 1996.
Income from operations increased to $12.5 million or 7.3% of net sales for
the nine months ended September 26, 1997, from $4.8 million or 3.7% of net
sales for the same period in 1996.
Interest increased to $8.8 million for the nine months ended September 26,
1997, from $3.3 million for the same period in 1996. This increase was due
primarily to an increase in borrowings related to the J.R. Cup Acquisition and
the StyroChem Acquisition, including the issuance of the Prior Notes.
Net income increased to $3.5 million or 2.0% of net sales for the nine
months ended September 26, 1997, from $1.3 million or 1.0% of net sales for
the same period in 1996 due to the reasons described above.
YEAR ENDED DECEMBER 27, 1996 COMPARED TO YEAR ENDED DECEMBER 29, 1995
Net sales for 1996 were $177.4 million, more than double the net sales of
$86.2 million for 1995. The increase was due primarily to the acquisitions of
J.R. Cup on January 20, 1996 and StyroChem on December 5, 1996.
Costs of goods sold increased to $136.0 million or 76.6% of net sales for
1996, from $75.7 million or 87.8% of net sales 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 $41.4 million or 23.4% of net sales for 1996, from
$10.5 million or 12.2% of net sales 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 $14.1 million or 8.0% of net sales for
1996, from $6.0 million or 7.0% of net sales 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.
35
<PAGE>
Selling, general and administrative expenses increased to $18.7 million or
10.5% of net sales for 1996, from $9.1 million or 10.5% of net sales in 1995.
Selling, general and administrative expenses were fairly constant as a
percentage of net sales.
Income (loss) from operations increased to $7.7 million or 4.4% of net sales
for 1996, from a loss from operations of $4.5 million in 1995. As noted above,
during 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 $4.5 million or 2.5% of net sales for 1996, from $2.8
million or 3.3% of net sales in 1995 due primarily to an increase in
borrowings related to the J.R. Cup Acquisition, the StyroChem Acquisition and
the sale of the Prior Notes.
Other expense, net decreased to $0.4 million or 0.2% of net sales for 1996
from $0.5 million or 0.6% of net sales in 1995.
Income (loss) from continuing operations increased to $1.4 million or 0.8%
of net sales for 1996, from a loss from continuing operations of $7.9 million
in 1995, for the reasons outlined above.
YEAR ENDED DECEMBER 29, 1995 COMPARED TO YEAR ENDED DECEMBER 30, 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.
36
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During fiscal years 1994, 1995 and 1996 and the nine months ended September
26, 1997, the Company's principal sources of funds consisted of cash from
operations and financing sources. During the nine months ended September 26,
1997, after tax cash flow increased to $10.0 million offset by cash used for
working capital of $5.8 million. Additional borrowings under the credit
facilities of $11.3 million, offset by an increase in cash of $0.4 million,
were used to fund capital expenditures of $10.3 million and a dividend payment
of $3.0 million. 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.
Approximately $8.7 million of the net proceeds of the Offering were used to
repay indebtedness under the Amended Credit Agreement. The weighted average
interest rate of the repaid indebtedness was 7.4% as of September 26, 1997.
The Company used approximately $51.1 million of the net proceeds of the
Offering to pay the cash portion of the StyroChem Europe Acquisition purchase
price.
Concurrently with the consummation of the Offering, the Company entered into
certain amendments to the Amended Credit Agreement, including a modification
to incorporate performance-based pricing. In addition, under the Amended
Credit Agreement there is a $10.0 million sublimit for the Company's European
subsidiaries, with borrowings under the sublimit to be based on a "borrowing
base" formula. The Company obligations under the sublimit are secured by
assets of certain of its European subsidiaries. These amendments have
increased the aggregate commitment amount of the existing revolving credit
facility under the Amended Credit Agreement to $40.0 million. As of September
26, 1997, on a pro forma basis, after giving effect to the StyroChem Europe
Acquisition and the use of net proceeds of the Offering, there was $5.7
million outstanding under the Amended Credit Agreement. See "Description of
Other Company Indebtedness--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 $0.4 million Canadian and a revolving credit facility of up
to $2.5 million Canadian. As of September 26, 1997, there was $0.8 million
outstanding under the Canadian Credit Agreement. At September 26, 1997,
availability under the Credit Agreements was approximately $12.4 million, net
of outstanding letters of credit of approximately $2.0 million. See
"Description of Other Company Indebtedness--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 Company's capital
expenditures for fiscal years 1994, 1995 and 1996 and the nine months ended
September 26, 1997 were $1.6 million, $5.5 million, $4.9 million and $10.3
million, respectively. Total capital expenditures increased beginning in 1995
due to the implementation of the engineering initiatives which began in 1994.
By completing the Offering, the offering of the Prior Notes, and entering into
the Credit Agreements, the Company believes that it has increased its
flexibility over the next five years 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 to approximately $17.0 million
over the next twelve months, in addition to approximately $3.8 million of non-
discretionary capital expenditures anticipated during such period.
Following consummation of the Offering, the Company has had an increase in
annual debt service requirements from historical levels, due primarily to the
StyroChem Europe Acquisition. As a holding company, the Company is dependent
upon dividends and other payments from its subsidiaries to generate the funds
necessary to meet its obligations. Subject to certain limitations, the Company
is, and will continue to be, able to control its receipt of dividends and
other payments from its subsidiaries. See "Risk Factors--Holding Company
Structure; Possible Invalidity of Guarantees." Management believes that cash
generated from operations, together with available borrowings from the
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.
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BUSINESS
GENERAL
The Company manufactures and distributes worldwide a variety of disposable
foam packaging products for the foodservice industry and is a leading producer
of EPS for the foodservice, insulation and packaging industries. The Company
is the second largest manufacturer of disposable foam packaging products for
the foodservice industry, with an estimated 35% share of the U.S. foam cup and
container market segment. In 1996, the Company's 14 highly automated
manufacturing facilities produced 13 billion foam cups for hot and cold
drinks, foam bowls and containers and thermoformed lids and 130 million pounds
of EPS. EPS is consumed internally as well as sold to third party
manufacturers of foam containers, insulation products and packaging products.
The Company believes the StyroChem Europe Acquisition provides a strategic
international platform for expanding product sales into Eastern and Western
Europe and also provides enhanced manufacturing technologies for the Company's
operations. For the nine months ended September 26, 1997, pro forma for the
StyroChem Europe Acquisition, the Company had net sales and income from
continuing operations before interest, income tax expense, depreciation,
amortization and restructuring charges of $234.1 million and $27.8 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 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. StyroChem Europe is a leading EPS producer in Northern Europe
and has produced EPS since 1972.
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 in the U.S. 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 1996, is highly concentrated, with the Company
and its primary competitor accounting for more than 80% of the market. 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 in the
domestic market 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.
In addition to being used in the manufacture of foam cups and containers,
EPS is 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.
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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 "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, auto-case packaging machines and customized EPS formulations that
further enhance manufacturing efficiencies and specific product features. The
Company believes that it will be able to enhance StyroChem Europe's one-step
manufacturing process to improve production efficiency for its current EPS
facilities and the StyroChem Europe facilities.
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.
The acquisition of StyroChem Europe, a manufacturer of EPS since 1972, has
improved the Company's competitive position in the EPS market. Over the years,
StyroChem Europe has focused on improving its EPS technologies through
internal process development as well as closely working with recognized
industry experts. This, combined with a polystyrene products sales force that
is well-educated and technically oriented, has enhanced customer relationships
by providing consistent improvements in product quality, service and
reliability. As a leading supplier of foam insulation products in Finland and
Sweden since the mid-1980's, StyroChem Europe's converter operations have had
success attracting and maintaining customers. New and specialized foam
insulation products, such as metal and foam sandwich building panels and ship
insulation panels, have been well-received by customers.
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
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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.
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 existing 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 existing suppliers and customers regarding further expansion
in these markets.
Integrated manufacturing process. By manufacturing its own EPS, the Company
has integrated its manufacturing process, thereby reducing the Company's cost
of raw materials and mitigating the impact of raw material price fluctuations.
Control over EPS manufacturing provides more reliable, consistently high-
quality EPS, improving the Company's overall manufacturing efficiencies. The
Company obtains substantially all of its EPS requirements internally.
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 domestic and
international 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
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 "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.
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The Company also manufactures EPS for its internal consumption, in addition
to selling directly to third party manufacturers of foam containers,
insulation products and packaging products. Prior to its acquisition by the
Company, StyroChem had been a long-term supplier of EPS to the Company. EPS is
categorized by grade, with the highest grade, or cup-grade, used to
manufacture foam cups and containers. Block-grade and shape-grade are sold to
manufacturers of insulation and packaging products, respectively.
StyroChem Europe manufactures EPS, general purpose polystyrene and HIPS, and
also converts a significant portion of its EPS production into a variety of
standard and specialized insulation products. StyroChem Europe's EPS is made
primarily for the insulation and packaging industries and includes a range of
bead sizes (0.4 to 2.5mm) and densities for conversion by customers into light
and heavy insulation boards as well as various shape products, such as
insulated fish packaging boxes. StyroChem Europe works closely with its
customers to incorporate special product features into its EPS such as fire
retardancy, specialty coatings and higher thermal insulation qualities.
StyroChem Europe's foam insulation operations directly convert internally
produced EPS into a full range of building insulation panels as well as
specialized foam insulation products, such as combined metal and foam sandwich
building panels, ship insulation panels and cold room storage modules. These
specialized products are modified to conform to different building and
construction requirements in different countries. StyroChem Europe frequently
works directly with contractor customers in situations where enhanced
technical support is needed, such as the installation of roof insulation.
SALES, MARKETING AND CUSTOMERS
The Company sells its products through a 64-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. In
addition, the Company sells EPS through a dedicated sales force to
manufacturers of foam packaging and insulation products.
StyroChem Europe markets its EPS and other polystyrene products throughout
Europe through a combination of its own sales force, sales agency arrangements
with sales offices and personnel of affiliates of Neste Oy and manufacturer's
representatives. In support of these sales and marketing efforts, StyroChem
Europe employs people who are knowledgeable of chemical engineering and
manufacturing processes in order to provide technical assistance to its
customers. StyroChem Europe maintains its own direct sales force for its foam
insulation products. A portion of this foam insulation products sales force is
decentralized, allowing StyroChem Europe to separately market specialized
products in addition to its standard product offerings.
The Company sells disposable foam packaging products 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 1996, sales to
these customers accounted for approximately 10.7% 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. and Dunkin' Donuts Incorporated.
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
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institutions, airlines, movie theaters and similar leisure time
concessionaires, such as sports stadiums. These customers, representing
approximately 36.6% of the Company's net sales in 1996 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 1996, retail customers accounted
for approximately 9.4% 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.
StyroChem Europe sells EPS, general purpose polystyrene and HIPS to 200
primarily mid-sized companies throughout Europe. StyroChem Europe has actively
pursued these customers because they provide potential for higher margins and
because of their increased reliance on the Company's technical support, which
results in a greater ability to foster long-term customer relationships.
StyroChem Europe also consumes internally a portion of its annual EPS
production. In 1996, approximately one-third of its total annual EPS
production volume was consumed internally by the foam insulation converter
operations. StyroChem Europe sells its foam insulation products to more than
2,000 customers, including large building supply wholesalers, such as Kesko Oy
in Finland and Utec AB in Sweden, and residential and commercial construction
companies and distributors.
Pro forma for the Acquisitions, no customer represented more than 6.3% of
the Company's net sales for 1996. In addition, the five largest accounts
represented approximately 21.6% of the Company's pro forma net sales for 1996.
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 prices. Substantially all of the Company's other foam product
sales and substantially all of StyroChem Europe's 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.
MANUFACTURING
The Company's highly automated manufacturing facilities produced 13 billion
foam cups, containers and lids and 130 million pounds of EPS, respectively, in
1996. 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. The Company
also operates four plants located in the U.S. and Canada that manufacture EPS
from styrene monomer. StyroChem Europe operates two plants located in Finland
that manufacture EPS, general purpose polystyrene and HIPS from styrene
monomer. These plants generally operate 24 hours a day, seven days a week.
StyroChem Europe also operates six plants located in Finland, Sweden and
Denmark that manufacture foam insulation panels from EPS. These plants
generally operate for 8 or 16 hours a day, five days a week.
Manufacturing Process
The manufacture of EPS, 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, including general
purpose polystyrene. To produce EPS, the crystal is impregnated with a high-
purity pentane gas.
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The Company manufactures its foam cups and containers utilizing a custom
molding process. First, the cup-grade EPS is blended with a lubricating agent
and then pre-expanded so that the EPS is of the appropriate density. This pre-
expanded EPS is then fed through special screeners to remove undersized and
oversized beads. The pre-expanded EPS is then injected into machine molds and
fused by injecting steam into the mold cavity. After the EPS is 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 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. If necessary to further
reduce costs, the Company will examine whether it can also produce HIPS in
certain of its U.S. and Canadian facilities.
StyroChem Europe manufacturers HIPS through a polymerization process in
which rubber bales are granulated and the granules are dissolved in styrene
monomer. After additional styrene monomer is added to the resulting rubber
solution and initial polymerization occurs without water, the resulting
solution is then suspended in water and treated with chemicals and catalysts
to produce HIPS beads.
StyroChem Europe's foam insulation panels are manufactured through a block
molding cutting process or a continuous foam extrusion cutting process. The
block-grade EPS is pre-expanded to the proper density, aged and then injected
into extra large block molding machines or continuous extrusion machines. In
the block machine, the pre- expanded EPS is fused by injecting steam into the
block mold cavity. The blocks are then cooled, removed from the mold to
storage for proper shrinkage, and then transferred to automated hot wire or
vibrating wire cutting machines. In the continuous extrusion machine, the pre-
expanded EPS is fused into sheets of predetermined thickness, which are
automatically cut to various sizes.
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.
The Company's EPS quality control laboratory includes infrared spectrograph
and atomic absorption units. The Company's 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 production. This gives the Company the ability to customize EPS
formulas to meet any special customer requirements. The EPS quality control
program includes testing every production batch of EPS to ensure it meets
specific customer requirements. Each batch is tested for particle sizes,
pentane gas volume and, if the EPS is to be used for insulation, their fire
retardation capability.
StyroChem Europe's sophisticated quality control laboratory is complemented
by a fully equipped analytical laboratory containing three fully instrumented,
automatically controlled pilot reactors. Testing equipment for analytical and
quality audit work includes electronic balancers, colorimeters,
flexural/compressive strength
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testers, an izod impact tester and lambda value testers. StyroChem Europe
regularly tests its EPS, general purpose polystyrene and HIPS for a range of
key attributes that vary by specific product. Insulation panels are routinely
tested for resistance to heat transfer, lambda value and compressive and
tensile strength.
StyroChem Europe's facilities are all ISO 9002 certified, and the quality
control laboratory is also ISO 14001 certified. StyroChem Europe is
implementing total quality manufacturing and good manufacturing principles
through a series of ongoing initiatives.
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, Fort Worth and Montreal 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.
The managing director of StyroChem Europe is an engineer as are each of the
managers of the two EPS production facilities located in Finland. StyroChem
Europe also employs two full-time engineers who are responsible for process
and production engineering and interact regularly with research and
development personnel based in the analytical laboratory as well as senior
technical support staff responsible for assisting the sales team.
RAW MATERIALS
The Company's foam products are manufactured from EPS, which is 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. Styrene monomer prices during 1996 ranged
from $.27 to $.30 per pound. During 1997, styrene monomer prices have ranged
from $.28 to $.30 per pound. Styrene monomer purchases during 1996 represented
approximately 34% of the Company's cost of goods sold on a pro forma basis for
the Acquisitions.
The StyroChem Acquisition and the StyroChem Europe Acquisition have not
insulated the Company from price fluctuations for styrene monomer, although it
mitigates the impact of such fluctuations by increasing the Company's
flexibility to purchase styrene monomer. The Company 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 extends for seven years. Under the contract, the Company
will be required to purchase at least the first 120 million pounds of its
styrene monomer requirements per year from Chevron and will have certain
rights to purchase additional styrene monomer.
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StyroChem Europe purchases styrene monomer from a number of suppliers. In
1996, StyroChem Europe purchased 60 million pounds of styrene monomer, more
than half of its annual purchases, through a contract with Elf Atochem. In
October 1997, Elf Atochem agreed to provide a long-term supply of styrene
monomer at a reduced price and with volume discounts. The initial term of the
new agreement extends for three years. Under the agreement, StyroChem Europe
has the right to purchase up to 110 million pounds of styrene monomer per
year.
The Company and StyroChem Europe obtain substantially all of their EPS
supply internally.
The Company purchases high-purity pentane, which is used as the expanding
agent in the production of EPS, from South Hampton Refining Co. and Ashland
Chemical Company. StyroChem Europe purchases the majority of its pentane
requirements from Borealis, a joint venture between Neste Oy and Statoil, a
Norwegian oil 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.
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 and StyroChem
Europe holds approximately 15 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 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.
45
<PAGE>
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.
The U.S. EPS industry is highly concentrated. 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 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.
StyroChem Europe competes within the highly competitive European EPS
industry. Several companies, including BASF Corporation, Shell Oil Company,
Enichem S.P.A. and Huntsman Chemical Corp., are larger and have more
substantial financial resources than StyroChem Europe. Management believes
that competition is based primarily on price, although technical support and
consistently high quality beads are important factors to many of StyroChem
Europe's customers. The Company expects that a significant percentage of
StyroChem Europe's EPS production will continue to be used internally for its
foam insulation product operations. These foam insulation product operations
are located in Finland, Sweden and Denmark, and compete primarily against
other insulation manufacturers located in these countries. Foam insulation
products generally compete with insulation products made from other materials
such as mineral wool and glass wool.
ENVIRONMENTAL MATTERS
The Company's facilities are used for manufacturing or warehousing of foam
container products or the EPS from which such products are manufactured. Many
of these facilities are subject to federal, state, foreign and local 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.
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, although no material citations
were issued within the periods covered by the Financial Statements included in
this Prospectus and all of these citations have been resolved without a
material adverse effect on the Company's financial condition or results of
operations. Certain of the Company's facilities also have failed to report
certain emissions as required, and it is possible that certain of the
Company's facilities lack proper air emission permits, that these permits do
not address all regulated emissions and/or that certain of the facilities are
not in full compliance with all permit conditions. Certain of the Company's
Finnish and Scandinavian facilities could be required in the future to reduce
emissions of pentane and styrene. The requirement to reduce such air emissions
is subject to negotiation with Finnish and Scandinavian regulatory authorities
and could require significant capital expenditures. The Company believes,
however, that the costs of achieving and maintaining compliance with laws and
regulations regarding air emissions are not reasonably likely to have a
material adverse effect on the Company's financial condition or operating
results, based on its prior experience in addressing compliance matters that
raised potentially similar issues for other facilities and on the existence of
the StyroChem environmental escrow. Furthermore, the Company has no knowledge
of any claims regarding air emissions that could be expected to have a
material effect on the Company's financial condition or results of operations.
However, it is possible that the Company could incur significant fines,
penalties or capital costs associated with any confirmed noncompliance. There
can be no assurance that future environmental laws or regulations, or permit
requirements under the 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
46
<PAGE>
properly permitted, certain of the Company's facilities have been cited for
instances of past noncompliance, although the only material citation issued
within the periods covered by the Financial Statements included in this
Prospectus was in 1995 for alleged noncompliance by the Fort Worth, Texas
facility with a municipal wastewater discharge ordinance. All of these
citations, including the Fort Worth citation, have been resolved without a
material adverse effect on the Company's financial condition or results of
operations. Moreover, one of the Company's facilities has failed to report
wastewater pretreatment system upset conditions as required, 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. The Company has no knowledge of any claims regarding wastewater
discharge that could be expected to have a material adverse effect on the
Company's financial condition or results of operations. The Company believes
that the costs of achieving and maintaining compliance with laws and
regulations regarding wastewater discharges is not reasonably likely to have a
material effect on the Company's financial condition or results of operations,
based both on the Company's prior experience in obtaining similar permits or
addressing compliance matters that raised potentially similar issues for other
facilities and on preliminary estimates of the cost of addressing such
potential permit issues, which would be within the scope of, and are
preliminary estimated to be significantly less than, the StyroChem
environmental escrow. However, 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 the Company's domestic EPS facilities are known to contain
elevated levels of various contaminants. However, the Company does not
believe, based on the results of soil and groundwater testing, that material
remediation efforts with respect to these conditions will be required.
Although the Company believes that the elevated levels of various contaminants
in the soil and shallow groundwater at the Company's domestic EPS facilities
and any confirmed noncompliance with applicable laws regarding the handling
and disposal of certain hazardous substances have not had, and are not
reasonably likely to have, either individually or in the aggregate, a material
adverse effect on the Company's financial condition or results of operations,
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, fines or
penalties in connection with historical on- or off-site handling or disposal
of such substances and wastes or cleanup costs for site contamination.
The Company owns and operates underground storage tanks ("USTs") at three of
its facilities for the storage of liquid pentane. Leak detection or
contaminant systems are in place at all three facilities. One of the tanks,
located at the Fort Worth, Texas facility, was pressure tested in 1996 and no
leaks were detected. USTs are generally subject to federal, state, local and
foreign 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 USTs 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.
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.
47
<PAGE>
As part of the StyroChem Acquisition, approximately $1.4 million of the
purchase price was placed in escrow and may be used by the Company to offset
certain expenses associated with specified environmental matters relating to
the Company'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 the 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.
48
<PAGE>
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>
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
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
StyroChem Europe Facilities:
Porvoo, Finland (5 facilities)(2)................... O 17,707 M
O 52,831 W
O 22,067 O
O 11,335 MA
O 5,210 U
Kokemaki, Finland (4 facilities).................... L 14,047 M
L 3,843 O
L 3,617 U
L 6,459 W
Nurmijarvi, Finland (4 facilities).................. O 21,701 M
O 13,875 W
O 3,638 W
O 3,789 O
Vammala, Finland.................................... O 122,497 M/W/O
Pietarsaari, Finland (4 facilities)................. L 17,761 M
L 1,292 O
L 10,334 W
L 2,853 W
Norrtalje, Sweden (2 facilities).................... L 61,087 M/O
L 3,200 W
Vargarda, Sweden.................................... O 63,961 M/O/W
Hedensted, Denmark.................................. O 44,306 M/O/W
</TABLE>
- --------
(1)M = Manufacturing; W = Warehouse; O = Office; MA = Machine assembly; U =
Utilities.
(2) In connection with the StyroChem Europe Acquisition, the land on which the
Porvoo, Finland facilities are located has been leased to the Company for
a period of 30 years for a nominal rent, with an option for the Company to
extend the loan or acquire the leased property following the initial term
of the lease. See "The Company--The Acquisitions."
49
<PAGE>
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 26, 1997, the Company and StyroChem Europe had 1,504 and 252
full-time employees, respectively. Except for StyroChem Europe employees, the
Company's employees are not represented by any union. In Finland, over 90% of
StyroChem Europe's employees are represented by one of five unions and
StyroChem Europe is subject to three collective bargaining agreements with
these unions, each of which was extended on January 1, 1997 and now expires on
January 31, 1998. StyroChem Europe is represented in Finnish collective
bargaining negotiations by Kemiarteollisuus ry (Chemical Industry Federation).
In Sweden, over 90% of StyroChem Europe's employees are represented by one of
four unions and StyroChem Europe is subject to two collective bargaining
agreements with these unions, both of which were extended on May 1, 1997 and
now expire on April 30, 1998. StyroChem Europe is represented in Swedish
collective bargaining negotiations by Byggnadsamnesforbundet (Construction
Materials Federation). In Denmark, StyroChem's employees are not represented
by any union, nor is StyroChem Europe subject to any collective bargaining
agreement. However, all contracts for white collar employees in Denmark must
include provisions that are at least as favorable as those provided in the
Danish Employees Act. In addition, contracts for blue collar employees in
Denmark must fulfill the requirements of applicable European Union directives
regarding employment. The European Union directives are also applicable to
StyroChem Europe in Finland and Sweden; however, the terms of the collective
bargaining agreements will control employment relationships in these countries
to the extent that these agreements address relevant issues in a more detailed
manner and include benefits exceeding the minimum standards established by the
directives. Neither StyroChem Europe nor the Company has ever experienced a
labor strike or other labor-related work stoppage. The Company considers its
relations with its employees to be good.
LEGAL PROCEEDINGS
On November 25, 1995, 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, WinCup L.P., 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 the November 1995 sale to James
River: (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 sale, payment to Holdings of the profits received by James River and
WinCup L.P. since the sale and WinCup L.P.'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
$10.0 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 WinCup L.P. and costs of suit. Alternatively,
the suit seeks actual damages in excess of $30.0 million and punitive damages
in excess of $10.0 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.
50
<PAGE>
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. Although
it is not possible to predict with certainty the outcome of any legal
proceeding, 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. Discovery is currently ongoing.
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.
51
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their ages as of
December 1, 1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael T. Kennedy...... 43 President, Chief Executive Officer and Director
Michael V. Valenza...... 38 Senior Vice President--Finance
Richard C. Hunsinger.... 49 Senior Vice President--Sales and Marketing
Donald D. Walker........ 56 Senior Vice President--Operations
John P. McNiff.......... 36 Senior Vice President--Corporate Development and Director
R. Radcliffe Hastings... 47 Senior Vice President, Treasurer and Director
Donald C. Rogalski...... 52 Senior Vice President--Administration
John P. McKelvey........ 57 Vice President--Human Resources
Van D. Groenwold........ 65 Vice President--Engineering
Caroline J. Williamson.. 30 Vice President and Corporate Counsel
Thomas J. Hopkins....... 41 Director
Vincent F. Garrity,
Jr..................... 60 Director
</TABLE>
Michael T. Kennedy has served as President, Chief Executive Officer and as a
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 and as a director since May
1997. 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 and as a director since May 1997. 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.
52
<PAGE>
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.
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.
Caroline J. Williamson has served as Vice President and Corporate Counsel of
the Company since March 1997. From March 1996 to March 1997, Ms. Williamson
served as counsel for Aetna U.S. Healthcare. Prior to that, Ms. Williamson
worked as an associate for Duane, Morris & Heckscher LLP from September 1992
to March 1996.
Thomas J. Hopkins has served as a director of the Company since May 1997.
Mr. Hopkins has been a Managing Director of Bear, Stearns & Co. Inc. since
March 1997. Mr. Hopkins was employed by Alex. Brown & Sons Incorporated from
August 1991 to February 1997, most recently as a Principal.
Vincent F. Garrity, Jr. has served as a director of the Company since May
1997. Mr. Garrity has been a partner in the law firm of Duane, Morris &
Heckscher LLP since 1970.
53
<PAGE>
DIRECTOR AND EXECUTIVE COMPENSATION
The directors do not receive separate compensation for their service as
directors 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 for the year ended December
27, 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 $863,597 $ -- $4,276
President and Chief Executive 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 85,755 200,266 275
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>
401(K) LIFE
NAME YEAR CONTRIBUTION INSURANCE 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>
The following table sets forth information with respect to options held at
December 27, 1996 by the persons named in the Summary Compensation Table
above. No options were exercised by such persons during the fiscal year ended
December 31, 1996.
FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT
DECEMBER 27, 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 27, 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.
54
<PAGE>
EMPLOYMENT AGREEMENTS
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 advanced $75,000 on a non-interest-bearing basis to Michael
V. Valenza, the Company's Senior Vice President--Finance, for certain incurred
relocation costs.
Vincent F. Garrity, Jr., a director of the Company, is a partner of Duane,
Morris & Heckscher LLP, which serves as the Company's primary legal counsel.
Thomas J. Hopkins, a director of the Company, is a Managing Director of Bear,
Stearns & Co. Inc., an investment banking firm that has performed services for
the Company in 1997 in addition to being one of the Initial Purchasers in this
offering.
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.
55
<PAGE>
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 1, 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
TITLE OF SHARES
NAME OF INDIVIDUAL OR IDENTITY OF CLASS OF CAPITAL BENEFICIALLY PERCENT
GROUP STOCK OWNED OF CLASS
- --------------------------------- ------------------- ------------ --------
<S> <C> <C> <C>
Michael T. Kennedy.................. Voting Common Stock 480 80.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
John P. McNiff...................... Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
R. Radcliffe Hastings............... Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
</TABLE>
56
<PAGE>
The following table sets forth certain information as of December 1, 1997,
with respect to beneficial ownership of each class of equity securities of the
Company by (a) the directors of the Company, (b) the Named Executive Officers
and (c) the directors and all executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
NAME OF INDIVIDUAL OR TITLE OF BENEFICIALLY OF
IDENTITY OF GROUP CLASS OF CAPITAL STOCK OWNED(1) CLASS(2)
--------------------- ---------------------- ------------ --------
<S> <C> <C> <C>
Michael T. Kennedy....... Voting Common Stock 480 80.0%
Class B Nonvoting Common Stock 3760 69.6%
Nonvoting Common Stock -- --
Michael V. Valenza....... Voting Common Stock -- --
Class B Nonvoting Common Stock -- --
Nonvoting Common Stock 52 18.8%
Richard C. Hunsinger..... Voting Common Stock -- --
Class B Nonvoting Common Stock -- --
Nonvoting Common Stock 140 41.8%
Donald D. Walker......... Voting Common Stock -- --
Class B Nonvoting Common Stock -- --
Nonvoting Common Stock 135 40.9%
R. Radcliffe Hastings.... Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock -- --
John P. McNiff........... Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock -- --
Vincent F. Garrity, Jr... Voting Common Stock -- --
Class B Nonvoting Common Stock -- --
Nonvoting Common Stock -- --
Thomas J. Hopkins........ Voting Common Stock -- --
Class B Nonvoting Common Stock -- --
Nonvoting Common Stock -- --
Directors and all
executive officers as a
group................... Voting Common Stock 600 100.0%
(12 persons) Class B Nonvoting Common Stock 4,840 89.6%
Nonvoting Common Stock 505 90.7%
</TABLE>
- --------
(1) Includes shares of Nonvoting Common Stock that certain individuals have
the right to acquire, on or before January 30, 1998, upon the exercise of
stock options granted pursuant to the Company's Equity Incentive Plan, as
follows: Michael V. Valenza--32; Richard C. Hunsinger--90; Donald D.
Walker--85; and the directors and all executive officers as a group--345.
(2) Based upon 600, 245 and 5,400 outstanding shares of Voting Common Stock,
Nonvoting Common Stock and Class B Nonvoting Common Stock, respectively.
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DESCRIPTION OF OTHER COMPANY INDEBTEDNESS
THE AMENDED CREDIT AGREEMENT
On October 15, 1997, the Company entered into a Second Amended and Restated
Revolving Credit and Security Agreement (the "Amended Credit Agreement") with
BNY Financial Corporation and NationsBank, N.A., pursuant to which the Amended
and Restated Revolving Credit and Security Agreement dated as of December 5,
1996 was amended and restated. The Amended Credit Agreement includes the
Company and certain of 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 applicable
margin for domestic rate loans plus a rate equal to the greater of (a) BNY
Financial Corporation's prime rate or (b) the sum of the federal funds rate
plus not more than 0.5% or (ii) the applicable margin for Eurodollar rate
loans plus a rate equal to the LIBOR rate with respect to the period during
which such interest rate shall be applicable. The applicable margin for
domestic rate loans varies from 0% to 0.5%, and the applicable margin for
Eurodollar rate loans varies from 1.25% to 2.0%, depending upon the Company's
ability to achieve certain performance-based pricing criteria. The revolving
loans under the Amended Credit Agreement will mature on October 15, 2002. In
addition, the Amended Credit Agreement provides for a fee which varies from
0.125% to 0.5% per annum on the undrawn amount of the credit facility,
depending on the Company's ability to meet certain performance-based pricing
criteria, 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. As of October 15, 1997, the
applicable margin for domestic rate loans was 0.25%, the applicable margin for
Eurodollar rate loans was 1.75% and the applicable fee on the undrawn amount
of the credit facility was 0.375% per annum. 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.
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 certain of 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.
On October 15, 1997, the Company also entered into a supplement to the
Amended Credit Agreement pursuant to which a $10.0 million credit facility for
the Company's European subsidiaries was created, with
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borrowings under the sublimit based on a "borrowing base" formula. The
obligations of the Company's European subsidiaries under the supplement, as
amended to date, are secured by assets of certain of the European subsidiaries
and are guaranteed by the Company and certain of its U.S. subsidiaries. This
supplement has increased the aggregate commitment amount of the existing
revolving credit facility to $40.0 million.
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 Canada, Ltd., formerly known as StryoChem International, Ltd.
("StyroChem Canada") and the Bank of Montreal (as amended through annual
review processes, the "Canadian Credit Agreement"). The credit facilities
under the Canadian Credit Agreement consist of the following: (i) a term loan
in the principal amount of $0.4 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 will be 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
Canada'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 Canada'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 Canada under the Canadian Credit Agreement are
secured by a first priority perfected security interest in all of the material
assets of StyroChem Canada. In addition, Radnor Chemical Corporation
guaranteed the obligations of StyroChem Canada under the Canadian Credit
Agreement up to a maximum amount of $3.3 million Canadian. Radnor Chemical
Corporation has pledged all of the issued and outstanding shares of StyroChem
Canada as security for its obligations under its guarantee. Certain long-term
advances payable by StyroChem Canada to Radnor Chemical Corporation and
StyroChem U.S., Inc. will continue to be subordinated to the obligations of
StyroChem Canada under the Canadian Credit Agreement.
The Canadian Credit Agreement contains customary events of default,
including without limitation, the following: StyroChem Canada's failure to pay
principal, interest, fees or other amounts when due; StyroChem Canada's
violation or material breach of any covenants, representations or warranties;
cross-default and cross-acceleration; change of control of StyroChem Canada;
bankruptcy, insolvency or similar events involving StyroChem Canada; cessation
of StyroChem Canada's business and the levy of certain material judgments
against StyroChem Canada.
THE PRIOR NOTES
The Company has previously issued $100.0 million principal amount of the
Prior Notes, which have been registered under the Securities Act. The Prior
Notes bear interest at the rate of 10%, payable semi-annually in arrears on
June 1 and December 1 of each year. The Prior Notes mature on December 1, 2003
and are fully and unconditionally guaranteed on a joint and several basis by
substantially all of the Company's subsidiaries. The Prior Notes are senior
unsecured obligations of the Company and rank pari passu in right of payment
with all
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other existing and future senior indebtedness of the Company, including the
Notes. The Prior Notes are effectively subordinated in right of payment to all
existing and future secured indebtedness of the Company and its subsidiaries,
including indebtedness under the Credit Agreements.
In the event of a change of control of the Company, each holder of Prior
Notes will have the right to require the Company to repurchase all or a
portion of such holder's Prior 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. The Prior 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 Prior 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
Prior Notes remains outstanding following such redemption. Thereafter, the
Prior Notes will be redeemable at the option of the Company, in whole or in
part, at redemption prices that decrease annually, plus accrued interest to
the date of redemption.
The Prior Notes were issued pursuant to and are entitled to the benefits of
the Prior Indenture. The Prior Indenture contains certain covenants with
respect to the Company and its subsidiaries that 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 Prior Indenture also
restricts 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 that are set forth in detail in the Prior
Indenture.
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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 that 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 , 1998; 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, $60 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 , 1998, 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 DELIVERY OF OLD
NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENT'S 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
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<PAGE>
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 reasonable judgment,
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 reasonable judgment, which determination shall be final
and binding. The Company reserves the right, in its reasonable judgment, 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
reasonable judgment of the Company or its counsel, be unlawful. The Company
also reserves the right, in its reasonable judgment, to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular Old
Notes before 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 before 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 before the Expiration Date, proper evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
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
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any such other person (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. See "Plan of
Distribution." 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. 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 March 14, 1998, 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 March 15, 1998 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 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
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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 Notes 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 having tendered the Old Notes to be withdrawn,
identify the Old Notes to be withdrawn (including 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 that have been
tendered for exchange but that 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-
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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 events 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 reasonable 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.
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
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, NC 28262
Attention: Michael Klotz
By Hand or Overnight Courier:
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, NC 28262
Attention: Michael Klotz
By Facsimile:
(704) 590-7628
Confirm by Telephone:
(704) 590-7408
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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 unless requested by
the holders of Old Notes who are not eligible to participate in the Exchange
Offer. 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)
at the time of the consummation of the Exchange Offer, it has no arrangement
or understanding with any person to participate in the 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.
By so acknowledging and by delivering a prospectus, a broker-dealer will
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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 or any other person subject to the prospectus delivery requirements of
the Securities Act 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 offer or 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 (the "Indenture") among the
Company, as issuer, substantially all of the Company's Domestic 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, and has been filed as
an exhibit to the Registration Statement on Form S-4 of which this Prospectus
is a part. See "Additional Information." The Company must deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
stating that the Company and each of its subsidiaries have fulfilled all of
their obligations under the Indenture during the preceding fiscal year.
The Notes are limited to $60.0 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 and will be payable semi-annually on
June 1 and December 1 of each year, commencing June 1, 1998, 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 will rank pari passu in right of payment with all other
existing and future senior indebtedness of the Company, including the Prior
Notes. 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 to the Company and certain of its U.S. subsidiaries
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 such U.S. subsidiaries, and loans to the Company's
European subsidiaries under a supplement to the Amended Credit Agreement dated
October 15, 1997, as amended to date, are secured by similar assets of certain
of its European subsidiaries and are guaranteed by the Company and certain of
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 Indenture
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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. On a pro forma basis after
giving effect to the Offering and the application of the net proceeds
therefrom as of September 26, 1997, the Company and its subsidiaries would
have had no outstanding indebtedness other than the Old Notes, the Prior Notes
and approximately $5.7 million outstanding under the Credit Agreements. In
addition, the Company would have had $32.4 million of additional borrowings
available under the Credit Agreements. See "--Certain Covenants," "Risk
Factors--Ranking of the Notes" and "Description of Other Company
Indebtedness."
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 (as defined
below), 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, jointly and severally, fully
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 will rank pari passu in right of payment with all other existing and
future senior indebtedness of such Guarantor, including the Prior Notes, 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 material Domestic 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."
Each Guarantor will be released from all its obligations under its Guarantee
only in accordance with the terms of the Indenture, as described under "--
Certain Covenants--Subsidiary Guarantees."
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 $21.0 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 $39.0 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 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
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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 shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election 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. The Prior Indenture provides that upon
the occurrence of a change of control (as defined therein), the Company shall
be required to make an offer to the holders of the Prior Notes to repurchase
any or all of the Prior Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase. 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.
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,"
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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 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 Guarantor 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 Notes 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) $40.0 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) Indebtedness of any Restricted Subsidiary which is a Foreign
Subsidiary in an aggregate principal amount at any one time outstanding not
to exceed the greater of (x) $10.0 million (or the equivalent amount
thereof, at the time of incurrence, in other foreign currencies) and (y)
the Foreign Subsidiary Borrowing Base at the time such Indebtedness was
incurred, or any refinancing, refunding, deferral, renewal or extension
thereof not in excess of such amount;
(f) 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
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such Indebtedness of the Company and all of the Restricted Subsidiaries
does not exceed $5.0 million outstanding at any time;
(g) 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);
(h) 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;
(i) 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;
(j) In addition to any Indebtedness otherwise permitted to be incurred
under the Indenture, up to $25.0 million aggregate principal amount of
Indebtedness at any one time outstanding; and
(k) 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) $15.0
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; and (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 $1.0 million 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.
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.
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
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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 incurred under clause (d) of
the covenant described under "--Limitations on Indebtedness;"
(j) Liens on assets or properties of Restricted Subsidiaries that are
Foreign Subsidiaries securing the obligations incurred under clause (e) of
the covenant described under "--Limitations on Indebtedness;" and
(k) 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 Restricted Subsidiary or (iv) transfer any
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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 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.
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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 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 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.
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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 jurisdiction under
which such Subsidiary was organized or under the laws of the United States of
America, any state thereof or the District of Columbia or under the laws of
any jurisdiction within the European Union 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, the Indenture and the Guarantee provided by such Guarantor;
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 Domestic
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, (iii) any Domestic 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 any Senior Indebtedness of the Company, or (iv) any Foreign
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 and is not a Guarantor (x) directly or indirectly guarantees
any Senior Indebtedness of the Company (other than the Prior Notes) or (y)
causes more than two-thirds of its Capital Stock to be pledged to secure any
Senior Indebtedness of the Company, the Company will cause such Subsidiary or
Subsidiaries to execute and 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. The Company may at its option cause any Subsidiary of the
Company which is a Foreign Subsidiary to execute and deliver a Guarantee in
accordance with the provisions of the Indenture.
Upon (i) any sale, exchange, transfer or other disposition (by way of
merger, consolidation or otherwise), to any Person (other than a Guarantor) of
all of the Equity Interests of any Guarantor, or all or substantially all of
the assets of any Guarantor, which is in compliance with the Indenture, or
(ii) the designation by the Company
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of any Guarantor to be an Unrestricted Subsidiary in accordance with the
Indenture, or (iii) the release of the guarantee or other obligation of any
Guarantor with respect to any other Senior Indebtedness of the Company which
caused such Guarantor to guarantee the Company's obligations under the
Indenture and the Notes in accordance with clause (iii) or (iv) of the
preceding paragraph, such Guarantor will be automatically released from all
its obligations under its Guarantee.
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 $1.0 million, 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 $5.0 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 $1.0 million 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 any of its Capital Stock
(other than directors' qualifying shares or shares required to be held by
foreign nationals, in each case to the extent mandated by applicable law) to
any Person other than to the Company or a Wholly-Owned Restricted Subsidiary.
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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 to comply with the covenant
entitled "Limitations on Mergers; Sales of Assets"; (iv) 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" and "Change of Control"
for a period that continues for 30 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) 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; (vi) the Company denies or disaffirms in writing its
obligations under the Indenture or the Notes; (vii) 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; (viii) 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,
(ix) final judgments rendered against the Company or any 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 (x) certain events of bankruptcy or insolvency of the
Company or any of the Restricted Subsidiaries.
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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 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
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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 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
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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 is 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
New Notes issued in exchange for Old Notes (i) offered and sold (x) to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) ("QIBs") in reliance on the exemption from the registration requirements
of the Securities Act provided by Rule 144A, and (y) outside the United States
in reliance on Regulation S under the Securities Act or (ii) transferred
subsequent to the consummation of the Offering to institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) ("Accredited Investors") who are not QIBs, will be represented by a
separate note in registered, global form without interest coupons (the "Global
Note"). Upon consummation of the Exchange Offer, the Global Note will be
deposited with, or on behalf of, The Depositary Trust Company (the
"Depositary") and will be registered in the name of Cede & Co., as nominee of
the Depositary (such nominee being referred to herein as the "Global Note
Holder"), in each case for credit to an account of a direct or indirect
participant as described below.
The New Notes that are issued as described below under "--Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Such Certificated Securities may, unless the
Global Note has previously been exchanged for Certificated Securities, be
exchanged for an interest in the Global Note representing the principal amount
of Notes being transferred.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company that was created to hold securities for its
participating organizations (collectively, the "Participants" or the
"Depositary's Participants") and to facilitate the clearance and settlement of
transactions in such securities between Participants through electronic book-
entry changes in accounts of its Participants. The Depositary's Participants
include securities brokers and dealers (including the Initial Purchasers),
banks and trust companies,
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clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that, pursuant to procedures established by the
Depositary, (i) upon deposit of the Global Note, the Depositary will credit
the accounts of Participants initially designated by or on behalf of the
Initial Purchasers with portions of the principal amount of the Global Note
and (ii) ownership of the Notes evidenced by the Global Note will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer Notes
evidenced by the Global Notes will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of
any Notes evidenced by the Global Notes. Beneficial owners of Notes evidenced
by the Global Note will not be considered the owners or Holders thereof under
the Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary relating to the Notes.
Payments in respect of the principal of and premium, interest and amounts
payable in respect of Registration Defaults, if any, on any Notes registered
in the name of the Global Note Holder on the applicable record date will be
payable by the Trustee to or at the direction of the Global Note Holder in its
capacity as the registered Holder under the Indenture. Under the terms of the
Indenture, the Company and the Trustee may treat the persons in whose names
Notes, including the Global Note, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither the Company nor the
Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes. The Company believes, however,
that it is currently the policy of the Depositary to immediately credit the
accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practice and will be the responsibility of the Depositary's
Participants or the Depositary's Indirect Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as
a depositary and the Company is unable to locate a qualified successor within
90 days or (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Notes in the form of Certificated
Securities under the Indenture, then, upon surrender by the Global Note Holder
of the Global Note, New Notes in such form will be issued to each person that
the Global Note Holder and the Depositary identify as being the beneficial
owner of the related New Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
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Same-Day Settlement and Payment
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, interest) be made by wire
transfer of immediately available funds to the accounts specified by the
Global Note Holder. With respect to Certificated Securities, the Company will
make all payments of principal, premium, and amounts payable in respect of a
Registration Default, by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address.
The Notes represented by the Global Note are expected to be eligible to
trade in the Depositary's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Notes will, therefore, be required
by the Depositary to be settled in immediately available funds. The Company
expects that secondary trading in the Certificated Securities will also be
settled in immediately available funds.
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
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
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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 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 insurance cost,
(iii) capitalized interest, (iv) non-cash interest expense,
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(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).
"Controlled Subsidiary" means a Restricted Subsidiary (i) 80% or more of the
total Equity Interests or other ownership interests of which (other than
directors' qualifying shares or shares required to be held by foreign
nationals, in each case to the extent mandated by applicable law) is at the
time owned by the Company (directly or through one or more Controlled
Subsidiaries of the Company) and (ii) of which the Company possesses, directly
or indirectly, the power to direct or cause the direction of the management or
policies, whether through the ownership of voting securities, by agreement or
otherwise.
"Domestic Subsidiary" means, with respect to any Person, any Subsidiary of
such Person which is not incorporated or organized in any jurisdiction outside
of the United States of America.
"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).
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means senior notes issued pursuant to any Exchange Offer
Registration Statement.
"Exchange Offer Registration Statement" means the registration statement to
be filed by the Company and the Guarantors with the Securities and Exchange
Commission with respect to an offer to exchange the Notes for another series
of senior notes of the Company with substantially identical terms to the
Notes.
"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
thereto.
"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.
"Foreign Subsidiary" means, with respect to any Person, any Subsidiary of
such Person other than a Domestic Subsidiary of such Person.
"Foreign Subsidiary 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
Restricted Subsidiaries of the Company which are Foreign Subsidiaries as of
such date, and (b) 60% of the net book value of the inventory owned by the
Restricted Subsidiaries of the Company which are Foreign 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 statements of such
Subsidiaries for purposes of calculating the Foreign Subsidiary Borrowing
Base.
"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 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
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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.
"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
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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 (g) of the covenant
described under "--Certain Covenants--Limitations on Indebtedness," (v)
Investments in any Controlled Subsidiary or any Guarantor or any Person which,
as a result of such Investment, becomes a Controlled Subsidiary or a
Guarantor, and (vi) Investments that do not at one time outstanding exceed
$20.0 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 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;
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(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, 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.
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"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.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary all of
the Capital Stock of which (other than Capital Stock constituting directors'
qualifying shares or shares required to be held by foreign nationals, in each
case to the extent mandated by applicable law) is owned by the Company or one
or more Wholly-Owned Restricted Subsidiaries or by the Company and one or more
Wholly-Owned Restricted Subsidiaries.
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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) no later than December 14, 1997, file the Exchange
Offer Registration Statement with the SEC 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 February 12, 1998. 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 at least 20 business days (or longer if required
by applicable law) 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) and other applicable laws, rules and regulations.
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.
Under existing interpretations of the staff of the SEC'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) at the time of the
consummation of the Exchange Offer, it has no arrangement or understanding
with any person to participate in the 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 any of 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 a broker-dealer and who receives New Notes
for its own account in exchange for Old Notes will be required to acknowledge
that such Old Notes were acquired by it as a result of market-making
activities or other trading activities and 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 March
14, 1998, 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) as promptly as
practicable file a shelf registration statement (a "Shelf Registration
Statement" and together with the Exchange Offer Registration Statement, the
"Registration Statements") permitting resales from time to time of the Notes,
(b) use their best efforts to cause such registration statement to become
effective within a specified time period and (c) use their best efforts to
keep such registration statement current and effective until 24 months
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from the date it becomes effective (subject to extension in certain
circumstances) 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
March 14, 1998, (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 of any additional 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 and has
been filed as an exhibit to the Registration Statement on Form S-4 of which
this Prospectus is a part.
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<PAGE>
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. The Company has obtained an opinion from Duane, Morris &
Heckscher LLP counsel to the Company, that the material federal income tax
consequences of consummating the Exchange Offer and holding and disposing of
the New Notes are as set forth below, provided that no opinion was expressed
with respect to the calculation and accrual of original issue discount, if
any, on the New Notes. Such counsel's opinion and this discussion are 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. Such counsel's opinion is not binding on
the IRS, and there can be no assurance that the IRS will have a similar view
with respect to the tax consequences described below. No ruling has been or
will be requested by the Company from the IRS on any matters relating to the
New Notes. 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
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.
Interest Income. Interest on the Notes will be includable in the income of a
holder under the holder's regular method of accounting. The Notes will not be
treated as having been issued with original issue discount.
Market Discount. Investors acquiring Notes pursuant to this Prospectus
should note that the resale of the 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 Note (other than a holder who
purchased the 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 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 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 Notes. Each holder of Notes generally
will recognize gain or loss upon the sale, exchange, repurchase, redemption,
retirement or other disposition of those 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
96
<PAGE>
included in income, which amount will be taxable as ordinary income) and (ii)
the holder's adjusted tax basis in those 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 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 Note had
been held for more than one year at the time of the sale or exchange, although
a 20% preferential capital gains rate applicable to individuals does not apply
unless the Notes have been held for more than 18 months. An investor's initial
basis in a Note will be the cash price it paid therefor.
Backup Withholding. A holder of 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
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 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.
Foreign Holders. The following discussion is a summary of certain U.S.
federal income tax consequences to a Foreign Person that holds a Note. The
term "Foreign Person" means a nonresident alien individual or foreign
corporation, but only if the income or gain on the Note is not "effectively
connected with the conduct of a trade or business within the U.S." If the
income or gain on the 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 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 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 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 Note on behalf of the owner of the 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 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
97
<PAGE>
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 Note is
redeemed, sold or exchanged, and certain other requirements are met.
Prospective Final Regulations. On October 6, 1997, the IRS released Treasury
Regulations that revise the procedures for withholding tax, and the associated
backup withholding and information reporting rules described above for
payments of interest and gross proceeds made after December 31, 1998. The
regulations modify the requirements imposed on a Foreign Person and certain
intermediaries for establishing the recipient's status as a Foreign Person
eligible for exemption from withholding and backup withholding. Foreign
Persons should consult their tax advisors to determine how the regulations
will affect their particular circumstances.
98
<PAGE>
PLAN OF DISTRIBUTION
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. 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. Based
on interpretations by the Staff, 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 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) at the time of the
consummation of the Exchange Offer, it has no arrangement or understanding
with any person to participate in the 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 any of 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. 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 or any
other person subject to the prospectus delivery requirements of the Securities
Act 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 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.
99
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LEGAL MATTERS
Certain legal matters relating to the New Notes being offered hereby will be
passed upon for the Company by Duane, Morris & Heckscher LLP, Philadelphia,
Pennsylvania. Vincent F. Garrity, Jr. a director of the Company, is also a
partner in Duane, Morris & Heckscher LLP.
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 audited consolidated financial statements of StyroChem as of and for the
eight month period ended December 5, 1996 included in this Prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said report.
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 report
of such firm given upon their authority as experts in accounting and auditing.
The audited financial statements of Neste Oy Polystyrene Upstream Business
in Provoo and Kokemaki and Isora Oy included in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said report.
The audited financial statements of Neste Cellplast AB as of and for the
year ended December 31, 1996 included in this Prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen AB, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report.
The audited financial statements of Neste Thermisol A/S included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen, independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said report.
AVAILABLE 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
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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,
Radnor, Pennsylvania 19087, Attention: Treasurer (telephone number (610) 341-
9600).
The Company and the Guarantors are required to file periodic reports in
accordance with Section 13 or 15(d) of the Exchange Act with the SEC and will
be required to file periodic reports for such time 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.
101
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RADNOR HOLDINGS CORPORATION
Report of Independent Public Accountants................................ F-3
Consolidated Balance Sheets as of December 29, 1995 and December 27,
1996................................................................... F-4
Consolidated Statements of Operations for the Fiscal Years Ended
December 30, 1994, December 29, 1995 and December 27, 1996............. F-5
Consolidated Statements of Stockholders' (Deficit) Equity for the Fiscal
Years Ended December 30, 1994, December 29, 1995 and December 27,
1996................................................................... F-6
Consolidated Statements of Cash Flows for the Fiscal Years Ended
December 30, 1994, December 29, 1995 and December 27, 1996............. F-7
Notes to Consolidated Financial Statements.............................. F-8
Condensed Consolidated Balance Sheets as of December 27, 1996 and
September 26, 1997 (unaudited)......................................... F-18
Condensed Consolidated Statements of Income for the Three Months and
Nine Months Ended September 27, 1996 and September 26, 1997
(unaudited)............................................................ F-19
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 27, 1996 and September 26, 1997 (unaudited)............ F-20
Notes to Condensed Consolidated Financial Statements (unaudited)........ F-21
J.R. CUP FOAM CONTAINER OPERATIONS OF JAMES RIVER PAPER COMPANY, INC.
Report of Independent Public Accountants................................ F-23
Balance Sheets as of December 25, 1994 and December 31, 1995............ F-24
Statements of Operations for the Years Ended December 26, 1993, December
25, 1994 and December 31, 1995......................................... F-25
Statements of Changes in Owner's Investment for the Years Ended December
26, 1993, December 25, 1994 and December 31, 1995...................... F-26
Statements of Cash Flows for the Years Ended December 26, 1993, December
25, 1994 and December 31, 1995......................................... F-27
Notes to Financial Statements........................................... F-28
SP ACQUISITION CO. AND SUBSIDIARIES
Report of Independent Public Accountants................................ F-32
Independent Auditors' Report............................................ F-33
Consolidated Balance Sheets as of April 1, 1995, March 30, 1996 and De-
cember 5, 1996......................................................... F-34
Consolidated Statements of Income for the Years Ended April 1, 1995 and
March 30, 1996 and the Eight Month Period Ended December 5, 1996....... F-35
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended April 1, 1995 and March 30, 1996 and the Eight Month Period Ended
December 5, 1996....................................................... F-36
Consolidated Statements of Cash Flows for the Years Ended April 1, 1995
and March 30, 1996 and the Eight Month Period Ended December 5, 1996... F-37
Notes to Consolidated Financial Statements for the Years Ended April 1,
1995 and March 30, 1996 and the Eight Month Period Ended December 5,
1996................................................................... F-38
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
Report of Independent Public Accountants................................ F-48
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-49
Statements of Operations for the Years ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-50
Statements of Changes in Owner's Investment for the Years Ended December
31, 1994, 1995 and 1996 and the Nine Month Period Ended September 30,
1997 (unaudited)....................................................... F-51
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-52
Notes to Financial Statements........................................... F-53
</TABLE>
F-1
<PAGE>
<TABLE>
<S> <C>
ISORA OY
Report of Independent Public Accountants................................ F-57
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-58
Statements of Operations for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-59
Statements of Changes in Stockholder's Equity for the Years Ended Decem-
ber 31, 1994, 1995 and 1996 and the Nine Month Period Ended September
30, 1997 (unaudited)................................................... F-60
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-61
Notes to Financial Statements........................................... F-62
NESTE CELLPLAST AB
Report of Independent Public Accountants................................ F-66
Auditors' Report on Neste Cellplast AB.................................. F-67
Auditors' Report on Neste Cellplast Aktiebolag.......................... F-68
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-69
Statements of Operations for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-70
Statements of Changes in Stockholders' Equity for the Years Ended Decem-
ber 31, 1994, 1995 and 1996 and the Nine Month Period Ended September
30, 1997 (unaudited)................................................... F-71
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-72
Notes to Financial Statements........................................... F-73
NESTE THERMISOL A/S
Report of Independent Public Accountants................................ F-77
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-78
Statements of Operations for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-79
Statements of Changes in Shareholder's Equity for the Years Ended Decem-
ber 31, 1994, 1995 and 1996 and the Nine Month Period Ended September
30, 1997 (unaudited)................................................... F-80
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the Nine Month Periods Ended September 30, 1996 and 1997 (un-
audited)............................................................... F-81
Notes to Financial Statements........................................... F-82
STYROCHEM EUROPE
Combining Statement of Operations for the Year Ended December 31, 1996
(unaudited)............................................................ F-85
Combining Statement of Operations for the Nine Months Ended September
30, 1997 (unaudited)................................................... F-86
Combining Balance Sheet as of September 30, 1997 (unaudited)............ F-87
</TABLE>
F-2
<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) and subsidiaries as of December 29, 1995 and December 27, 1996,
and the related consolidated statements of operations, stockholders' (deficit)
equity and cash flows for each of the three years in the period ended December
27, 1996. 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 consolidated financial position
of Radnor Holdings Corporation and subsidiaries as of December 29, 1995 and
December 27, 1996, and the results of their operations and cash flows for each
of the three years in the period ended December 27, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania,
March 18, 1997
F-3
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 29, 1995 AND DECEMBER 27, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS 1995 1996
------ ------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 5 $ 855
Accounts receivable, net.................................. 8,402 24,687
Inventories, net.......................................... 6,494 19,078
Prepaid expenses and other................................ 1,777 3,971
Deferred tax asset........................................ -- 2,380
Net current assets of discontinued operations............. 982 --
------- --------
17,660 50,971
------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land...................................................... 401 3,747
Supplies and spare mold parts............................. 1,964 2,529
Buildings and improvements................................ 7,000 18,050
Machinery and equipment................................... 23,699 91,437
------- --------
33,064 115,763
Less accumulated depreciation............................. (4,690) (4,372)
------- --------
28,374 111,391
------- --------
OTHER ASSETS................................................ 554 10,007
------- --------
$46,588 $172,369
======= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.......................................... $12,369 $ 28,884
Accrued liabilities....................................... 6,653 13,166
Current portion of long-term debt......................... 9,000 237
------- --------
28,022 42,287
------- --------
LONG-TERM DEBT, net of current portion...................... 7,252 104,362
------- --------
DEFERRED TAX LIABILITY...................................... 4,760 11,173
------- --------
OTHER NONCURRENT LIABILITIES................................ -- 218
------- --------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Voting and nonvoting common stock, 22,700 shares
authorized, 6,245 shares issued and outstanding.......... 1 1
Series A Convertible Preferred Stock, 2,000 shares
authorized, 2,000 shares issued and outstanding at
December 29, 1995 retired in 1996........................ 8,575 --
Additional paid-in capital................................ 3,497 17,720
Accumulated deficit....................................... (5,519) (3,420)
Cumulative translation adjustment......................... -- 28
------- --------
Total stockholders' equity.............................. 6,554 14,329
------- --------
$46,588 $172,369
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED DECEMBER 30, 1994, DECEMBER 29, 1995 AND DECEMBER
27, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
NET SALES.......................................... $80,850 $86,239 $177,395
COST OF GOODS SOLD................................. 64,078 75,690 135,982
------- ------- --------
GROSS PROFIT....................................... 16,772 10,549 41,413
------- ------- --------
OPERATING EXPENSES:
Distribution..................................... 5,584 6,027 14,099
Selling, general and administrative.............. 8,209 9,051 18,676
Restructuring charges ........................... -- -- 910
------- ------- --------
13,793 15,078 33,685
------- ------- --------
INCOME (LOSS) FROM OPERATIONS...................... 2,979 (4,529) 7,728
------- ------- --------
OTHER (INCOME) EXPENSE:
Interest......................................... 3,001 2,822 4,496
Other, net....................................... 290 526 374
------- ------- --------
3,291 3,348 4,870
------- ------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST................ (312) (7,877) 2,858
Provision for income taxes....................... -- -- 121
Minority interest in income...................... -- -- 1,348
------- ------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS........... (312) (7,877) 1,389
------- ------- --------
DISCONTINUED OPERATIONS:
Income (loss) from operations.................... (5,082) 534 --
Gain on disposal................................. -- 2,038 --
------- ------- --------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS......... (5,082) 2,572 --
------- ------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............ (5,394) (5,305) 1,389
------- ------- --------
Extraordinary Item-Gain on Early Extinguishment
of Debt......................................... -- 23,828 710
------- ------- --------
NET INCOME (LOSS).................................. $(5,394) $18,523 $ 2,099
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE FISCAL YEARS ENDED DECEMBER 30, 1994, DECEMBER 29, 1995 AND DECEMBER
27, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
VOTING AND
NONVOTING
COMMON STOCK SERIES A ADDITIONAL CUMULATIVE
------------- CONVERTIBLE PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT PREFERRED STOCK CAPITAL DEFICIT ADJUSTMENT TOTAL
------ ------ --------------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1993................... 6,245 $ 1 $7,490 $ 3,497 $(17,563) $-- $ (6,575)
Net loss.............. -- -- -- -- (5,394) -- (5,394)
Accretion of preferred
stock redemption
value................ -- -- 524 -- (524) -- --
----- --- ------ ------- -------- --- --------
BALANCE, December 30,
1994................... 6,245 1 8,014 3,497 (23,481) -- (11,969)
Net income............ -- -- -- -- 18,523 -- 18,523
Accretion of preferred
stock redemption
value................ -- -- 561 -- (561) -- --
----- --- ------ ------- -------- --- --------
BALANCE, December 29,
1995................... 6,245 1 8,575 3,497 (5,519) -- 6,554
Net income............ -- -- -- -- 2,099 -- 2,099
Effect of partnership
equity transaction
(Note 1)............. -- -- -- 8,648 -- -- 8,648
Redemption of
preferred stock...... -- -- (8,575) 5,575 -- -- (3,000)
Cumulative translation
adjustment........... -- -- -- -- -- 28 28
----- --- ------ ------- -------- --- --------
BALANCE, December 27,
1996................... 6,245 $ 1 $ -- $17,720 $ (3,420) $28 $ 14,329
===== === ====== ======= ======== === ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
RADNOR HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED DECEMBER 30, 1994, DECEMBER 29, 1995 AND DECEMBER
27, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................ $(5,394) $ 18,523 $ 2,099
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating
activities--
Depreciation................................... 1,190 2,057 4,451
Amortization................................... 113 323 625
Minority interest in income.................... -- -- 1,348
Extraordinary gain on early extinguishment of
debt.......................................... -- (23,828) (710)
Discontinued operations ....................... 4,411 (2,572) --
Changes in operating assets and liabilities,
net of effects of acquisition and disposition
of businesses--
Accounts receivable, net..................... (353) (135) (4,703)
Inventories.................................. (2,052) 1,508 2,906
Prepaid expenses and other................... 119 (1,465) (1,314)
Accounts payable............................. 2,902 (573) 260
Accrued liabilities.......................... (147) 3 263
------- -------- --------
Net cash provided by (used in) continuing
operations................................ 789 (6,159) 5,225
Net cash provided by (used in) discontinued
operations................................ (6,079) 5,978 982
------- -------- --------
Net cash provided by (used in) operating
activities................................ (5,290) (181) 6,207
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................. (1,645) (5,491) (4,944)
Disposal of building and land.................... 835 -- --
Acquisition of J.R. Cup, net of cash acquired ... -- -- (21,592)
Acquisition of StyroChem, net of cash acquired .. -- -- (26,168)
Proceeds from sale of discontinued operations ... -- 50,995 --
(Increase) decrease in other assets.............. 39 (2) (4,635)
------- -------- --------
Net cash provided by (used in) investing
activities.................................... (771) 45,502 (57,339)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on revolving credit
lines and unsecured notes payable............... 6,562 (15,802) (5,006)
Borrowings on mortgage note...................... -- -- 364
Payments on mortgage note........................ (500) -- (4,616)
Borrowings on bank term loans.................... -- -- 19,426
Payments of bank term loans...................... -- (29,518) (19,426)
Issuance of senior notes......................... -- -- 100,000
Payments of acquisition notes ................... -- -- (35,760)
Retirement of preferred stock.................... -- -- (3,000)
------- -------- --------
Net cash provided by (used in) financing
activities.................................... 6,062 (45,320) 51,982
------- -------- --------
NET INCREASE IN CASH............................... 1 1 850
CASH, beginning of period.......................... 3 4 5
------- -------- --------
CASH, end of period................................ $ 4 $ 5 $ 855
======= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest,
including discontinued operations............... $ 2,990 $ 4,702 $ 3,626
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION, ACQUISITIONS AND DISCONTINUED OPERATIONS:
The Company
Radnor Holdings Corporation (Radnor) (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). Radnor and subsidiaries (collectively the Company) manufacture
and distribute 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 37% of the Company's net sales for fiscal
years 1995 and 1996, respectively. Although the Company has not lost sales
from its key customers in fiscal years 1995 or 1996, 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, 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.
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. The acquisition was accounted for as a purchase and,
accordingly, the purchased assets and assumed liabilities of StyroChem were
recorded at their estimated fair values at the date of acquisition.
The purchase price consisted of approximately $23.5 million of cash plus
$0.9 million of assumed indebtedness and consulting payments. Approximately
$1.4 million of the purchase price has been placed in a separate escrow
account, and may be used by the Company to satisfy obligations associated with
specified environmental matters relating to StyroChem's Texas and Quebec
facilities. In addition, the former owner was paid $4.8 million in connection
with a five year agreement not to compete.
J.R. Cup Acquisition
On January 20, 1996, WinCup entered into an agreement 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 to WinCup Holdings, L.P. This
new entity was structured as a Delaware limited partnership with WinCup as the
sole general partner and James River as the sole limited partner. Ownership
interests were allocated 55% to WinCup and 45% to James River.
The above transaction has been accounted for as a business combination in
accordance with Accounting Principles Board Opinion No. 16 (APB No. 16),
Business Combinations. The contribution of its assets and liabilities was
accounted for at WinCup's historical cost basis in such assets and
liabilities. The acquisition of assets and liabilities from James River has
been accounted for as a purchase by the partnership 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,
F-8
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(ii) $16.8 million of promissory notes (Note 3), (iii) the assumption of $1.0
million of liabilities and (iv) the 45% equity interest in the partnership
valued at $17.7 million. This partnership equity transaction resulted in an
increase in WinCup's pro rata share (55%) of the underlying equity in the
partnership which has been recorded as an addition to paid-in capital. The
purchase price was allocated to inventories ($8,200) and property, plant and
equipment ($46,400). At January 20, 1996 the minority interest in the
partnership was reflected in the Company's consolidated balance sheet at
approximately $9.1 million. For the period January 20, 1996 through December
5, 1996 the minority interest (45%) in the income of the partnership was
approximately $1.3 million and this amount has been reflected in the
consolidated statement of operations.
Pursuant to the Agreement, the Company had the option to acquire James
River's partnership interest at the times and for the applicable prices set
forth in the Agreement, ranging from $15.0 million at January 20, 1996, to
$37.3 million at January 20, 2001. Furthermore, James River could at any time
beginning on the fifth anniversary of the Agreement have required the Company
to acquire its interest for $37.3 million. On December 5, 1996, Radnor
exercised the option and acquired the 45% partnership interest from James
River. The price paid by Radnor to acquire the 45% interest exceeded the
carrying value of the minority interest by approximately $7.3 million, and
this amount has been allocated to fixed assets in the consolidated balance
sheet as of December 27, 1996.
Operating results of the acquired businesses are included in consolidated
results only from the date of acquisition. Unaudited pro forma data reflecting
results as if the acquisitions were effective at the beginning of 1995 follow:
<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net sales............................................. $237,061 $233,507
Income from operations................................ 1,036 12,113
Income (loss) from continuing operations.............. (9,350) 590
</TABLE>
Pro forma results are unaudited and are based on historical results,
adjusted for the impact of certain acquisition related adjustments, such as:
increased depreciation of property, plant and equipment, increased interest
expense on acquisition debt, and the related income tax effects. Pro forma
results do not reflect any synergies that might be achieved from combined
operations and, therefore, in management's opinion, are not indicative of what
actual results would have been if the acquisitions had occurred at the
beginning of 1995. In addition, they are not intended to be a projection of
future results.
Discontinued Operations
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.
F-9
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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>
1994 1995
------- -------
<S> <C> <C>
Net sales............................................... $59,953 $58,472
Cost of goods sold...................................... 50,668 45,016
------- -------
Gross profit............................................ 9,285 13,456
Operating expenses...................................... 10,276 9,306
Other expense........................................... (4,091) (3,616)
------- -------
Income (loss) from operations........................... $(5,082) $ 534
======= =======
</TABLE>
The components of net current and net noncurrent assets of discontinued
operations as of December 30, 1994 and December 29, 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 from 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 lender as
part of this transaction. As a result, at the closing of this transaction, the
total amount of debt outstanding to the Company's primary bank was reduced to
$9.0 million. During 1996, the bank was paid $8.25 million in full
satisfaction of this obligation. The extinguishment gains resulting from these
transactions have been presented as extraordinary items in the accompanying
financial statements.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year
The Company's fiscal year is the fifty-two or fifty-three week period which
ends on the last Friday of December of each year. The fiscal years ended
December 30, 1994, December 29, 1995 and December 27, 1996 are fifty-two week
periods.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and all of its subsidiaries. All material intercompany balances
and transactions have been eliminated in consolidation.
Radnor Holdings Corporation is a holding company which has no operations or
assets separate from its investments in subsidiaries. The $100 million senior
notes are guaranteed by all direct and all but one indirect wholly-owned
subsidiaries on a full, unconditional, joint and several basis. The financial
information of the sole non-guarantor indirect subsidiary is inconsequential.
Separate financial statements of the guarantors are
F-10
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
not presented because management has determined that they would not be
material to investors. The guarantees will continue subsequent to the exchange
offer contemplated by this registration statement.
Accounts Receivable, Net
Included in accounts receivable are allowances for doubtful accounts of
$496,000 and $713,000 at December 29, 1995 and December 27, 1996,
respectively.
Inventories
Inventories are recorded at the lower of cost (first-in, first-out) or
market. Inventories at December 29, 1995 and December 27, 1996 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1996
------ -------
<S> <C> <C>
Raw materials.......................................... $1,860 $ 4,503
Work in process........................................ -- 2,242
Finished goods......................................... 4,634 12,333
------ -------
$6,494 $19,078
====== =======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment are recorded at cost and 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.
Other Assets
Other assets include deferred financing costs ($4,826) related to the
financing arrangements and notes offering executed in 1996. Such costs are
being amortized over the terms of the related debt instruments. Amortization
of deferred financing costs of $232 is included in interest expense for the
year ended December 27, 1996. In addition, the noncompete agreement payment
($4,760) resulting from the StyroChem Acquisition, which is being amortized
over five years, is included in this caption.
Accounts Payable
Included in accounts payable are amounts relating to outstanding checks of
$1.5 million and $6.1 million at December 29, 1995 and December 27, 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-11
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Currency Translation
Adjustments resulting from the translation of the Canadian subsidiary
financial statements are reflected as a currency translation adjustment in
stockholders' equity. Currency transaction gains and losses that are included
in operating results were not significant.
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.
The carrying values of cash, accounts receivable, accounts payable and
accrued liabilities approximate fair value due to the short-term nature of
these items.
The carrying amounts of the Company's bank term loans and line of credit
approximate fair value because they have variable interest rates based on
either prime rate or LIBOR. Additionally, the carrying amount of the $100
million senior notes approximates fair value.
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, was adopted
by the Company in 1996, and the Company elected to continue to account for
transactions with its employees pursuant to Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees. There were no
transactions requiring disclosure in 1995 or 1996.
F-12
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- --------
<S> <C> <C>
Outstanding balance under the $30 million Amended Credit
Agreement bearing interest at the Company's option at a
rate not greater than (i) the sum of 0.25% plus a rate
equal to the greater of (a) 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 LIBOR with respect to the period
during which such interest shall be applicable. The
revolving loans under the Amended Credit Agreement will
mature on January 22, 2001. All the obligations of the
Company under the Amended Credit Agreement are secured by
a lien on all of the Company's U.S. inventory and
receivables............................................... $ -- $ 3,773
Borrowings under the Canadian Revolving Credit Facility
(borrowing capacity of $2.5 million Canadian), bearing
interest at Canadian prime rate (4.75% at December 27,
1996) plus 1.0%, payable on demand and secured by
substantially all the assets of the Canadian subsidiary... -- 352
Canadian term loan (borrowing capacity of $0.7 million
Canadian), bearing interest at Canadian prime rate (4.75%
at December 27, 1996) plus 1.50%, collateralized by
substantially all assets of the Canadian subsidiary,
payable in quarterly principal payments of $81,250
Canadian plus interest, with final payment due November
1998...................................................... -- 474
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 --
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............................... 9,000 --
Senior notes bearing interest at 10%, interest payable
semi-annually, due December 1, 2003....................... -- 100,000
Other...................................................... 3,000 --
------- --------
16,252 104,599
Less current portion....................................... (9,000) (237)
------- --------
$ 7,252 $104,362
======= ========
</TABLE>
On December 5, 1996, the Company completed a $100 million senior note
offering. The 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 mortgage note payable, (ii) repay
certain J.R. Cup acquisition obligations, (iii) redeem the outstanding
redeemable convertible preferred stock and warrants, (iv) finance the
StyroChem Acquisition and (v) provide working capital.
In addition, on December 5, 1996, the Company entered into an Amended and
Restated Revolving Credit and Security Agreement (the Amended Credit
Agreement) with a bank, as agent and lender, pursuant to which the former
revolving credit, term loan and security agreements were amended and restated.
The Amended Credit Agreement includes the Company and its U.S. subsidiaries as
borrowers. 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% or 1.5% of the aggregate face amounts of standby letters of credit and
documentary letters of credit, respectively. There is a $5 million sublimit on
standby letters of credit and a $1 million sublimit on documentary letters of
credit. At December 27, 1996, the Company had outstanding $1.7 million of
letters of credit.
The Amended Credit Agreement and the Canadian Revolver and Term Note
agreements contain certain restrictive covenants which include, among other
things, restrictions on the declaration or payment of dividends,
F-13
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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:
<TABLE>
<S> <C>
1997............................................................. $ 237
1998............................................................. 237
1999............................................................. --
2000............................................................. --
2001............................................................. 4,125
2002 and thereafter.............................................. 100,000
--------
$104,599
========
</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:
<TABLE>
<S> <C>
1997.............................................................. $ 4,389
1998.............................................................. 3,497
1999.............................................................. 1,300
2000.............................................................. 683
2001.............................................................. 507
2002 and thereafter............................................... 994
-------
$11,370
=======
</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.
Supply Agreement
In December 1996, in connection with the StyroChem Acquisition, 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.
(5) STOCKHOLDERS' EQUITY:
The Company is currently authorized to issue up to 11,650 shares of Voting
Common Stock, 5,400 shares of Class B Nonvoting Common Stock, 5,650 shares of
Nonvoting Common Stock and 2,000 shares of series preferred stock. At December
27, 1996, there are issued and outstanding 600 shares of Voting Common Stock,
5,400 shares of Class B Nonvoting Common Stock and 245 shares of Nonvoting
Common Stock. All shares have a par value of $.10 except for shares of Class B
Nonvoting Common Stock, which have a par value of $.01. In October 1996, the
Company completed a recapitalization in which each outstanding share of Voting
F-14
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Common Stock was converted into 0.1 shares of Voting Common Stock and 0.9
shares of Class B Nonvoting Common Stock.
The Series A Convertible Preferred Stock ($.10 par value) was redeemable at
the option of the holder under certain circumstances, however, the Company at
its discretion had the right to satisfy the redemption obligation solely
through the issuance of Nonvoting Common Stock. Based upon the Company's
ability and intent to satisfy any redemption obligation solely through the
issuance of Nonvoting Common Stock and holder's obligation to accept Nonvoting
Common Stock, the preferred stock was classified within stockholders' equity
through December 29, 1995.
During 1996, the Company and the holders of the preferred stock renegotiated
the optional and mandatory redemption provisions. As a result of such
negotiations the redemption obligation was substantially reduced and the
Company's right to satisfy such obligation through the issuance of Nonvoting
Common Stock was eliminated. On December 5, 1996 the Company redeemed the
preferred stock.
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 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 1996.
(6) RESTRUCTURING CHARGES:
In connection with the J.R. Cup Acquisition, the Company incurred certain
restructuring costs related principally to plant closures and severance
payments. These costs were incurred and paid during the year ended December
27, 1996.
(7) 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 30, 1994, and December 29, 1995, 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 27, 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------- ------
<S> <C> <C> <C>
Current:
Federal............................................ $ -- $ -- $ 168
State.............................................. -- -- 10
Deferred............................................. (999) 30 (57)
(Generation) utilization of net operating loss
carryforwards....................................... (741) 2,274 1,324
Change in valuation allowance........................ 1,740 (2,304) (1,324)
------ ------- ------
$ -- $ -- $ 121
====== ======= ======
</TABLE>
F-15
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of deferred taxes at December 29, 1995 and December 27, 1996
are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................... $ 6,081 $ 4,757
Vacation pay and compensation accruals..................... -- 528
Bad debt, inventory and returns and allowances............. -- 829
Other accruals............................................. 288 1,261
------- -------
6,369 7,375
Deferred tax liabilities:
Accelerated tax depreciation............................... 5,048 10,475
Other...................................................... 67 936
------- -------
Net deferred tax liability................................... 1,254 (4,036)
Valuation allowance.......................................... (6,014) (4,757)
------- -------
Deferred tax liability....................................... $(4,760) $(8,793)
======= =======
</TABLE>
The Company has recorded a valuation allowance with respect to the 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 $14.0
million at December 27, 1996. Net operating loss carryforwards expire through
2010.
(8) 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>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Options outstanding at beginning of period.................... 752 738 710
Granted..................................................... -- -- --
Exercised................................................... -- -- --
Canceled.................................................... (14) (28) (10)
--- --- ---
Options outstanding at end of period.......................... 738 710 700
=== === ===
Options available for grant................................... 511 539 549
=== === ===
Exercisable at end of period.................................. 196 327 362
=== === ===
</TABLE>
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.
F-16
<PAGE>
RADNOR HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(9) 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
27, 1996. Employer matching contributions to the plan amounted to
approximately $111,000, $99,000 and $441,000 for each of the three years in
the period ended December 27, 1996, respectively.
F-17
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 27, SEPTEMBER 26,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.............................................. $ 855 $ 1,303
Accounts receivable, net.......................... 24,687 20,194
Inventories, net.................................. 19,078 25,386
Prepaid expenses and other........................ 3,971 5,438
Deferred tax asset................................ 2,380 2,378
-------- --------
Total current assets............................ 50,971 54,699
-------- --------
PROPERTY, PLANT AND EQUIPMENT....................... 115,763 126,269
LESS--ACCUMULATED DEPRECIATION...................... (4,372) (9,380)
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT................... 111,391 116,889
-------- --------
OTHER ASSETS........................................ 10,007 10,320
-------- --------
Total assets.................................... $172,369 $181,908
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.................................. $ 28,884 $ 25,681
Accrued liabilities............................... 13,166 13,836
Current portion of long-term debt................. 237 235
-------- --------
Total current liabilities....................... 42,287 39,752
-------- --------
LONG-TERM DEBT, net of current portion.............. 104,362 115,632
-------- --------
DEFERRED TAX LIABILITY.............................. 11,173 11,286
-------- --------
OTHER NONCURRENT LIABILITIES........................ 218 450
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Voting and nonvoting common stock, 22,700 shares
authorized, 6,245 shares issued and outstanding.. 1 1
Additional paid-in capital........................ 17,720 17,720
Accumulated deficit............................... (3,420) (2,931)
Cumulative translation adjustment................. 28 (2)
-------- --------
Total stockholders' equity...................... 14,329 14,788
-------- --------
Total liabilities and stockholders' equity...... $172,369 $181,908
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-18
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------- ---------------------------
SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 27, SEPTEMBER 26,
1996 1997 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales............... $43,526 $56,090 $128,052 $170,545
Cost of goods sold...... 33,899 42,299 98,660 127,730
------- ------- -------- --------
Gross profit........ 9,627 13,791 29,392 42,815
Operating expenses:
Distribution.......... 3,490 4,024 10,223 12,569
Selling, general and
administrative....... 4,659 6,307 13,538 17,747
Restructuring
charges.............. 174 -- 855 --
------- ------- -------- --------
Income from
operations......... 1,304 3,460 4,776 12,499
Other (income) expense:
Interest.............. 1,214 2,993 3,346 8,781
Other, net............ (70) 44 153 (94)
------- ------- -------- --------
Income (loss) from
operations before
income taxes and
minority interest...... 160 423 1,277 3,812
Provision for income
taxes
Current............... -- 4 -- 210
Deferred.............. -- -- -- 113
Minority interest in
income................. 70 -- 731 --
------- ------- -------- --------
Income (loss) before
extraordinary item..... 90 419 546 3,489
Extraordinary item-gain
on early extinguishment
of debt................ -- -- 710 --
------- ------- -------- --------
Net income.............. $ 90 $ 419 $ 1,256 $ 3,489
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-19
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
---------------------------
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................... $ 1,256 $ 3,489
Adjustments to reconcile net income to cash
provided by (used in) operating activities--
Depreciation.................................... 3,170 5,008
Amortization.................................... 446 1,363
Deferred income taxes........................... -- 113
Minority interest in income..................... 731 --
Extraordinary gain on early extinguishment of
debt........................................... (710) --
Changes in operating assets and liabilities, net
of acquisition of business--
Accounts receivable, net....................... (6,459) 4,493
Inventories.................................... (47) (6,308)
Prepaid expenses and other..................... (772) (1,689)
Accounts payable............................... 4,087 (3,203)
Accrued liabilities............................ 1,157 902
-------- --------
Net cash provided by continuing operations.... 2,859 4,168
Net cash provided by discontinued operations.. 982 --
-------- --------
Net cash provided by operating activities..... 3,841 4,168
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures............................... (2,629) (10,312)
Acquisition of JR Cup, net of cash acquired...... (21,042) --
Increase in other assets......................... (1,254) (1,676)
-------- --------
Net cash used in investing activities........... (24,925) (11,988)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank financed debt and
unsecured notes payable......................... 21,100 11,268
Cash dividends................................... -- (3,000)
-------- --------
Net cash provided by financing activities....... 21,100 8,268
-------- --------
NET INCREASE IN CASH............................... 16 448
CASH, beginning of period.......................... 5 855
-------- --------
CASH, end of period................................ $ 21 $ 1,303
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest Paid.................................... $ 1,488 $ 5,619
======== ========
Income Taxes Paid................................ $ 7 $ 717
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-20
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Radnor Holdings Corporation ("Radnor") and subsidiaries
(collectively, the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. In the opinion of the
Company, the statements include all adjustments (which include only normal
recurring adjustments) required for a fair statement of financial position,
results of operations and cash flows for such periods. The results of
operations for the interim periods are not necessarily indicative of the
results for a full year.
Radnor is a holding company which has no operations or assets separate from
its investment in its subsidiaries. Radnor's $100 million senior notes are
guaranteed by all of its direct and indirect wholly-owned subsidiaries on a
full, unconditional, joint and several basis other than certain non-guarantor
subsidiaries that are individually and in the aggregate inconsequential.
Separate financial statements of the guarantors are not presented because
management has determined that they would not be material.
(2) INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, SEPTEMBER 26,
1996 1997
------------ -------------
<S> <C> <C>
Raw Materials..................................... $ 4,503 $ 6,869
Work in Process................................... 2,242 1,260
Finished Goods.................................... 12,333 17,257
------- -------
$19,078 $25,386
======= =======
</TABLE>
(3) INTEREST EXPENSE
Included in interest expense is $114,000 and $188,000 of amortization of
deferred financing costs for the three months ended September 27, 1996 and
September 26, 1997, respectively. In addition, included in interest expense is
$266,000 and $464,000 of amortization of deferred financing costs for the nine
months ended September 27, 1996 and September 26, 1997, respectively.
(4) PENDING ACCOUNTING CHANGES
In July 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income," and Statement No. 131, "Disclosures About Segments of an Enterprise
and Related Information." Statement No. 130 establishes standards for
reporting comprehensive income in financial statements. Statement No. 131
expands certain reporting and disclosure requirements for segments from
current requirements. The Company is not required to adopt these Statements
until 1998 and does not expect the adoption of these new standards to result
in material changes to previously reported amounts or disclosures.
(5) SUBSEQUENT EVENTS
StyroChem Europe Acquisition
On October 15, 1997, the Company acquired substantially all of the tangible
and intangible assets and long term investments relating to the polystyrene
production and conversion operations of Neste Oy (the "StyroChem Europe
Acquisition"). The cash consideration for the acquired assets was 213.0
million Finnish markkas ($40.8
F-21
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
million as of the date of closing) plus 60.0 million Finnish markkas ($11.5
million as of the date of closing) for the net working capital, which included
accounts receivable, inventory, trade accounts payable and accrued
liabilities. Pursuant to the Sale of Assets Agreement, the purchase price will
be adjusted on a markka for markka basis following an audit of the net working
capital to the extent that net working capital is greater or less than 60.0
million Finnish markkas.
Senior Note Offering
On October 15, 1997, the Company issued $60.0 million of 10% Series B Senior
Notes due 2003. The net proceeds to the Company from the offering in the
amount of $60.6 million were used to repay existing indebtedness under the
Company's revolving credit agreement and to finance the StyroChem Europe
Acquisition.
Amended Credit Agreement
On October 15, 1997, the Company amended its current credit facility which
increased the aggregate commitment to $40.0 million and included a $10.0
sublimit for the StyroChem Europe subsidiaries.
F-22
<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-23
<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-24
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF OPERATIONS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------
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-25
<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-26
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF CASH FLOWS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------
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-27
<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.
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:
F-28
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<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 that 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>
Workers' 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 $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.
F-29
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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
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.
F-30
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(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-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SP Acquisition Co.:
We have audited the accompanying consolidated balance sheet of SP
Acquisition Co. (a Delaware Corporation) and subsidiaries as of December 5,
1996 and the related consolidated statements of income, stockholders' equity
and cash flows for the eight month period then ended. 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 audit.
We conducted our audit 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 audit provides 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 SP
Acquisition Co. and subsidiaries as of December 5, 1996, and the results of
their operations and cash flows for the eight month period then ended in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 18, 1997
F-32
<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-33
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995, MARCH 30, 1996 AND DECEMBER 5, 1996
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
ASSETS 1995 1996 1996
------ ----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............. $ 117,696 $ 73,342 $ 2,413,575
Accounts receivable................... 15,933,813 11,697,236 12,066,644
Refundable income taxes............... -- 391,340 436,629
Inventory............................. 7,839,053 6,794,310 7,411,516
Prepaid expenses...................... 313,636 436,823 443,336
Deferred income taxes................. 923,687 858,920 946,191
----------- ----------- -----------
Total current assets................ 25,127,885 20,251,971 23,717,891
PROPERTY, PLANT AND EQUIPMENT, NET...... 3,878,920 7,391,878 6,826,068
PROPERTY HELD FOR SALE.................. 1,600,000 1,771,176 --
DEFERRED INCOME TAXES................... 1,990,557 1,380,264 1,065,103
OTHER ASSETS............................ 253,113 171,248 60,018
----------- ----------- -----------
TOTAL................................... $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable......................... $ 1,609,954 $ 1,832,581 $ 133,781
Accounts payable...................... 17,131,719 14,464,013 17,242,167
Accrued liabilities................... 1,509,801 1,207,789 2,979,653
Income taxes payable.................. 683,908 252,963 568,195
Current portion of long-term debt..... 1,219,135 1,242,556 1,320,179
----------- ----------- -----------
Total current liabilities........... 22,154,517 18,999,902 22,243,975
----------- ----------- -----------
LONG-TERM DEBT.......................... 6,235,010 6,318,873 2,859,264
----------- ----------- -----------
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 5,658,568
Cumulative translation adjustments.... (31,585) (75,699) (92,727)
----------- ----------- -----------
Total stockholders' equity.......... 4,460,948 5,647,762 6,565,841
----------- ----------- -----------
TOTAL................................... $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-34
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 1996
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
---------------------------PERIOD ENDED
APRIL 1, DECEMBER 5,
1995 MARCH 30, 1996 1996
----------- -------------- -----------
<S> <C> <C> <C>
NET SALES....................... $72,106,153 $76,221,366 $52,375,480
COST OF GOODS SOLD.............. 61,472,165 68,121,794 44,534,090
----------- ----------- -----------
GROSS PROFIT.................... 10,633,988 8,099,572 7,841,390
DISTRIBUTION EXPENSE............ 2,011,000 2,604,026 1,316,131
SELLING, GENERAL AND ADMINISTRA-
TIVE EXPENSE................... 2,980,743 3,069,379 4,106,890
----------- ----------- -----------
INCOME FROM OPERATIONS.......... 5,642,245 2,426,167 2,418,369
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense.............. (924,033) (830,966) (684,129)
Other income (expense), net... 254,996 589,820 (175,633)
----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE).... (669,037) (241,146) (859,762)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES...... 4,973,208 2,185,021 1,558,607
INCOME TAXES.................... 1,845,675 954,093 623,500
----------- ----------- -----------
NET INCOME...................... $ 3,127,533 $ 1,230,928 $ 935,107
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-35
<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 THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 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................ -- -- -- 935,107 --
Translation adjustments... -- -- -- -- (17,028)
---- ---- -------- ---------- --------
BALANCE, DECEMBER 5, 1996... $223 $652 $999,125 $5,658,568 $(92,727)
==== ==== ======== ========== ========
</TABLE>
See notes to consolidated financial statements.
F-36
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 1996
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
------------------------ PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 3,127,533 $ 1,230,928 $ 935,107
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 357,984 490,759 1,202,778
Deferred income taxes............... 245,756 675,060 228,118
Loss on sale of property............ -- -- 712,069
Changes in operating assets and lia-
bilities:
Accounts receivable............... (2,833,745) 4,236,577 (369,408)
Inventory......................... (3,497,510) 1,044,743 (617,206)
Prepaid expenses and other as-
sets............................. (300,042) (117,473) (6,513)
Accounts payable.................. 6,919,397 (2,667,706) 2,778,154
Accrued liabilities............... 60,096 (302,012) 1,771,635
Income taxes refundable and
payable.......................... 583,861 (822,285) 269,943
----------- ----------- ----------
Net cash provided by operating
activities..................... 4,663,330 3,768,591 6,904,677
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.... (3,241,588) (3,916,806) (1,046,646)
Additions to property held for sale... -- (226,049) --
Disposal of property and equipment.... -- -- 1,562,988
----------- ----------- ----------
Net cash provided by (used in)
investing activities........... (3,241,588) (4,142,855) 516,342
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt..................... (858,877) (1,035,507) (3,381,986)
Net borrowings (repayment) on line of
credit and other..................... (392,519) 1,365,417 (1,698,800)
Payment of financing costs............ (160,192) -- --
----------- ----------- ----------
Net cash provided by (used in)
financing activities........... (1,411,588) 329,910 (5,080,786)
----------- ----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ 10,154 (44,354) 2,340,233
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR................................ 107,542 117,696 73,342
----------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR................................... $ 117,696 $ 73,342 $2,413,575
=========== =========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest............................ $ 800,745 $ 794,009 $ 605,226
Income taxes........................ 1,111,521 1,116,000 422,436
Noncash financing activities:
Note payable for insurance policy... $ 188,393 $ 203,462 $ --
</TABLE>
See notes to consolidated financial statements.
F-37
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH
PERIOD ENDED DECEMBER 5, 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--SPAC 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 SUMMARY OPERATING RESULTS--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>
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
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
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.
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.
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 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 losses 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
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
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
April 1, 1995 and March 30, 1996, respectively, and approximately $1.5 million
for the eight month period ended December 5, 1996.
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. The Company adopted this pronouncement
during the eight month period ended December 5, 1996 and the adoption did 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, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Trade accounts receivable......... $15,964,399 $11,680,811 $12,120,749
Other receivables................. 54,414 125,425 29,397
----------- ----------- -----------
16,018,813 11,806,236 12,150,146
Allowance for doubtful accounts... (85,000) (109,000) (83,502)
----------- ----------- -----------
$15,933,813 $11,697,236 $12,066,644
=========== =========== ===========
</TABLE>
3. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
Finished goods....................... $3,921,857 $3,149,525 $3,455,685
Work-in-process...................... 897,126 1,076,670 1,989,546
Raw materials........................ 3,384,070 3,067,115 2,239,108
---------- ---------- ----------
8,203,053 7,293,310 7,684,339
Allowance for obsolescence........... (364,000) (499,000) (272,823)
---------- ---------- ----------
$7,839,053 $6,794,310 $7,411,516
========== ========== ==========
</TABLE>
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
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<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 6,324,086
Furniture and fixtures............... 111,028 152,448 152,448
Construction in progress............. 167,180 1,744,503 1,830,098
---------- ---------- ----------
4,202,196 8,119,002 8,647,357
Accumulated depreciation............. (323,276) (727,124) (1,821,289)
---------- ---------- ----------
$3,878,920 $7,391,878 $6,826,068
========== ========== ==========
</TABLE>
5. PROPERTY HELD FOR SALE
The Company had property held for sale, which included land and a building
and related improvements. During the eight months ended December 5, 1996, the
Company made net improvements of $222,898 to this property, which were
capitalized. This property was sold on November 21, 1996 at a loss of
approximately $700,000 to a real estate company owned by certain of the
Company's stockholders.
The Company had 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 $155,564 for
the eight month period ended December 5, 1996.
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, $66,746 and $160,192 as of April 1,
1995, March 30, 1996 and December 5, 1996, respectively.
F-41
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 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 (4.75% at
December 5, 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, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Bank term note, with interest at
prime (8.25% at December 5, 1996)
plus 1.25%, collateralized by all
assets and outstanding common stock
of the Company, payable in monthly
principal payments of $66,667 plus
interest, with the final payment
due February 1999.................. $ 3,200,000 $ 2,400,000 $ 2,559,482
Note payable to bank under a $6 mil-
lion line of credit which expires
on September 1, 1998, with interest
at prime plus 1%, collateralized by
all assets and outstanding common
stock of the Company. Interest is
due and payable quarterly along
with commitment fees of 0.5% on the
unused balance..................... 2,200,011 3,300,000 860,000
Term loan payable to Canadian bank,
with interest at Canadian prime
plus 1.50%, collateralized by sub-
stantially all assets of the Cana-
dian subsidiary, payable in quar-
terly principal payments of $59,773
plus interest, with the final pay-
ment due November 1998............. 865,282 657,508 478,646
Notes payable to stockholders, with
interest at 17.5% payable quarter-
ly, due February 28, 1999, subject
to prepayment penalties............ 1,000,459 1,000,459 --
Other............................... 188,393 203,462 281,315
----------- ----------- -----------
7,454,145 7,561,429 4,179,443
Less--current maturities............ (1,219,135) (1,242,556) (1,320,179)
----------- ----------- -----------
$ 6,235,010 $ 6,318,873 $ 2,859,264
=========== =========== ===========
</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 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 was
reduced to 0.25% of the unused balance of the line of credit which is payable
quarterly.
F-42
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
The following represents the future annual maturities for the Company's
long-term debt obligations:
<TABLE>
<CAPTION>
DECEMBER 5,
1996
-----------
<S> <C>
1997............................................................. $1,320,179
1998............................................................. 1,899,790
1999............................................................. 959,474
----------
$4,179,443
==========
</TABLE>
In conjunction with the acquisition (see Note 16), the bank term loan and
note payable to bank were paid off in the amounts of $2,559,482 and $860,000,
respectively.
8. INCOME TAXES
Income tax expense included in the consolidated statements of income is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
-------------------- PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- --------- ------------
<S> <C> <C> <C>
Current income tax expense:
Federal..................................... $1,362,656 $209,727 $296,440
State....................................... 237,263 69,306 98,942
---------- -------- --------
1,599,919 279,033 395,382
---------- -------- --------
Deferred income tax expense:
Federal..................................... 215,817 592,920 200,361
State....................................... 29,939 82,140 27,757
---------- -------- --------
245,756 675,060 228,118
---------- -------- --------
Income tax expense ........................... $1,845,675 $954,093 $623,500
========== ======== ========
</TABLE>
A reconciliation of the Company's effective income tax rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
------------------ PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
-------- --------- ------------
<S> <C> <C> <C>
Federal income taxes computed at the statutory
rate......................................... 34.0% 34.0% 34.0%
State income taxes, net of federal income tax
benefit...................................... 3.1 2.0 2.7
Net operating (income) loss of Canadian sub-
sidiary...................................... -- 4.4 --
Other......................................... -- 3.3 3.3
---- ---- ----
37.1% 43.7% 40.0%
==== ==== ====
</TABLE>
F-43
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 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, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
Deferred income tax assets:
Current:
Inventory.............................. $ 285,213 $ 408,331 $ 282,864
Accrued liabilities and reserves....... 607,031 411,771 629,927
Allowance for doubtful accounts........ 31,443 38,818 33,400
---------- ---------- ----------
923,687 858,920 946,191
---------- ---------- ----------
Noncurrent:
Property and equipment................. 2,585,104 2,095,410 1,721,656
Valuation allowance.................... (594,547) (715,146) (656,553)
---------- ---------- ----------
1,990,557 1,380,264 1,065,103
---------- ---------- ----------
Net deferred income tax assets........... $2,914,244 $2,239,184 $2,011,294
========== ========== ==========
</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 past 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.
9. MAJOR SUPPLIER
The Company agreed to purchase a minimum of 67% of its styrene monomer used
in production from one supplier. The agreement was for a five year period
ending February 1999, was renewable for successive annual terms, and provided
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 eight month period ended December
5, 1996, the Company's purchases from this supplier amounted to approximately
$31.3 million. As of December 5, 1996, the balance payable to this supplier
was approximately $13.4 million.
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,
F-44
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
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 $12.8
million for the eight month period ended December 5, 1996. As of April 1,
1995, March 30, 1996 and December 5, 1996, outstanding accounts receivable
from this customer were approximately $6.5 million, $4.2 million and $2.6
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 $66,505 for the eight month period ended December 5, 1996.
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 eight month period ended December
5, 1996 to Convermex, a subsidiary of Grupo Industrial Hermes, and to James
River are as follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
----------------------PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ---------- -----------
<S> <C> <C> <C>
Convermex.......................... $ 1,262,144 $1,218,230 $2,031,650
James River........................ 12,072,402 4,635,959 2,730,555
</TABLE>
Receivables from the above related parties are as follows:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
--- ---------- --------- -----------
<S> <C> <C> <C> <C>
Convermex............................. $ 138,600 $201,600 $619,760
James River........................... 1,396,305 76,698 122,488
</TABLE>
F-45
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
Effective January 20, 1996, James River, one of the Company's shareholders,
acquired an interest in the Company's largest customer, WinCup Holdings, L.P.,
a subsidiary of Radnor Holdings Corporation.
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 eight month
period ended December 5, 1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
----------------------- PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
United States...................... $57,764,433 $61,357,065 $39,294,285
Canada............................. 14,341,720 14,864,301 13,081,195
----------- ----------- -----------
Total............................ $72,106,153 $76,221,366 $52,375,480
=========== =========== ===========
Operating income (loss):
United States...................... $ 5,096,319 $ 2,639,092 $ 1,389,043
Canada............................. 511,218 (244,963) 935,880
----------- ----------- -----------
Total............................ $ 5,607,537 $ 2,394,129 $ 2,324,923
=========== =========== ===========
Identifiable assets (at end of peri-
od):
United States...................... $25,709,341 $24,150,958 $23,684,841
Canada............................. 7,141,134 6,815,579 7,984,239
----------- ----------- -----------
Total............................ $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
</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 December 5, 1996, 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-46
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 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 December 5, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $211,859
1998............................................................. 197,779
1999............................................................. 169,261
2000............................................................. 83,655
2001............................................................. 6,817
--------
Total............................................................ $669,371
========
</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 $263,000 for the eight month period ended December 5, 1996.
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 in 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
others. 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. ACQUISITION BY RADNOR HOLDINGS CORPORATION
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 and subject to certain adjustments, as defined. The closing of the
acquisition occurred on December 5, 1996.
F-47
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Oy:
We have audited the accompanying balance sheets of NESTE OY POLYSTYRENE
UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI (an operating unit of the NESTE Oy
Chemicals division) as of December 31, 1995 and 1996, 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, 1996. 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 financial statements referred to above present fairly,
in all material respects, the financial position of NESTE OY POLYSTYRENE
UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI as of December 31, 1995 and 1996, and
the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles (see Note 1).
ARTHUR ANDERSEN OY
Helsinki, Finland
September 5, 1997
(except with respect to the matters discussed in Note 10,
as to which the date is October 15, 1997)
F-48
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS:
Accounts receivable.................. $ 7,615 $ 6,499 $ 8,659
Inventories, net..................... 10,498 5,149 5,718
Prepaid expenses and other........... 71 735 553
-------- -------- --------
18,184 12,383 14,930
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and improvements................ 483 453 398
Buildings and improvements........... 19,680 18,648 16,531
Machinery and equipment.............. 30,374 28,146 25,519
-------- -------- --------
50,537 47,247 42,448
Less accumulated depreciation........ (23,263) (22,963) (21,240)
-------- -------- --------
27,274 24,284 21,208
Share of common assets allocated by
Neste (Note 5)...................... 2,581 1,735 1,357
-------- -------- --------
Total property, plant, and
equipment......................... 29,855 26,019 22,565
-------- -------- --------
OTHER ASSETS........................... 332 344 323
-------- -------- --------
$ 48,371 $ 38,746 $ 37,818
======== ======== ========
LIABILITIES AND OWNER'S INVESTMENT
----------------------------------
CURRENT LIABILITIES:
Accounts payable..................... $ 3,811 $ 3,657 $ 3,708
Accrued liabilities.................. 1,024 1,353 1,160
-------- -------- --------
4,835 5,010 4,868
COMMITMENTS AND CONTINGENCIES (Note 9)
OWNER'S INVESTMENT..................... 43,536 33,736 32,950
-------- -------- --------
$ 48,371 $ 38,746 $ 37,818
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these finanacial statements.
F-49
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD
FOR THE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- ---------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $ 58,188 $ 63,179 $ 60,805 $ 45,905 $ 46,380
COST OF GOODS SOLD...... 41,060 47,944 40,752 30,635 32,455
---------- ---------- ---------- ------------ ------------
GROSS PROFIT............ 17,128 15,235 20,053 15,270 13,925
OPERATING EXPENSES:
Distribution.......... 2,961 2,471 3,392 2,440 2,632
Selling, general and
administrative....... 7,515 10,652 10,768 7,774 8,781
Allocation from
Neste................ 1,529 2,026 1,610 1,324 --
---------- ---------- ---------- ------------ ------------
INCOME FROM OPERATIONS.. 5,123 86 4,283 3,732 2,512
OTHER INCOME............ 1 1 -- -- --
---------- ---------- ---------- ------------ ------------
INCOME BEFORE INCOME
TAXES.................. 5,124 87 4,283 3,732 2,512
PROVISION FOR INCOME
TAXES.................. 1,434 24 1,199 1,045 703
---------- ---------- ---------- ------------ ------------
NET INCOME.............. $ 3,690 $ 63 $ 3,084 $ 2,687 $ 1,809
========== ========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF CHANGES IN OWNER'S INVESTMENT
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<S> <C>
BALANCE, January 1, 1994........................................... $ 39,522
Net income....................................................... 3,690
Contributions from Neste......................................... 932
--------
BALANCE, December 31, 1994......................................... $ 44,144
Net income....................................................... 63
Distributions to Neste........................................... (2,107)
Translation adjustment........................................... 1,436
--------
BALANCE, December 31, 1995......................................... 43,536
Net income....................................................... 3,084
Distributions to Neste........................................... (10,170)
Translation adjustment........................................... (2,714)
--------
BALANCE, December 31, 1996......................................... 33,736
Net income (unaudited)........................................... 1,809
Contributions to Neste (unaudited)............................... (2,547)
Translation adjustment (unaudited)............................... (48)
--------
BALANCE, September 30, 1997 (unaudited)............................ $ 32,950
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD
FOR THE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------- ----------------------------
1994 1995 1996 1996 1997
---------- ---------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERAT-
ING ACTIVITIES:
Net income............ $ 3,690 $ 63 $ 3,084 $ 2,687 $ 1,809
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation.......... 2,141 2,455 1,975 1,506 1,286
Changes in operating
assets and liabili-
ties--
Accounts receivable.. (3,739) 4,016 648 (1,597) (2,160)
Inventories, net..... (1,354) 306 4,704 5,288 (569)
Prepaid expenses and
other............... -- (71) (668) (274) 182
Accounts payable..... 541 (2,605) 80 751 51
Accrued liabilities.. (587) 903 392 285 (193)
---------- ---------- ----------- ------------ ------------
Net cash provided by
operating activi-
ties............... 692 5,067 10,215 8,646 406
---------- ---------- ----------- ------------ ------------
CASH FLOWS FROM INVEST-
ING ACTIVITIES:
Net purchases of
property, plant,
equipment and other
assets............... (1,517) (3,081) (699) 938 1,811
Net (increase)
decrease in share of
common assets
allocated by Neste... (485) 121 695 (156) 378
---------- ---------- ----------- ------------ ------------
Net cash provided by
(used in) investing
activities......... (2,002) (2,960) (4) 782 2,189
---------- ---------- ----------- ------------ ------------
CASH FLOWS FROM FINANC-
ING ACTIVITIES:
Other................. 378 -- (41) 27 (48)
Contributions from
(distributions to)
Neste................ 932 (2,107) (10,170) (9,455) (2,547)
---------- ---------- ----------- ------------ ------------
Net cash provided by
(used in) financing
activities......... 1,310 (2,107) (10,211) (9,428) (2,595)
---------- ---------- ----------- ------------ ------------
CASH, BEGINNING OF PERI-
OD..................... -- -- -- -- --
---------- ---------- ----------- ------------ ------------
CASH, END OF PERIOD..... $ -- $ -- $ -- $ -- $ --
========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Neste Oy (Neste) is an international oil, exploration and production, energy
and chemicals company, which is registered in Espoo, Finland and the shares of
which are quoted on the Helsinki stock exchange. The Neste Oy Polystyrene
Upstream Business in Porvoo and Kokemaki (the Company) has been an operating
unit of the Neste Oy Chemicals division.
The production and sales of the Company consist of polystryrene resins
including expandable polystyrene (EPS), general purpose polystyrene (PS) and
high-impact polystyrene (HIPS). EPS is manufactured in the Porvoo and Kokemaki
plants and PS and HIPS are manufactured in the Porvoo plant. EPS is sold
through Neste Oy Chemicals' European sales network mainly to construction
applications and approximately 30% is sold for packaging uses. Approximately
70% of the PS and HIPS grades are sold in Finland through the Company's
salespeople. The remainder of the PS and HIPS is sold by the Neste Chemicals
sales force.
Neste is establishing a production base in St. Petersburg, Russia where
exploratory marketing efforts have been underway since 1994, using products
exported from Finland. The St. Petersburg plant started operations in the
spring of 1997. These financial statements do not include the St. Petersburg
conversion business.
Basis of Presentation
Neste Oy's records are maintained in accordance with Finnish law and
reporting requirements. These financial statements have been converted from
Finnish generally accepted accounting principles (GAAP) to U.S. GAAP.
The financial statements of the Company include certain amounts that have
been allocated to the Company by Neste Oy. These allocations include general
and administrative expenses incurred at the Porvoo site, but do not include
expenses incurred in the Espoo headquarters. The balance sheet includes a
share of common facilities at the Porvoo site. The definition of common
facilities and the method of allocating them has changed during 1997 such that
these costs are invoiced, not allocated, directly to the Company. Management
believes that the allocation methodologies used to allocate these costs and
corresponding assets to the Company represent a reasonable basis for
allocation. The amounts of the allocations have been shown as separate line
items in the balance sheets and statements of operations in 1994, 1995 and
1996 and are included in selling, general and administrative in the nine month
period ended September 30, 1997.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods indicated. The functional
currency of the Company is the Finnish markka and the exchange rates used were
those quoted by the Bank of Finland. Translation gains and losses are not
included in determining net income but are accumulated in a separate component
of owner's investment, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
F-53
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash
The Company is an operating unit of the Neste Oy Chemicals division, and
participates in the cash pool of Neste Oy. All cash requirements of the
Company have been funded out of this cash pool. As a result, the entity has no
cash balances recorded on its books.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfills the terms of trade agreed upon.
Research and Development
Research and development expenses are charged to operations as incurred.
Total research and development expenses were approximately $859,000,
$1,233,000, $1,206,000, $885,000 and $861,000 for the years ended December 31,
1994, 1995 and 1996 and the nine month periods ended September 30, 1996 and
1997, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
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 financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments, including accounts receivable and
accounts payable, approximate their recorded values due primarily to the
short-term nature of their maturities.
(3) ACCOUNTS RECEIVABLE
Accounts receivable include the following balances due from affiliated
companies:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Isora Oy......................................... $ 949 $ 756 $ 657
Neste Cellplast AB............................... 691 380 475
Neste Thermisol A/S.............................. 417 175 243
------ ------ ------
Total............................................ $2,057 $1,311 $1,375
====== ====== ======
</TABLE>
(4) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------- ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Raw materials................................... $ 5,130 $2,493 $3,734
Work-in-progress................................ 382 187 208
Finished goods.................................. 4,986 2,469 1,776
------- ------ ------
Total......................................... $10,498 $5,149 $5,718
======= ====== ======
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
improvements that increase the values or extend the useful life are
capitalized and maintenance repair costs are expensed as incurred.
Depreciation is
F-54
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
recorded using the straight-line method over the useful lives of the
respective assets, which range from 20 to 40 years for buildings, 5 to 20
years for machinery and equipment and 5 to 10 years for other property and
equipment.
The share of common facilities allocated from Neste has been shown as a
separate line item, net of accumulated depreciation, in the balance sheets. In
addition to an allocated share of common facilities it includes spare parts
stored in a central stores location, but apportioned to the Company in the
Neste Oy stock records. The amount of spare parts at December 31, 1995 was
$565,000, at December 31, 1996 was $502,000, and at September 30, 1997 was
$[419,000]. Spare parts are expensed in the period they are needed and shipped
to the various manufacturing facilities.
(6) ACCRUED LIABILITIES
Accrued liabilities consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Accrued holiday................................. $ 764 $ 839 $ 540
Payroll related items........................... 322 318 534
Added value tax................................. (88) 95 --
Other........................................... 26 101 86
------ ------ ------
Total......................................... $1,024 $1,353 $1,160
====== ====== ======
</TABLE>
(7) PENSION COSTS
The pensions of the Company personnel are covered by the Joint Pension
Foundation of Neste Corporation (the Foundation) in accordance with the local
laws and practices. The Foundation has been able to offer pension services at
lower annual fees than the market prices of pension insurance companies. The
compulsory deficit of the foundation is immaterial but has been provided for
in the accounts of Neste Oy. Under Finnish GAAP the future salary increases
have not been taken into account when calculating the pension liability. U.S.
GAAP calculations have been prepared only for that part of pension liability
that exceeds the normal pension liability stipulated by law. The calculations
are at the level of total Neste Corporation only, and show that at December
31, 1996 the local method had resulted in a somewhat higher pension liability
and somewhat higher annual pension cost than the U.S. GAAP method.
(8) INCOME TAXES
The Company, having legally been part of Neste Oy, has been included in the
tax return of Neste Oy. The tax in the statements of operations has been
calculated by applying the general company tax rate of 28% to the income
before income taxes. No possible tax losses, accelerated depreciation or other
similar effects, which usually have been considered at the level of Neste Oy
only, have been reflected in the calculations. Accordingly no deferred tax
assets or liabilities have been recorded. All taxes are paid by the parent
company.
(9) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
It has been Neste Oy's policy to not make use of leased assets except for
minor office equipment.
F-55
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(10) SUBSEQUENT EVENT
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-56
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Isora Oy:
We have audited the accompanying balance sheets of ISORA OY (a Finnish Joint
Stock company) as of December 31, 1995 and 1996, and the related statements of
operations, changes in stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1996. 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 financial statements referred to above present fairly,
in all material respects, the financial position of ISORA OY as of December
31, 1995 and 1996, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles (see Note 1).
ARTHUR ANDERSEN OY
Helsinki, Finland
September 5, 1997
(except with respect to the matters discussed in Note 12,
as to which the date is October 15, 1997).
F-57
<PAGE>
ISORA OY
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash.................... $ 3,182 $ 4,863 $ 4,241
Accounts receivable..... 1,708 1,311 2,462
Inventories, net........ 1,495 1,383 1,311
Prepaid expenses and
other.................. 378 199 208
Loans to Neste Oy and
affiliates............. 2,960 2,048 1,086
------- ------- -------
9,723 9,804 9,308
------- ------- -------
PROPERTY, PLANT AND
EQUIPMENT, at cost:
Machinery and
equipment.............. 8,470 8,133 7,213
Less accumulated
depreciation........... (3,068) (3,887) (3,758)
------- ------- -------
5,402 4,246 3,455
------- ------- -------
OTHER ASSETS.............. 330 236 195
------- ------- -------
$15,455 $14,286 $12,958
======= ======= =======
LIABILITIES AND
STOCKHOLDER'S EQUITY
--------------------
CURRENT LIABILITIES:
Accounts payable........ $ 1,656 $ 2,220 $ 1,227
Accrued liabilities..... 1,048 1,260 2,337
Loans from credit
institutions........... 23 95 --
------- ------- -------
2,727 3,575 3,564
------- ------- -------
LONG-TERM LIABILITIES..... 3,597 1,818 990
COMMITMENTS AND
CONTINGENCIES (Note 10)
STOCKHOLDER'S EQUITY
Common stock............ 3,858 3,858 3,858
Retained earnings....... 4,531 4,859 5,490
Cumulative translation
adjustment............. 742 176 (944)
------- ------- -------
9,131 8,893 8,404
------- ------- -------
$15,455 $14,286 $12,958
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE>
ISORA OY
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE NINE MONTH PERIOD
DECEMBER 31, ENDED SEPTEMBER 30,
------------------------- ---------------------------
1994 1995 1996 1996 1997
------- ------- ------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $15,823 $20,561 $19,298 $ 14,392 $ 13,759
COST OF GOODS SOLD...... 12,484 16,800 14,960 10,406 9,842
------- ------- ------- ------------ ------------
GROSS PROFIT............ 3,339 3,761 4,338 3,986 3,917
OPERATING EXPENSES:
Distribution.......... 730 841 938 682 664
Selling, general and
administrative....... 3,069 3,567 3,336 2,861 2,692
------- ------- ------- ------------ ------------
INCOME (LOSS) FROM
OPERATIONS............. (460) (647) 64 443 561
OTHER INCOME............ 32 637 112 58 70
------- ------- ------- ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES........... (428) (10) 176 501 631
(PROVISION) BENEFIT FOR
INCOME TAXES........... (63) (17) 152 113 --
------- ------- ------- ------------ ------------
NET INCOME (LOSS)....... $ (491) $ (27) $ 328 $ 614 $ 631
======= ======= ======= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE>
ISORA OY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE
------------- RETAINED TRANSLATION
SHARES AMOUNT EARNINGS ADJUSTMENT TOTAL
------ ------ -------- ----------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994............ 18,300 $3,858 $4,744 $ 18 $8,620
Net loss.......................... -- -- (491) --
Group contribution................ -- -- 305 --
Translation adjustment............ -- -- -- (18)
------ ------ ------ -------
BALANCE, December 31, 1994.......... 18,300 3,858 4,558 -- 8,416
Net loss.......................... -- -- (27) --
Translation adjustment............ -- -- -- 742
------ ------ ------ -------
BALANCE, December 31, 1995.......... 18,300 3,858 4,531 742 9,131
Net income........................ -- -- 328 --
Translation adjustment............ -- -- -- (566)
------ ------ ------ -------
BALANCE, December 31, 1996.......... 18,300 3,858 4,859 176 8,893
Net income (unaudited)............ -- -- 631 --
Translation adjustment
(unaudited)...................... -- -- -- (1,120)
------ ------ ------ -------
BALANCE, September 30, 1997
(unaudited)........................ 18,300 $3,858 $5,490 $ (944) $8,404
====== ====== ====== ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
ISORA OY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ----------------------
1994 1995 1996 1996 1997
------ ------ ------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income(loss)............ $ (491) $ (27) $ 328 $ 614 $ 631
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation............... 658 575 1,101 828 353
Other...................... 50 1 (19) 1
Changes in operating assets
and liabilities:
Accounts receivable....... (286) 476 293 (1,543) (1,314)
Inventories, net.......... (935) 1,134 20 (20) (100)
Loans, prepaid expenses
and other................ 500 1,325 887 305 674
Accounts payable.......... 677 (934) 665 242 (718)
Loans from credit
institutions and accrued
liabilities.............. (399) (154) 349 505 1,150
Other assets.............. 2 (9) (11) 11
------ ------ ------- ------- -------
Net cash (used in)
provided by operating
activities.............. (224) 2,387 3,624 920 688
------ ------ ------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net purchases of property,
plant and equipment........ (589) (293) (190) (114) (88)
------ ------ ------- ------- -------
Net cash used in
investing activites..... (589) (293) (190) (114) (88)
------ ------ ------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Group contribution....... 305 -- -- -- --
Long-term liabilities.... (191) (95) (1,557) (33) (603)
------ ------ ------- ------- -------
Net cash provided by
(used in) financing
activities.............. 114 (95) (1,557) (33) (603)
------ ------ ------- ------- -------
Translation effect on cash.... -- 95 (196) (142) (619)
------ ------ ------- ------- -------
CASH, BEGINNING OF PERIOD..... 1,787 1,088 3,182 3,182 4,863
------ ------ ------- ------- -------
CASH, END OF PERIOD........... $1,088 $3,182 $ 4,863 $ 3,813 $ 4,241
====== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Isora Oy (the Company) is a Finnish Joint Stock company 100% owned by Neste
Oy.
Isora has three production sites--Nurmijarvi, Vammala and Pietarsaari.
Nurmijarvi is an almost fully automated site for standard insulation products.
Vammala produces standard as well as special products. Pietarsaari, located on
the northwest coast, covers the northern region. In addition to its EPS
conversion business, Isora also produces and markets patented EPS sandwich
elements for a broad range of construction applications. Sales are carried out
through Isora's sales organization located at the three sites.
Neste is establishing a production base in St. Petersburg, Russia where
exploratory marketing efforts have been underway since 1994, using products
exported from Finland. The plant started operations in spring 1997. These
statements do not include any part of the St. Petersburg conversion business.
Basis of Presentation
Isora Oy's records are maintained in accordance with Finnish law and
reporting requirements. These financial statements have been converted from
Finnish generally accepted accounting principles (GAAP) to U.S. GAAP.
The following adjustments have been made to Finnish GAAP amounts to comply
with U.S. GAAP requirements:
. Voluntary provisions (difference between fiscal depreciation and the
planned depreciation) have been transferred to stockholder's equity.
Deferred tax at 28% has been deduced from the difference and added to
long-term liabilities. The change of deferred tax is included in the
statements of operations (provision for income taxes). The Company has
accumulated tax losses from fiscal years 1992 and 1994, which can be
deducted from future taxable profits. Deferred tax on accumulated tax
losses has not been calculated as the effect on income of 1994 is not
material.
. Obligatory provisions have been classified as long term liabilities.
. In 1994 Neste Oy paid a group contribution of $305,000 to Isora Oy. In
these statements the amount has been reflected as a capital contribution,
so that it has no effect on the income of 1994.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods. The functional currency of
the Company is the Finnish markka and the exchange rates used were those
quoted by the Bank of Finland. Translation gains and losses are not included
in determining net income but are accumulated in a separate component of
owner's investment, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
F-62
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfils the terms of trade agreed upon.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
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 financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments, including accounts receivables and
accounts payable, approximate their recorded values due primarily to the
short-term nature of their maturities.
(3) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1995 1996 SEPTEMBER 30, 1997
------ ------ ------------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials............................... $ 915 $1,086 $ 968
Work-in-progress............................ 247 149 194
Finished goods.............................. 333 148 149
------ ------ ------
Total....................................... $1,495 $1,383 $1,311
====== ====== ======
</TABLE>
(4) PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
improvements that increase the values or extend the useful life are
capitalized and maintenance repair costs are expensed as incurred.
Depreciation is recorded using the straight-line method over the useful lives
of the respective assets, which is 15 years for machinery and equipment and 5
years for other capitalized expenditures.
(5) OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------
1995 1996 SEPTEMBER 30, 1997
----- ----- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Intangible rights............................ $ 17 $ 19 $ 17
Other capitalized expenditures............... 155 82 60
Shares in housing and other corporations..... 158 135 118
----- ----- ----
Total........................................ $ 330 $ 236 $195
===== ===== ====
</TABLE>
F-63
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Unpaid rent to Neste.................... $ -- $ 672 $ 442
Provision for holiday payment........... 441 377 225
Other accrued liabilities............... 607 211 1,670
------- ------- ------
Total................................... $ 1,048 $ 1,260 $2,337
======= ======= ======
(7) LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Loans from pension institutions......... $ 2,128 $ 756 $ 38
Other non-current liabilities........... 69 43 121
Difference between fiscal and planned
depreciation........................... 1,032 835 725
Obligatory provisions................... 368 184 106
------- ------- ------
Total................................... $ 3,597 $ 1,818 $ 990
======= ======= ======
</TABLE>
(8) PENSION COSTS
The pensions of the personnel have been covered by the Joint Pension
Foundation of Neste Corporation in line with the local laws and practices. The
foundation has been able to offer pension services at lower annual fees than
the market prices of pension insurance companies. The compulsory deficit of
the foundation, which is immaterial, has been provided for in the accounts of
the company. In Finnish GAAP the future salary increases have not been taken
into account when calculating the pension liability. U.S. GAAP calculations
have been prepared only for that part of pension liability that exceeds the
normal pension liability stipulated by law. The calculations are at the level
of total Neste Corporation only, and show, that at December 31, 1996 the local
method had resulted in a somewhat higher pension liability and somewhat higher
annual pension cost than the U.S. GAAP method.
(9) INCOME TAXES
The tax in the statements of operations has been calculated by applying the
general company tax rate of 28% to the income before taxes (according to
Finnish GAAP). Deferred taxes on the differences between the fiscal and
planned depreciation has been added.
(10) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
F-64
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The land and buildings in Vammala and Nurmijarvi are owned by Neste Oy and
rented to the Company under two separate rental agreements. The annual rent of
the Vammala agreement is $480,000. The rental payment can be renegotiated
annually in February. The Nurmijarvi agreement is similar to the Vammala
agreement. The annual rent is $144,000. The right to rent the property cannot,
however be transferred to a third party without the consent of the lessor. The
Pietarsaari production facilities have been rented from a third party at an
annual rent of $65,000. The rental period ends 12th of April 2000, but notice
can be given by both parties any time upon six months notice. The contract
includes an option to buy the land and buildings at a price offered by a third
party. The contract cannot be transferred to a third party without the consent
of the lessor.
(11) RELATED PARTY TRANSACTIONS:
The Company had accounts receivable from Neste Oy of $125,000, $81,000 and
$69,000 at December 31, 1995 and 1996 and September 30, 1997, respectively.
Additionally, the Company had accounts payable to Neste Oy and Neste Cellplast
AB of $952,000 and $46,000 at December 31, 1995, $907,000 and $44,000 at
December 31, 1996 and $613,000 and $0 at September 30, 1997.
(12) SUBSEQUENT EVENT:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-65
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Cellplast AB:
We have audited the accompanying balance sheet of NESTE CELLPLAST AB (a
Swedish Corporation and subsidiary of Neste Sverige AB) as of December 31,
1996, and the related statements of operations, changes in stockholders'
equity and cash flows for the year ended December 31, 1996. 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 audit.
We conducted our audit 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 NESTE CELLPLAST AB as of
December 31, 1996, and the results of its operations and its cash flows for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles (see Note 2).
The financial statements of Neste Cellplast AB for the two years ended
December 31, 1994 and 1995 were audited by other auditors whose reports dated
February 17, 1995 and February 21, 1996, respectively, expressed unqualified
opinions on these statements. The opinion of such auditors, however, does not
cover the restatement of those financial statements as described in Note 2.
We have also audited the adjustments described in Note 2 that were applied
to restate the December 31, 1994 and December 31, 1995 financial statements.
In our opinion, such adjustments are appropriate and have been properly
applied.
ARTHUR ANDERSEN AB
Stockholm, Sweden
September 12, 1997
(except with respect to the matters discussed in Note 10,
as to which the date is October 15, 1997).
F-66
<PAGE>
ORGANISATION NUMBER: 556190-3419
AUDITORS' REPORT ON NESTE CELLPLAST AB
We have examined the annual report, the accounting records and the
administration by the Board of Directors and the Managing Director for the
financial year 1995. The examination was made in accordance with generally
accepted auditing standards.
The accounts have been prepared in conformity with the Swedish Companies Act.
We recommend,
that the Income Statement and the Balance Sheet be adopted,
that the profit be disposed as proposed in the administration report and
that the members of the Board of Directors and the Managing Director be
discharged from personal liability for the fiscal year.
1996-02-21
Ohrlings Coopers & Lybrand AB
F-67
<PAGE>
ORGANISATION NUMBER: 556190-3419
AUDITORS' REPORT ON NESTE CELLPLAST AKTIEBOLAG
We have examined the annual report, the accounting records and the
administration by the Board of Directors and the Managing Director for the
financial year 1994. The examination was made in accordance with generally
accepted auditing standards.
The accounts have been prepared in conformity with the Swedish Companies
Act.
We recommend,
that the Income Statement and the Balance Sheet be adopted,
that the profit be disposed as proposed in the administration report and
that the members of the Board of Directors and the Managing Director be
discharged from personal liability for the fiscal year.
1995-02-17
Ohrlings Reveko AB
F-68
<PAGE>
NESTE CELLPLAST AB
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash................................. $ 1,029 $ 2,631 $ 1,636
Accounts receivable, net............. 1,159 727 1,372
Inventories, net..................... 489 439 505
Prepaid expenses and other current
assets.............................. 651 122 199
------- ------- -------
3,328 3,919 3,712
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land................................. 11 11 10
Buildings and improvements........... 973 946 856
Machinery and equipment.............. 4,478 4,546 4,202
------- ------- -------
5,462 5,503 5,068
Less--accumulated depreciation....... (4,789) (4,869) (4,557)
------- ------- -------
673 634 511
------- ------- -------
TOTAL ASSETS........................... $ 4,001 $ 4,553 $ 4,223
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENTS LIABILITIES
Accounts payable..................... $ 933 $ 1,748 $ 1,381
Accrued liabilities.................. 383 489 493
Other current liabilities............ 333 60 221
------- ------- -------
1,649 2,297 2,095
------- ------- -------
DEFERRED TAX LIABILITY................. 61 51 36
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY
Share capital, 67,000 shares of nom.
SEK 100 each........................ 804 804 804
Retained earnings.................... 1,130 1,131 1,228
Cumulative translation adjustment.... 357 270 60
------- ------- -------
Total stockholders' equity......... 2,291 2,205 2,092
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY AND LIABILI-
TIES.................................. $ 4,001 $ 4,553 $ 4,223
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- -----------------------
1994 1995 1996 1996 1997
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES.................. $ 8,961 $10,072 $10,319 $ 7,715 $ 7,275
COST OF GOODS SOLD......... (6,251) (7,810) (6,904) (5,013) (4,685)
------- ------- ------- ------- -------
GROSS PROFIT............... 2,710 2,262 3,415 2,702 2,590
OPERATING EXPENSES:
Distribution............. (736) (766) (870) (705) (801)
Selling, general and ad-
ministrative............ (1,236) (1,253) (1,725) (1,104) (1,108)
------- ------- ------- ------- -------
(1,972) (2,019) (2,595) (1,809) (1,909)
------- ------- ------- ------- -------
INCOME FROM OPERATIONS..... 738 243 820 893 681
OTHER INCOME:
Interest income, net..... 23 74 80 61 37
------- ------- ------- ------- -------
INCOME FROM CONTINUING OP-
ERATIONS BEFORE INCOME
TAXES..................... 761 317 900 954 718
Current income tax provi-
sion.................... (2) (6) (4) (4) 8
Deferred income tax bene-
fit..................... 39 2 8 6 10
------- ------- ------- ------- -------
NET INCOME................. $ 798 $ 313 $ 904 $ 956 $ 736
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-70
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE
------------- RETAINED TRANSLATION
SHARES AMOUNT EARNINGS ADJUSTMENT TOTAL
------ ------ -------- ----------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994............ 67,000 $804 $1,244 $(127) $1,921
Net income........................ -- -- 798 --
Group contribution................ -- -- (895) --
Translation Adjustment............ -- -- -- 221
------ ---- ------ -----
BALANCE, December 31, 1994.......... 67,000 804 1,147 94 2,045
Net income........................ -- -- 313 --
Group contribution................ -- -- (330) --
Translation Adjustment............ -- -- -- 263
------ ---- ------ -----
BALANCE, December 31, 1995.......... 67,000 804 1,130 357 2,291
Net income........................ 904
Group contribution................ (903)
Translation Adjustment............ -- -- -- (87)
------ ---- ------ -----
BALANCE, December 31, 1996.......... 67,000 804 1,131 270 2,205
Net income (unaudited)............ 736
Group contribution (unaudited).... (639)
Translation Adjustment (unau-
dited)........................... -- -- -- (210)
------ ---- ------ -----
BALANCE, September 30, 1997 (unau-
dited)............................. 67,000 $804 $1,228 $ 60 $2,092
====== ==== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE
FOR THE YEAR MONTH PERIOD
ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------ -----------------------
1994 1995 1996 1996 1997
------- ------ ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income................. $ 798 $ 313 $ 904 $ 956 $ 736
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation.............. 336 205 233 167 164
Changes in operating
assets and liabilities
Accounts receivable...... (246) (296) 432 (440) (645)
Inventories.............. (255) 112 50 (107) (67)
Prepaid expense and
other................... 673 204 529 441 (76)
Accounts payable......... 423 (275) 815 325 (367)
Accrued liabilities and
other liabilities....... 22 270 (177) 203 150
------- ------ ------- ------ ------
Net cash provided by
(used in) operating
activities............. 1,751 533 2,786 1,545 (105)
------- ------ ------- ------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures....... (110) (331) (212) (97) (115)
Group contribution......... (895) (330) (903) (716) (639)
------- ------ ------- ------ ------
Net cash used in
investing activities... (1,005) (661) (1,115) (813) (754)
------- ------ ------- ------ ------
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments of bank loans..... (127) (142) -- -- --
------- ------ ------- ------ ------
Net cash used in
financing activities... (127) (142) -- -- --
------- ------ ------- ------ ------
Translation effect on
cash...................... 153 198 (69) (21) (136)
------- ------ ------- ------ ------
NET INCREASE (DECREASE) IN
CASH........................ 772 (72) 1,602 711 (995)
CASH, beginning of period.... 329 1,101 1,029 1,029 2,631
------- ------ ------- ------ ------
CASH, end of period.......... $ 1,101 $1,029 $ 2,631 $1,740 $1,636
======= ====== ======= ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION
The Company
Neste Cellplast AB (the Company), a Swedish company, is owned by Neste
Sverige AB (91%) and Gullfiber AB (9%). Neste Sverige AB is a wholly owned
subsidiary of the Finnish oil-chemistry and energy company, Neste Oy. The
Company carries on thermisol manufacturing for insulation purposes in the
building and packaging industry. The Company has two manufacturing plants, one
in Norrtalje, and one in Vargarda. The Company's headquarters are located in
Norrtalje.
Intercompany transaction
For 1995 and 1996 91% and 89%, respectively, of total purchases were made
from other group companies, and 1% and 0%, respectively, of total sales were
made to group companies.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company's records are maintained in accordance with Swedish laws and
reporting requirements. These financial statements have been prepared in
accordance with United States generally accepted accounting principles ("U.S.
GAAP") and have been translated into U.S. dollars.
For Swedish statutory reporting purposes, operating expenses in the
statement of operations include cost of goods sold, distribution cost and
selling, general and administration costs. For U.S. GAAP purposes these costs
have been separated.
Foreign currency translation
The functional currency for the Company's operations is Swedish krona. The
translation from Swedish krona to U.S. dollars is performed for the balance
sheet accounts using the exchange rates in effect at the balance sheet date
and for revenue and expense accounts using a weighted average exchange rate
during the period. Translation gains and losses 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."
Contributions to Neste Sverige AB
The Company has given group contribution to Neste Sverige AB during each of
the three years ended December 31, 1994, 1995 and 1996. Group contributions
are principally made to transfer taxable income from one group entity with the
objective of reducing the group's total current tax expenses. These
contributions lead to a taxable income for the recipient and a taxable expense
for the donor. The Company's annual current tax expense has therefore been
impacted by the group contributions. Since the contributions are permanent
differences for tax purposes, no deferred tax accounting related to group
contribution has been made.
For Swedish statutory reporting purposes, group contributions are accounted
for as an appropriation in the statement of operations. This accounting
methodology is utilized primarily to obtain an agreement between a company's
financial statement income and taxable income. Group contributions are thus
not related to a company's operations. For U.S. GAAP purposes, group
contributions provided have been treated as a transfer from stockholders'
equity.
F-73
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash
Cash is deposited on a group account held by the Swedish parent company
Neste Sverige AB. The Company has access to these accounts. For Swedish
statutory purposes these liquid funds are disclosed as a short-term receivable
from the parent company. For U.S. GAAP purposes the item is restated to cash.
Revenue Recognition
Revenue is recognized when goods are shipped.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
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 financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair value of financial instruments, including
accounts receivable and accounts payable, approximate their recorded values
due primarily to the short-term nature of their maturities.
(3) INVENTORY
Inventories are valued at the lower of cost (first-in, first-out) or market.
Provision for obsolescence has been calculated based on review of individual
items. Inventories at December 31, 1995 and 1996, and for the nine month
period ended September 30, 1997 consist of the following items:
<TABLE>
<CAPTION>
(IN THOUSANDS)
SEPTEMBER 30,
1995 1996 1997
---- ---- -------------
(UNAUDITED)
<S> <C> <C> <C>
Raw material............................................ $199 $171 $201
Work in progress........................................ 87 72 86
Finished goods.......................................... 203 196 218
---- ---- ----
Total................................................. $489 $439 $505
==== ==== ====
</TABLE>
The Company purchases most of its raw material from Neste in Finland. The
prices are based on market prices of polystyrene, the primal component of
thermisol products.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using the
straight-line method with estimated lives ranging as follows:
<TABLE>
<S> <C>
Land................................................................ None
Land improvements................................................... 27 years
Buildings........................................................... 20 years
Equipment........................................................... 5 years
</TABLE>
F-74
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) PROVISION FOR PENSION LIABILITIES
Providing for future pension liabilities, two main systems are used in
Sweden. One where actuarially computed premiums are currently paid to an
independent pension insurance company, and the other where an independent body
computes the actuarial liability for unfunded pensions which a company has to
include among long-term liabilities (the book reserve method).
When a company uses the method by paying premiums to an insurance company
there is no remaining risk or cost to the company for benefits earned to date
once the premium is paid. It is only benefits financed by the book reserve
method that has to be actuarially valued according to FAS 87.
The Company is paying a fixed premium to a Swedish independent insurance
company, SPP. The Company has therefore no pension liability to provide for
and no restatement is to be made according to FAS 87.
(6) INCOME TAXES
Deferred income taxes are provided under the asset and liability method.
This method requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this period, deferred income taxes
are determined based on the difference between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized. Income tax expense consists of the Company's current
liability for income taxes and the change in the Company's deferred tax assets
and liabilities.
The provision for income taxes varies from the amount of income tax
determined by applying the applicable domestic statutory tax rate to pre-tax
income as a result of the following:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate........................................ 28% 28% 28%
Group contribution........................................ (26)% (27)% (27)%
Other..................................................... -- (1)% (1)%
--- --- ---
Effective tax rate........................................ 2% 0% 0%
=== === ===
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
Patent dispute with Sundolitt AB
The Company is involved in a patent dispute with Sundolitt AB, a Swedish
competitor. In 1991, Sundolitt commented a patent infringement for the product
"Makribbdack". In 1995, the Swedish Patent and Registration Office accorded
another patent for the product to Sundolitt AB. In November 1995, Sundolitt
claimed damages of $110,000. The Company has filed an objection towards the
patent to the Swedish Patent and Registration Office in June 1997. The dispute
is expected to be settled in 1997. If the Company loses the dispute, they are
to pay $110,000 in damages to Sundolitt AB.
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
F-75
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
(8) EMPLOYEE BENEFIT PLAN:
The Company has a profit sharing plan, which covers all employees. The
Company will pay the employees a total annual bonus amounting to 10% of income
after depreciation. The profit sharing plan exists on a voluntary basis and
the management is free to abolish the plan from one year to another. The board
of directors has decided that a bonus will be paid to the employees according
to the plan in 1997. The bonus amounted to $82,000, $29,000 and $38,000 in
1996, 1995 and 1994, respectively. The amount for 1997 has not yet been
decided upon.
(9) RESTRICTIONS ON RETAINED EARNINGS
Retained earnings available for dividends are based upon statutory financial
statements. Under the provisions of the Swedish Companies Act a legal reserve
must be established in an amount equal to 20% of the share capital. This
reserve is established by appropriating 10% of the statutory net income each
year until the prescribed amount has been appropriated. The legal reserve may
be used to absorb deficit, but usually may not be distributed as dividends.
Retained earnings available for dividends were $905,000 at December 31,
1996.
(10) SUBSEQUENT EVENTS:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
On October 15, 1997, the minority interest of Gullfiber AB was acquired by
Neste Sverige AB.
F-76
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Thermisol A/S:
We have audited the accompanying balance sheets of NESTE THERMISOL A/S as of
December 31, 1995 and 1996, and the related statements of operations, changes
in shareholder's equity and cash flows for each of the three years in the
period ended December 31, 1996. 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 financial statements referred to above present fairly,
in all material respects, the financial position of NESTE Thermisol A/S as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles (see Note 1).
ARTHUR ANDERSEN
Arhus, Denmark
August 29, 1997
(except with respect to the matters discussed in Note 8,
as to which the date is October 15, 1997).
F-77
<PAGE>
NESTE THERMISOL A/S
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents................. $ 787 $ 872 $ 720
Accounts receivable.................. 403 327 575
Inventories, net..................... 481 242 332
Prepaid expenses and other........... 174 32 71
------- ------- -------
1,845 1,473 1,698
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements................ 207 193 170
Buildings and improvements........... 2,076 1,979 1,747
Machinery and equipment.............. 2,920 2,864 2,452
------- ------- -------
5,203 5,036 4,369
Less accumulated depreciation........ (1,758) (1,936) (1,800)
------- ------- -------
Total fixed assets................. 3,445 3,100 2,569
------- ------- -------
$ 5,290 $ 4,573 $ 4,267
======= ======= =======
LIABILITIES AND OWNER'S INVESTMENT
CURRENT LIABILITIES:
Accounts payable..................... $ 652 $ 439 $ 501
Accrued liabilities.................. 1,248 1,280 875
------- ------- -------
1,900 1,719 1,376
OTHER LONG-TERM LIABILITIES............ 2,073 1,710 1,310
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY:
Share capital........................ 2,398 2,237 1,973
Accumulated deficit.................. (1,074) (1,096) (354)
Translation adjustment............... (7) 3 (38)
------- ------- -------
1,317 1,144 1,581
------- ------- -------
$ 5,290 $ 4,573 $ 4,267
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-78
<PAGE>
NESTE THERMISOL A/S
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
PERIOD ENDED
FOR THE YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $ 4,538 $ 5,675 $ 5,470 $4,074 $5,083
COST OF GOODS SOLD...... 3,105 3,800 3,405 2,617 2,816
---------- ---------- ---------- ------ ------
GROSS PROFIT............ 1,433 1,875 2,065 1,457 2,267
OPERATING EXPENSES
Distribution.......... 561 624 642 473 616
Selling, general and
administrative....... 1,094 1,241 1,368 1,002 965
---------- ---------- ---------- ------ ------
INCOME (LOSS) FROM OPER-
ATIONS................. (222) 10 55 (18) 686
FINANCIAL EXPENSES...... 186 151 142 114 76
---------- ---------- ---------- ------ ------
NET INCOME (LOSS)....... $ (408) $ (141) $ (87) $ (132) $ 610
========== ========== ========== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-79
<PAGE>
NESTE THERMISOL A/S
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<S> <C>
BALANCE, January 1, 1994................................................ $1,070
Increase to share capital............................................. 575
Reduction of share capital............................................ (575)
Share capital transferred to cover the loss........................... 575
Net loss.............................................................. (408)
Translation adjustment................................................ 98
------
BALANCE, December 31, 1994.............................................. 1,335
Net loss.............................................................. (141)
Translation adjustment................................................ 123
------
BALANCE, December 31, 1995.............................................. 1,317
Net loss.............................................................. (87)
Translation adjustment................................................ (86)
------
BALANCE, December 31, 1996.............................................. 1,144
Net income (unaudited)................................................ 610
Translation adjustment (unaudited).................................... (173)
------
BALANCE, September 30, 1997 (unaudited)................................. $1,581
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE>
NESTE THERMISOL A/S
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- -----------------------
1994 1995 1996 1996 1997
------ ------ ------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIV-
ITIES:
Net income (loss)............ $ (408) $ (141) $ (87) $(132) $ 610
Adjustments to reconcile net
income (loss) to net cash
provided by operating activ-
ities:
Depreciation................. 372 413 320 239 231
Changes in operating assets
and liabilities:
Accounts receivable.......... (17) (145) 76 37 (247)
Inventories, net............. (76) (77) 238 184 (89)
Prepaid expenses and other... (41) (107) 142 39 (39)
Accounts payable............. 357 39 (212) (214) 61
Accrued liabilities.......... 362 83 50 (228) (383)
------ ------ ------ ----- -----
Net cash provided (used) by
operating activities...... 549 65 527 (75) 144
------ ------ ------ ----- -----
CASH FLOWS FROM INVESTING AC-
TIVITIES:
Net purchases of property,
plant & equipment........... (121) (134) (201) (116) (57)
------ ------ ------ ----- -----
Net cash used in investing
activities................ (121) (134) (201) (116) (57)
------ ------ ------ ----- -----
CASH FLOWS FROM FINANCING AC-
TIVITIES:
Increase of share capital.... 575
Installment on bank debt..... (133) (7) -- -- --
Installment on loan.......... -- (29) (232) (234) (211)
------ ------ ------ ----- -----
Net cash (provided by) used
in financing activites.... 442 (36) (232) (234) (211)
------ ------ ------ ----- -----
Increase (decrease) in cash.... 870 (105) 94 (425) (124)
CASH, beginning of period...... 46 878 787 787 872
Translation effect on cash... (38) 14 (9) (6) (28)
------ ------ ------ ----- -----
CASH, end of period............ $ 878 $ 787 $ 872 $ 356 $ 720
====== ====== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Neste Thermisol A/S (the Company) is owned by the Finnish concern Neste Oy,
who has activities within chemistry, gas and natural gas. The company is
registered in Denmark.
The Company produces and markets insulation material made of polystyrene for
the Danish and German construction activities, and has considerable market
shares within floor- and roof insulation.
Basis of Presentation
The Company's records are maintained in accordance with Danish law and
reporting requirements. These financial statements have been converted from
Danish GAAP to U.S. GAAP.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods. Translation gains and
losses are not included in determining net income but are accumulated in a
separate component of owner's investment, as is required by Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation."
Cash
The Company is an operating unit of Neste Oy, and participates in the cash
pool of Neste Oy. All cash requirements of the Company have been funded out of
this cash pool.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfills the terms of trade agreed upon.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
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 financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair value of financial instruments, including
accounts
F-82
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
receivables and accounts payable, approximate their recorded values due
primarily to the short-term nature of their maturities.
(3) INVENTORIES
Inventories are stated at acquisition cost or production cost--determined on
the basis of FIFO (first-in, first-out) method and include the cost of
materials, labor and manufacturing overhead.
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
1995 1996 SEPTEMBER 30, 1997
---- ---- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Raw material and supplies................... $204 $ 69 $ 135
Work in progress............................ 213 104 137
Finished goods.............................. 64 69 60
---- ---- -----
$481 $242 $ 332
==== ==== =====
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements that 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 10 to 25 years for buildings and 3 to 15 years for machinery and
equipment. The depreciation time for the production plant has from 1996 been
changed from 10 to 15 years.
(5) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Bonus due to customers................... $ 510 $ 591 $ 454
A-Tax, vacation pay, etc................. 178 185 159
Other accrued liabilities................ 320 280 64
Current part of long term liabilities.... 240 224 198
------- ------- ------
$ 1,248 $ 1,280 $ 875
======= ======= ======
(6) LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Due 1-5 years............................ $ 1,322 $ 1,065 $ 791
Due after 5 years........................ 751 645 519
------- ------- ------
$ 2,073 $ 1,710 $1,310
======= ======= ======
</TABLE>
F-83
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
The company has no contracts of guarantee or pension provisions.
(8) SUBSEQUENT EVENT:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-84
<PAGE>
STYROCHEM EUROPE
COMBINING STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------
NESTE OY
POLYSTYRENE
BUSINESS COMBINING STYROCHEM
IN PORVOO NESTE NESTE & ELIMINATING EUROPE
AND KOKEMAKI ISORA OY CELLPLAST AB THERMISOL A/S ADJUSTMENTS COMBINED
------------ -------- ------------ ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $60,805 $19,298 $10,319 $5,470 $(12,274)(2) $83,618
Cost of goods sold...... 40,752 14,960 6,904 3,405 (12,373)(3) 53,648
------- ------- ------- ------ -------- -------
Gross profit............ 20,053 4,338 3,415 2,065 99 29,970
Distribution expense.... 3,392 938 870 642 5,842
Selling, general and
administrative
expenses............... 12,378(1) 3,336 1,725 1,368 18,807
Restructuring charges... -- -- -- -- --
------- ------- ------- ------ -------- -------
Income (loss) from
operations............. 4,283 64 820 55 99 5,321
Interest................ -- -- -- 142 142
Other income............ -- 112 80 -- 192
------- ------- ------- ------ -------- -------
Income (loss) from
continuing operations
before income taxes and
minority interest...... 4,283 176 900 (87) 99 5,371
Income tax expense
(benefit).............. 1,199 (152) (4) -- 1,043
------- ------- ------- ------ -------- -------
Income (loss) from
continuing operations
before minority
interest............... 3,084 328 904 (87) 99 4,328
Minority interest in
income................. --
------- ------- ------- ------ -------- -------
Income (loss) from
continuing operations.. $ 3,084 $ 328 $ 904 $ (87) $ 99 $ 4,328
======= ======= ======= ====== ======== =======
</TABLE>
- --------
(1) Includes allocation of selling, general and administrative costs from
Neste Oy of $1.8 million.
(2) Reflects elimination of intercompany sales.
(3) Reflects elimination of cost of goods sold related to intercompany sales
of $12.3 million plus the elimination of the change in intercompany profit
in inventory of $0.1 million.
F-85
<PAGE>
STYROCHEM EUROPE
COMBINING STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
----------------------------------------------------------------------------------
NESTE OY
POLYSTYRENE BUSINESS COMBINING STYROCHEM
IN PORVOO NESTE NESTE & ELIMINATING EUROPE
AND KOKEMAKI ISORA OY CELLPLAST AB THERMISOL A/S ADJUSTMENTS COMBINED
-------------------- -------- ------------ ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $46,380 $13,759 $7,275 $5,083 $(8,970)(1) $63,527
Cost of goods sold...... 32,455 9,842 4,685 2,816 (8,975)(2) $40,823
------- ------- ------ ------ ------- -------
Gross profit............ 13,925 3,917 2,590 2,267 5 22,704
Distribution expense.... 2,632 664 801 616 4,713
Selling, general and
administrative
expenses............... 8,781 2,692 1,108 965 13,546
Restructuring charges... -- -- -- -- --
------- ------- ------ ------ ------- -------
Income (loss) from
operations............. 2,512 561 681 686 5 4,445
Interest................ -- -- -- 76 76
Other income............ -- (70) (37) -- (107)
------- ------- ------ ------ ------- -------
Income (loss) from
continuing operations
before income taxes and
minority interest...... 2,512 631 718 610 5 4,476
Income tax expense
(benefit).............. 703 -- (18) -- 685
------- ------- ------ ------ ------- -------
Income (loss) from
continuing operations
before minority
interest............... 1,809 631 736 610 5 3,791
Minority interest in
income................. --
------- ------- ------ ------ ------- -------
Income (loss) from
continuing operations.. $ 1,809 $ 631 $ 736 $ 610 $ 5 $ 3,791
======= ======= ====== ====== ======= =======
</TABLE>
- --------
(1) Reflects elimination of intercompany sales.
(2) Reflects elimination of cost of goods sold related to intercompany sales
of $9.0 million, net of the elimination of the change in intercompany
profit.
F-86
<PAGE>
STYROCHEM EUROPE
COMBINING BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------------------------------------------------
NESTE OY
POLYSTYRENE BUSINESS COMBINING STYROCHEM
IN PORVOO NESTE NESTE & ELIMINATING EUROPE
AND KOKEMAKI ISORA OY CELLPLAST AB THERMISOL A/S ADJUSTMENT COMBINED
-------------------- -------- ------------ ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash.................. $ -- $ 4,241 $1,636 $ 720 $ 6,597
Accounts receivable,
net.................. 8,659 2,462 1,372 575 $(1,375) 11,693
Inventory............. 5,718 1,311 505 332 7,866
Deferred tax asset.... -- -- -- -- --
Prepaid expenses and
other................ 553 1,294 199 71 2,117
------- ------- ------ ------ -------
Total current assets.. 14,930 9,308 3,712 1,698 28,273
Property, plant and
equipment, net......... 22,565 3,455 511 2,569 29,100
Other assets............ 323 195 -- -- 518
------- ------- ------ ------ -------
Total assets........ $37,818 $12,958 $4,223 $4,267 $57,891
======= ======= ====== ====== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...... $ 3,708 $ 1,227 $1,381 $ 501 $(1,375) $ 5,442
Accrued liabilities... 1,160 2,337 493 875 4,865
Other current
liabilities.......... -- -- 221 -- 221
------- ------- ------ ------ -------
Total current
liabilities........ 4,868 3,564 2,095 1,376 10,528
------- ------- ------ ------ -------
Long-term debt.......... -- -- -- -- --
------- ------- ------ ------ -------
Deferred income taxes... -- -- 36 -- 36
------- ------- ------ ------ -------
Other non-current
liabilities............ -- 990 -- 1,310 2,300
------- ------- ------ ------ -------
Commitment and
contingencies:
Stockholders' equity
Common stock.......... -- 3,858 804 1,973 6,635
Division equity....... 32,950 -- -- -- 32,950
Foreign currency
translation
adjustment........... -- (944) 60 (38) (922)
Retained earnings
(deficit)............ -- 5,490 1,228 (354) 6,364
------- ------- ------ ------ -------
Total stockholders'
equity............. 32,950 8,404 2,092 1,581 45,027
------- ------- ------ ------ -------
Total liabilities
and stockholders'
equity............. $37,818 $12,958 $4,223 $4,767 $57,891
======= ======= ====== ====== =======
</TABLE>
F-87
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT ANY
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 4
Risk Factors............................................................. 15
The Company.............................................................. 23
Capitalization........................................................... 25
Pro Forma Consolidated Financial Data.................................... 26
Selected Consolidated Financial Data..................................... 31
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 33
Business................................................................. 38
Management............................................................... 52
Security Ownership by Certain Beneficial Owners and Management........... 56
Description of Other Company Indebtedness................................ 58
The Exchange Offer....................................................... 61
Description of the Notes................................................. 68
Registration Rights...................................................... 94
Certain U.S Federal Income Tax Considerations............................ 96
Plan of Distribution..................................................... 99
Legal Matters............................................................ 100
Experts.................................................................. 100
Available Information.................................................... 100
Index to Financial Statements............................................ F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING 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 UNDER
WRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF RADNOR HOLDINGS CORPORATION APPEARS HERE]
OFFER FOR ALL OUTSTANDING 10% SERIES B SENIOR NOTES DUE 2003 IN EXCHANGE FOR
10% SERIES B 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:
(704) 590-7628
Confirmation by Telephone:
(704) 590-7408
By Mail/Hand/Overnight Courier:
FIRST UNION NATIONAL BANK
1525 WEST W.T. HARRIS BLVD.
BUILDING 3C3
CHARLOTTE, NC 28262
ATTENTION: MICHAEL KLOTZ
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Radnor Holdings Corporation (the "Company"), WinCup Holdings, Inc., Radnor
Chemical Corporation 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 Radnor Chemical Corporation, 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 (b) 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 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
II-1
<PAGE>
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 Radnor Chemical Corporation
state that 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, 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.
StyroChem U.S., 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 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 U.S., Inc.'s Articles of Incorporation do not contain such a
restriction.
II-2
<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 (Incorporated by reference to Exhibit 3.1 filed
with Form S-4 Registration Statement, filed by Registrants and
certain other entities, Commission File No. 333-19495 (the
"Prior S-4"))
3.2 Bylaws of Radnor Holdings Corporation (Incorporated by reference
to Exhibit 3.2 filed with the Prior S-4)
3.3 Certificate of Incorporation of WinCup Holdings, Inc.
(Incorporated by reference to Exhibit 3.3 filed with the Prior
S-4)
3.4 Bylaws of WinCup Holdings, Inc. (Incorporated by reference to
Exhibit No. 3.4 filed with the
Prior S-4)
3.5 Certificate of Incorporation of Radnor Management, Inc.
(Incorporated by reference to Exhibit No. 3.5 filed with the
Prior S-4)
3.6 Bylaws of Radnor Management, Inc. (Incorporated by reference to
Exhibit No. 3.6 filed with the Prior S-4)
3.7 Certificate of Incorporation of Radnor Chemical Corporation
3.8 Bylaws of Radnor Chemical Corporation (Incorporated by reference
to Exhibit No. 3.10 filed with the Prior S-4)
3.9 Articles of Incorporation of StyroChem U.S., Inc.
3.10 Bylaws of StyroChem U.S., Inc. (Incorporated by reference to
Exhibit No. 3.12 filed with the
Prior S-4)
4.1 Indenture, dated as of October 15, 1997 among Radnor Holdings
Corporation, WinCup Holdings, Inc., SP Acquisition Co.,
StyroChem International, Inc., Radnor Management, Inc., and
First Union National Bank, including form of Notes and
Guarantees
4.2 Exchange and Registration Rights Agreement, dated as of October
15, 1997, among Radnor Holdings Corporation, WinCup Holdings,
Inc., SP Acquisition Co., StyroChem International, Inc., Radnor
Management, Inc., Bear, Stearns & Co. Inc., NatWest Capital
Markets Limited and BT Alex. Brown Incorporated
4.3 Form of Letter of Transmittal
4.4 Form of Notice of Guaranteed Delivery
4.5 Form of Letter to Noteholders
4.6 Form of Letter to Record Holders
*5.1 Opinion of Duane, Morris & Heckscher LLP regarding the legality
of the securities registered
*8.1 Opinion of Duane, Morris & Heckscher LLP 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, SA. de
C.V., and the Rosenthal Group, dated October 30, 1996
(Incorporated by reference to Exhibit No. 10.1 filed with the
Prior S-4)
10.2 Asset Purchase Agreement among Benchmark Holdings, Inc., WinCup
Holdings, Inc. and James River Paper Company, Inc., dated
October 31, 1995 (Incorporated by reference to Exhibit No. 10.2
filed with Amendment No.1 to the Prior S-4)
10.3 JR Capital Contribution Agreement by and between James River
Paper Company, Inc. and WinCup Holdings, L.P., dated January
20, 1996 (Incorporated by reference to Exhibit No. 10.3 filed
with the Prior S-4)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.4 WinCup Capital Contribution Agreement by and between WinCup
Holdings, Inc. and WinCup Holdings, L.P., dated January 20,
1996 (Incorporated by reference to Exhibit No. 10.4 filed with
the Prior S-4)
10.5 Working Capital Escrow Agreement, dated as of December 5, 1996,
among Radnor Holdings Corporation, Richard Davidovich and
Duane, Morris & Heckscher (Incorporated by reference to Exhibit
No. 10.5 filed with the Prior S-4)
10.6 Environmental Escrow Agreement, dated as of December 5, 1996,
among Radnor Holdings Corporation, Richard Davidovich and
Duane, Morris & Heckscher (Incorporated by reference to Exhibit
No. 10.6 filed with the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.7
filed with Amendment No.1 the Prior S-4)
10.8 Equipment Use Agreement, dated January 20, 1996, as amended by
an Equipment Use Extension and Modification Agreement dated
December 5, 1996 (Incorporated by reference to Exhibit No. 10.8
filed with Amendment No.1 to the Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.9 filed with Amendment No.1 to the
Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.10 filed with Amendment No.1 to the
Prior S-4)
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. (Incorporated by
reference to Exhibit No. 10.11 filed with Amendment No.1 to the
Prior S-4)
10.12 Contract between ARCO Chemical Company and WinCup Holdings,
L.P., dated April 1, 1996, as amended on September, 1996
(Incorporated by reference to Exhibit No. 10.12 filed with
Amendment No.1 to the Prior S-4)
10.13 Product Sales Agreement by and between Huntsman Chemical
Corporation and WinCup Holdings, Inc., dated January 1, 1996
(Incorporated by reference to Exhibit No. 10.13 filed with
Amendment No.1 to the Prior S-4)
10.14 Agreement between BASF Corporation and WinCup Holdings, L.P.,
dated March 27, 1996, as supplemented by letter agreement dated
April 25, 1996 (Incorporated by reference to Exhibit No. 10.14
filed with Amendment No.1 to the Prior S-4)
10.15 Sales Agreement between Fina Oil and Chemical Company and WinCup
Holdings, L.P., dated May 21, 1996 (Incorporated by reference
to Exhibit No. 10.15 filed with Amendment No.1 to the Prior S-
4)
10.16 Contract of Sale between Scott Polymers, 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
(Incorporated by reference to Exhibit No. 10.16 filed with
Amendment No. 1 to the Prior S-4)
10.17 Supply Agreement by and between SP Acquisition Co. and James
River Canada, Inc., dated March, 1996 (Incorporated by
reference to Exhibit No. 10.17 filed with Amendment No. 1 to
the Prior S-4)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.18 Noncompetition Agreement by and between Radnor Holdings
Corporation and Richard Davidovich, dated December 5, 1996
(Incorporated by reference to Exhibit No. 10.18 filed with the
Prior S-4)
10.19 Consulting Agreement by and between Radnor Holdings Corporation
and Richard Davidovich, dated December 5, 1996 (Incorporated by
reference to Exhibit No. 10.19 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.20 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.21 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.22 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.23 filed with the Prior S-4)
10.24 Letter Agreement, dated December 5, 1996, between WinCup
Holdings, L.P. and James River Paper Company, Inc., regarding
Corte Madera subleases (Incorporated by reference to Exhibit
No. 10.24 filed with the Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.25 filed with Amendment No. 1 to
the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.26 filed
with Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference to Exhibit No.
10.27 filed with Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference
to Exhibit No. 10.28 filed with Amendment No. 1 to the Prior S-
4)
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
(Incorporated by reference to Exhibit No. 10.29 filed with
Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.30 filed with
Amendment No. 1 to the Prior S-4)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
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 (Incorporated by reference
to Exhibit No. 10.31 filed with Amendment No. 1 to the Prior S-
4)
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
(Incorporated by reference to Exhibit No. 10.32 filed with
Amendment No. 1 to the Prior S-4)
10.33 Industrial Building Lease between Centerpoint Properties
Corporation and WinCup Holdings, L.P. dated May 1996
10.34 Radnor Corporate Center Office Lease by and between Radnor
Center Associates and WinCup Holdings, L.P., dated May 31, 1996
(Incorporated by reference to Exhibit No. 10.34 filed with
Amendment No. 1 to the Prior S-4)
10.35 Standard Commercial Lease by and between Bradford Management
Company of Dallas, Inc. and Scott Polymers, Inc., dated June
22, 1994, as amended on April 5, 1996, and as renewed on
October 22, 1996 (Incorporated by reference to Exhibit No.
10.35 filed with Amendment No. 1 to the Prior S-4)
10.36 Sublease between Cargologan Inc. and StyroChem International,
Ltd., dated August 2, 1996 (Incorporated by reference to
Exhibit No. 10.36 filed with Amendment No. 1 to the Prior S-4)
10.37 Employment Agreement by and between WinCup Holdings, L.P. and
Michael T. Kennedy, dated January 20, 1996 (Incorporated by
reference to Exhibit No. 10.37 filed with the Prior S-4)
10.38 Executive Employment Agreement by and between Benchmark
Corporation of Delaware and Richard Hunsinger, dated May 1,
1993, as amended in October, 1995 (Incorporated by reference to
Exhibit No. 10.38 filed with the Prior S-4)
10.39 Benchmark Corporation of Delaware Equity Incentive Plan, dated
April 24, 1992, as amended on November 1, 1993 (Incorporated by
reference to Exhibit No. 10.39 filed with Amendment No. 1 to
the Prior S-4)
10.40 Benchmark Corporation of Delaware Management Equity
Participation Plan, dated March 10, 1993, as amended on
November 1, 1993 (Incorporated by reference to Exhibit No.
10.40 filed with Amendment No. 1 to the Prior S-4)
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. (Incorporated by
reference to Exhibit No. 10.41 filed with Amendment No. 1 to
the Prior S-4), as amended by Second Amended and Restated
Revolving Credit and Security Agreement among BNY Financial
Corporation, The Bank of New York Commercial Corporation,
NationsBank, N.A., WinCup Holdings, Inc., SP Acquisition Co.,
StyroChem International, Inc. and Radnor Holdings Corporation,
dated October 15, 1997
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 (Incorporated by reference to Exhibit
No. 10.42 filed with Amendment No. 1 to the Prior S-4)
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.
(Incorporated by reference to Exhibit No. 10.43 filed with
Amendment No. 1 to the Prior S-4)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.44 Trademark Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.44 filed with Amendment No. 1 to the Prior S-4)
10.45 Trademark Assignment of Security, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.45 filed with Amendment No. 1 to the Prior S-4)
10.46 Trademark Collateral Security Agreement, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.46 filed with Amendment No. 1 to the Prior S-4)
10.47 Trademark Assignment of Security, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.47 filed with Amendment No. 1 to the Prior S-4)
10.48 Patent Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.48 filed with Amendment No. 1 to the Prior S-4)
10.49 Patent Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.49 filed with Amendment No. 1 to the Prior S-4)
10.50 Collateral Assignment, dated as of December 5, 1996, among
Radnor Holdings Corporation and The Bank of New York Commercial
Corporation (Incorporated by reference to Exhibit No. 10.50
filed with Amendment No. 1 to the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.51
filed with the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.52
filed with the Prior S-4)
10.53 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of Scott Paper Company ($2.7
million) (Incorporated by reference to Exhibit No. 10.53 filed
with the Prior S-4)
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) (Incorporated by reference to Exhibit No.
10.54 filed with the Prior S-4)
10.55 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of Scott Paper Company
($300,000) (Incorporated by reference to Exhibit No. 10.55
filed with the Prior S-4)
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) (Incorporated by reference to
Exhibit No. 10.56 filed with the Prior S-4)
10.57 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of WinCup Holdings, Inc. ($1.8
million) (Incorporated by reference to Exhibit No. 10.57 filed
with the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.58 filed
with the Prior S-4)
10.59 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of James River Paper Company,
Inc. (Incorporated by reference to Exhibit No. 10.59 filed with
the Prior S-4)
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
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.
(Incorporated by reference to Exhibit No. 10.60 filed with the
Prior S-4)
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
(Incorporated by reference to Exhibit No. 10.61 filed with the
Prior S-4)
10.62 Assumption and Modification Agreement, dated as of January 20,
1996, among Scott Paper Company, WinCup Holdings, Inc. and
WinCup Holdings, L.P. (Incorporated by reference to Exhibit No.
10.62 filed with the Prior S-4)
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 (Incorporated by reference to
Exhibit No. 10.63 filed with Amendment No. 1 to the Prior S-4)
10.64 Letter of Undertaking, dated December 5, 1996, made by StyroChem
International, Ltd. and Radnor Holdings Corporation in favor of
Bank of Montreal (Incorporated by reference to Exhibit No.
10.64 filed with the Prior S-4)
10.65 Guaranty, dated February 25, 1994, made by SP Acquisition Co. in
favor of Bank of Montreal (Incorporated by reference to Exhibit
No. 10.65 filed with Amendment No. 1 to the Prior S-4)
10.66 Employment Agreement, dated April 5, 1996, between WinCup
Holdings, Inc. and R. Radcliffe Hastings (Incorporated by
reference to Exhibit No. 10.66 filed with the Prior S-4)
10.67 Sale of Assets Agreement between Neste Oy, Isora Oy, Neste
Cellplast AB, Neste Thermisol A/S and StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB, ThermiSol Denmark
ApS and Radnor Holdings Corporation dated as of September 17,
1997 (Incorporated by reference to Exhibit No. 2.1 filed with
the Form 8-K filed by Radnor Holdings Corporation dated October
15, 1997)
10.68 Neste Service Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997
10.69 Land Lease Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997
10.70 Plant Lease--195 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
10.71 Engineering Lease--201 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
10.72 Warehouse Lease--205 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
*10.73 Supplement Revolving Multicurrency Credit Agreement among BNY
Financial Limited, NationsBank, N.A., StyroChem Europe (The
Netherlands) B.V., StyroChem Finland Oy, ThermiSol Finland Oy,
ThermiSol Denmark ApS and ThermiSol Sweden AB Guaranteed by
Inter Alia WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Inc. and Radnor Holdings Corporation dated
October 15, 1997 as amended by Supplement Revolving
Multicurrency Credit Agreement among BNY Financial Limited,
NationsBank, N.A., StyroChem Europe (The Netherlands) B.V.,
StyroChem Finland Oy, ThermiSol Finland Oy, ThermiSol Denmark
ApS and ThermiSol Sweden AB Guaranteed by Inter Alia WinCup
Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Inc. and Radnor Holdings Corporation dated November 21, 1997
10.74 Lease Agreement between Oy KWH Plast Ab, Jakobstad and Isora Oy
dated January 24, 1995
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.75 Lease and Cooperation Agreement between Suomen Polystyreeni
Tehdas Oy/Finska Polystyren Fabriken Ab and Borough of Kokemaki
dated February 27, 1971, as amended by Subcontract dated
October 13, 1976, Subcontract II dated February 26, 1981,
Subcontract III dated August 13, 1985, Transfer of Lease
Agreement between City of Kokemaki and Neste Oy dated December
29, 1987, Lease dated April 15, 1994 and Lease Agreement II
dated September 26, 1996
10.76 Lease Agreement between Avena Siilot Oy and Neste Oy
Polystyreeni dated March 13, 1997
*10.77 Office Lease Agreement between Keharakenpajat Oy and Neste Oy
Polystyreeni dated July 1, 1995
*10.78 Lease Contract between Lokalo Fastighetsforvaltning and Neste
Cellplast AB dated August 16, 1996
*10.79 Lease Contract between Norrtalje Industri- och Hantverkshus AB
(NIHAB) and Neste Cellplast AB dated June 26, 1996
*10.80 Styrene Monomer Supply Agreement dated as of October 15, 1997
between StyroChem Finland Oy and Elf Atochem SA
12.1 Computation of ratios
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Arthur Andersen Oy
23.3 Consent of Arthur Andersen AB
23.4 Consent of Arthur Andersen
23.5 Consent of Deloitte & Touche LLP
23.6 Consent of Ohrlings Coopers & Lybrand AB
23.7 Consent of Duane, Morris & Heckscher LLP (to be included in
Exhibits 5.1 and 8.1 to this Registration Statement)
24.1 Power of Attorney (see pages II-10 to II-14)
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 (SP Acquisition Co. and Subsidiaries)
27.3 Financial Data Schedule (Neste Oy Polystyrene Upstream Business
in Porvoo and Kokemaki)
27.4 Financial Data Schedule (Isora Oy)
27.5 Financial Data Schedule (Neste Cellplast AB)
27.6 Financial Data Schedule (Neste Thermisol A/S)
</TABLE>
- --------
* To be filed by an amendment to this Registration Statement.
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
this 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 this Registration Statement when it became effective.
II-9
<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 December 12, 1997.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael V. Valenza
----------------------------------
MICHAEL V. VALENZA Senior Vice
President--Finance
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.
SIGNATURE TITLE DATE
/s/ Michael T. Kennedy Chief Executive December 12,
- ------------------------------------- Officer, President 1997
MICHAEL T. KENNEDY and Director
(principal
executive officer)
/s/ Michael V. Valenza Senior Vice December 12,
- ------------------------------------- President--Finance 1997
MICHAEL V. VALENZA (principal
financial and
accounting officer)
/s/ R. Radcliffe Hastings Director December 12,
- ------------------------------------- 1997
R. RADCLIFFE HASTINGS
Director December ,
- ------------------------------------- 1997
THOMAS J. HOPKINS
/s/ Vincent F. Garrity, Jr Director December 12,
- ------------------------------------- 1997
VINCENT F. GARRITY, JR
/s/ John P. McNiff Director December 12,
- ------------------------------------- 1997
JOHN P. MCNIFF
II-10
<PAGE>
SIGNATURES
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
December 12 , 1997.
WINCUP HOLDINGS, INC.
By: /s/ Michael V. Valenza
----------------------------------
MICHAEL V. VALENZA
Senior Vice President--Finance
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.
SIGNATURE TITLE DATE
/s/ Michael T. Kennedy President and Sole December 12 ,
- ------------------------------------- Director (principal 1997
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice December 12 ,
- ------------------------------------- President-- Finance 1997
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Radnor Chemical
Corporation has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Radnor, Pennsylvania,
on December 12, 1997.
Radnor Chemical Corporation
By: /s/ Michael V. Valenza
----------------------------------
MICHAEL V. VALENZA Senior Vice
President--Finance
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.
SIGNATURE TITLE DATE
/s/ Michael T. Kennedy President and Sole December 12,
- ------------------------------------- Director (principal 1997
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice December 12,
- ------------------------------------- President--Finance 1997
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, StyroChem U.S.,
Inc. has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Radnor, Pennsylvania, on
December 12 , 1997.
StyroChem U.S., Inc.
By: /s/ Michael V. Valenza
----------------------------------
MICHAEL V. VALENZA Senior Vice
President--Finance
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.
SIGNATURE TITLE DATE
/s/ Michael T. Kennedy President and Sole December 12,
- ------------------------------------- Director (principal 1997
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice December 12,
- ------------------------------------- President- Finance 1997
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-13
<PAGE>
SIGNATURES
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 December 12, 1997.
Radnor Management, Inc.
By: /s/ Michael V. Valenza
----------------------------------
MICHAEL V. VALENZA Senior Vice
President--Finance
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.
SIGNATURE TITLE DATE
/s/ Michael T. Kennedy President and Sole December 12,
- ------------------------------------- Director (principal 1997
MICHAEL T. KENNEDY executive officer)
/s/ Michael V. Valenza Senior Vice December 12,
- ------------------------------------- President-- Finance 1997
MICHAEL V. VALENZA (principal
financial and
accounting officer)
II-14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.1 Restated Certificate of Incorporation of Radnor Holdings
Corporation (Incorporated by reference to Exhibit 3.1 filed
with Form S-4 Registration Statement, filed by Registrants and
certain other entities, Commission File No. 333-19495 (the
"Prior S-4"))
3.2 Bylaws of Radnor Holdings Corporation (Incorporated by reference
to Exhibit 3.2 filed with the Prior S-4)
3.3 Certificate of Incorporation of WinCup Holdings, Inc.
(Incorporated by reference to Exhibit 3.3 filed with the Prior
S-4)
3.4 Bylaws of WinCup Holdings, Inc. (Incorporated by reference to
Exhibit No. 3.4 filed with the
Prior S-4)
3.5 Certificate of Incorporation of Radnor Management, Inc.
(Incorporated by reference to Exhibit No. 3.5 filed with the
Prior S-4)
3.6 Bylaws of Radnor Management, Inc. (Incorporated by reference to
Exhibit No. 3.6 filed with the Prior S-4)
3.7 Certificate of Incorporation of Radnor Chemical Corporation
3.8 Bylaws of Radnor Chemical Corporation (Incorporated by reference
to Exhibit No. 3.10 filed with the Prior S-4)
3.9 Articles of Incorporation of StyroChem U.S., Inc.
3.10 Bylaws of StyroChem U.S., Inc. (Incorporated by reference to
Exhibit No. 3.12 filed with the
Prior S-4)
4.1 Indenture, dated as of October 15, 1997 among Radnor Holdings
Corporation, WinCup Holdings, Inc., SP Acquisition Co.,
StyroChem International, Inc., Radnor Management, Inc., and
First Union National Bank, including form of Notes and
Guarantees
4.2 Exchange and Registration Rights Agreement, dated as of October
15, 1997, among Radnor Holdings Corporation, WinCup Holdings,
Inc., SP Acquisition Co., StyroChem International, Inc., Radnor
Management, Inc., Bear, Stearns & Co. Inc., NatWest Capital
Markets Limited and BT Alex. Brown Incorporated
4.3 Form of Letter of Transmittal
4.4 Form of Notice of Guaranteed Delivery
4.5 Form of Letter to Noteholders
4.6 Form of Letter to Record Holders
*5.1 Opinion of Duane, Morris & Heckscher LLP regarding the legality
of the securities registered
*8.1 Opinion of Duane, Morris & Heckscher LLP 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, SA. de
C.V., and the Rosenthal Group, dated October 30, 1996
(Incorporated by reference to Exhibit No. 10.1 filed with the
Prior S-4)
10.2 Asset Purchase Agreement among Benchmark Holdings, Inc., WinCup
Holdings, Inc. and James River Paper Company, Inc., dated
October 31, 1995 (Incorporated by reference to Exhibit No. 10.2
filed with Amendment No.1 to the Prior S-4)
10.3 JR Capital Contribution Agreement by and between James River
Paper Company, Inc. and WinCup Holdings, L.P., dated January
20, 1996 (Incorporated by reference to Exhibit No. 10.3 filed
with the Prior S-4)
</TABLE>
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<TABLE>
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10.4 WinCup Capital Contribution Agreement by and between WinCup
Holdings, Inc. and WinCup Holdings, L.P., dated January 20,
1996 (Incorporated by reference to Exhibit No. 10.4 filed with
the Prior S-4)
10.5 Working Capital Escrow Agreement, dated as of December 5, 1996,
among Radnor Holdings Corporation, Richard Davidovich and
Duane, Morris & Heckscher (Incorporated by reference to Exhibit
No. 10.5 filed with the Prior S-4)
10.6 Environmental Escrow Agreement, dated as of December 5, 1996,
among Radnor Holdings Corporation, Richard Davidovich and
Duane, Morris & Heckscher (Incorporated by reference to Exhibit
No. 10.6 filed with the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.7
filed with Amendment No.1 the Prior S-4)
10.8 Equipment Use Agreement, dated January 20, 1996, as amended by
an Equipment Use Extension and Modification Agreement dated
December 5, 1996 (Incorporated by reference to Exhibit No. 10.8
filed with Amendment No.1 to the Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.9 filed with Amendment No.1 to the
Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.10 filed with Amendment No.1 to the
Prior S-4)
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. (Incorporated by
reference to Exhibit No. 10.11 filed with Amendment No.1 to the
Prior S-4)
10.12 Contract between ARCO Chemical Company and WinCup Holdings,
L.P., dated April 1, 1996, as amended on September, 1996
(Incorporated by reference to Exhibit No. 10.12 filed with
Amendment No.1 to the Prior S-4)
10.13 Product Sales Agreement by and between Huntsman Chemical
Corporation and WinCup Holdings, Inc., dated January 1, 1996
(Incorporated by reference to Exhibit No. 10.13 filed with
Amendment No.1 to the Prior S-4)
10.14 Agreement between BASF Corporation and WinCup Holdings, L.P.,
dated March 27, 1996, as supplemented by letter agreement dated
April 25, 1996 (Incorporated by reference to Exhibit No. 10.14
filed with Amendment No.1 to the Prior S-4)
10.15 Sales Agreement between Fina Oil and Chemical Company and WinCup
Holdings, L.P., dated May 21, 1996 (Incorporated by reference
to Exhibit No. 10.15 filed with Amendment No.1 to the Prior S-
4)
10.16 Contract of Sale between Scott Polymers, 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
(Incorporated by reference to Exhibit No. 10.16 filed with
Amendment No. 1 to the Prior S-4)
10.17 Supply Agreement by and between SP Acquisition Co. and James
River Canada, Inc., dated March, 1996 (Incorporated by
reference to Exhibit No. 10.17 filed with Amendment No. 1 to
the Prior S-4)
</TABLE>
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<TABLE>
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10.18 Noncompetition Agreement by and between Radnor Holdings
Corporation and Richard Davidovich, dated December 5, 1996
(Incorporated by reference to Exhibit No. 10.18 filed with the
Prior S-4)
10.19 Consulting Agreement by and between Radnor Holdings Corporation
and Richard Davidovich, dated December 5, 1996 (Incorporated by
reference to Exhibit No. 10.19 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.20 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.21 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.22 filed with the Prior S-4)
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) (Incorporated by reference
to Exhibit No. 10.23 filed with the Prior S-4)
10.24 Letter Agreement, dated December 5, 1996, between WinCup
Holdings, L.P. and James River Paper Company, Inc., regarding
Corte Madera subleases (Incorporated by reference to Exhibit
No. 10.24 filed with the Prior S-4)
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 (Incorporated by
reference to Exhibit No. 10.25 filed with Amendment No. 1 to
the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.26 filed
with Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference to Exhibit No.
10.27 filed with Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference
to Exhibit No. 10.28 filed with Amendment No. 1 to the Prior S-
4)
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
(Incorporated by reference to Exhibit No. 10.29 filed with
Amendment No. 1 to the Prior S-4)
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 (Incorporated by reference to Exhibit No. 10.30 filed with
Amendment No. 1 to the Prior S-4)
</TABLE>
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<TABLE>
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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 (Incorporated by reference
to Exhibit No. 10.31 filed with Amendment No. 1 to the Prior S-
4)
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
(Incorporated by reference to Exhibit No. 10.32 filed with
Amendment No. 1 to the Prior S-4)
10.33 Industrial Building Lease between Centerpoint Properties
Corporation and WinCup Holdings, L.P. dated May 1996
10.34 Radnor Corporate Center Office Lease by and between Radnor
Center Associates and WinCup Holdings, L.P., dated May 31, 1996
(Incorporated by reference to Exhibit No. 10.34 filed with
Amendment No. 1 to the Prior S-4)
10.35 Standard Commercial Lease by and between Bradford Management
Company of Dallas, Inc. and Scott Polymers, Inc., dated June
22, 1994, as amended on April 5, 1996, and as renewed on
October 22, 1996 (Incorporated by reference to Exhibit No.
10.35 filed with Amendment No. 1 to the Prior S-4)
10.36 Sublease between Cargologan Inc. and StyroChem International,
Ltd., dated August 2, 1996 (Incorporated by reference to
Exhibit No. 10.36 filed with Amendment No. 1 to the Prior S-4)
10.37 Employment Agreement by and between WinCup Holdings, L.P. and
Michael T. Kennedy, dated January 20, 1996 (Incorporated by
reference to Exhibit No. 10.37 filed with the Prior S-4)
10.38 Executive Employment Agreement by and between Benchmark
Corporation of Delaware and Richard Hunsinger, dated May 1,
1993, as amended in October, 1995 (Incorporated by reference to
Exhibit No. 10.38 filed with the Prior S-4)
10.39 Benchmark Corporation of Delaware Equity Incentive Plan, dated
April 24, 1992, as amended on November 1, 1993 (Incorporated by
reference to Exhibit No. 10.39 filed with Amendment No. 1 to
the Prior S-4)
10.40 Benchmark Corporation of Delaware Management Equity
Participation Plan, dated March 10, 1993, as amended on
November 1, 1993 (Incorporated by reference to Exhibit No.
10.40 filed with Amendment No. 1 to the Prior S-4)
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. (Incorporated by
reference to Exhibit No. 10.41 filed with Amendment No. 1 to
the Prior S-4), as amended by Second Amended and Restated
Revolving Credit and Security Agreement among BNY Financial
Corporation, The Bank of New York Commercial Corporation,
NationsBank, N.A., WinCup Holdings, Inc., SP Acquisition Co.,
StyroChem International, Inc. and Radnor Holdings Corporation,
dated October 15, 1997
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 (Incorporated by reference to Exhibit
No. 10.42 filed with Amendment No. 1 to the Prior S-4)
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.
(Incorporated by reference to Exhibit No. 10.43 filed with
Amendment No. 1 to the Prior S-4)
</TABLE>
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<TABLE>
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10.44 Trademark Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.44 filed with Amendment No. 1 to the Prior S-4)
10.45 Trademark Assignment of Security, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.45 filed with Amendment No. 1 to the Prior S-4)
10.46 Trademark Collateral Security Agreement, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.46 filed with Amendment No. 1 to the Prior S-4)
10.47 Trademark Assignment of Security, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.47 filed with Amendment No. 1 to the Prior S-4)
10.48 Patent Collateral Security Agreement, dated December 5, 1996,
between StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.48 filed with Amendment No. 1 to the Prior S-4)
10.49 Patent Assignment of Security, dated December 5, 1996, between
StyroChem International, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.49 filed with Amendment No. 1 to the Prior S-4)
10.50 Collateral Assignment, dated as of December 5, 1996, among
Radnor Holdings Corporation and The Bank of New York Commercial
Corporation (Incorporated by reference to Exhibit No. 10.50
filed with Amendment No. 1 to the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.51
filed with the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.52
filed with the Prior S-4)
10.53 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of Scott Paper Company ($2.7
million) (Incorporated by reference to Exhibit No. 10.53 filed
with the Prior S-4)
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) (Incorporated by reference to Exhibit No.
10.54 filed with the Prior S-4)
10.55 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of Scott Paper Company
($300,000) (Incorporated by reference to Exhibit No. 10.55
filed with the Prior S-4)
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) (Incorporated by reference to
Exhibit No. 10.56 filed with the Prior S-4)
10.57 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of WinCup Holdings, Inc. ($1.8
million) (Incorporated by reference to Exhibit No. 10.57 filed
with the Prior S-4)
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) (Incorporated by reference to Exhibit No. 10.58 filed
with the Prior S-4)
10.59 Subordinated Promissory Note, dated January 20, 1996, made by
WinCup Holdings, L.P. in favor of James River Paper Company,
Inc. (Incorporated by reference to Exhibit No. 10.59 filed with
the Prior S-4)
</TABLE>
<PAGE>
<TABLE>
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NO. EXHIBIT
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<C> <S>
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.
(Incorporated by reference to Exhibit No. 10.60 filed with the
Prior S-4)
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
(Incorporated by reference to Exhibit No. 10.61 filed with the
Prior S-4)
10.62 Assumption and Modification Agreement, dated as of January 20,
1996, among Scott Paper Company, WinCup Holdings, Inc. and
WinCup Holdings, L.P. (Incorporated by reference to Exhibit No.
10.62 filed with the Prior S-4)
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 (Incorporated by reference to
Exhibit No. 10.63 filed with Amendment No. 1 to the Prior S-4)
10.64 Letter of Undertaking, dated December 5, 1996, made by StyroChem
International, Ltd. and Radnor Holdings Corporation in favor of
Bank of Montreal (Incorporated by reference to Exhibit No.
10.64 filed with the Prior S-4)
10.65 Guaranty, dated February 25, 1994, made by SP Acquisition Co. in
favor of Bank of Montreal (Incorporated by reference to Exhibit
No. 10.65 filed with Amendment No. 1 to the Prior S-4)
10.66 Employment Agreement, dated April 5, 1996, between WinCup
Holdings, Inc. and R. Radcliffe Hastings (Incorporated by
reference to Exhibit No. 10.66 filed with the Prior S-4)
10.67 Sale of Assets Agreement between Neste Oy, Isora Oy, Neste
Cellplast AB, Neste Thermisol A/S and StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB, ThermiSol Denmark
ApS and Radnor Holdings Corporation dated as of September 17,
1997 (Incorporated by reference to Exhibit No. 2.1 filed with
the Form 8-K filed by Radnor Holdings Corporation dated October
15, 1997)
10.68 Neste Service Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997
10.69 Land Lease Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997
10.70 Plant Lease--195 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
10.71 Engineering Lease--201 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
10.72 Warehouse Lease--205 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, L.P., dated May 1, 1997
*10.73 Supplement Revolving Multicurrency Credit Agreement among BNY
Financial Limited, NationsBank, N.A., StyroChem Europe (The
Netherlands) B.V., StyroChem Finland Oy, ThermiSol Finland Oy,
ThermiSol Denmark ApS and ThermiSol Sweden AB Guaranteed by
Inter Alia WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Inc. and Radnor Holdings Corporation dated
October 15, 1997 as amended by Supplement Revolving
Multicurrency Credit Agreement among BNY Financial Limited,
NationsBank, N.A., StyroChem Europe (The Netherlands) B.V.,
StyroChem Finland Oy, ThermiSol Finland Oy, ThermiSol Denmark
ApS and ThermiSol Sweden AB Guaranteed by Inter Alia WinCup
Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Inc. and Radnor Holdings Corporation dated November 21, 1997
10.74 Lease Agreement between Oy KWH Plast Ab, Jakobstad and Isora Oy
dated January 24, 1995
</TABLE>
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<TABLE>
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10.75 Lease and Cooperation Agreement between Suomen Polystyreeni
Tehdas Oy/Finska Polystyren Fabriken Ab and Borough of Kokemaki
dated February 27, 1971, as amended by Subcontract dated
October 13, 1976, Subcontract II dated February 26, 1981,
Subcontract III dated August 13, 1985, Transfer of Lease
Agreement between City of Kokemaki and Neste Oy dated December
29, 1987, Lease dated April 15, 1994 and Lease Agreement II
dated September 26, 1996
10.76 Lease Agreement between Avena Siilot Oy and Neste Oy
Polystyreeni dated March 13, 1997
*10.77 Office Lease Agreement between Keharakenpajat Oy and Neste Oy
Polystyreeni dated July 1, 1995
*10.78 Lease Contract between Lokalo Fastighetsforvaltning and Neste
Cellplast AB dated August 16, 1996
*10.79 Lease Contract between Norrtalje Industri- och Hantverkshus AB
(NIHAB) and Neste Cellplast AB dated June 26, 1996
*10.80 Styrene Monomer Supply Agreement dated as of October 15, 1997
between StyroChem Finland Oy and Elf Atochem SA
12.1 Computation of ratios
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Arthur Andersen Oy
23.3 Consent of Arthur Andersen AB
23.4 Consent of Arthur Andersen
23.5 Consent of Deloitte & Touche LLP
23.6 Consent of Ohrlings Coopers & Lybrand AB
23.7 Consent of Duane, Morris & Heckscher LLP (to be included in
Exhibits 5.1 and 8.1 to this Registration Statement)
24.1 Power of Attorney (see pages II-10 to II-14)
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 (SP Acquisition Co. and Subsidiaries)
27.3 Financial Data Schedule (Neste Oy Polystyrene Upstream Business
in Porvoo and Kokemaki)
27.4 Financial Data Schedule (Isora Oy)
27.5 Financial Data Schedule (Neste Cellplast AB)
27.6 Financial Data Schedule (Neste Thermisol A/S)
</TABLE>
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* To be filed by an amendment to this Registration Statement.
<PAGE>
Exhibit 3.7
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>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SP ACQUISITION CO.
SP Acquisition Co., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That by written consent of the Sole Director of SP Acquisition Co.
(the "Corporation"), in accordance with Section 141(f) of the General
Corporation Law of the State of Delaware, resolutions were adopted setting forth
a proposed amendment of the Certificate of Incorporation of said Corporation,
declaring said amendment to be advisable and calling for action by written
consent of the sole stockholder of said Corporation for consideration thereof.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof number "FIRST" so that, as amended,
said Article "FIRST" shall be and read in the entirety as follows:
"FIRST: The name of the corporation is Radnor Chemical Corporation."
SECOND: That thereafter, pursuant to a written consent of the sole
stockholder of said Corporation in accordance with Section 228 of the General
Corporation Law of the State of Delaware, the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not by reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, SP Acquisition Co. has caused this certificate to be
signed by its Chairman and CEO this sixth day of October, 1997.
SP Acquisition Co.
By: /s/ Michael T. Kennedy
----------------------------------
Michael T. Kennedy,
Chairman and CEO
<PAGE>
Exhibit 3.9
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
<PAGE>
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
<PAGE>
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
-------
<PAGE>
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.
<PAGE>
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
<PAGE>
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>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
STYROCHEM INTERNATIONAL, 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 StyroChem International,
Inc.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on November 4, 1997. The name
of the corporation is hereby changed to "StyroChem U.S., 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 U.S., 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 10. 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 November 5, 1997.
STYROCHEM INTERNATIONAL, INC.
By: /s/ Michael T. Kennedy
------------------------------
Michael T. Kennedy, President
<PAGE>
EXHIBIT 4.1
[EXECUTION VERSION]
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
RADNOR MANAGEMENT, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
________________________
INDENTURE
Dated as of October 15, 1997
_______________________
$60,000,000
10% Series B Senior Notes due 2003
<PAGE>
PAGE
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES............................................................ 1
RECITALS........................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 101. Definitions........................... 2
144A Global Security..................................... 2
Acquired Indebtedness.................................... 2
Affiliate................................................ 2
Amended Credit Agreement................................. 3
Applicable Procedures.................................... 3
Asset Sale............................................... 3
Attributable Indebtedness................................ 4
Bankruptcy Law........................................... 4
Board of Directors....................................... 4
Board Resolution......................................... 4
Borrowing Base........................................... 4
Business Day............................................. 5
Canadian Credit Agreement................................ 5
Capital Stock............................................ 5
Capitalized Lease Obligation............................. 5
Cash Equivalents......................................... 5
Cedel.................................................... 6
Change of Control........................................ 6
Code..................................................... 7
Commission............................................... 7
Company.................................................. 7
Company Request" or "Company Order....................... 7
Consolidated Indebtedness................................ 7
Consolidated Interest Expense............................ 7
Consolidated Net Income.................................. 8
Consolidated Net Worth................................... 8
Controlled Subsidiary.................................... 8
Corporate Trust Office................................... 9
Credit Agreements........................................ 9
Default.................................................. 9
Depositary............................................... 9
Domestic Subsidiary...................................... 9
EBITDA................................................... 9
Equity Interests......................................... 9
Euroclear................................................ 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
Event of Default......................................... 9
Exchange Act............................................. 9
Exchange Notes........................................... 9
Exchange Offer........................................... 10
Exchange Offer Registration Statement.................... 10
Existing Indebtedness.................................... 10
Fair Market Value........................................ 10
Foreign Subsidiary....................................... 10
Foreign Subsidiary Borrowing Base........................ 10
GAAP..................................................... 10
Global Security Legend................................... 11
Guarantee................................................ 11
Guarantor................................................ 11
Hedging Obligations...................................... 11
Holder................................................... 11
IAI Global Security...................................... 11
incur.................................................... 11
Indebtedness............................................. 12
Indenture Obligations.................................... 13
Independent Director..................................... 13
Indirect Participation................................... 13
Initial Securities....................................... 13
Institutional Accredited Investor........................ 13
Interest Coverage Ratio.................................. 13
Interest Payment Date.................................... 15
Investment............................................... 15
Issue Date............................................... 15
Letter of Transmittal.................................... 15
Lien..................................................... 15
Maturity................................................. 15
Moody's.................................................. 15
Net Cash Proceeds........................................ 15
Net Income............................................... 16
Net Proceeds............................................. 16
Non-U.S. Person.......................................... 16
Officers' Certificate.................................... 16
Opinion of Counsel....................................... 17
Opinion of Independent Counsel........................... 17
Outstanding.............................................. 17
Participant.............................................. 18
Participating Broker-Dealer.............................. 18
Paying Agent............................................. 18
Permitted Holders........................................ 18
Permitted Indebtedness................................... 18
Permitted Investment..................................... 20
Permitted Liens.......................................... 20
Person................................................... 21
Predecessor Security..................................... 22
Preferred Stock.......................................... 22
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prior Notes.............................................. 22
Private Placement Legend................................. 22
Public Equity Offering................................... 22
QIB...................................................... 22
Redeemable Stock......................................... 22
Redemption Date.......................................... 22
Redemption Price......................................... 23
Registration Rights Agreement............................ 23
Registration Statement................................... 23
Regular Record Date...................................... 23
Regulation S............................................. 23
Regulation S Global Security............................. 23
Resale Restriction Termination Date...................... 23
Responsible Officer...................................... 23
Restricted Global Security............................... 23
Restricted Investment.................................... 23
Restricted Physical Security............................. 24
Restricted Subsidiary.................................... 24
Rule 144................................................. 24
Rule 144A................................................ 24
Rule 903................................................. 24
Rule 904................................................. 24
S&P...................................................... 24
Sale and Leaseback Transaction........................... 24
Securities............................................... 24
Securities Act........................................... 25
Security Register" and "Security Registrar............... 25
Senior Indebtedness...................................... 25
Shelf Registration Statement............................. 25
Special Record Date...................................... 25
Stated Maturity.......................................... 25
StyroChem Europe Acquisition............................. 25
Subordinated Indebtedness................................ 25
Subsidiary............................................... 25
Trust Indenture Act...................................... 26
Trustee.................................................. 26
Unrestricted Global Security............................. 26
Unrestricted Physical Security........................... 26
Unrestricted Subsidiary.................................. 26
U.S. Person.............................................. 27
U.S. Government Obligations.............................. 27
Voting Stock............................................. 27
Wholly-Owned Restricted Subsidiary....................... 27
Section 102. Other Definitions............................. 27
Section 103. Compliance Certificates and Opinions.......... 28
Section 104. Form of Documents Delivered to
Trustee...................................... 29
Section 105. Acts of Holders............................... 29
Section 106. Notices, etc., to Trustee, the Company
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
and any Subsidiary Guarantor.......... 31
Section 107. Notice to Holders; Waiver.............. 32
Section 108. Conflict with Trust Indenture Act...... 32
Section 109. Effect of Headings and Table of
Contents.............................. 32
Section 110. Successors and Assigns................. 33
Section 111. Separability Clause.................... 33
Section 112. Benefits of Indenture.................. 33
Section 113. Governing Law.......................... 33
Section 114. Legal Holidays......................... 33
Section 115. Schedules and Exhibits................. 33
Section 116. Counterparts........................... 33
Section 117. Communication by Holders with Other
Holders............................... 34
Section 118. No Recourse Against Others............. 34
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally........................ 34
Section 202. Restrictive Legends.................... 35
Section 203. Form of Face of Securities............. 37
Section 204. Form of Reverse of Securities.......... 40
Section 205. Form of Trustee's Certificate of
Authentication........................ 44
Section 206. Form of Schedule of Exchanges in the
Global Securities..................... 45
Section 207. Form of Guarantee of Each of the
Guarantors............................ 45
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms........................ 46
Section 302. Denominations.......................... 48
Section 303. Execution, Authentication, Delivery and
Dating................................ 48
Section 304. Temporary Securities................... 49
Section 305. Registration of Transfer and Exchange.. 50
Section 306. Book-Entry Provisions for Global
Securities............................ 52
Section 307. Special Transfer Provisions............ 53
Section 308. Mutilated, Destroyed, Lost and Stolen
Securities............................ 67
Section 309. Payment of Interest; Interest Rights
Preserved............................. 68
Section 310. Persons Deemed Owners.................. 69
Section 311. Cancellation........................... 69
</TABLE>
(iv)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
Section 312. Computation of Interest................ 70
Section 313. Deposit of Moneys...................... 70
Section 314. CUSIP Number........................... 70
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance
or Covenant Defeasance................ 70
Section 402. Defeasance and Discharge............... 70
Section 403. Covenant Defeasance.................... 71
Section 404. Conditions to Defeasance or Covenant
Defeasance............................ 72
Section 405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions.............. 74
Section 406. Reinstatement.......................... 75
Section 407. Repayment of the Company............... 75
ARTICLE FIVE
REMEDIES
Section 501. Events of Default...................... 76
Section 502. Acceleration........................... 78
Section 503. Other Remedies......................... 79
Section 504. Waiver of Past Defaults................ 79
Section 505. Control by Majority.................... 80
Section 506. Limitation on Suits.................... 80
Section 507. Rights of Holders to Receive Payment... 81
Section 508. Collection Suit by Trustee............. 81
Section 509. Trustee May File Proofs of Claim....... 82
Section 510. Priorities............................. 82
Section 511. Undertaking for Costs.................. 83
Section 512. Waiver of Stay, Extension or Usury
Laws.................................. 83
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults..................... 84
Section 602. Certain Rights of Trustee.............. 84
Section 603. Trustee Not Responsible for Recitals,
Dispositions of Securities or
Application of Proceeds Thereof....... 86
Section 604. Trustee and Agents May Hold Securities;
Collections; etc...................... 86
Section 605. Money Held in Trust.................... 86
Section 606. Compensation and Indemnification of
</TABLE>
(v)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
Trustee and Its Prior Claim........... 87
Section 607. Conflicting Interests.................. 88
Section 608. Corporate Trustee Required;
Eligibility........................... 88
Section 609. Resignation and Removal; Appointment of
Successor Trustee..................... 88
Section 610. Acceptance of Appointment by Successor. 90
Section 611. Merger, Conversion, Consolidation or
Succession to Business................ 91
Section 612. Preferential Collection of Claims
Against Company....................... 92
Section 613. Certain Duties and Responsibilities.... 92
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and
Addresses of Holders.................. 92
Section 702. Disclosure of Names and Addresses of
Holders............................... 93
Section 703. Reports by Trustee..................... 93
Section 704. Reports by Company and Guarantors...... 93
ARTICLE EIGHT
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801. When the Company May Merge, Etc........ 94
Section 802. Successor Substituted.................. 96
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements
without Consent of Holders............ 97
Section 902. Supplemental Indentures and Agreements
with Consent of Holders............... 98
Section 903. Execution of Supplemental Indentures
and Agreements........................ 99
Section 904. Revocation Effect of Supplemental
Indentures............................ 100
Section 905. Conformity with Trust Indenture Act.... 100
Section 906. Reference in Securities to Supplemental
Indentures............................ 100
</TABLE>
(vi)
<PAGE>
<TABLE>
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<S> <C>
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal.................. 100
Section 1002. Maintenance of Office or Agency....... 100
Section 1003. Compliance Certificate................ 101
Section 1004. Taxes................................. 102
Section 1005. Limitations on Investments............ 102
Section 1006. Limitations on Restricted Payments.... 102
Section 1007. Limitations on Payment Restrictions
Affecting Restricted Subsidiaries.... 105
Section 1008. Limitations on Indebtedness........... 106
Section 1009. Limitations on Asset Sales............ 106
Section 1010. Limitations on Sale and Leaseback
Transactions......................... 108
Section 1011. Limitations on Transactions With
Affiliates........................... 108
Section 1012. Limitations on Liens.................. 110
Section 1013. Corporate Existence................... 111
Section 1014. Change of Control..................... 112
Section 1015. Maintenance of Properties............. 114
Section 1016. Maintenance of Insurance.............. 115
Section 1017. [Intentionally omitted]............... 115
Section 1018. Money for Security Payments to Be Held
in Trust............................. 115
Section 1019. Subsidiary Guarantees................. 116
Section 1020. Limitation on Issuances and Sales of
Capital Stock of Restricted
Subsidiaries......................... 118
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.................. 118
Section 1102. Applicability of Article.............. 119
Section 1103. Election to Redeem; Notice to Trustee. 119
Section 1104. Selection by Trustee of Securities to
Be Redeemed.......................... 119
Section 1105. Notice of Redemption.................. 120
Section 1106. Deposit of Redemption Price........... 121
Section 1107. Securities Payable on Redemption Date. 121
Section 1108. Securities Redeemed or Purchased in
Part................................. 121
Section 1109. Asset Sale Offers..................... 122
</TABLE>
(vii)
<PAGE>
<TABLE>
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ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of
Indenture............................ 125
Section 1202. Application of Trust Money............ 126
ARTICLE THIRTEEN
GUARANTEE
Section 1301. Guarantors' Guarantee................. 126
Section 1302. Continuing Guarantee; No Right of Set
Off; Independent Obligation.......... 127
Section 1303. Guarantee Absolute.................... 128
Section 1304. Right to Demand Full Performance...... 130
Section 1305. Waivers............................... 130
Section 1306. The Guarantors Remain Obligated in
Event the Company Is No Longer Obligated
to Discharge Indenture Obligations... 131
Section 1307. Fraudulent Conveyance; Subrogation.... 131
Section 1308. Guarantee Is in Addition to Other
Security............................. 132
Section 1309. Contribution.......................... 132
Section 1310. No Bar to Further Actions............. 133
Section 1311. Failure to Exercise Rights Shall Not
Operate as a Waiver.................. 133
Section 1312. Trustee's Duties; Notice to Trustee... 133
Section 1313. Successors and Assigns................ 133
Section 1314. Release of Guarantee.................. 134
Section 1315. Execution of Guarantee................ 134
Section 1316. Payment Permitted by Each of the
Subsidiary Guarantors if No Default.. 134
Section 1317. Notice to Trustee by Each of the
Guarantors........................... 134
Section 1318. Article Applicable to Paying Agents... 135
Section 1319. No Suspension of Remedies............. 135
</TABLE>
EXHIBIT A Transferee Letter of Representation
EXHIBIT B Form of Certificate of Transfer
EXHIBIT C Form of Certificate of Exchange
SCHEDULE 1 Existing Indebtedness
(viii)
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of October 15, 1997
<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 October 15, 1997 among RADNOR HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a
Delaware corporation, SP ACQUISITION CO., a Delaware corporation, STYROCHEM
INTERNATIONAL, INC., a Texas corporation and RADNOR MANAGEMENT, INC., a Delaware
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% Series
B 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.
"144A Global Security" means the global security in the form set forth
in Article Two hereof bearing the Global Security Legend and the Private
Placement Legend, guaranteed by the Guarantors and deposited with and registered
in the name of the Depositary or its nominee that will be issued in a
denomination equal to the outstanding principal amount of the Securities sold in
reliance on Rule 144A.
"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
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<PAGE>
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 shall be deemed to
be control.
"Amended Credit Agreement" means the Amended and Restated Credit and
Security Agreement dated as of December 5, 1996 among the Company, WinCup
Holdings, Inc., SP Acquisition Co., StyroChem International, Inc., StyroChem
Finland Oy, ThermiSol Denmark ApS, ThermiSol Finland Oy, and ThermiSol Sweden
AB, as borrowers and BNY Financial Corporation (successor in interest to the
Bank of New York Commercial Corporation), as agent and lender, and the
supplement thereto, among StyroChem Europe (The Netherlands) B.V., StyroChem
Finland Oy, ThermiSol Denmark ApS, ThermiSol Finland Oy, and ThermiSol Sweden
AB, as borrowers and BNY Financial Ltd. as agent and lender, dated as of October
15, 1997, as amended from time to time.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Security, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"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 hereof), 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
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<PAGE>
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 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 which are Domestic Subsidiaries as of such date, and (b)
60% of the net book value of the inventory owned by the Company and its
Restricted Subsidiaries which are Domestic Subsidiaries as of such date, all
calculated on a consolidated basis and in
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<PAGE>
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.
"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 $500,000,000,
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
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<PAGE>
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 $500,000,000 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 $500,000,000 investing solely in investments permitted by
the foregoing clauses (i), (ii) and (iv).
"Cedel" means Cedel Bank, societe anonyme.
A "Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms 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
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<PAGE>
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.
"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) 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.
-7-
<PAGE>
"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 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).
"Controlled Subsidiary" means a Restricted Subsidiary (i) 80% or more
of the total Equity Interests or other ownership interests of which (other than
directors' qualifying shares or shares required to be held by foreign nationals,
in each case to the extent mandated by applicable law) is at the time owned by
the Company (directly or through one or more Controlled Subsidiaries of the
Company) and (ii) of which the Company
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<PAGE>
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies, whether through the ownership of voting securities,
by agreement or otherwise.
"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.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is not incorporated or organized in any
jurisdiction outside of the United States of America.
"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).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"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.
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<PAGE>
"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.
"Foreign Subsidiary" means, with respect to any Person, any Subsidiary
of such Person other than a Domestic Subsidiary of such Person.
"Foreign Subsidiary 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 Restricted Subsidiaries of the Company which are Foreign Subsidiaries as of
such date, and (b) 60% of the net book value of the inventory owned by the
Restricted Subsidiaries of the Company which are Foreign 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 statements of such Subsidiaries
for purposes of calculating the Foreign Subsidiary Borrowing Base.
"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.
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<PAGE>
"Global Security Legend" means the legend initially set forth on the
Securities in the form set forth in the second paragraph of Section 202 hereof.
"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.
"IAI Global Security" means the global security in the form set forth
in Article Two hereof bearing the Global Security Legend and the Private
Placement Legend, guaranteed by the Guarantors and deposited with or on behalf
of and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the
Security sold to Institutional Accredited Investors.
"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
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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.
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<PAGE>
"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 or which Indebtedness is required to be determined pursuant to the
Indenture. As used herein, Indebtedness with
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<PAGE>
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.
"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.
"Indirect Participation" means a person who holds a beneficial
interest in a Global Security through a Participant.
"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
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<PAGE>
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 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
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<PAGE>
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 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.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Securities for use by such Holders
in connection with the Exchange Offer.
"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
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<PAGE>
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 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.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"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.
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<PAGE>
"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 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,
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<PAGE>
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.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to the Depositary, shall include Euroclear and
Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"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 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
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aggregate principal amount at any one time outstanding not to exceed the
greater of (x) $40,000,000 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) Indebtedness of any Restricted Subsidiary which is a Foreign
Subsidiary in an aggregate principal amount at any one time outstanding not
to exceed the greater of (x) $10,000,000 (or the equivalent amount thereof,
at the time of incurrence, in other foreign currencies) and (y) the Foreign
Subsidiary Borrowing Base at the time such Indebtedness was incurred, or
any refinancing, refunding, deferral, renewal or extension thereof not in
excess of such amount;
(f) 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
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principal amount of such Capitalized Lease Obligations plus such
Indebtedness of the Company and all of the Restricted Subsidiaries does not
exceed $5,000,000 outstanding at any time;
(g) 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);
(h) 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;
(i) 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;
(j) In addition to any Indebtedness otherwise permitted to be
incurred under the provisions of this Indenture, up to $25,000,000
aggregate principal amount of Indebtedness at any one time outstanding; and
(k) Any refinancing, refunding, deferral, renewal or extension (each,
a "Refinancing") of any Indebtedness of the Company or any Restricted
Subsidiary permitted by the
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initial paragraph of this covenant (the "Refinancing Indebtedness");
provided, however, that (x) such Refinancing does not increase the total
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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 (g) of the definition of
"Permitted Indebtedness" in this Section 101, (v) Investments in any Controlled
Subsidiary or any Guarantor, or any Person which, as a result of such
Investment, becomes a Controlled Subsidiary or a Guarantor, and (vi) Investments
that do not at one time outstanding exceed $20,000,000 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 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
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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
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.
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"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.
"Prior Notes" means the 10% Senior Notes Due 2003 of the Company,
issued pursuant to an indenture, dated December 5, 1996, among the Company, the
guarantors thereto and First Union National Bank.
"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.
"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.
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<PAGE>
"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 October 15, 1997, by and among the Company, the
Guarantors and Bear, Stearns & Co. Inc., NatWest Capital Markets Limited and BT
Alex. Brown Incorporated, 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.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Security" means the global security in the form
set forth in Article Two hereof bearing the Global Security Legend and the
Private Placement Legend guaranteed by the Guarantors and deposited with or on
behalf of and registered in the name of the Depository or its nominee, issued in
a denomination equal to the outstanding principal amount of the Securities
initially sold in reliance on Rule 903 of Regulation S.
"Resale Restriction Termination Date" means the date which is two
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 Global Security" means a Global Security bearing the
Private Placement Legend and guaranteed by the Guarantors.
"Restricted Investment" means any Investment other than a Permitted
Investment.
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<PAGE>
"Restricted Period" means the 40-day restricted period, within the
meaning of Regulation S, commencing on the Issue Date.
"Restricted Physical Security" means a Physical Security bearing the
Private Placement Legend and guaranteed by the Guarantors.
"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 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 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated 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
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<PAGE>
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.
"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 Europe Acquisition" means the acquisition by the Company or
Affiliates of the Company of the polystyrene production and conversion
operations of Neste Oy, pursuant to a Sale of Assets Agreement dated as of
September 17, 1997 among the Company, certain of its Foreign Subsidiaries 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
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<PAGE>
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 Global Security" means a permanent global security as
set forth in Article Two hereof attached hereto that bears the Global Security
Legend and that has the "Schedule of Exchanges of Interests in the Global
Security" attached thereto, and that are guaranteed by the Guarantors and is
deposited with or on behalf of and registered in the name of the Depositary,
representing a series of Physical Securities that do not bear the Private
Placement Legend.
"Unrestricted Physical Security" means one or more Physical Securities
that are guaranteed by the Guarantors and do not bear and are not required to
bear the Private Placement Legend.
"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 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.
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<PAGE>
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"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.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary all
of the Capital Stock of which (other than Capital Stock constituting directors'
qualifying shares or shares required to be held by foreign nationals, in each
case to the extent mandated by applicable law) is owned by the Company or one or
more Wholly-Owned Restricted Subsidiaries or by the Company and one or more
Wholly-Owned Restricted Subsidiaries.
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
"Excess Proceeds" 1009
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Defined in
Term Section
---- -----------
<S> <C>
"Funding Guarantor" 1309
"Physical Securities" 201
"Global Securities" 201
"Registration Default" 203
"Required Filing Date" 704
"Refinancing" 101*
"Refinancing Indebtedness" 101*
"Restricted Payment" 1006
</TABLE>
_________________
* See "Permitted Indebtedness", paragraph (k).
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
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<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
-29-
<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
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<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, 19109 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, 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.
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<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.
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<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
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<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, Regulation S or
sold to Institutional Accredited Investors as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act shall be issued initially in
the form of one or more permanent global securities substantially in the form
set forth in this Article (the "Global Securities") deposited with the Trustee,
as custodian for the Depositary, duly executed by
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<PAGE>
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Securities may from 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 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"), OR (C) IT IS A NON-U.S. PERSON THAT IS
OUTSIDE THE UNITED STATES, (2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT
WILL NOT, WITHIN TWO 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), (E) OUTSIDE THE UNITED STATES TO A
PERSON THAT IS NOT A U.S.
-35-
<PAGE>
PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (F) 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
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 TWO 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 SECURITIES LAWS OF ANY
JURISDICTION. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Each 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 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 GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 307 OF THE INDENTURE.
-36-
<PAGE>
Section 203. Form of Face of Securities.
--------------------------
The form of the face of the Securities shall be substantially as
follows:
RADNOR HOLDINGS CORPORATION
___________________
10% SERIES B SENIOR NOTES DUE 2003
CUSIP/CINS 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
December 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
-37-
<PAGE>
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.
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
____________________
/1/ To be included in each Security prior to expiration of the obligations of
the Company and the Guarantors under the Registration Rights Agreement.
-38-
<PAGE>
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 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.
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 _______________________
President
Attest:
______________________________
Secretary
-39-
<PAGE>
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% Series B Senior Notes due 2003 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $60,000,000, which may be issued
under an indenture (herein called the "Indenture") dated as of October 15, 1997,
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 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:
<TABLE>
<CAPTION>
Year Redemption
---- ----------
<S> <C>
2000 105.0000%
2001 102.5000%
2002 and thereafter 100.0000%
</TABLE>
-40-
<PAGE>
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 $21,000,000 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
$39,000,000 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 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.
-41-
<PAGE>
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.
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
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<PAGE>
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 October 15, 1997 (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 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
_____________________
/2/ To be included in each Security prior to expiration of the obligations of
the Company and the Guarantors under the Registration Rights Agreement.
-43-
<PAGE>
________________________________________________________________________________
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.
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.
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: [ ].
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.
-44-
<PAGE>
FIRST UNION NATIONAL BANK
As Trustee
By_________________________________
Authorized Signatory
Section 206. Form of Schedule of Exchanges in the Global Securities.
------------------------------------------------------
Each Global Security, whether or not an Exchange Note, shall also
include the following schedule on the reverse thereof:
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Physical Security, or exchanges of
a part of another Global Security or Physical Security for an interest in this
Global Security, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in of this Global Security Signature of
Principal Amount of Principal Amount of following such decrease authorized officer of
Date of Exchange this Global Security this Global Security (or increase) Trustee or Custodian
- ------------------ --------------------- --------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
</TABLE>
Section 207. 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:
SP ACQUISITION CO.
Attest________________________ By____________________________
Name: Name:
Title: Title:
STYROCHEM INTERNATIONAL, INC.
Attest________________________ By____________________________
Name: Name:
Title: Title:
RADNOR MANAGEMENT, INC.
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 $60,000,000 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% Series B
Senior Notes due 2003" of the Company. The Stated Maturity of the principal
amount of the Securities shall be December 1, 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 December 1, 1997 and semiannually thereafter on June 1 and
December 1, in each year, until the
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<PAGE>
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
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 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 any 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 such 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.
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.
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<PAGE>
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
$60,000,000 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.
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,
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<PAGE>
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, 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
-49-
<PAGE>
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 a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Holder of
such Global Security (or its agent), and that ownership of a 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
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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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Section 306. Book-Entry Provisions for Global Securities.
-------------------------------------------
All provisions of this Section 306 shall be subject to Section 307
hereof.
(a) The Global Securities initially shall (i) be registered in the
name of the Depositary for such 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 Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
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 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 Global Securities shall be limited to transfers
of such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in the
Global Security may be transferred in accordance with the rules and procedures
of the Depositary, the Applicable Procedures and the provisions of Section 307
hereof. Beneficial owners may obtain Physical Securities in exchange for their
beneficial interests in a 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 a Global Security if (i) the Depositary notifies the Company in
writing that it is unwilling or unable to continue as Depositary for the Global
Securities 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) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Securities in the form of Physical
Securities.
(c) In connection with any transfer of a portion of the beneficial
interest in a Global Security to beneficial owners of such Global Security
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
Global Security in an amount equal to the principal amount of the
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beneficial interest in the 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 an entire Global Security to
beneficial owners pursuant to Subsection (b) of this Section, the 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 Global Security, an equal aggregate principal amount of Physical
Securities of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest in a
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 a 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.
---------------------------
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Global
Securities that are held by the Agent Members through Euroclear or Cedel Bank.
(a) 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:
(i) Transfer of Beneficial Interests in the Same Global Security.
------------------------------------------------------------
Beneficial interest in any Restricted Global Security may be transferred to
persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Security in accordance with the transfer
restrictions in the legend set forth in Section 202 hereof; provided,
--------
however, that prior to the expiration of
-------
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the Restricted Period transfers of beneficial interests in the Regulation S
Global Security may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Security may be transferred only to
persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Security. No written orders or instruction shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 307(a)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
------------------------------------------------------------
Global Securities. In connection with all transfers and exchanges of
-----------------
beneficial interests (other than a transfer of a beneficial interest in a
Global Security to a person who takes delivery thereof in the form of a
beneficial interest in the same Global Security), the transferor of such
beneficial interest must deliver to the Registrar either (A)(1) a written
order from a Participant or an Indirect Participant given to the Depositary
in accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Security in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or (B)(1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Physical Security in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the person in whose name
such Physical Security shall be registered to effect the transfer or
exchange referred to in (1) above. Upon an Exchange Offer by the Company
in accordance with Section 307(c) hereof, the requirements of this Section
307(a)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Securities. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Securities contained
in this Indenture and the Securities and otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Security or Securities pursuant to Section 307(f) hereof.
(iii) Transfer of Beneficial Interests in a Restricted Global
-------------------------------------------------------
Security to Another Restricted Global Security. A beneficial interest in
----------------------------------------------
any Restricted Global Security may be
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<PAGE>
transferred to a person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Security if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Security, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (i) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Security, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Security, then the transferor
must deliver (x) a certificate in the form of Exhibit B hereto,
including the certifications and certificates and an Opinion of
Counsel required by item (3) thereof, if applicable and (y) a
certificate from the transferee in the form of Exhibit A hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
-------------------------------------------------------------
Global Security for Beneficial Interests in the Unrestricted Global
-------------------------------------------------------------------
Security. A beneficial interest in any Restricted Global Security may be
--------
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Security or transferred to a person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Security if the exchange or transfer complies with the requirements of
clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a person participating in the distribution of the
Exchange Notes or (3) a person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange
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<PAGE>
Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposed to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global Security,
a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a person who shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Security, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and such beneficial
interest in a Restricted Global Security is being exchanged or
transferred in compliance with any applicable blue sky securities laws
of any State of the United States.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 303 hereof, the Trustee shall authenticate
one or more Unrestricted Global Securities in an aggregate principal amount
equal to the principal amount of beneficial interests transferred pursuant
to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Security cannot be
exchanged for, or transferred to persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Security.
(b) Transfer or Exchange of Beneficial Interests for Physical
Securities.
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<PAGE>
(i) If any holder of a beneficial interest in a Restricted Global
Security proposes to exchange such beneficial interest for a Physical
Security or to transfer such beneficial interest to a person who takes
delivery thereof in the form of a Physical Security, then, upon receipt by
the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Security proposes to exchange such beneficial interest for a
Physical Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable, and a certificate from the transferee to the effect set
forth in Exhibit A hereto;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
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(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 307(f)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the person designated in the instructions a Physical
Security in the appropriate principal amount. Any Physical Security issued
in exchange for a beneficial interest in a Restricted Global Security
pursuant to this Section 307(b)(i) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Physical Securities to the persons in whose
names such Securities are so registered. Any Physical Security issued in
exchange for a beneficial interest in a Registered Global Security pursuant
to this Section 307(b)(i) shall bear the Private Placement Legend and shall
be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding 307(b)(i) hereof, a holder of a beneficial
interest in a Restricted Global Security may exchange such beneficial
interest for an Unrestricted Physical Security or may transfer such
beneficial interest to a person who takes delivery thereof in the form of
an Unrestricted Physical Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a person participating in the distribution of the
Exchange Notes or (3) a person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a Physical Security that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a person who shall take delivery thereof in the form of a
Physical Security that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company, to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and such beneficial
interest in a Restricted Global Security is being exchanged or
transferred in compliance with any applicable blue sky securities laws
of any State of the United States.
(iii) If any holder of a beneficial interest in an Unrestricted
Global Security proposes to exchange such beneficial interest for a
Physical Security or to transfer such beneficial interest to a person who
takes delivery thereof in the form of a Physical Security, then upon
satisfaction of the conditions set forth in Section 307(a)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Security to be reduced accordingly pursuant to Section 307(g) hereof, and
the Company shall execute and the Trustee shall authenticate and deliver to
the person designated in the instructions a Physical Security in the
appropriate principal amount. Any Physical Security issued in exchange for
a beneficial interest pursuant to this Section 307(b)(ii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Physical Securities
to the persons in whose names such Securities are so registered. Any
Physical Security issued
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in exchange for a beneficial interest pursuant to this Section 307(b)(ii)
shall not bear the Private Placement Legend. A beneficial interest in an
Unrestricted Global Security cannot be exchanged for a Physical Security
bearing the Private Placement Legend or transferred to a person who takes
delivery thereof in the form of a Physical Security bearing the Private
Placement Legend.
(c) Transfer and Exchange of Physical Securities for Beneficial
-----------------------------------------------------------
Interests.
---------
(i) If any Holder of a Restricted Physical Security proposes to
exchange such Security for a beneficial interest in a Restricted Global
Security or to transfer such Physical Securities to a person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Security, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Physical Security proposes
to exchange such Security for a beneficial interest in a Restricted
Global Security, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof;
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such Physical Security is being transferred to a Non-U.S.
person in an offshore transaction in accordance with Rule 903 or Rule
904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Physical Security is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such Physical Security is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a
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certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable and a certificate from the transferee to
the effect set forth in Exhibit A hereto;
(F) if such Physical Security is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such Physical Security is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Physical Security, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Security, in the case of clause
(B) above, the 144A Global Security, in the case of clause (C) above, the
Regulation S Global Security, in the case of clause (D) above, the
appropriate Restricted Global Security, in the case of clause (E) above,
the IAI Global Security, in the case of clause (F) above,the Trustee shall
cancel the Physical security without a corresponding increase in any Global
Security and, in the case of clause (G) above, the Unrestricted Global
Security.
(ii) A Holder of a Restricted Physical Security may exchange such
Security for a beneficial interest in an Unrestricted Global Security or
transfer such Restricted Physical Security to a person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registrations Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a person
participating in the distribution of the Exchange Notes or (3) a
person who is a affiliate (as defined in Rule 144) or the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Physical Securities proposes to
exchange such Securities for a beneficial interest in the Unrestricted
Global Security, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(c) thereof;
(2) if the Holder of such Physical Securities proposes to
transfer such Securities to a person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Security, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Physical Securities are
being exchanged or transferred in compliance with any applicable blue
sky securities laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 307(c)(ii), the Trustee shall cancel the Physical Securities and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Security.
(iii) A Holder of an Unrestricted Physical Security may exchange such
Security for a beneficial interest in an Unrestricted Global Security or
transfer such Physical Securities to a person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Security at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Physical Security and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Securities.
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If any such exchange or transfer from a Physical Security to a
beneficial interest in a Global Security is effected pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Security
has not yet been issued, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 303 hereof, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(d) Transfer and Exchange of Physical Securities for Physical
---------------------------------------------------------
Securities. Upon request by a Holder of Physical Securities and such Holder's
- ----------
compliance with the provisions of this Section 307(d), the Registrar shall
register the transfer of exchange of Physical Securities. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Physical Securities duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, pursuant to the provisions of this
Section 307(d).
(i) Restricted Physical Securities may be transferred to and
registered in the name of persons who take delivery thereof if the
Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B
hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable; and
(D) if the transfer is being made to an Institutional Accredited
Investor and effected pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144,
Rule
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903 or Rule 904 under the Securities Act, a certificate from the
transferee in the form of Exhibit A hereto.
(ii) Any Restricted Physical Security may be exchanged by the Holder
thereof for an Unrestricted Physical Security or transferred to a person or
persons who take delivery thereof in the form of an Unrestricted Physical
Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a person
participating in the distribution of the Exchange Notes or (3) a
person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Physical Securities
proposes to exchange such Securities for an Unrestricted Physical
Security, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the Holder of such Restricted Physical Securities
proposes to transfer such Securities to a person who shall take
delivery thereof in the form of an Unrestricted Physical Security, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Restricted Physical
Security is being exchanged or transferred in
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compliance with any applicable blue sky securities laws of any State
of the United States.
(iii) A Holder of Unrestricted Physical Securities may transfer such
Securities to a person who takes delivery thereof in the form of an
Unrestricted Physical Security. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Physical Securities
pursuant to the instructions from the Holder thereof. Unrestricted
Physical Securities cannot be exchanged for or transferred to persons who
take delivery thereof in the form of a Restricted Physical Security.
(e) Exchange Offer. Upon the occurrence of the Exchange Offer in
--------------
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 303 hereof,
the Trustee shall authenticate (i) one or more Unrestricted Global Securities in
an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Securities tendered for acceptance by persons
that are not (x) broker-dealers, (y) persons participating in the distribution
of the Exchange Notes or (z) persons who are affiliates (as defined in Rule 144)
of the Company and accepted for exchange in the Exchange Offer and (ii) Physical
Securities in an aggregate principal amount equal to the principal amount of the
Restricted Physical Securities accepted for exchange in the Exchange Offer.
Concurrent with the issuance of such Securities, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Securities to be
reduced accordingly, and the Company and the Guarantors shall execute and the
Trustee shall authenticate and deliver to the persons designated by the Holders
of Physical Securities so accepted Physical Securities in the appropriate
principal amount.
(f) Cancellation and/or Adjustment of Global Securities. At such
---------------------------------------------------
times as all beneficial interests in a particular Global Security have been
exchanged for Physical Securities or a particular Global Security has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Security shall be returned to or retained and canceled by the Trustee in
accordance with Section 311 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for or transferred to
a person who will take delivery thereof in the form of a beneficial interest in
another Global Security or for Physical Securities, the principal amount of
Securities represented by such Global Security shall be reduced accordingly and
an endorsement shall be made on such Global Security, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such reduction; and if
the beneficial interest is being exchanged for or transferred to a person who
will take delivery thereof in the form of a
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beneficial interest in another Global Security, such other Global Security shall
be increased accordingly and an endorsement shall be made on such Global
Security, by the Trustee or by the Depositary at the direction of the Trustee,
to reflect such increase.
(g) 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 requested transfer is on or after the Resale
Restriction Termination Date 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.
(h) 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 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
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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.
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
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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 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
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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.
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.
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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" or CINS
number(s), as applicable, and, the Trustee shall use the CUSIP or CINS 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 or CINS 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.
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,
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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 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
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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
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
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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(10) or
(11) 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.
(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
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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.
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.
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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 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.
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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 Article Eight hereof;
(4) 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 or 1020 hereof and such failure continues for the
period and after the notice specified below;
(5) 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;
(6) the Company denies or disaffirms its obligations under this
Indenture or the Securities;
(7) 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;
(8) 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
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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;
(9) 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;
(10) 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
(11) 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,
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(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 clauses (4) or (5) 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 (i) in the case of
a Default under clause (4), thirty (30) days after receipt of such notice and
(ii) in the case of clause (5), 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 (10) and (11) 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 (10) or (11) 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 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,
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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 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
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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 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.
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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 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.
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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 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
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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 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
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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;
(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
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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 duties hereunder, or in the exercise of any
of its rights or powers.
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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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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(10) or 501(11) 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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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 hereof (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)
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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 shall be a
corporation duly organized and validly existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of
the United States of America, any state thereof or the District of Columbia
or under the laws of any jurisdiction within the European Union 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, the Indenture and the
Guarantee provided by such Guarantor; 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
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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 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;
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(ix) to comply with any requirement of the Commission or applicable
law to effectuate the Exchange Offer; or
(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
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in the case of the failure to make a Change of Control Offer, two-thirds)
in aggregate principal amount of the 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.
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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 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
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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
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.
----------------------
(a) 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).
(b) 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
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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 indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) 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
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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 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)
$15,000,000.
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
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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 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; and (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
$1,000,000 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.
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 hereof, 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 Guarantor 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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(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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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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exceeds $1,000,000, 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 $5,000,000, 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 $1,000,000 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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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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(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 $5,000,000;
(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 incurred under clause (d) of
the definition of "Permitted Indebtedness" in Section 101 hereof;
(j) Liens on assets or properties of Restricted Subsidiaries that are
Foreign Subsidiaries securing the obligations incurred under clause (e) of
the definition of "Permitted Indebtedness" in Section 101 hereof; and
(k) 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.
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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 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
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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 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
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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 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
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desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole.
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;
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(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the 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 Domestic 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,
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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 Domestic 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 any Senior Indebtedness of the Company, or (iv) any
Foreign 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 and is not a Guarantor (x) directly or indirectly guarantees
any Senior Indebtedness of the Company (other than the Prior Notes) or (y)
causes more than two-thirds of its Capital Stock to be pledged to secure 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.
The Company may, at its option, cause any Subsidiary of the Company which is a
Foreign Subsidiary to execute and deliver a Guarantee in accordance with the
provisions of Article XIII of this Indenture.
(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 (i) any sale, exchange, transfer or other disposition (by way of merger,
consolidation or otherwise), to any Person (provided, that if such Person is a
--------
Guarantor, the Guarantee of such Person shall not also be released and
discharged) of all of the Equity Interests of any Guarantor, or all or
substantially all of the assets of any Guarantor, which is in compliance with
this Indenture, or (ii) the designation by the Company of any Guarantor to be an
Unrestricted Subsidiary in accordance with the Indenture, or (iii) the release
of the guarantee or other obligation of any Guarantor with respect to any other
Senior Indebtedness of the Company which caused such Guarantor to guarantee the
Company's obligations under this Indenture and the Securities in accordance with
clause (iii) or (iv) of paragraph (a) of this section.
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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 or
shares to be held by foreign nationals, in each case to the extent mandated by
applicable law ) to any Person other than to the Company or a Wholly-Owned
Restricted Subsidiary.
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:
Year Redemption
---- ----------
2000 105.0000%
2001 102.5000%
2002 and thereafter 100.0000%
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 $21,000,000 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 $39,000,000 in aggregate principal amount of the Securities must remain
outstanding after such redemption.
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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.
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.
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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;
(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
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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 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
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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 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;
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(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;
(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
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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 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.
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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 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
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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.
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).
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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 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
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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 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,
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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;
(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;
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(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.
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
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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;
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
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or fraudulent transfer or similar laws affecting the rights of creditors
generally.
(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 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.
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<PAGE>
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 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.
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<PAGE>
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.
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
-134-
<PAGE>
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 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.
-135-
<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/ R. Radcliffe Hastings By /s/ Michael T. Kennedy
--------------------------- --------------------------
Name: R. Radcliffe Hastings Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
WINCUP HOLDINGS, INC.
Attest /s/ R. Radcliffe Hastings By /s/ Michael T. Kennedy
--------------------------- --------------------------
Name: R. Radcliffe Hastings Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
SP ACQUISITION CO.
Attest /s/ R. Radcliffe Hastings By /s/ Michael T. Kennedy
--------------------------- --------------------------
Name: R. Radcliffe Hastings Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
STYROCHEM INTERNATIONAL, INC.
Attest /s/ R. Radcliffe Hastings By /s/ Michael T. Kennedy
--------------------------- --------------------------
Name: R. Radcliffe Hastings Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
RADNOR MANAGEMENT, INC.
Attest /s/ R. Radcliffe Hastings By /s/ Michael T. Kennedy
--------------------------- --------------------------
Name: R. Radcliffe Hastings Name: Michael T. Kennedy
Title: Assistant Secretary Title: President
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: Vice President Title: AVP
-136-
<PAGE>
EXHIBIT A
---------
TRANSFEREE LETTER OF REPRESENTATION
Radnor Holdings Corporation
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
First Union National Bank
Broad & Walnut Streets
PA 1249
Philadelphia, PA 19109
Ladies and Gentlemen:
In connection with our proposed purchase of $________ aggregate
principal amount of 10% Series B 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
A-1
<PAGE>
Securities Act that is purchasing for his own account or for the account of
such an institutional "accredited investor," 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 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 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 CERTIFICATE OF TRANSFER
Radnor Holdings Corporation
Three Radnor Corporate Center
Suite 300
Radnor, Pennsylvania 19087
[Registrar address block]
Re: 10% Series B Senior Notes due 2003
Reference is hereby made to the Indenture, dated as of October 15,
1997 (the "Indenture"), between Radnor Holdings Corporation, as issuer (the
---------
"Company"), the guarantors thereof and First Union National Bank, as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
___________, (the "Transferor") owns and proposes to transfer the
----------
Security [Securities] or interest in such Security [Securities] in the principal
amount of $__________ in such Security [Securities] or interests (the
"Transfer"), to ___________ (the "Transferee"), as further specified in Annex A
-------- ----------
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL SECURITY OR A PHYSICAL SECURITY PURSUANT TO RULE 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
--------------
accordingly, the Transferor hereby further certifies that the beneficial
interest or Physical Security is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Physical Security for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Physical Security will be subject to the restrictions on transfer enumerated
in the Private Placement
B-1
<PAGE>
Legend printed on the 144A Global Security and/or the Physical Security and in
the Indenture and the Securities Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
REGULATION S GLOBAL SECURITY OR A PHYSICAL SECURITY PURSUANT TO REGULATION S.
The Offer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Physical Security will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Security and/or the Physical Security and in the
Indenture and the Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL SECURITY OR A PHYSICAL SECURITY PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Securities and
Restricted Physical Securities and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a subsidiary
thereof;
B-2
<PAGE>
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the
Transferor hereby further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Security
or Restricted Physical Securities and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the Transferee
in the form of Exhibit A to the Indenture and (2) if such Transfer is in respect
of a principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Physical Security will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Security and/or the Physical Securities and in the Indenture and the Securities
Act.
4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL SECURITY OR OF AN UNRESTRICTED PHYSICAL SECURITY.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Physical
Security will no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Securities, on
Restricted Physical Securities and in the Indenture.
B-3
<PAGE>
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws or any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Physical Security will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Securities, on Restricted Physical Securities and in the Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144A, Rule
144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Physical Security will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Securities or Restricted Physical Securities and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________
[Insert Name of Transferor]
By:___________________________
Name:
Title:
Dated:___________________________
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Security (CUSIP____________________), or
(ii) [_] Regulation S Global Security (CINS_________________),
or
(iii) [_] IAI Global Security (CUSIP__________________); or
(b) [_] a Restricted Physical Security.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Security (CUSIP_________________), or
(ii) [_] Regulation S Global Security (CINS ______________), or
(iii) [_] IAI Global Security (CUSIP _______________); or
(iv) [_] Unrestricted Global Security (CUSIP _______________);
or
(b) [_] a Restricted Physical Security; or
(c) [_] an Unrestricted Physical Security, in accordance with the terms
of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Radnor Holdings Corporation
Three Radnor Corporate Center
Suite 300
Radnor, Pennsylvania 19087
[Registrar address block]
Re: 10% Series A Senior Notes due 2003
(CUSIP __________)
Reference is hereby made to the Indenture, dated as of October 15,
1997 (the "Indenture"), between Radnor Holdings Corporation, as issuer (the
---------
"Company"), the guarantors thereof and First Union National Bank, as trustee.
- --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
__________, (the "Owner") owns and proposed to exchange the Security
-----
[Securities] or interest in such Security [Securities] specified herein, in the
principal amount of $ __________ in such Security [Securities] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:
--------
1. EXCHANGE OF RESTRICTED PHYSICAL SECURITIES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL SECURITY FOR UNRESTRICTED PHYSICAL SECURITIES OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL SECURITY.
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
SECURITY. In connection with the Exchange of the Owner's beneficial
interest in a Restricted Global Security for a beneficial interest in an
Unrestricted Global Security in an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global
Securities and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
--------------
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and
C-1
<PAGE>
(iv) the beneficial interest in an Unrestricted Global Security is being
acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO UNRESTRICTED PHYSICAL SECURITY. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Security for an Unrestricted Physical Security, the Owner hereby certifies
(i) the Physical Security is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with
the transfer restrictions applicable to the Restricted Global Securities
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Physical Security is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITY TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL SECURITY. In connection with
the Owner's Exchange of a Restricted Physical Security for a beneficial
interest in an Unrestricted Global Security, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with
the transfer restrictions applicable to Restricted Physical Securities and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITY TO
UNRESTRICTED PHYSICAL SECURITY. In connection with the Owner's Exchange of
Restricted Physical Security for an Unrestricted Physical Security, the
Owner hereby certifies (i) the Unrestricted Physical Security is being
acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable
to Restricted Physical Securities and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Physical Security is being
C-2
<PAGE>
acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
2. EXCHANGE OF RESTRICTED PHYSICAL SECURITIES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL SECURITIES FOR RESTRICTED PHYSICAL SECURITIES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL SECURITIES.
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO RESTRICTED PHYSICAL SECURITY. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Security for a Restricted Physical Security with an equal principal amount,
the Owner hereby certifies that the Restricted Physical Security is being
acquired for the Owner's own account without transfer. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
Restricted Physical Security issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Physical Security and in the Indenture and the Securities
Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITY TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL SECURITY. In connection with
the Exchange of the Owner's Restricted Physical Security for a beneficial
interest in the [CHECK ONE] 144A Global Security, Regulation S
Global Security, IAI Global Security with an equal principal amount,
the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
the Restricted Global Securities and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the relevant Restricted Global
Security and in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
______________________________
[Insert Name of Owner]
By: _________________________
Name:
Title:
Dated: ____________
C-4
<PAGE>
SCHEDULE 1
----------
EXISTING INDEBTEDNESS
None.
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
_________________________________________________________________
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of October 15, 1997
Between
RADNOR HOLDINGS CORPORATION
WINCUP HOLDINGS, INC.
SP ACQUISITION CO.
RADNOR MANAGEMENT, INC.
and
STYROCHEM INTERNATIONAL, INC.
as Issuers
and
BEAR, STEARNS & CO. INC.
NATWEST CAPITAL MARKETS LIMITED
and
BT ALEX. BROWN INCORPORATED
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 October 15, 1997 between Radnor Holdings Corporation, a Delaware
corporation (the "Company"), WinCup Holdings, Inc., a Delaware corporation, SP
-------
Acquisition Co., a Delaware corporation, Radnor Management, Inc., a Delaware
corporation, and StyroChem International, Inc., a Texas corporation
(collectively, the "Guarantors" and together with the Company, the "Issuers")
---------- -------
and Bear, Stearns & Co. Inc., NatWest Capital Markets Limited and BT Alex. Brown
Incorporated (together, the "Initial Purchasers").
------------------
This Agreement is entered into in connection with the Purchase
Agreement, dated October 1, 1997, 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 $60,000,000 aggregate principal amount of
the Company's 10% Series B 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 Registrable
------
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 October 15, 1997 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.
----
2
<PAGE>
Notes: See the second introductory paragraph hereto.
-----
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
3
<PAGE>
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.
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.
---------------------------------------
4
<PAGE>
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 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
5
<PAGE>
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 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 market-making 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,
6
<PAGE>
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 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,
7
<PAGE>
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 be effected without registration under
the Securities Act. The Private Exchange Securities shall bear the same CUSIP
number or CINS 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.
8
<PAGE>
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
(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
9
<PAGE>
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 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 24 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
10
<PAGE>
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 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
11
<PAGE>
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 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.
12
<PAGE>
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;
(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
13
<PAGE>
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.
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.
14
<PAGE>
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 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, 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
15
<PAGE>
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 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
16
<PAGE>
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 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
17
<PAGE>
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.
(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
18
<PAGE>
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 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
19
<PAGE>
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.
(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 and a CINS 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
20
<PAGE>
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 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
21
<PAGE>
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 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
22
<PAGE>
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 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,
23
<PAGE>
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 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
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
24
<PAGE>
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
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)),
25
<PAGE>
(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.
(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, its officers, authorized
representatives and directors (such officers, authorized representatives and
directors of a Holder of Registrable Securities being referred to in this
Section 7(a) as "affiliated persons") and each person, if any, who controls a
------------------
Holder of Registrable Securities within the meanings of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including but not limited to, and
subject to Section 7(c) below, reasonable attorneys' fees and any and all
expenses reasonably incurred in investigating, preparing or defending against
any investigation or litigation commenced or threatened, or any claim
26
<PAGE>
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) ("Losses"), joint or several, to which a Holder of Registrable
------
Securities 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 Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented
if the Issuers shall have furnished any amendments or supplements thereto), or
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 case of any
Prospectus, in the light of the circumstances under which they were made) not
misleading, 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
made therein in reliance upon and in conformity with information relating to a
Holder of Registrable Securities made in the Registration Statement or
Prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Holder of Registrable
Securities expressly for use therein; provided, further, that the indemnity
-------- -------
obligations arising under this Section 7(a) with respect to the Registration
Statement or Prospectus shall not inure to a Holder's benefit or that of any
such controlling or affiliated person if the person asserting any such Losses
purchased the Securities from such Holder of Registrable Securities and if a
copy (provided that the Issuers have complied with their obligations under
Section 5 hereof) of the Prospectus was not sent or given by such Holder or on
such Holder's behalf to such person at or prior to the written confirmation of
the sale of the Securities to such person, and if the Prospectus would have
cured the untrue statement or omission giving rise to such Losses.
The indemnity agreement in this Section 7(a) shall be in addition to any
liability which any of the Issuers may otherwise have.
(b) Each Holder of Registrable Securities, severally and not jointly,
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 7(b) as "affiliated
----------
persons") and each person, if any, who controls any of the Issuers within the
- -------
meanings 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 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
27
<PAGE>
Registration Statement (or any amendment thereto) or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
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 case of any Prospectus, 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 the Registration Statement
or the Prospectus or such amendment or supplement in reliance upon and in
conformity with written information relating to a Holder of Registrable
Securities furnished to the Issuers by such Holder of Registrable Securities
expressly for use therein, provided, however, that in no case shall any Holder
-------- -------
of Registrable Securities be liable or responsible for any amount in excess of
the discounts received by such Holder of Registrable Securities.
The indemnity agreement in this Section 7(b) shall be in addition to any
liability which any of the Issuers may otherwise have.
(c) Promptly after receipt by an indemnified party under Section 7(a)
or 7(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 indemnified party under Section 7(a) or 7(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 7(a) or 7(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
28
<PAGE>
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 Bear, Stearns & Co. Inc. in the case of parties
indemnified pursuant to Section 7(a) and by Radnor Holdings Corporation in the
case of parties indemnified pursuant to Section 7(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 Holder of Registrable Securities, its officers, authorized
representatives and directors and each person, if any, who controls a Holder of
Registrable Securities 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 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 7 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 (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 (or actions in respect
thereof), 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
29
<PAGE>
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, (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 a Holder of Registrable Securities 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 but before deducting expenses) received by the Issuers bears
to the total proceeds received by a Holder of Registrable Securities from the
sale thereof. 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
a Holder of Registrable Securities, 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 Issuers and a Holder of Registrable Securities were each 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 party as a
result of the Losses (or actions in respect thereof), referred to in this
Section 7 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 7, in no event shall a Holder of
Registrable Securities be required to contribute any amount in excess of the
Holder of Registrable Securities' discounts applicable to the Securities. 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.
(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
such contributing party from any liability which it may have to any other party
for contribution under the Securities Act, the Exchange Act or
30
<PAGE>
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.
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
-------------
31
<PAGE>
(a) Remedies. The Issuers agree that monetary damages (including the
--------
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. 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 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.
(c) 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.
(d) 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.
32
<PAGE>
(e) 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:
Bear, Stearns & Co. Inc.
NatWest Capital Markets Limited
BT Alex. Brown Incorporated
c/o Bear, Stearns & Co. Inc.
245 Park Avenue, 20th floor
New York, NY 10167
Facsimile No.: (212) 272-3092
Attention: Corporate Finance 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
33
<PAGE>
(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.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the parties
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.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE
34
<PAGE>
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) 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.
(k) 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.
(l) 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.
(m) 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
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.
(n) 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]
35
<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
SP ACQUISITION CO.
By: /s/ Michael T. Kennedy
-----------------------------
Name: Michael T. Kennedy
Title: President
RADNOR MANAGEMENT, INC.
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
36
<PAGE>
BEAR, STEARNS & CO. INC.
By: /s/ J. Andrew Bugas
-----------------------------
Name: J. Andrew Bugas
Title: Senior Managing Director
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Neil Coulbeck
-----------------------------
Name: Neil Coulbeck
Title: Director
BT ALEX. BROWN INCORPORATED
By: /s/ A. Penn
-----------------------------
Name: A. Penn
Title: Principal
37
<PAGE>
EXHIBIT 4.3
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM., PHILADELPHIA TIME ON ,
1998 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
Radnor, PA 19087
LETTER OF TRANSMITTAL
To Exchange 10% Series B Senior Notes due 2003
Exchange Agent:
FIRST UNION NATIONAL BANK
To: First Union National Bank
Facsimile Transmission
(704) 590-7628
Confirm by telephone to:
(704) 590-7408
By Mail/Hand Delivery/Overnight Delivery
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, NC 28262
Attention: Michael Klotz
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
<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 the schedule to
this Letter.
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT OF OLD NOTES
(PLEASE FILL IN IF BLANK) NUMBER(S)(1) OF OLD NOTES TENDERED(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Totals:
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Need not be completed if Old Notes are being tendered by book-entry
transfer.
(b) Unless otherwise indicated, the entire principal amount of Old Notes
represented by a certificate or a 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 Company 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 Company 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 Company) 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 Company 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 Company 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 Company 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 Company 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
Company 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 Company and the
Guarantors of their obligations under the Registration Rights Agreements (as
defined in the Prospectus) and that, upon the issuance of the New Notes, the
Company 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 Company or
any Guarantor, that it is not a broker-dealer that owns Old Notes acquired
directly from the Company or an affiliate of the Company, that it is acquiring
the New Notes offered hereby in the ordinary course of the undersigned's
business and that at the time of the consummation of the Exchange Offer 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
Company or of the Initial Purchasers 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; (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; or (d) that if it is not a broker-dealer, it is not engaged in and does
not intend to engage in a distribution of New Notes.
The undersigned acknowledges that, if it is a broker-dealer, the Old Notes
were acquired for its own account as a result of market-making activities or
other trading activities, and will deliver a prospectus in connection with any
resale of New Notes received in respect of such Old Notes pursuant to the
Exchange Offer. 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 Company 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.
3
<PAGE>
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.
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 OWNERS(S) OR AUTHORIZED SIGNATORY)
Date: _____________, 1998
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: _____________, 1998
5
<PAGE>
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME: FIRST UNION NATIONAL BANK
- --------------------------------------------------------------------------------
PART 1 Social Security Number
or Employer
PLEASE PROVIDE YOUR TIN IN Identification Number
THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND ______________________
SUBSTITUTE DATING BELOW
FORM W-9 ---------------------------------------------------------
DEPARTMENT OF PART 2 [_]
THE TREASURY,
INTERNAL REVENUE Check the box if you are NOT subject to back-up
SERVICE withholding under the provisions of Section
2406(a)(1)(C) of the Internal Revenue Code because
PAYOR'S REQUEST FOR (1) you have not been notified that you are subject
TAXPAYER to back-up withholding as result of failure to report
IDENTIFICATION all interest or dividends or (2) the Internal Revenue
NUMBER (TIN) Service has notified you that you are no 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 ISSUANCE 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 that are Box 1.
not accepted for exchange are to
be returned by credit to an ac- Deliver:
count maintained in the Book-En- (check appropriate boxes)
try Transfer Facility other than
the account indicated above. [_] 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 Num-
ber:
Please complete the substitute
Form W-9 at Box 3 __________________________________
Tax I.D. or Social Security Num-
ber:
__________________________________
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 Company and duly executed
by the registered holder and the signature on the endorsement or instrument of
transfer must be guaranteed 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 (each an "Eligible
Institution"). 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.
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 properly completed and duly executed Notice of Guaranteed Delivery (by
mail, telegram, facsimile transmission or hand delivery 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 Notice of Guaranteed Delivery 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 Company 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
8
<PAGE>
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 Company in its reasonable judgment, whose determination will be final
and binding. The Company reserves the right in its reasonable judgment to
reject any or all tenders that are not in proper form or the acceptance of
which, in the opinion of the Company's counsel, would be unlawful. The Company
also reserves the right in its reasonable judgment 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 Company'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 Company, 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).
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 Company 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 Company 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 Company, in its reasonable judgment, 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.
9
<PAGE>
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 Company of their authority to so act must be submitted, unless waived by
the Company before the Expiration Date.
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
Company, in its reasonable judgment, 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 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. U.S. 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 U.S. federal income tax laws, payments that may be made by the Company
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.
10
<PAGE>
6. TRANSFER TAXES. The Company 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 Company 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 Company reserves the right in its reasonable
judgment 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 DEEMED 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
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the
account or, if joint funds,
either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor
is the only contributor, the
minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent person(3)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under State law
8. Sole proprietorship account The owner(4)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust The legal entity (Do not
furnish the 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, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other tax-exempt The organization
organization
14. A broker or registered agent The broker or nominee
15. Account with the Department of The public entity
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>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-
4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from back up withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852). Payments described in section 6049(b)(5) to non-resident
aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires more recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payors must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1998, payors must generally
withhold 31% of taxable interest, dividend and certain other payments to a
payee who does not furnish a taxpayer identification number to a payor.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payor, you are subject to
a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
13
<PAGE>
EXHIBIT 4.4
RADNOR HOLDINGS CORPORATION
NOTICE OF GUARANTEED DELIVERY
OF 10% SERIES B SENIOR NOTES
DUE 2003
As set forth in the Prospectus dated , 1998 (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--
Guaranteed Delivery Procedures" and in the Letter of Transmittal for 10%
Series B 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")
Facsimile Transmission
(704) 590-7628
Confirm by telephone to:
(704) 590-7408
By Mail/Hand Delivery/Overnight Delivery
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, NC 28262
Attention: Michael Klotz
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.
<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 , 1998, 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.
SIGNATURES Principal amount of Old Notes
___________________________________ Exchanged: $ ________________________
SIGNATURE OF OWNER
Certificate Nos. of Old Notes (if
___________________________________ available)
SIGNATURE OF OWNER (IF MORE THAN
ONE) _____________________________________
Dated: _____________________ , 199_ _____________________________________
Name(s): __________________________ Total: $ ____________________________
_____________________________ IF OLD NOTES WILL BE DELIVERED BY
(PLEASE PRINT) BOOK-ENTRY TRANSFER, PROVIDE THE
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 three 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 4.5
RADNOR HOLDINGS CORPORATION
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
10% SERIES B SENIOR NOTES DUE 2003
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 10% SERIES B 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 , 1998 (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 $60,000,000 in aggregate principal amount of its 10% Series B
Senior Notes due 2003 (the "New Notes") for up to $60,000,000 in aggregate
principal amount of its outstanding 10% Series B 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").
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 , 1998 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 $60,000,000 aggregate principal amount of the Old
Notes was outstanding as of , 1998. 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 transferable 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.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
Philadelphia time, on , 1998 unless extended.
<PAGE>
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
$ *
-------------------------------------
*1 (we) understand that if I (we) -------------------------------------
sign these instruction forms without Signature(s)
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. (Please Print name(s) and address
above)
Dated: __________________, 1998
-------------------------------------
(Area Code & Telephone Number)
-------------------------------------
(Taxpayer Identification or
Social Security Number)
2
<PAGE>
EXHIBIT 4.6
RADNOR HOLDINGS CORPORATION
OFFER TO EXCHANGE
$1,000 IN PRINCIPAL AMOUNT OF
10% SERIES B SENIOR NOTES DUE 2003
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF
OUTSTANDING 10% SERIES B 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 , 1998 (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 $60,000,000 in aggregate principal amount of its 10% Series B
Senior Notes due 2003 (the "New Notes") for up to $60,000,000 in aggregate
principal amount of its outstanding 10% Series B 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. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 (included in the
Letter of Transmittal);
4. 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;
5. A Notice of Guaranteed Delivery; and
6. A return envelope addressed to First Union National Bank, the Exchange
Agent.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., Philadelphia time, on , 1998 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.
<PAGE>
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 (704) 590-7408.
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 10.33
INDUSTRIAL BUILDING LEASE
LANDLORD:
CENTERPOINT PROPERTIES CORPORATION,
a Maryland corporation
TENANT:
WINCUP HOLDINGS, L.P.,
a Delaware limited partnership
Property Address:
1250 Carolina Drive
West Chicago, Illinois
<PAGE>
Property Address:
1250 Carolina Drive
West Chicago, Illinois
INDUSTRIAL BUILDING LEASE
-------------------------
THIS LEASE is made as of this _______ day of May, 1996 between
CENTERPOINT PROPERTIES CORPORATION, a Maryland corporation ("Landlord"), and
WINCUP HOLDINGS, L.P., a Delaware limited partnership ("Tenant").
ARTICLE I
---------
LEASE TERMS
-----------
SECTION 1.1 DEFINITIONS. In addition to the other terms, which are
-----------
elsewhere defined in this Lease, the following terms and phrases, whenever used
in this Lease shall have the meanings set forth in this Section 1.1, and only
such meanings, unless such meanings are expressly contradicted, limited or
expanded elsewhere herein.
A. SECURITY DEPOSIT: One monthly Base Rent payment.
B. TENANT'S PROPORTION: 59.70%
C. INITIAL MONTHLY RENT ADJUSTMENT DEPOSIT: $7,615.00
(i) Initial Tax Deposit: $5,675.00
(ii) Initial Expense Deposit: $1,940.00
D. INITIAL TERM: The initial four (4) year term,
commencing as of the Commencement Date.
E. COMMENCEMENT DATE: May 1, 1996.
F. TERMINATION DATE: April 30, 2000.
G. TERM: The Initial Term as same may be extended or
sooner terminated.
H. USE: Warehouse, storage, converting, printing,
distribution of paper and plastic products and
ancillary office use.
I. LANDLORD'S MAILING ADDRESS:
401 North Michigan Avenue
Chicago, Illinois 60611
Attn: Robert L. Stovall
J. TENANT'S MAILING ADDRESS:
7980 West Buckeye Road
Phoenix, Arizona 85043
Attn: Mr. Donald C. Rogalski
<PAGE>
K. LANDLORD'S BROKER: Colliers Bennett & Kahnweiler.
L. TENANT'S BROKER: Grubb & Ellis.
SECTION 1.2 SIGNIFICANCE OF BASIC LEASE PROVISIONS. Each reference
--------------------------------------
in this Lease to any of the Basic Lease Terms contained in Section 1.1 of this
Article shall be deemed and construed to incorporate all of the terms provided
under each such Basic Lease Terms.
SECTION 1.3 ENUMERATION OF EXHIBITS. The exhibits in this Section
-----------------------
and attached to this Lease are incorporated in this Lease by this reference and
are to be construed as a part of this Lease.
EXHIBIT "A" - Premises
EXHIBIT "B" - Legal Description
EXHIBIT "C" - Form of Estoppel Certificate
EXHIBIT "D" - Landlord's Work
ARTICLE II
----------
PREMISES
--------
SECTION 2.1 LEASE. Landlord, for and in consideration of the rents
-----
herein reserved and of the covenants and agreements herein contained on the part
of Tenant to be kept, observed and performed, does by these presents, lease to
Tenant, and Tenant hereby leases from Landlord, the demised premises
("Premises"), being depicted on page 1 of the plan attached hereto as EXHIBIT
"A" in the building located at 1250 Carolina Drive, West Chicago, Illinois
("Building"), and legally described on EXHIBIT "B" attached hereto and by this
reference incorporated herein ("Land") (the Land and Building are sometimes
collectively referred to as the "Project"), subject to covenants, conditions,
agreements, easements, encumbrances and restrictions of record on the date
hereof affecting the Land and the Building ("Restrictions").
ARTICLE III
-----------
TERM
----
SECTION 3.1 TERM. The Initial Term of this Lease shall commence on
----
the Commencement Date and shall end on the Termination Date, unless sooner
terminated as hereinafter set forth.
ARTICLE IV
-----------
CONDITION OF DEMISED PREMISES
-----------------------------
SECTION 4.1 CONDITION OF PREMISES. Subject to the performance of
---------------------
the Landlord's Work (as hereinafter defined), Tenant agrees to accept the
Premises in an absolutely "as-is" condition. Tenant acknowledges that Landlord,
its agents, attorneys, representatives and employees have not and do not make
any representations or warranties, express or implied, to Tenant regarding the
Premises or the Project, including, but not limited to: (i) the zoning of the
Premises or the Project; (ii) the condition of any underground, above ground or
surface improvements; (iii) the size, area, use or type of the Premises or the
fitness of the Premises for any intended or particular use; (iv) the nature of
the soil on and underlying the Premises or the Project or its suitability for
development or any other
2
<PAGE>
use thereof; (v) any financial information pertaining to the operation of the
Premises or the Project; (vi) the status of any requirements or obligations
imposed, implied or to be undertaken by the owner or developer of the Premises
or the Project pursuant to any zoning, subdivision, development laws or
agreements with any governmental entities; (vii) the presence or absence of any
toxic wastes, hazardous materials or structural defects in, on or under the
Premises or the Project or any improvements thereon; or (viii) the presence or
absence of any rights of any governmental authority, or of owners of property in
the vicinity of the Premises or the Project, to obtain reimbursement, recapture
or special assessments from any owner of the Premises or the Project for all or
a portion of the cost of any utilities, roads or other improvements heretofore
or hereafter located on or in the vicinity of the Premises or the Project, any
and all such representations and warranties, express or implied, being hereby
expressly waived by Tenant and disclaimed by Landlord. Tenant waives any claim
that may exist for patent and/or latent defects or for mutual or unilateral
mistake of fact. Except for Landlord's obligation to improve the Premises in
accordance with Article XXXIII below, no promise of Landlord to alter, remodel,
decorate, clean or improve the Premises or any portion thereof and no
representation respecting the condition of the Premises or any portion thereof
have been made by Landlord to Tenant.
ARTICLE V
---------
RENT
----
SECTION 5.1 BASE RENT. In consideration of the leasing aforesaid,
---------
Tenant agrees to pay Landlord, without offset or deduction, base rent for the
Initial Term ("Base Rent"), payable monthly in advance in equal installments on
the first (1st) day of each month and in addition thereto, shall pay such
charges as are herein described as "Additional Rent". Commencing on May 1, 1996
and continuing through April 30, 1997, Base Rent shall be $304,452.96 per annum
("Annual Base Rent"), payable in equal monthly installments of $25,371.08 ("Base
Rent"). On the first day of May ("Adjustment Date") of each year during the
Initial Term commencing May 1, 1997, Annual Base Rent shall increase to an
amount equal to the lesser of (i) the amount obtained by multiplying the Annual
Base Rent for the preceding twelve (12) month period (each such twelve (12)
month period commencing on May 1st and expiring on April 30th is hereinafter
referred to as a "Lease Year") by 1.03, or (ii) the amount obtained by
multiplying the Annual Base Rent for the preceding Lease Year by a fraction, the
numerator of which is the CPI (hereinafter defined) for April of the preceding
Lease Year and the denominator of which is the CPI for April of 1996. For
example, on May 1, 1997 if the April 1997 CPI is 161.9 and the April 1996 CPI is
155.7, the Annual Base Rent for the Lease Year commencing May 1, 1997 will be
the lesser of (i) 304,452.96 x 1.03 = 313,586.54 or (ii) 304,452.96 x (161.9 /
155.7) = 316,576.30, which is 313,586.54. The term "CPI" when used herein means
the Consumer Price Index - U.S. City Averages for Urban Wage Earners and
Clerical Workers, All Items (1982-1984 = 100), of the United States Bureau of
Labor Statistics. If the CPI shall be substantially revised (including but not
limited to a change from using the 1982-1984 averages as the Base Index of 100)
or become unavailable to the public, Landlord will substitute therefor, a
comparable index based upon changes in the cost of living or purchasing power of
the consumer dollar. In the event the CPI for April of the preceding Lease Year
is not available on the Adjustment Date, Tenant shall make payments of Base Rent
equal to 1.03% of Base Rent for the previous Lease Year until the applicable CPI
shall become available, at which time Base Rent shall be adjusted as provided
hereinabove and Tenant shall receive a credit for any amounts paid in excess of
the actual amount due, if any. The term "Rent" when used in this Lease shall
include all Base Rent payable under this Section 5.1., as well as the charges
herein described as Additional Rent. All Rent payable hereunder shall be
payable to Landlord and Landlord's Mailing Address, or as Landlord may otherwise
from time to time designate in writing.
SECTION 5.2 BASE RENT ADJUSTMENT. In addition to the Base Rent
--------------------
payable by Tenant hereunder, Tenant shall pay to Landlord, as Additional Rent,
the Rent Adjustment described in this Section 5.2 without set off or deduction.
Until such time as Tenant receives the first Adjustment Statement provided for
in clause (C) of this Section 5.2, Tenant shall, commencing on the Commencement
Date and on the first (1st) day of each and every month thereafter, make the
Initial Monthly Rent Adjustment Deposit specified in Article I hereof.
3
<PAGE>
A. For the purposes of this Lease:
(1) The term "Calendar Year" shall mean each calendar year or a
portion thereof during the Term.
(2) The term "Expenses" shall mean and include all expenses paid
or incurred by Landlord or its beneficiaries for managing, owning,
maintaining, operating, insuring, replacing and repairing the Project, the
Land, appurtenances and personal property used in conjunction therewith.
Expenses shall not include (i) depreciation charges, (ii) interest and
principal payments on mortgages, (iii) ground rental payments, (iv) real
estate brokerage and leasing commissions, (v) capital expenses (other than
the amortized portion thereof during the Term which shall be a part of
Expenses, based upon the assumption that the cost thereof is amortized over
the useful life of the improvement in accordance with generally accepted
accounting principles), (vi) legal fees for the negotiation or enforcement
of leases, (vii) Taxes, (viii) cost of repair from a casualty or taking,
(ix) cost of altering the space of other tenants and (x) cost of services
provided by affiliates in excess of costs which a bona fide third party
would charge. If the Building is not fully occupied during all or a
portion of any Calendar Year, then Landlord may elect to make an
appropriate adjustment of the Expenses which vary due to occupancy for such
Calendar Year employing sound accounting and management principles, to
determine the amount of Expenses that would have been paid or incurred by
Landlord had the Building been fully occupied and the amount so determined
shall be the amount of Expenses attributable to such Calendar Year.
(3) The term "Rent Adjustments" shall mean all amounts owed by
Tenant as Additional Rent on account of Expenses or Taxes, or both.
(4) The term "Rent Adjustment Deposit" shall mean an amount
equal to Landlord's estimate of Rent Adjustments due for any Calendar Year
made from time to time during the Term.
(5) The term "Taxes" shall mean real estate taxes, assessments,
sewer rents, rates and charges, transit taxes, taxes based upon the receipt
of rent, and any other federal, state or local governmental charge,
general, special, ordinary or extraordinary, which may now or hereafter be
assessed against the Project or any portion thereof in any Calendar Year
during the Term and any tax in substitution of any of the foregoing;
provided, however, in determining the income of Landlord with respect to
any such substituted tax, only the income derived from the Building shall
be included. Taxes shall not include any franchise, capital stock,
transfer, inheritance or income (other than rental income in replacement of
any real estate tax) tax imposed upon Landlord. In case of special taxes
or assessments which may be payable in installments, only the amount of
each installment and interest paid thereon paid during a Calendar Year
shall be included in Taxes for that Calendar Year. Taxes shall also
include any personal property taxes (attributable to the year in which
paid) imposed upon the furniture, fixtures, machinery, equipment,
apparatus, systems and appurtenances of Landlord used in connection with
the operation of the Building. Taxes also include Landlord's reasonable
costs and expenses (including reasonable attorney's fees) in contesting or
attempting to reduce any taxes. Taxes shall be reduced by any recovery or
refund received of Taxes previously paid by the Landlord, provided such
refund relates to taxes paid during the Term of this Lease.
B. Tenant shall pay to the Landlord as Additional Rent Tenant's
Proportion of Expenses and Taxes attributable to each Calendar Year of the
Term. The amount of Taxes attributable to a Calendar Year shall be the
amount assessed for any such Calendar Year, even though the assessment for
such Taxes may be payable in a different Calendar Year.
C. As soon as reasonably feasible after the expiration of each
Calendar Year, Landlord will furnish Tenant a statement ("Adjustment
Statement") showing the following:
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(1) Actual Expenses and Taxes for Calendar Year last ended and
the amount of Expenses and Taxes payable by Tenant for such Calendar Year;
(2) The amount of Rent Adjustments due Landlord for the Calendar
Year last ended, less credits for Rent Adjustment Deposits paid, if any;
and
(3) The Rent Adjustment Deposit due in the current Calendar
Year.
D. Within thirty (30) days after Tenant's receipt of each Adjustment
Statement, Tenant shall pay to Landlord:
(1) The amount of Rent Adjustment shown on said statement to be
due Landlord for the Calendar Year last ended; plus
(2) The amount, which when added to the Rent Adjustment Deposit
theretofore paid in the current Calendar Year would provide that Landlord
has then received such portion of the Rent Adjustment Deposit as would have
theretofore been paid to Landlord had Tenant paid one twelfth (1/12) of the
Rent Adjustment Deposit, for the current Calendar Year, to Landlord monthly
on the first (1st) day of each month of such Calendar Year.
Commencing on the first (1st) day of the first (1st) month after Tenant's
receipt of each Adjustment Statement, and on the first day of each month
thereafter until Tenant receives a more current Adjustment Statement,
Tenant shall pay to Landlord one twelfth (1/12) of the Rent Adjustment
Deposit shown on said statement. During the last complete Calendar Year,
Landlord may include in the Rent Adjustment Deposit its estimate of the
Rent Adjustment which may not be finally determined until after the
expiration of the Term. The Tenant's obligation to pay the Rent Adjustment
shall survive the Term.
E. Tenant's payment of the Rent Adjustment Deposit for each Calendar
Year shall be credited against the Rent Adjustments for such Calendar Year.
All Rent Adjustment Deposits may be co-mingled and no interest shall be
paid to Tenant thereon. If the Rent Adjustment Deposits paid by Tenant for
any Calendar Year exceeds the Rent Adjustments for such Calendar Year, then
Landlord shall give a credit to Tenant in an amount equal to such excess
against the Rent Adjustments due for the next succeeding Calendar Year,
except that if any such excess relates to the last Calendar Year of the
Term, then, provided that no default of Tenant exists hereunder, Landlord
shall refund such excess to Tenant within thirty (30) days after the
expiration of the Term.
F. Tenant or its representative shall have the right to examine
Landlord's books and records with respect to the items in the Adjustment
Statement during normal business hours at any time within thirty (30) days
following the furnishing by Landlord to Tenant of such Adjustment
Statement. Unless Tenant shall take written exception to any item within
forty-five (45) days after the furnishing of the foregoing statement, such
statement shall be considered as final and accepted by Tenant. Any amount
due to Landlord as shown on any such statement, whether or not written
exception is taken thereto, shall be paid by Tenant within thirty (30) days
after Landlord shall have submitted the statement, without prejudice to any
such written exception. If the actual Taxes and Expenses are at least five
percent (5%) less than those shown on the Adjustment Statement, Landlord
shall reimburse Tenant the reasonable cost of examining Landlord's books
and records.
G. If the Commencement Date is on any day other than the first (1st)
day of January or if the Termination Date is on any day other than the last
day of December, then any Rent Adjustments due Landlord shall be prorated.
5
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SECTION 5.3 INTEREST AND LATE CHARGES ON LATE PAYMENTS. Rent not
------------------------------------------
paid when due shall bear interest from the date when the same is payable under
the terms of this Lease until the same shall be paid at an annual rate of
interest equal to the rate of interest announced from time to time by The Wall
--------
Street Journal ("Journal") as its Prime Rate, plus three percent (3%), unless a
- --------------
lesser rate shall then be the maximum rate permissible by law, in which event
said lesser rate shall be charged ("Lease Interest Rate"). The term "Prime
Rate" means that rate of interest published by the Journal from time to time as
its "Prime Rate" of interest, changing automatically and simultaneously with
each change in the Prime Rate made by the Journal from time to time. Tenant
further acknowledges that its late payment of any Rent will cause Landlord to
incur certain costs and expenses not contemplated under this Lease, the exact
amount of which is extremely difficult or impracticable to fix. Such costs and
expenses will include, without limitation, loss of use of money, administrative
and collection costs and processing and accounting expenses. Therefore, if any
installment of monthly Base Rent is not received by Landlord when due or any
other sum due hereunder is not paid within ten (10) days of when due, Tenant
shall promptly pay to Landlord a late charge equal to three percent (3%) of the
unpaid amount. Such late charge is in addition to any interest due pursuant to
the first (1st) sentence of this Section 5.3. Landlord and Tenant agree that
this late charge represents a reasonable estimate of costs and expenses incurred
by Landlord from, and is fair compensation to Landlord for, its loss suffered,
by such non-payment by Tenant. Acceptance of the late charge shall not
constitute a waiver of Tenant's default with respect to such non-payment by
Tenant or prevent Landlord from exercising any other rights and remedies
available to Landlord under this Lease. Failure to pay the late charge shall
constitute a default under this Lease.
ARTICLE VI
----------
UTILITIES
---------
SECTION 6.1 UTILITIES. Tenant shall pay, directly to the
---------
appropriate supplier, all costs of natural gas, electricity, heat, light, power,
sewer service, telephone, water, refuse disposal and other utilities and
services supplied to the Premises. Landlord shall, at Landlord's sole cost and
expense, separately meter the Premises. If, however, at any time, any services
or utilities are jointly metered, Landlord shall make a reasonable determination
of Tenant's Proportionate share thereof and Tenant shall pay its proportionate
share, as Additional Rent hereunder, within fifteen (15) days after receipt of
Landlord's written statement. So long as Landlord does not supply any utility
service, Landlord shall not in any way be liable or responsible to Tenant for
any cost or damage or expense which Tenant may sustain or incur if either the
quality or character of such service is changed or is no longer available or
suitable for Tenant's requirements.
ARTICLE VII
-----------
USE
---
SECTION 7.1 USE. The Premises shall be used for the Use only, and
---
for no other purpose.
SECTION 7.2 PROHIBITED USES. Tenant shall not permit the Premises,
---------------
or any portion thereof, to be used in such manner which impairs Landlord's
right, title or interest in the Premises or any portion thereof, or in such
manner which gives rise to a claim or claims of adverse possession or of a
dedication of the Premises, or any portion thereof, for public use. Tenant
shall not use or occupy the Premises or permit the Premises to be used or
occupied contrary to any statute, rule, order, ordinance, requirement,
regulation or restrictive covenant applicable thereto or in any manner which
would violate any certificate of occupancy affecting the same or which would
render the insurance thereon void or the insurance risk more hazardous, or which
would cause structural injury to the Building or cause the value or usefulness
of the Premises or any part thereof to diminish or which would constitute
6
<PAGE>
a public or private nuisance or waste, and Tenant agrees that it will, promptly
upon discovery of any such use, immediately notify Landlord and take all
necessary steps to compel the discontinuance of such use.
ARTICLE VIII
------------
MAINTENANCE OF PREMISES
-----------------------
SECTION 8.1 MAINTENANCE.
-----------
A. TENANT'S MAINTENANCE. Subject to the Landlord's obligations in
--------------------
Section 8.1B hereof, Tenant agrees, at Tenant's sole cost and expense, to take
good care of the Premises and keep same and all parts thereof, together with any
and all alterations and additions thereto, in good order, condition and repair,
suffering no waste or injury, reasonable wear and tear and damage by casualty
excepted. Subject to the Landlord's obligations in Section 8.1B hereof, Tenant
shall, at its sole cost and expense, promptly make all necessary repairs and
replacements, foreseen as well as unforeseen, in and to any equipment now or
hereafter located in the Premises, including without limitation, water, sewer,
gas, HVAC and electricity connections, pipes, mains and all other fixtures,
machinery, apparatus, equipment, overhead cranes and appurtenances now or
hereafter belonging to, connected with or used in conjunction with the Premises.
All such repairs and replacements shall be of equal quality to those being
repaired and sufficient for the proper maintenance and operation of the
Premises. Tenant shall keep and maintain the Premises safe, secure and clean,
specifically including, but not by way of limitation, removal of waste and
refuse matter. Tenant shall not permit anything to be done upon the Premises
(and shall perform all maintenance and repairs thereto so as not) to invalidate,
in whole or in part, or prevent the procurement of any insurance policies which
may, at any time, be required under the provisions of this Lease. Tenant shall
not obstruct or permit the obstruction of any parking area, adjoining street or
sidewalk.
B. LANDLORD'S MAINTENANCE. Subject to the provisions of Articles X
----------------------
and XIII hereof, Landlord shall keep, maintain, repair and replace the roof,
structural members of the Building, the parking lot, fire sprinkler system,
sidewalks and appurtenances thereto, including, as necessary, snow and ice
removal and the cost thereof shall be deemed an Expense.
SECTION 8.2 GOVERNMENTAL REQUIREMENTS. Tenant at its own cost and
-------------------------
expense also shall promptly comply with any and all governmental requirement
applicable to the Premises or any part thereof, as a result of Tenant's use,
occupancy or alteration of the Premises, irrespective of the nature of the work
required to be done, extraordinary as well as ordinary, whether or not the same
involve or require any structural changes or additions in or to the Improvements
and irrespective of whether or not such changes or additions be required on
account of any particular use to which the Premises or any part thereof are
being put. Included in the obligations set forth above, but not in limitation
thereof, Tenant, at its own cost and expense, shall promptly comply with OSHA
regulations relating to overhead cranes (CFR 1910-179(j)(2) and 184(d), CFR
1910-179(j)(3), CFR 1910-179(e)(1) through (4) and CFR 1910-179(b)(5)).
SECTION 8.3 TENANT'S RESPONSIBILITIES. Landlord shall not be
-------------------------
required to furnish any services or facilities whatsoever to the Premises.
Except as set forth in Sections 8.1.B. and 8.2 above, Tenant hereby assumes full
and sole responsibility for condition, operation, repair, alteration,
improvement, replacement, maintenance and management of the Premises.
7
<PAGE>
ARTICLE IX
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TENANT'S INSURANCE
------------------
SECTION 9.1 COMMERCIAL GENERAL LIABILITY AND WORKERS COMPENSATION
-----------------------------------------------------
INSURANCE. At all times during the Term of this Lease, Tenant, at its own
- ---------
expense, shall maintain, with insurance companies which are authorized to do
business in the State of Illinois and which are reasonably acceptable to
Landlord, the following commercial general liability and workers compensation
insurance (including employer's liability insurance):
(a) COMMERCIAL GENERAL LIABILITY INSURANCE. Written on an
--------------------------------------
Occurrence basis, insuring against claims for bodily and personal injury,
death and property damage occurring in connection with the use and
occupancy of the Premises by Tenant and shall name by specific endorsement
Landlord, Landlord's managing agent, and mortgagee, if any, as additional
insureds. The coverage afforded the additional insureds under the Tenant's
policy shall be primary insurance. Commercial General Liability Insurance
shall afford a limit of at least $1,000,000.00 for each occurrence and at
least a $2,000,000.00 General Aggregate and Personal and Advertising Injury
coverage with a limit of at least $1,000,000.00 for each occurrence.
(b) WORKERS COMPENSATION INSURANCE. Workers compensation
------------------------------
insurance shall meet or exceed the statutory requirements set by the State
of Illinois and shall include occupational disease insurance and employer's
liability insurance. The employer's liability insurance shall afford a
limit of not less than $100,000.00.
(c) CONTENTS INSURANCE. Insurance against fire, sprinkler
------------------
leakage, vandalism, and the extended coverage perils for the full insurable
value of all contents of Tenant within the Premises, and of all office
furniture, trade fixtures, office equipment, merchandise and all other
items of Tenant's property on the Premises and business interruption
insurance.
Tenant shall deliver to Landlord, at least fifteen (15) days prior to
the earlier of (i) the Commencement Date of this Lease or (ii) the date Tenant
takes possession of the Premises, duplicate copies of policies (or certificates
evidencing such policies) of the insurance required by this Section 9.1. Such
policies of insurance shall be renewed and duplicate copies of the new policies
(or new certificates) shall be deposited with Landlord at least fifteen (15)
days prior to the expiration of the old policies.
SECTION 9.2 POLICIES. All insurance policies shall be written with
--------
insurance companies and shall be in form reasonably satisfactory to Landlord.
All insurance policies shall name Landlord as an additional insured and shall
provide that they may not be terminated or modified in any way which would
materially decrease the protection afforded Landlord under this Lease without
thirty (30) days' advance written notice to Landlord. All policies shall also
contain an endorsement that Landlord, although named as an additional insured,
shall nevertheless be entitled to recover for damages caused by the negligence
of Tenant. The minimum limits of insurance specified in this Section shall in
no way limit or diminish Tenant's liability under this Lease. Tenant shall
furnish to Landlord, not less than fifteen (15) days prior to the date such
insurance is first required to be carried by Tenant, and thereafter at least
fifteen (15) days prior to the expiration of each such policy, true and correct
photocopies of all insurance policies required under this Section, together with
any amendments and endorsements to such policies, certificates of insurance, and
such other evidence of coverages as Landlord may reasonably request, and
evidence of payment of all premiums and other expenses owed in connection
therewith. Upon Tenant's default in obtaining or delivering the policy for any
such insurance or Tenant's failure to pay the charges therefor, Landlord may, at
its option, on or after the tenth (10th) day after written notice thereof is
given to Tenant, procure or pay the charges for any such policy or policies and
the total cost and expense (including reasonable attorneys' fees) thereof shall
be paid by Tenant to Landlord as Additional Rent within five (5) days of the
receipt of a bill therefor. Any minimum amount of coverage specified above
shall be subject to increase at any time, and from time to time, after
commencement of
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<PAGE>
the third Lease Year of the term of this Lease, if Landlord shall reasonably
deem same to be necessary for adequate protection. Within thirty (30) days after
demand by Landlord that the minimum amount of any coverage be so increased,
Tenant shall furnish Landlord with evidence of Tenant's compliance with such
demand.
SECTION 9.3 ADJUSTMENT. So long as this Lease remains in effect,
----------
the proceeds of any such insurance which are received by Tenant shall be used by
Tenant to repair or replace the property so insured.
SECTION 9.4 SUBROGATION. Landlord and Tenant agree to have all
-----------
fire and extended coverage and material damage insurance which may be carried by
either of them endorsed with a clause providing that any release from liability
of or waiver of claim for recovery from the other party or any of the parties
named in Section 9.2 above entered into in writing by the insured thereunder
prior to any loss or damage shall not affect the validity of said policy or the
right of the insured to recover thereunder, and providing further that the
insurer waives all rights of subrogation which such insurer might have against
the other party or any of the parties named in Section 9.2 above. Without
limiting any release or waiver of liability or recovery contained in any other
section of this Lease but rather in confirmation and furtherance thereof,
Landlord and any beneficiaries of Landlord waive all claims for recovery from
Tenant, and Tenant waives all claims for recovery from Landlord, any
beneficiaries of Landlord and the managing agent for the Project and their
respective agents, partners and employees, for any loss or damage to any of its
property insured under valid and collectible insurance policies to the extent of
any recovery collectible under such insurance policies. Notwithstanding the
foregoing or anything contained in this Lease to the contrary, any release or
any waiver of claims shall not be operative, nor shall the foregoing
endorsements be required, in any case where the effect of such release or waiver
is to invalidate insurance coverage or invalidate the right of the insured to
recover thereunder or increase the cost thereof (provided that in the case of
increased cost the other party shall have the right, within ten (10) days
following written notice, to pay such increased cost, thereby keeping such
release or waiver in full force and effect).
ARTICLE X
---------
DAMAGE OR DESTRUCTION
---------------------
SECTION 10.1 TOTAL DEMISE. In the event that (a) the Premises are
------------
made untenantable by fire or other casualty and Landlord shall decide not to
restore or repair same, or (b) the Building is so damaged by fire or other
casualty that Landlord shall decide to demolish or not rebuild the same, then,
in any of such events, Landlord shall have the right to terminate this Lease by
notice to Tenant given within ninety (90) days after the date of such fire or
other casualty and the Rent shall be apportioned on a per diem basis and paid to
the date of such fire or other casualty. In the event the Premises are made
untenantable by fire or other casualty and Landlord shall decide to rebuild and
restore the same, this Lease shall not terminate and Landlord shall repair and
restore the Premises at Landlord's expense and with due diligence within one
hundred eighty (180) days with the right to extend said time period for a total
period of two hundred forty (240) days due to (i) reasonable delays for
insurance adjustments and (ii) delays caused by matters beyond Landlord's
control. Rent shall abate on a per diem basis during the period of
reconstruction and repair. Tenant shall have the right to terminate this Lease,
upon written notice to Landlord within ten (10) days after the expiration of
said time period (as same may be extended), in the event that the restoration or
repair of the Premises is not substantially complete within said time period (as
same may be extended).
SECTION 10.2 PARTIAL DEMISE. In the event the Premises are
--------------
partially damaged by fire or other casualty but are not made wholly
untenantable, then Landlord shall, except during the last Lease Year of the Term
hereof, proceed with all due diligence to repair and restore the Premises,
subject, however, to (i) reasonable delays for insurance adjustments, and (ii)
delays caused by forced beyond Landlord's control. In such event, Rent shall
abate in proportion to the non-useability of the Premises during the period
while repairs are in progress. If the Premises are made partially untenantable
as aforesaid during the last Lease Year of the Term hereof, Landlord and
9
<PAGE>
Tenant shall have the right to terminate this Lease as of the date of fire or
other casualty upon thirty (30) days' prior notice to the other, in which event,
Rent shall be apportioned on a per diem basis and paid to the date of such fire
or other casualty.
ARTICLE XI
----------
LIENS
-----
SECTION 11.1 LIEN CLAIMS. Tenant shall not do any act which shall
-----------
in any way encumber the title of Landlord in and to the Premises or the
Building, nor shall any interest or estate of Landlord in the Premises or the
Building be in any way subject to any claim by way of lien or encumbrance,
whether by operation of law or by virtue of any express or implied contract by
Tenant, and any claim to or lien upon the Premises or the Building arising from
any act or omission of Tenant shall accrue only against the leasehold estate of
Tenant and shall in all respects be subject and subordinate to the paramount
title and rights of Landlord in and to the Premises or the Building. Tenant
will not permit the Premises or the Building to become subject to any
mechanics', laborers' or materialmen's lien on account of labor or material
furnished to Tenant or claimed to have been furnished to Tenant in connection
with work of any character performed or claimed to have been performed on the
Premises by or at the direction of sufferance of Tenant; provided, however that
Tenant shall have the right to contest in good faith and with reasonable
diligence, the validity of any such lien or claimed lien if Tenant shall first
give to Landlord such security as Landlord may reasonably require or an amount
equal to one hundred twenty percent (120%) of the amount of the lien or claimed
lien, which amount, together with interest earned thereon, shall be held by
Landlord as security to insure payment thereof and to prevent any sale,
foreclosure or forfeiture of the Premises by reason of non-payment thereof. Any
such amount so deposited with Landlord shall be held by Landlord in an account
established at a federally insured banking institution until satisfactory
removal of said lien or claim of lien. On any final determination of the lien
or claim for lien, Tenant will immediately pay any judgment rendered, with all
proper costs and charges, and will, at its own expense, have the lien released
and any judgment satisfied. Should Tenant fail to diligently contest and pursue
such lien contest, Landlord may, at its option, use the sums so deposited to
discharge any such lien upon the renewal of such lien or encumbrance Landlord
shall pay all such sums remaining on deposit to Tenant.
SECTION 11.2 LANDLORD'S RIGHT TO CURE. If Tenant shall fail to
------------------------
contest the validity of any lien or claimed lien or fail to give security to
Landlord to insure payment thereof, or shall fail to prosecute such contest with
diligence, or shall fail to have the same released and satisfy any judgment
rendered thereon, then Landlord may, at its election (but shall not be so
required) remove or discharge such lien or claim for lien (with the right, in
its discretion, to settle or compromise the same), and any amounts advanced by
Landlord, including reasonable attorneys' fees, for such purposes shall be so
much additional rent due from Tenant to Landlord at the next rent date after any
such payment, with interest thereon at the Lease Interest Rate from the date so
advanced.
ARTICLE XII
-----------
TENANT ALTERATIONS
------------------
SECTION 12.1 ALTERATIONS. Tenant shall not at any time during the
-----------
Term of this Lease make any openings in the roof or exterior walls of the
Building or make any Tenant alteration, addition or improvement to the Premises
(collectively "Alterations") or any portion thereof without in each instance,
the prior written consent of Landlord; provided, however, upon notice to, but
without the consent of Landlord, Tenant shall have the right to make any
Alterations where same are non-structural, do not require openings on the roof
or exterior walls of the Building, do not affect any Building system, and do not
exceed TEN THOUSAND AND NO/100 ($10,000.00)
10
<PAGE>
DOLLARS in the aggregate in any twelve (12) month period. Landlord shall not
unreasonably withhold, delay or condition its consent to other Alterations made
by Tenant. No Alteration to the Premises for which Landlord's consent is
required shall be commenced by Tenant until Tenant has furnished Landlord with a
satisfactory certificate or certificates from an insurance company reasonably
acceptable to Landlord, evidencing workmen's compensation coverage, and
insurance coverage in amounts reasonably satisfactory to Landlord and protecting
Landlord against public liability and property damage to any person or property,
on or off the Premises, arising out of and during the making of such
Alterations. Any Alteration by Tenant hereunder shall be done in a good and
workmanlike manner in compliance with any applicable governmental law, statute,
ordinance or regulation. Upon completion of any Alteration by Tenant hereunder
for which Landlord's consent is required, Tenant shall furnish Landlord with a
copy of the "as built" plans covering such construction. Tenant, at its sole
cost and expense, will make all Alterations on the Premises which may be
necessary by the act or neglect of any other person or corporation (public or
private), except Landlord, its agents, employees or contractors. Before
commencing any Alterations for which Landlord's consent is required: (a) plans
and specifications therefor, prepared by a licensed architect, shall be
submitted to and approved by Landlord (such approval shall not be unreasonably
withheld, delayed or conditioned); (b) Tenant shall furnish to Landlord an
estimate of the cost of the proposed work, certified by the architect who
prepared such plans and specifications; (c) all contracts for any proposed work
shall be submitted to and approved by Landlord; and (d) Tenant shall either
demonstrate to Landlord its ability to pay the entire cost of the Alterations
when due or furnish to Landlord a bond in form and substance satisfactory to
Landlord, or such other security reasonably satisfactory to Landlord to insure
payment for the completion of all work free and clear of liens. Tenant further
agrees that all contractors engaging in any construction activity by and for the
benefit of Tenant for which Landlord's consent shall be required shall obtain
comprehensive/commercial general liability, worker's compensation and such other
liability insurance in such amounts as may be reasonably required by Landlord
naming the Landlord as an additional insured and providing liability coverage
during all phases of construction including, without limitation: (a)
contractor's and owners protection; (b) blanket contractual liability coverage;
(c) broad form property damage insurance; (d) statutory worker's compensation
coverage and employer's liability coverage; and (e) coverage under the
structural work act of the State of Illinois. Before commencing any Alteration
for which Landlord's consent is required, Tenant shall provide Landlord with a
written certification that the Alteration does not have any environmental impact
on the Premises. Prior to the commencement of any construction activity for
which Landlord's consent shall be required, certificates of such insurance
coverages (and original policies with respect to environmental liability
insurance) shall be provided to Landlord and renewal certificates shall be
delivered to Landlord prior to the expiration date of the respective policies.
SECTION 12.2 OWNERSHIP OF ALTERATIONS. All Alterations (except
------------------------
Tenant's Equipment, as defined in Section 19.2 hereof), put in at the expense of
Tenant shall become the property of Landlord at the expiration of the Term and
shall remain upon and be surrendered with the Premises as a part thereof at the
termination of this Lease, or at Landlord's option, provided Landlord shall have
advised Tenant in writing at the time of its consent to said Alteration is
sought that same must be removed and restored to its original condition.
SECTION 12.3 SIGNS. Tenant shall not place any signs on any part of
-----
the Building or Land without the prior written consent of Landlord.
Notwithstanding any of the immediately foregoing provisions of this Section
12.3, upon notice to and with the consent of Landlord, which consent shall not
be unreasonably withheld, conditioned or delayed, Tenant may place a monument
sign adjacent to the Premises, provided that (i) the installation and dimensions
of said sign is in strict accordance with applicable law, ordinances and
restrictions; (ii) Tenant continually maintains said sign in a first-class
manner and (iii) Tenant, at Tenant's sole cost and expense, removes said sign at
the expiration of the Term and restores the area in which said sign is placed to
its condition prior to the installation of said sign.
SECTION 12.4 TENANT INDEMNITY. Tenant hereby agrees to indemnify
----------------
and hold the Landlord, its beneficiaries, shareholders, partners or members and
their respective agents and employees harmless from any and all liabilities of
every kind and description which may arise out of or be connected in any way
with said Alterations. Subject to the Tenant's right to contest as set forth in
Section 11.1 above, any mechanic's lien filed
11
<PAGE>
against the Premises for work claimed to have been furnished to Tenant shall be
discharged of record by Tenant within thirty (30) days after Tenant receives
notice thereof, at Tenant's expense. Upon completing any Alterations, Tenant
shall furnish Landlord with contractors' affidavits and full and final waivers
of lien and receipted bills covering all labor and materials expended and used.
All Alterations shall comply with all insurance requirements and with all
applicable ordinances and regulations of any pertinent governmental authority.
All alterations and additions shall be constructed in a good and workmanlike
manner and only good grades of materials shall be used.
SECTION 12.5 ENVIRONMENTAL IMPACT. Notwithstanding any other term,
--------------------
covenant or condition contained in this Lease, in the event that any Alteration
has any environmental impact on the Premises, Landlord may deny the Tenant the
right to proceed in Landlord's sole and absolute discretion.
ARTICLE XIII
------------
CONDEMNATION
------------
SECTION 13.1 TAKING: LEASE TO TERMINATE. If a portion of the
---------------------------
Building or the Premises shall be lawfully taken or condemned for any public or
quasi-public use or purpose, or conveyed under threat of such condemnation and
as a result thereof the Premises cannot be used for the same purpose and with
the same utility as before such taking or conveyance, the Term of this Lease
shall end upon, and not before, the date of the taking of possession by the
condemning authority, and without apportionment of the award ("Award"). Tenant
hereby assigns to Landlord, Tenant's interest in such Award, if any. Current
Rent shall be apportioned as of the date of such termination. If any part of
the Building shall be so taken or condemned, or if the grade of any street or
alley adjacent to the Building is changed by any competent authority and such
taking or change of grade makes it necessary or desirable to demolish,
substantially remodel, or restore the Building, the Landlord shall have the
right to cancel this Lease upon not less than ninety (90) days' prior notice to
the date of cancellation designed in the notice.
SECTION 13.2 TAKING: LEASE TO CONTINUE. In the event only a part
--------------------------
of the Premises shall be taken as a result of the exercise of the power of
eminent domain or condemned for a public or quasi-public use or purpose by any
competent authority or sold to the condemning authority under threat of
condemnation, and as a result thereof the balance of the Premises can be used
for the same purpose as before such taking, sale or condemnation, this Lease
shall not terminate and Landlord, at its sole cost and expense up to the amount
of any condemnation Award, shall promptly repair and restore the Premises,
subject to extension due to delay because of changes, deletion or additions,
acts of Tenant, strikes, lockouts, casualties, acts of God, war, fuel or energy
shortages, material or labor shortages, governmental regulation or control,
severe weather conditions or other causes beyond the actual control of Landlord
and Landlord's receipt of insurance proceeds. Any Award paid as a consequence
of such taking, sale or condemnation, shall be paid to Landlord. Any sums not
so disbursed shall be retained by Landlord.
SECTION 13.3 TENANT'S CLAIM. To the extent permitted by law and
--------------
subject to the rights of any lender with respect to the Premises, Tenant shall
be allowed to pursue a claim against the condemning authority (hereinafter
referred to as the "Tenant's Claim") that shall be independent of and wholly
separate from any action, suit or proceeding relating to the Award (hereinafter
referred to as the "Landlord's Proceeding") for reimbursement of relocation
expenses or for the loss of any Tenant's Equipment; provided, however: (i)
Tenant's Claim shall in no event limit, affect, alter or diminish in any kind or
way whatsoever the Award to Landlord as a result of such taking, sale or
condemnation; (ii) Tenant's Claim shall in no event include any claim for any
interest in real property, it being expressly understood and agreed that the
entire Award and other sums paid with respect to the real property interests
taken, sold or condemned shall be the sole property of Landlord pursuant to this
Article XIII; and (iii) Tenant's Claim shall in no event be joined with
Landlord's Proceeding or argued or heard concurrently therewith and if the
tribunal hearing Tenant's Claim orders such joinder, Tenant agrees to
voluntarily dismiss Tenant's Claim
12
<PAGE>
if such dismissal does not preclude Tenant from bringing Tenant's Claim after
such time as Landlord has received the Award for such taking, sale or
condemnation.
ARTICLE XIV
-----------
ASSIGNMENT -- SUBLETTING BY TENANT
----------------------------------
SECTION 14.1 NO ASSIGNMENT, SUBLETTING OR OTHER TRANSFER. Tenant
-------------------------------------------
shall not assign this Lease or any interest hereunder, nor shall Tenant sublet
or permit the use or occupancy of the Premises or any part thereof by anyone
other than Tenant, without the express prior written consent of Landlord, which
consent will not be unreasonably withheld or delayed. No assignment or
subletting shall relieve Tenant of its obligations hereunder, and Tenant shall
continue to be liable as a principal and not as a guarantor or surety, to the
same extent as though no assignment or sublease had been made, unless
specifically provided to the contrary in Landlord's consent. Consent by Landlord
pursuant to this Article shall not be deemed, construed or held to be consent to
any additional assignment or subletting, but each successive act shall require
similar consent of Landlord. Landlord shall be reimbursed by Tenant for any
reasonable costs or expenses incurred pursuant to any request by Tenant for
consent to any such assignment or subletting. In the consideration of the
granting or denying of consent, Landlord may, at its option, take into
consideration: (i) the business reputation and credit worthiness of the
proposed subtenant or assignee; (ii) any required alteration of the Premises;
(iii) the intended use of the Premises by the proposed subtenant or assignee;
and (iv) any other factors which Landlord shall deem reasonably relevant.
SECTION 14.2 OPERATION OF LAW. Tenant shall not allow or permit any
----------------
transfer of this Lease, or any interest hereunder, by operation of law.
SECTION 14.3 EXCESS RENTAL. If Tenant shall, with Landlord's prior
-------------
consent as herein required, sublet the Premises, an amount equal to fifty
percent (50%) of the rental in excess of the Base Rent and any Additional Rent
herein provided to be paid shall be for benefit of Landlord and shall be paid to
Landlord promptly when due under any such subletting as Additional Rent due
hereunder.
SECTION 14.4 MERGER OR CONSOLIDATION. If Tenant is a corporation
-----------------------
whose stock is not publicly traded, any transaction or series of transactions
(including, without limitation, any dissolution, merger, consolidation or other
reorganization of Tenant, or any issuance, sale, gift, transfer or redemption of
any capital stock of Tenant, whether voluntary, involuntary or by operation of
law, or any combination of any of the foregoing transactions) resulting in the
transfer of control of Tenant, other than by reason of death, shall be deemed to
be a voluntary assignment of this Lease by Tenant subject to the provisions of
this Section 14. If Tenant is a partnership, any transaction or series of
transactions (including without limitation any withdrawal or admittance of a
partner or a change in any partner's interest in Tenant, whether voluntary,
involuntary or by operation of law, or any combination of any of the foregoing
transactions) resulting in the transfer of control of Tenant, other than by
reason of death, shall be deemed to be a voluntary assignment of this Lease by
Tenant subject to the provisions of this assignment of this Lease by Tenant
subject to the provisions of this Section 14. If Tenant is a corporation, a
change or series of changes in ownership of stock which would result in direct
or indirect change in ownership by the stockholders or an affiliated group of
stockholders of less than fifty percent (50%) of the outstanding stock as of the
date of the execution and delivery of this Lease shall not be considered a
change of control. Notwithstanding the immediately foregoing, Tenant may, upon
notice to, but without Landlord's consent, assign this Lease to any entity
resulting from a merger or consolidation of Tenant, provided that the total
assets and the total net worth of such assignee after such consolidation or
merger shall be in excess of the greater of (i) the net worth of Tenant
immediately prior to such consolidation or merger, or (ii) the net worth of
Tenant as of the date hereof, determined by generally accepted accounting
principles and provided that Tenant is not at such time in default hereunder,
and provided further that such successor shall execute an instrument in writing,
acceptable to Landlord in its reasonable discretion, fully assuming all of the
obligations and liabilities imposed upon Tenant hereunder and deliver the same
to Landlord.
13
<PAGE>
Tenant shall provide in its notice to Landlord such information as may be
reasonably required by Landlord to determine that the requirements of this
Section 14.4 have been satisfied. As used in this Section 14.4, the term
"control" means possession of the power to vote not less than a majority
interest of any class of voting securities and partnership or limited liability
company interests or to direct or cause the direction (directly or indirectly)
of the management or policies of a corporation, or partnership or limited
liability company through the ownership of voting securities, partnership
interests or limited liability company interests, respectively.
SECTION 14.5 UNPERMITTED TRANSACTION. Any assignment, subletting,
-----------------------
use, occupancy, transfer or encumbrance of this Lease or the Premises without
Landlord's prior written consent shall be of no effect and shall, at the option
of Landlord, constitute a default under this Lease.
ARTICLE XV
----------
ANNUAL STATEMENTS
-----------------
SECTION 15.1 ANNUAL STATEMENTS. Tenant agrees to furnish Landlord
-----------------
annually, within ninety (90) days of the end of such fiscal year with a copy of
its annual audited statements, together with applicable footnotes and any other
financial information reasonably requested by Landlord (hereinafter collectively
referred to as, the "Financial Information") and agrees that Landlord may
deliver such Financial Information to any mortgagee, prospective mortgagee or
prospective purchaser of the Premises.
ARTICLE XVI
-----------
INDEMNITY FOR LITIGATION
------------------------
SECTION 16.1 INDEMNITY FOR LITIGATION. Tenant agrees to pay, and to
------------------------
indemnify and defend Landlord against, all costs and expenses (including
reasonable attorney's fees) incurred by or imposed upon Landlord by or in
connection with any litigation to which Landlord becomes or is made a party
without fault on its part, whether commenced by or against Tenant, or any other
person or entity or that may be incurred by Landlord in enforcing any of the
covenants and agreements of this Lease with or without the institution of any
action or proceeding relating to the Premises or this Lease, or in obtaining
possession of the Premises after an Event of Default hereunder or upon
expiration or earlier termination of this Lease. The foregoing notwithstanding,
Tenant's responsibility under this Section 16.1 to pay Landlord's costs and
expenses (including reasonable attorneys' fees) shall not extend to such costs
and expenses incurred in defending an action brought by Tenant to enforce the
terms of this Lease in which there is a court determination that Landlord failed
to perform its obligations under this Lease. The provisions of this Section
16.1 shall survive the expiration or earlier termination of this Lease.
ARTICLE XVII
------------
ESTOPPEL CERTIFICATES
---------------------
SECTION 17.1 ESTOPPEL CERTIFICATE. Tenant agrees that on the
--------------------
Commencement Date and at any time and from time to time thereafter, upon not
less than ten (10) days' prior written request by Landlord, it will execute,
acknowledge and deliver to Landlord, or Landlord's mortgagee to the extent
factually accurate, a statement in writing in the form of EXHIBIT "C" attached
hereto and by this reference incorporated herein; provided, however, that Tenant
agrees to certify to any prospective purchaser or mortgagee any other reasonable
information specifically requested by such prospective purchaser or mortgagee.
14
<PAGE>
Landlord agrees that, upon not less than ten (10) day's prior written
request of Tenant, it shall execute, acknowledge and deliver to Tenant an
estoppel certificate in a form reasonably acceptable to Landlord.
ARTICLE XVIII
-------------
INSPECTION OF PREMISES
----------------------
SECTION 18.1 INSPECTIONS. Tenant agrees to permit Landlord and any
-----------
authorized representatives of Landlord, to enter the Premises in the presence of
an employee of Tenant at all reasonable times on reasonable advance notice for
the purpose of inspecting the same; provided, however, in emergency
circumstances Landlord may inspect the Premises without advance notice and
whether or not in the presence of an employee of Tenant. Any such inspections
shall be solely for Landlord's purposes and may not be relied upon by Tenant or
any other person.
SECTION 18.2 SIGNS. Tenant agrees to permit Landlord and any
-----
authorized representative of Landlord to enter the Premises at all reasonable
times during business hours on reasonable advance notice to exhibit the same for
the purpose of sale, mortgage or lease, and during the final Lease Year of the
Term hereof, Landlord may display on the Premises customary "For Sale" or "For
Rent" signs.
ARTICLE XIX
-----------
FIXTURES
--------
SECTION 19.1 BUILDING FIXTURES. All improvements and all plumbing,
-----------------
heating, lighting, electrical and air conditioning fixtures and equipment, and
other articles of personal property used in the operation of the Premises (as
distinguished from operations incident to the business of Tenant), whether or
not attached or affixed to the Premises ("Building Fixtures"), shall be and
remain a part of the Premises and shall constitute the property of Landlord,
except as otherwise provided in Section 12.2 hereof with respect to Alterations.
SECTION 19.2 TENANT'S EQUIPMENT. All of Tenant's trade fixtures and
------------------
all personal property, fixtures, apparatus, machinery and equipment now or
hereafter located upon the Premises, other than Building Fixtures, as shall be
and remain the personal property of Tenant, and the same are herein referred to
as "Tenant's Equipment."
SECTION 19.3 REMOVAL OF TENANT'S EQUIPMENT. Tenant's Equipment may
-----------------------------
be removed from time to time by Tenant; provided, however, that if such removal
shall injure or damage the Premises, Tenant shall repair the damage and place
the Premises in the same condition as it would have been if such Tenant's
Equipment had not been installed.
ARTICLE XX
----------
DEFAULT
-------
SECTION 20.1 EVENTS OF DEFAULT. Tenant agrees that any one or more
-----------------
of the following events shall be considered "Events of Default" as said term is
used herein:
(a) If an order, judgment or decree shall be entered by any
court adjudicating Tenant a bankrupt or insolvent, or approving a petition
seeking reorganization of
15
<PAGE>
Tenant or appointing a receiver, trustee or liquidator of Tenant, or of all
or a substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of sixty (60) days; or
(b) Tenant shall file an answer admitting the material
allegations of a petition filed against Tenant in any bankruptcy,
reorganization or insolvency proceeding or under any laws relating to the
relief of debtors, readjustment or indebtedness, reorganization,
arrangements, composition or extension; or
(c) Tenant shall make any assignment for the benefit of
creditors or shall apply for or consent to the appointment of a receiver,
trustee or liquidator of Tenant, or any of the assets of Tenant; or
(d) Tenant shall file a voluntary petition in bankruptcy, or
shall admit in writing its inability to pay its debts as they come due, or
shall file a petition or an answer seeking reorganization or arrangement
with creditors or take advantage of any insolvency law; or
(e) A decree or order appointing a receiver of the property of
Tenant shall be made and such decree or order shall not have been vacated
within sixty (60) days from the date of entry or granting thereof; or
(f) Tenant shall vacate the Premises or abandon same during the
Term hereof; or
(g) Tenant shall default in making any payment of Rent or other
payment required to be made by Tenant hereunder within ten (10) days of
when due as herein provided; or
(h) Tenant shall be in default in the performance of or
compliance with any of the agreements, terms, covenants or conditions in
this Lease other than those referred to in the foregoing subparagraphs (a)
through (g) of this Section for a period of thirty (30) days after notice
from Landlord to Tenant specifying the items in default, or in the case of
a default which cannot, with due diligence, be cured within said thirty
(30)-day period, Tenant fails to proceed within said thirty (30)-day period
to cure the same and thereafter to prosecute the curing of such default
with due diligence (it being intended in connection with a default not
susceptible of being cured with due diligence within said thirty (30)-day
period that the time of Tenant within which to cure the same shall be
extended for such period as may be necessary to complete the same with all
due diligence).
Upon the occurrence of any one or more of such Events of Default,
Landlord may at its election terminate this Lease or terminate Tenant's right to
possession only, without terminating this Lease. Upon termination of this Lease
or of Tenant's right to possession, Tenant shall immediately surrender
possession and vacate the Premises, and deliver possession thereof to Landlord,
and Landlord or Landlord's agents may immediately or any time thereafter without
notice, re-enter the Premises and remove all persons and all or any property
therefrom, either by any suitable action or proceeding at law or equity, without
being liable in indictment, prosecution or damages, therefor, and repossess and
enjoy the Premises, together with the right to receive all income of, and from,
the Premises.
Upon termination of this Lease, Landlord shall be entitled to recover
as liquidated damages, because the parties hereto recognize that as of the date
hereof actual damages are not ascertainable and are of imprecise calculation and
not as a penalty, all Rent and other sums due and payable by Tenant through the
date of termination
16
<PAGE>
plus (i) an amount equal to sixty percent (60%) of the Rent and other sums
provided herein to be paid by Tenant for the residue of the Term, and (ii) the
costs of performing any other covenants to be performed by Tenant.
If Landlord elects to terminate Tenant's right to possession only,
without terminating this Lease, Landlord may, at Landlord's option, enter into
the Premises, remove Tenant's signs and other evidences of tenancy, and take and
hold possession thereof as hereinabove provided, without such entry and
possession terminating this Lease or releasing Tenant, in whole or in part, from
Tenant's obligations to pay the Rent hereunder for the full Term or from any
other obligations of Tenant under this Lease. Landlord shall use commercially
reasonably efforts to relet all or any part of the Premises for such rent and
upon terms as are commercially reasonable (including the right to relet the
Premises for a term greater or lesser than that remaining of the Term of
premises and the right to relet the Premises as a part of a larger area, the
right to change the character or use made of the Premises and the right to grant
concessions of free rent). For the purpose of such reletting, Landlord may
decorate or make any repairs, changes, alterations, or additions in or to the
Premises that may be reasonably necessary or desirable. If Landlord is unable
to relet the Premises after using such commercially reasonably efforts to do so,
Landlord shall have the right to terminate this Lease, in which event, Tenant
shall pay to Landlord liquidated damages (because the parties hereto recognize
that as of the date hereof actual damages are not ascertainable and are of
imprecise calculation and not as a penalty) equal to sixty percent (60%) of the
Rent, and other sums provided herein to be paid by Tenant for the remainder of
the Term. If the Premises are relet and sufficient sums shall not be realized
from such reletting after payment of all reasonable expenses of such
decorations, repairs, changes, alterations, additions and the expenses of
repossession and such reletting, and the collection of the Rent herein provided
and other payments required to be made by Tenant under the provisions of this
Lease for the remainder of the Term of this Lease then, in such event, Tenant
shall pay to Landlord on demand any such deficiency and Tenant agrees that
Landlord may file suit to recover any sums falling due under the terms of this
Section from time to time, and all costs and expenses of Landlord, including
attorneys' fees, incurred in connection with any such suit shall be paid by
Tenant.
SECTION 20.2 WAIVERS. Tenant hereby expressly waives, so far as
-------
permitted by law, the service of any notice of intention to re-enter provided
for in any statute, and except as is herein otherwise provided. Tenant for and
on behalf of itself and all persons claiming through or under Tenant, also
waives any and all rights of redemption or re-entry or repossession in case
Tenant shall be dispossessed by a judgment or by warrant of any court or judge
or in case of re-entry or repossession by Landlord or in case of any expiration
or termination of this Lease. The terms "enter," "re-enter," "entry" or "re-
entry" as used in this Lease are not restricted to their technical legal
meanings.
SECTION 20.3 BANKRUPTCY. If Landlord shall not be permitted to
----------
terminate this Lease, as provided in this Article XX because of the provisions
of the United States Code relating to Bankruptcy, as amended (the "Bankruptcy
Code"), then Tenant as a debtor-in-possession or any trustee for Tenant agrees
promptly, within no more than sixty (60) days after the filing of the bankruptcy
petition, to assume or reject this Lease. In such event, Tenant or any trustee
for Tenant may only assume this Lease if: (a) it cures or provides adequate
assurances that the trustee will promptly cure any default hereunder; (b)
compensates or provides adequate assurance that Tenant will promptly compensate
Landlord of any actual pecuniary loss to Landlord resulting from Tenant's
default; and (c) provides adequate assurance of performance during the fully
stated term hereof of all of the terms, covenants, and provisions of this Lease
to be performed by Tenant. In no event after the assumption of this Lease shall
any then-existing default remain uncured for a period in excess of the earlier
of ten (10) days or the time period set forth herein. Adequate assurance of
performance of this Lease, as set forth hereinabove, shall include, without
limitation, adequate assurance (i) of the source of rent reserved hereunder; and
(ii) that the assumption of this Lease will not breach any provision hereunder.
If Tenant assumes this Lease and proposes to assign the same pursuant
to the provisions of the Bankruptcy Code to any person or entity who shall have
made a bona fide offer to accept an assignment of this Lease on terms acceptable
to Tenant, then notice of such proposed assignment, setting forth: (i) the name
and address of such person; (ii) all of the terms and conditions of such offer;
and (iii) the adequate assurance to be
17
<PAGE>
provided Landlord to assure such person's future performance under this Lease,
including, without limitation, the assurance referred to in Section 365(b)(3) of
the Bankruptcy Code, shall be given to Landlord by the Tenant no later than
twenty (20) days after receipt by the Tenant but in any event no later than ten
(10) days prior to the date that the Tenant shall make application to a court of
competent jurisdiction for authority and approval to enter into such assignment
and assumption, and Landlord shall thereupon have the prior right and option, to
be exercised by notice to the Tenant given at any time prior to the effective
date of such proposed assignment, to accept an assignment of this Lease upon the
same terms and conditions and for the same consideration, if any, as the bona
fide offer made by such person, less any brokerage commissions which may be
payable out of the consideration to be paid by such person for the assignment of
this Lease.
If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code any and all monies or other considerations
payable or otherwise to be delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant or of
the estate of the Tenant within the meaning of the Bankruptcy Code. Any and all
monies or other considerations constituting the Landlord's property under the
preceding sentence not paid or delivered to the Landlord shall be held in trust
for the benefit of Landlord and shall be promptly paid to the Landlord.
Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be conclusively deemed without further
act or deed to have assumed all of the obligations arising under this Lease on
and after the date of such assignment. Any such assignee shall upon demand
execute and deliver to Landlord an instrument confirming such assumption. Any
such assignee shall be permitted to use the Leased Premises only for the Use.
Nothing contained in this Section shall, in any way, constitute a
waiver of the provisions of Article XV of this Lease relating to alienation.
Tenant shall not, by virtue of this Section, have any further rights relating to
assignment other than those granted in the Bankruptcy Code. Notwithstanding
anything in this Lease to the contrary, all amounts payable by Tenant to or on
behalf of Landlord under this Lease, whether or not expressly denominated as
rent, shall constitute rent for the purpose of Section 501(b)(6) or any
successive section of the Bankruptcy Code.
ARTICLE XXI
-----------
LANDLORD'S PERFORMANCE OF TENANT'S COVENANTS
--------------------------------------------
SECTION 21.1 LANDLORD'S PERFORMANCE OF TENANT'S COVENANTS. Should
--------------------------------------------
Tenant at any time fail to do any act or make any payment required to be done or
made by it under the provisions of this Lease, Landlord, at its option, may (but
shall not be required to), upon notice to Tenant (except in emergency
circumstances) do the same or cause the same to be done, and the amounts paid
and expenses incurred by Landlord in connection therewith shall be so much
Additional Rent due on the next rent date after such payment, together with
interest at the Lease Interest Rate from the date of payment.
ARTICLE XXII
------------
EXERCISE OF REMEDIES
--------------------
SECTION 22.1 CUMULATIVE REMEDIES. No remedy contained herein or
-------------------
otherwise conferred upon or reserved to Landlord, shall be considered exclusive
of any other remedy, but the same shall be cumulative and shall be in addition
to every other remedy given herein, now or hereafter existing at law or in
equity or by statute,
18
<PAGE>
and every power and remedy given by this Lease to Landlord may be exercised from
time to time and as often as occasion may arise or as may be deemed expedient.
No delay or omission of Landlord to exercise any right or power arising from any
default shall impair any such right or power or shall be construed to be a
waiver of any such default or an acquiescence therein.
SECTION 22.2 NO WAIVER. No waiver of any breach of any of the
---------
covenants of this Lease shall be construed, taken or held to be a waiver of any
other breach, or a waiver, acquiescence in or consent to any further or
succeeding breach of the same covenant. The acceptance by Landlord of any
payment of Rent or other sums payable hereunder after the termination by
Landlord of this Lease or of Tenant's right to possession hereunder shall not,
in the absence of agreement in writing to the contrary by Landlord, be deemed to
restore this Lease or Tenant's right to possession hereunder, as the case may
be, but shall be construed as a payment on account and not in satisfaction of
damages due from Tenant to Landlord. Receipt of Rent by Landlord, with
knowledge of any breach of this Lease by Tenant or of any default by Tenant in
the observance or performance of any of the conditions or covenants of this
Lease, shall not be deemed to be a waiver of any provision of this Lease.
SECTION 22.3 EQUITABLE RELIEF. In the event of any breach or
----------------
threatened breach by Tenant of any of the agreements, terms, covenants or
conditions contained in this Lease, Landlord shall be entitled to enjoin such
breach or threatened breach and shall have the right to invoke any right and
remedy allowed at law or in equity or by statute or otherwise as though re-
entry, summary proceedings, and other remedies were not provided for in this
Lease.
ARTICLE XXXIII
--------------
SUBORDINATION TO MORTGAGES
--------------------------
SECTION 23.1 SUBORDINATION. Landlord may execute and deliver a
-------------
mortgage or trust deed in the nature of a mortgage (both sometimes referred to
as "Mortgage") against the Premises or any portion thereof. This Lease and the
rights of Tenant hereunder, shall automatically, and without the requirement of
the execution of any further documents, be and are hereby made expressly subject
and subordinate at all times to the lien of any Mortgage now or hereafter
encumbering any portion of the Project, and to all advances made or hereafter to
be made upon the security thereof, provided that the holder of said Mortgage
agrees in writing not to disturb the rights of Tenant under this Lease so long
as Tenant is not in default hereunder. Notwithstanding the foregoing, Tenant
agrees to execute and deliver such instruments subordinating this Lease to the
lien of any such Mortgage as may be requested in writing by Landlord from time
to time. Notwithstanding anything to the contrary contained herein, any
mortgagee under a Mortgage may, by notice in writing to the Tenant, subordinate
its Mortgage to this Lease. Landlord shall use reasonable efforts to cause the
holder of any existing Mortgage to agree in writing with Tenant that it will not
disturb the rights of Tenant under this Lease so long as Tenant is not in
default hereunder.
SECTION 23.2 MORTGAGE PROTECTION. Tenant agrees to give the
-------------------
mortgagee under any Mortgage, by registered or certified mail, a copy of any
notice of default served upon the Landlord by Tenant, provided that prior to
such notice Tenant has received notice (by way of service on Tenant of a copy of
an assignment of rents and leases, or otherwise) of the address of such
mortgagee and containing a request therefor. Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then said mortgagee shall have an additional thirty (30) days after
receipt of notice thereof within which to cure such default or, if such default
cannot be cured within that time, then such additional time as may be necessary,
if, within such thirty (30) days, any mortgagee has commenced and is diligently
pursuing the remedies necessary to cure such default (including but not limited
to commencement of foreclosure proceedings, if necessary to effect such cure).
Until the time allowed as aforesaid for said mortgagee to cure such defaults has
expired without cure, Tenant shall have no right to, and shall not, terminate
this Lease on account of default. This Lease may not be modified or amended so
as to reduce the rent or shorten the term, or so as to adversely affect in any
other respect to any material extent the rights
<PAGE>
of the Landlord, nor shall this Lease be cancelled or surrendered, without the
prior written consent, in each instance, of the mortgagee.
ARTICLE XXIV
-------------
INDEMNITY AND WAIVER
--------------------
SECTION 24.1. TENANT'S INDEMNITY. Tenant will protect, indemnify and
------------------
save Landlord, its partners, shareholders, employees, officers, directors,
agents and their respective successors and assigns harmless (if Landlord is a
trustee, the term "Landlord", for the purposes of this Article XXIV only, shall
include the trustee and all beneficiaries of the trust) from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including without limitation, reasonable attorneys' fees and
expenses) imposed upon, incurred by or asserted against Landlord by reason of:
(a) any accident, injury to or death of persons or loss of or damage to property
occurring on or about the Premises or any part thereof or the adjoining
properties, sidewalks, curbs, streets or ways, or resulting from an act or
omission of Tenant or anyone claiming by, through or under Tenant; (b) Tenant's
use, occupation, condition or operation of the Premises or any part thereof; or
(c) performance of any labor or services or the furnishing of any materials or
other property by or on behalf of Tenant in respect of the Premises or any part
thereof. In case any action, suit or proceeding is brought against Landlord by
reason of any such occurrence. Tenant will, at Tenant's sole expense, resist
and defend such action, suit or proceeding, or cause the same to be resisted and
defended.
SECTION 24.2. WAIVER OF CLAIMS. Tenant waives all claims it may have
----------------
against Landlord and Landlord's agents for damage or injury to person or
property sustained by Tenant or any persons claiming through Tenant or by any
occupant of the Premises, or by any other person, resulting from any part of the
Premises becoming out of repair, or resulting from any accident on or about the
Premises or resulting directly or indirectly from any act or neglect of any
person other than the negligent act or omission of Landlord and its agents.
This Section 24.2. shall include, but not by way of limitation, damage caused by
water, snow, frost, steam, excessive heat or cold, sewage, gas, odors or noise,
or caused by bursting or leaking pipes or plumbing fixtures, and shall apply
equally whether any such damage results from the act or neglect of Tenant or of
any other person (excluding Landlord), and whether such damage be caused or
result from anything or circumstance above mentioned or referred to, or to any
other thing or circumstance whether of a like nature or of a wholly different
nature. All Tenant's Equipment and other personal property belonging to Tenant
or any occupant of the Premises that is in or on any part of the Premises shall
be there at the risk of Tenant or of such other person only, and Landlord shall
not be liable for any damage thereto other than the negligent act or omission of
Landlord and its agents or for the theft or misappropriation thereof.
ARTICLE XXV
------------
SURRENDER
---------
SECTION 25.1. CONDITION. Upon the termination of this Lease whether
---------
by forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises to Landlord, broom clean, in good order, condition and repair,
reasonable wear and tear and damage by casualty excepted. "Broom clean" means
free from all debris, dirt, rubbish, personal property of Tenant, oil, grease,
tire tracks or other substances. Any damage caused by removal of Tenant from
the Premises, including any damages caused by removal of tenant's equipment as
herein defined, shall be repaired and paid for by Tenant prior to the expiration
of the Term.
20
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All Alterations temporary or permanent, excluding Tenant's Equipment,
in or upon the Premises placed there by Tenant, shall become Landlord's property
and shall remain upon the Premises upon such termination of this Lease by lapse
of time or otherwise, without compensation or allowance or credit to Tenant,
unless Landlord requests their removal at the time Tenant requests Landlord to
consent to their installation. If Landlord so requests removal of said
additions, hardware, alterations or improvements and Tenant does not make such
removal by the termination of this Lease, or within ten (10) days after such
request, whichever is later, Landlord may remove the same and deliver the same
to any other place of business of Tenant or warehouse same, and Tenant shall pay
the reasonable cost of such removal, delivery and warehousing to Landlord on
demand.
SECTION 25.2. REMOVAL OF TENANT'S EQUIPMENT. Upon the termination of
-----------------------------
this Lease by lapse of time, or otherwise, Tenant may remove Tenant's Equipment
provided, however, that Tenant shall repair any injury or damage to the Premises
which may result from such removal. If Tenant does not remove Tenant's
Equipment from the Premises prior to the end of the Term, however ended,
Landlord may, at its option, remove the same and deliver the same to any other
place of business of Tenant or warehouse the same, and Tenant shall pay the
reasonable cost of such removal (including the repair of any injury or damage to
the Premises resulting from such removal), delivery and warehousing to Landlord
on demand, or Landlord may treat Tenant's equipment as having been conveyed to
Landlord with this Lease as a Bill of Sale, without further payment or credit by
Landlord to Tenant.
SECTION 25.3. HOLDOVER. If Tenant retains possession of the Premises
--------
or any part thereof after the termination of the Term, by lapse of time and
otherwise, then Tenant shall pay to Landlord monthly Base Rent, at one hundred
fifty percent (150%) of the rate payable for the month immediately preceding
said holding over (along with increases for Additional Rent which Landlord may
reasonably estimate), computed on a per-month basis, for each month or part
thereof (without reduction for any such partial month) that Tenant thus remains
in possession, and in addition thereto, Tenant shall pay Landlord all damages,
consequential as well as direct, sustained by reason of Tenant's retention of
possession. Alternatively, at the election of Landlord expressed in a written
notice to Tenant and not otherwise, such retention of possession shall
constitute a renewal of this Lease for one (1) year, at a rental equal to one
hundred twenty percent (120%) of the Base Rent during the previous year. The
provisions of this paragraph do not exclude the Landlord's rights of re-entry or
any other right hereunder. Any such extension or renewal shall be subject to
all other terms and conditions herein contained.
ARTICLE XXVI
------------
COVENANT OF QUIET ENJOYMENT
---------------------------
SECTION 26.1. COVENANT OF QUIET ENJOYMENT. Landlord covenants that
---------------------------
Tenant, on paying the Rent and all other charges payable by Tenant hereunder,
and on keeping, observing and performing all the other terms,covenants,
conditions, provisions and agreements herein contained on the part of Tenant to
be kept, observed and performed, all of which obligations of Tenant are
independent of Landlord's obligations hereunder, shall, during the Term,
peaceably and quietly have, hold and enjoy the Premises subject to the terms,
covenants, conditions, provisions and agreement hereof free from hindrance by
Landlord or any person claiming by, through or under Landlord.
ARTICLE XXVII
-------------
NO RECORDING
------------
SECTION 27.1. NO RECORDING. This Lease shall not be recorded.
------------
21
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PAGE>
ARTICLE XXVIII
--------------
NOTICES
-------
SECTION 28.1. NOTICES. All notices, consents, approvals to or
-------
demands upon or by Landlord or Tenant desired or required to be given under the
provisions hereof, shall be in writing. Any notices or demands from Landlord to
Tenant shall be deemed to have been duly and sufficiently given if a copy
thereof has been personally served, forwarded by expedited messenger or
recognized overnight courier service with evidence of delivery or mailed by
United States registered or certified mail in an envelope properly stamped and
addressed to Tenant at Tenant's Mailing Address, or at such other address as
Tenant may theretofore have furnished by written notice to Landlord. Any
notices or demands from Tenant to Landlord shall be deemed to have been duly and
sufficiently given if forwarded by expedited messenger or recognized overnight
courier service with evidence of delivery or mailed by United States registered
or certified mail in an envelope properly stamped and addressed to Landlord at
Landlord's Mailing Address, with a copy to Mark S. Richmond, Katz Randall &
Weinberg, 333 West Wacker Drive, Suite 1800, Chicago, Illinois 60606, or at such
other address as Landlord may theretofore have furnished by written notice to
Tenant. The effective date of such notice shall be the date of actual delivery,
except that if delivery is refused, the effective date of notice shall be the
date delivery is refused.
ARTICLE XXIX
------------
COVENANTS RUN WITH LAND
-----------------------
SECTION 29.1. COVENANTS. All of the covenants, agreements,
---------
conditions and undertakings in this Lease contained shall extend and inure to
and be binding upon the heirs, executors, administrators, successors and assigns
of the respective parties hereto, the same as if they were in every case
specifically named, and shall be construed as covenants running with the Land,
and wherever in this Lease reference is made to either of the parties hereto, it
shall be held to include and apply to, wherever applicable, the heirs,
executors, administrators, successors and assigns of such party. Nothing herein
contained shall be construed to grant or confer upon any person or persons,
firm, corporation or governmental authority, other than the parties hereto,
their heirs, executors, administrators, successors and assigns, any right, claim
or privilege by virtue of any covenant, agreement, condition or undertaking in
this Lease contained.
SECTION 29.2. RELEASE OF LANDLORD. The term "Landlord", as used in
-------------------
this Lease, so far as covenants or obligations on the part of Landlord are
concerned, shall be limited to mean and include only the owner or owners at the
time in question of the fee of the Project, and in the event of any transfer or
transfers of the title to such fee, Landlord herein named (and in the case of
any subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved, from and after the date of such transfer or
conveyance, of all personal liability as respects the performance of any
covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed; provided that any funds in the hands of such
Landlord or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be turned over to the grantee, and any amount then due and
payable to Tenant by Landlord or the then grantor under any provisions of this
Lease, shall be paid to Tenant.
ARTICLE XXX
------------
ENVIRONMENTAL MATTERS
---------------------
SECTION 30.1. HAZARDOUS MATERIALS. Tenant agrees that it will not
-------------------
use, handle, generate, treat, store or dispose of, or permit the use, handling,
generation, treatment, storage or disposal of any Hazardous Materials
22
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(as hereinafter defined) in, on, under, around or above the Premises or the
Project now or at any future time and will indemnify, defend and save Landlord
harmless from any and all actions, proceedings, claims, costs, expenses and
losses of any kind, including, but not limited to, those arising from injury to
any person, including death, damage to or loss of use or value of real or
personal property, and costs of investigation and cleanup or other
environmental remedial work, which may arise in connection with the existence of
Hazardous Materials on the Premises occurring or caused in whole or in part
during the Term hereof. The term "Hazardous Materials", when used herein, shall
include, but shall not be limited to, any substances, materials or wastes that
are regulated by any local governmental authority, the state where the Premises
or the Project is located, or the United States of America because of toxic,
flammable, explosive, corrosive, reactive, radioactive or other properties that
may be hazardous to human health or the environment, including without
limitation, above or underground storage tanks, flammables, explosives,
radioactive materials, radon, petroleum and petroleum products, asbestos, urea
formaldehyde foam insulation, methane, lead-based paint, polychlorinated
biphenyl compounds, hydrocarbons or like substances and their additives or
constituents, pesticides and toxic or hazardous substances on materials of any
kind, including without limitation, substances now or hereafter defined as
"hazardous substances," "hazardous materials," "toxic substances" or "hazardous
wastes" in the following statutes, as amended: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)9601, et seq.,
-- ----
"CERCLA"); the Hazardous Materials Transportation Act (49 U.S.C. (S)1801, et
--
seq., "HMTA"); the Toxic Substances Control Act (15 U.S.C. (S)2601, et seq.,
- ---- -- ----
"TSCA"); the Resource Conservation and Recovery Act (42 U.S.C. (S)6901, et seq.,
-- ----
"RCRA"); the Clean Air Act (42 U.S.C. (S)7401 et seq., "CAA"); the Clean Water
-- ----
Act (33 U.S.C. (S)1251, et seq., "CWA"); the Rivers and Harbors Act, (33 U.S.C.
-- ----
(S)401 et seq., "RHA"); the Emergency Planning and Community Right-to-Know Act
-- ----
of 1986 (41 U.S.C. (S)11001 et seq., "EPCRA"), the Federal Insecticide,
-- ----
Fungicide and Rodenticide Act (7 U.S.C. (S)136 to 136y, "FIFRA"); the Oil
Pollution Act of 1990 (33 U.S.C. (S)2701 et seq., "OPA"); and the Occupational
-- ----
Safety and Health Act (29 U.S.C. (S)651 et seq., "OSHA"); and any so-called
-- ----
"Superlien law"; and in the regulations promulgated pursuant thereto, and any
other applicable federal, state or local law, common law, code, rule,
regulation, order, policy or ordinance, presently in effect or hereafter
enacted, promulgated or implemented, or any other applicable governmental
regulation imposing liability or standards of conduct concerning any hazardous,
toxic or dangerous substances, waste or material, now or hereafter in effect.
SECTION 30.2. CONDUCT OF TENANT. If Tenant, in the current operation
-----------------
of its business or otherwise with the prior written authorization of Landlord,
which authorization may be granted or denied by Landlord in its sole and
absolute discretion, generates, uses, transports, stores, treats or disposes of
any Hazardous Materials:
(a) Tenant shall, at its own cost and expense, comply with all
applicable environmental laws relating to such Hazardous Materials;
(b) Tenant shall (i) not dispose of any Hazardous Materials in
dumpsters or trash containers; (ii) not discharge any Hazardous Materials
into drains or sewers; (iii) not cause or allow the release, discharge,
emission or run-off of any Hazardous Materials to air, to surface waters,
to the Land, to ground water, whether directly or indirectly; (iv) at
Tenant's own cost and expense, arrange for the lawful transportation and
off-site disposal of all Hazardous Materials generated by Tenant; (v)
provide secondary containment around all Hazardous Materials storage
containers, storage facilities and above ground storage tanks; (vi) conduct
all necessary environmental inspections, such as, but not limited to,
asbestos inspections prior to any renovation or demolition, as required by
40 CFR Part 61 and provide copies of all such reports to the Landlord;
(vii) comply with all reporting requirements under any local, state or
federal ordinance, statute or regulation, such as, but not limited to,
toxics inventory reporting under the Emergency Planning and Community
Right-to-Know Act, the provisions under 40 CFR Part 61, or various
regulations controlling the emissions into the atmosphere of volatile
organic compounds and provide copies of all such reports and notifications
to Landlord; and (viii) use only highly skilled people to address all
environmental issues associated with the leasehold, and that such people
and all employees of the Tenant shall receive all required training or
certification under any local, state or federal law specifically mentioned
or alluded to in Section 30.1 of this Lease;
23
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(c) Tenant shall promptly provide Landlord with copies of all
communications, permits or agreements with any governmental authority or
agency (federal, state or local) or any private entity relating in any way
to the violation or alleged violation of any environmental laws or to any
violation of Tenant's obligations under subparagraph (b) above;
(d) Landlord and Landlord's agents and employees shall have the
right to enter the Premises and/or conduct at Landlord's expense
appropriate tests for the purpose of ascertaining that Tenant complies with
all applicable laws, rules or permits relating in any way to the presence
of Hazardous Materials on the Premises and/or the Project; and
(e) Upon the written request of Landlord no more frequently than
once every Lease Year, or on any other occasion in the event that Landlord
has reason to believe an environmental problem exists at the Premises.
Tenant shall provide Landlord the results of appropriate tests of air,
water and soil to demonstrate (i) that Tenant is in compliance with all
applicable laws, rules or permits relating in any way to the presence of
any Hazardous Materials on the Premises and (ii) the lack of any releases,
discharges or emissions from the Premises.
If the presence, release, threat of release, placement on or in the
Premises and/or the Project occurs or is caused in whole or in part during the
Term of this Lease, or the generation, transportation, storage, treatment, or
disposal at the Premises and/or the Project occurs or is caused in whole or in
part during the Term of this Lease of any Hazardous Materials gives rise to
liability (including, but not limited to, a response action, remedial action, or
removal action) under any environmental laws or common law theory, including,
but not limited to nuisance, strict liability, negligence and trespass, Tenant
shall promptly take any and all remedial and removal action necessary to clean
up the Premises and/or the Project in accordance with applicable environmental
laws, except to the extent any of the foregoing is caused by Landlord or any
other tenant in the Project.
SECTION 30.3. TENANT'S ENVIRONMENTAL INDEMNITY. Tenant does hereby
--------------------------------
indemnify, defend and hold harmless Landlord and its agents and their respective
officers, directors, beneficiaries, lenders, shareholders, partners, agents and
employees and their respective successors and assigns from all fines, suits,
procedures, claims liabilities, damages and actions of every kind, and all costs
associated therewith (including reasonable attorneys', experts' and consultants'
fees and costs of testing) arising out of or in any way connected with any
deposit, spill, discharge or other release of Hazardous Materials that occurs or
is caused in whole or in part during the Term of this Lease, at or from the
Premises and/or the Project (except any deposit, spill, discharge or other
release caused by Landlord or any other tenant of the Project), or which arises
at any time from (i) Tenant's failure to provide all information, make all
submissions, and take all steps required by all applicable governmental
authorities; (ii) any Hazardous Materials on, in, under or affecting all or any
portion of the Premises and/or the Project or the groundwater as a result of
events that took place during the Term of this Lease (except any deposit, spill,
discharge or other release caused by Landlord or any other tenant of the
Project); (iii) any violation by Tenant or claim of a violation by Tenant of any
governmental law, statute, rule, regulation, ordinance, requirement, decree,
order or judgment now or hereafter in effect relating to public health, safety,
protection of the environment or any Hazardous Material; (iv) the imposition of
any lien for damages caused by, or the recovery of any costs for, the
remediation cleanup of Hazardous Material as a result of events that took place
during the Term of this Lease (except any deposit, spill, discharge or other
release caused by Landlord or any other tenant of the Project); (v) costs of
removal of any and all Hazardous Material from all or any portion of the
Premises and/or the Project, which Hazardous Material were placed on the
Premises and/or the Project during the Term of this Lease by Tenant or any
officer, director, shareholder, partner, member, employee, agent, invitee,
contractor, licensee, assignee, sublessee or successor of Tenant or anyone
acting by, through or under any of the foregoing parties; (vi) costs incurred to
comply, in connection with all or any portion of the Premises and/or the
Project, with all governmental regulations with respect to Hazardous Materials
on, in, under or affecting the Premises and/or the Project, which Hazardous
Materials were placed on the Premises and/or the Project by Tenant or any
officer, director, shareholder, partner, member, employee, agent, invitee,
contractor, licensee, assignee, sublessee or successor of Tenant or anyone
acting by, through or under
24
<PAGE>
any of the foregoing parties during the Term of this Lease; or (vii) any spills,
discharges, leaks, escapes, releases, dumping, transportation, storage,
treatment or disposal of any Hazardous Substances which occur during the Term of
this Lease, but only to the extent that such Hazardous Materials originated from
or were or are located on the Premises and/or the Project and not caused by
Landlord or any other tenant of the Project. Tenant's obligations and
liabilities under this Article XXX shall survive the expiration of this Lease.
SECTION 30.4. LANDLORD'S RIGHT TO ENTER PREMISES. Landlord shall have
----------------------------------
the right and privilege (but not the obligation) to enter the Premises at
reasonable times, upon reasonable prior notice (except in the event of an
emergency) to make inspections and other tests (including, but not limited to,
drilling) of its condition, including, but not limited to, air, soil and
groundwater sampling and other inspections for Hazardous Materials. In the event
any Hazardous Materials are discovered during the inspections in violation of
this Lease, Tenant shall reimburse Landlord for the cost of all inspections and
tests in addition to its liability under Section 30.3.
SECTION 30.5. TENANT'S NOTIFICATION REQUIREMENTS. Notwithstanding
----------------------------------
anything to the contrary contained in Article XXVIII of this Lease, Tenant
agrees to provide immediate telephonic notification to Landlord in the event of
any release of Hazardous Materials in any manner within or outside of the
Premises. Tenant shall further utilize its reasonable efforts to report to
Landlord any other release of Hazardous Materials actually known to Tenant
within or outside of the Premises by any party other than Tenant.
ARTICLE XXXI
-------------
SECURITY DEPOSIT
----------------
SECTION 31.1. SECURITY DEPOSIT. Tenant agrees to deposit with
----------------
Landlord, upon the execution of this Lease, the Security Deposit as security for
the full and faithful performance by Tenant of each and every term, provision,
covenant and condition of this Lease. If Tenant defaults beyond any applicable
grace and/or cure period in respect to any of the terms, provisions, covenants
and conditions of this Lease including, but not limited to, payment of all
rental and other sums required to be paid by Tenant hereunder, Landlord may use,
apply or retain the whole or any part of the Security Deposit for the payment of
such rent in default, for any sum which Landlord may expend or be required to
expend by reason of Tenant's default including, without limitation, any damages
or deficiency in the reletting of the Premises, whether such damages or
deficiency shall have accrued before or after re-entry by Landlord. If any of
the Security Deposit shall be so used, applied or retained by Landlord at any
time or from time to time, Tenant shall promptly, in each such instance, within
five (5) days of written demand therefor by Landlord, pay to Landlord such
additional sums as may be necessary to restore the Security Deposit to the
original amount set forth in the first Section of this Lease. If Tenant shall
fully and faithfully comply with all the terms, provisions, covenants and
conditions of this Lease, the Security Deposit, or the balance thereof, shall be
returned to Tenant after the following: (a) the time fixed as the expiration of
the Term of this Lease; (b) the removal of Tenant from the Premises; (c) the
surrender of the Premises by Tenant to Landlord in accordance with this Lease;
and (d) thirty (30) days after the Termination Date. Except as otherwise
required by law, Tenant shall not be entitled to any interest on the aforesaid
Security Deposit. In the absence of evidence satisfactory to Landlord of an
assignment of the right to receive the Security Deposit or the remaining balance
thereof, Landlord may return the security deposit to the original Tenant,
regardless of one or more assignments of this Lease.
25
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ARTICLE XXXII
-------------
MISCELLANEOUS
-------------
SECTION 32.1. CAPTIONS. The captions of this Lease are for
--------
convenience only and are not to be construed as part of this Lease and shall not
be construed as defining or limiting in any way the scope or intent of the
provisions hereof.
SECTION 32.2. SEVERABILITY. If any covenant, agreement or condition
------------
of this Lease or the application thereof to any person, firm or corporation or
to any circumstances, shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such covenant, agreement or
condition to persons, firms or corporations or to circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby. Each
covenant, agreement or condition of this Lease shall be valid and enforceable to
the fullest extent permitted by law.
SECTION 32.3. APPLICABLE LAW. This Lease shall be construed and
--------------
enforced in accordance with the laws of the state where the Premises are
located.
SECTION 32.4. AMENDMENTS IN WRITING. None of the covenants, terms or
---------------------
conditions of this Lease, to be kept and performed by either party, shall in any
manner be altered, waived, modified, changed or abandoned, except by a written
instrument, duly signed, acknowledged and delivered by the other party.
SECTION 32.5. RELATIONSHIP OF PARTIES. Nothing contained herein
-----------------------
shall be deemed or construed by the parties hereto, nor by any third party, as
creating the relationship of principal and agent or of partnership, or of joint
venture by the parties hereto, it being understood and agreed that no provision
contained in this Lease nor any acts of the parties hereto shall be deemed to
create any relationship other than the relationship of Landlord and Tenant.
SECTION 32.6. BROKERAGE. Each of Landlord and Tenant warrants to the
---------
other that it has no dealings with any real estate broker or agent in connection
with this lease other than Landlord's Broker and Tenant's Broker, and each of
Landlord and Tenant covenants to pay, hold harmless and indemnify the other from
and against any and all cost, expense or liability for any compensation,
commissions and charges claimed by any other broker or other agent with respect
to this Lease or the negotiation thereof arising out of any breach of the
foregoing warranty.
SECTION 32.7. NO ACCORD AND SATISFACTION. No payment by Tenant or
--------------------------
receipt by Landlord of a lesser amount than the monthly rent herein stipulated
and additional rent shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
in this Lease provided.
SECTION 32.8. JOINT EFFORT. The preparation of this Lease has been a
------------
joint effort of the parties hereto and the resulting documents shall not, solely
as a matter of judicial construction, be construed more severely against one of
the parties than the other.
SECTION 32.9. WAIVER OF JURY TRIAL. Tenant hereby waives a jury
--------------------
trial in action brought by Landlord hereunder. If Landlord commences any
proceeding for nonpayment of rent or any other sum due to be paid by Tenant
under this Lease, Tenant hereby agrees that Tenant will not impose any
counterclaim of any nature or description in any such proceeding, provided
however, that such agreement of Tenant shall not be construed as a waiver of the
right of Tenant to assert such claim in a separate action or actions brought by
Tenant.
26
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SECTION 32.10. TIME. Time is of the essence of this Lease, and all
----
provisions herein relating thereto shall be strictly construed.
SECTION 32.11. LANDLORD'S CONSENT. Landlord's granting of any consent
------------------
under this Lease, or Landlord's failure to object to any action taken by Tenant
without Landlord's consent required under this Lease, shall not be deemed a
waiver by Landlord of its rights to require such consent for any further similar
act by Tenant. No waiver by Landlord of any other breach of the covenants of
this Lease shall be construed, taken or held to be a waiver of any other breach
or to be a waiver, acquiescence in or consent to any further or succeeding
breach of the same covenant. None of the Tenant's covenants under this Lease,
and no breach thereof, shall be waived, altered or modified except by a written
instrument executed by Landlord.
SECTION 32.12. NO PARTNERSHIP. Landlord is not, and shall not be
--------------
deemed to be, in any way or for any purpose, the partner, employer, principal,
master or agent of or with Tenant.
SECTION 32.13. LANDLORD'S LIABILITY. Notwithstanding anything to the
--------------------
contrary herein contained, there shall be absolutely no personal liability
asserted or enforceable against Landlord or on any persons, firms or entities
who constitute Landlord with respect to any of the terms, covenants, conditions
and provisions of this Lease, and Tenant shall, subject to the rights of any
mortgagee, look solely to the interest of Landlord, its successors and assigns
in the Project for the satisfaction of each and every remedy of Tenant in the
event of default by Landlord hereunder; such exculpation of personal liability
is absolute and without any exception whatsoever. If the entity constituting
Landlord is a partnership, Tenant agrees that the deficit capital account of any
such partner shall not be deemed an asset or property of said partnership.
ARTICLE XXXIII
--------------
LANDLORD'S WORK
---------------
SECTION 33.1. LANDLORD'S WORK. Landlord hereby agrees, at Landlord's
---------------
sole cost and expense, in a good and workmanlike manner, to perform the work
described in Exhibit "D", which is attached hereto and made a part hereof, to
-----------
the Premises (hereinafter collectively referred to as "Landlord's Work"). When
Landlord's Work is "substantially complete" (as hereinafter defined), then
Landlord shall so notify Tenant. It is acknowledged between the parties that
Landlord's Work shall be deemed substantially complete at such time as Landlord
has substantially completed Landlord's Work, notwithstanding Landlord may not
have completed any extra work requested by Tenant or that minor or insubstantial
portions of the construction, decoration, mechanical adjustments or other
customary "punch list" items remain to be done. Upon such notification, Tenant
shall promptly (and not later than two (2) business days after the date of
Landlord's said notice) inspect Landlord's Work and furnish to Landlord a
written statement that, with the exception of certain specified and enumerated
items (hereinafter referred to as the "Punch List"), Landlord's Work is
substantially complete. At the request of Landlord, from time to time
thereafter, Tenant shall, upon completion of items previously listed on a Punch
List, promptly furnish to Landlord a revised Punch List acknowledging completion
of said item. Landlord hereby agrees to use reasonable efforts to complete all
Punch List items within thirty (30) days of the date Landlord's Work is
substantially complete, subject to extension due to delays caused by Tenant, its
agents or employees or customary "force majeure" conditions. Landlord shall use
its best efforts to minimize interference with Tenant's use and occupancy of the
Premises during the pendency of Landlord's Work.
27
<PAGE>
ARTICLE XXXIV
-------------
RENEWAL OPTION
--------------
SECTION 34.1. RENEWAL OPTION. Tenant shall have the option
--------------
(hereinafter referred to as the "Renewal Option") to renew the Initial Term for
all of the Premises as of the expiration date of the Initial Term, for two (2)
additional periods of three (3) Lease Years each (each of said renewals is a
"Renewal Term") upon the following terms and conditions:
A. Tenant gives Landlord written notice of its exercise of each
Renewal Option at least nine (9) months prior to the expiration of the
Term.
B. Tenant is not in default under this Lease either on the date
Tenant delivers the notice required under (A) above or at any time
thereafter prior to the commencement of the Renewal Term so exercised.
C. All of the terms and provisions of this Lease (except this
Article XXXIV) shall be applicable to the Renewal Term, except that Annual
Base Rent for each year of each Renewal Term shall be increased as provided
in Section 5.1 hereof on May 1st during each year of each Renewal Term.
SECTION 34.2. "AS IS" CONDITION. Tenant agrees to accept the
-----------------
Premises to be covered by this Lease during the Renewal Term in an "as is"
physical condition and Tenant shall not be entitled to receive any allowance,
credit, concession or payment from Landlord for the improvement thereof.
SECTION 34.3. AMENDMENT. In the event Tenant exercises a Renewal
---------
Option, Landlord and Tenant shall mutually execute and deliver an amendment to
this Lease reflecting the renewal of the Term on the terms herein provided,
which amendment shall be executed and delivered promptly after the determination
of Rent to be applicable to the first year of each Renewal Term as hereinabove
provided.
SECTION 34.4. TERMINATION. The Renewal Options herein granted shall
-----------
automatically terminate upon the earliest to occur of (i) the expiration or
termination of this Lease, (ii) the termination of Tenant's right to possession
of the Premises, (iii) any assignment or subletting by Tenant, or (iv) the
failure of Tenant to timely or properly exercise the Renewal Option.
IN WITNESS WHEREOF, the parties have executed this Lease as of the
date set forth above.
LANDLORD: CENTERPOINT PROPERTIES CORPORATION, a Maryland
- --------
corporation
By: [SIGNATURE APPEARS HERE]
--------------------------------------------------
Its: COO
By: [SIGNATURE APPEARS HERE]
--------------------------------------------------
Its: CFO
28
<PAGE>
TENANT: WINCUP HOLDINGS, L.P., a Delaware limited partnership
- ------
By: Wincup Holdings, Inc., its general partner
By: /s/ Donald Rogalski
-----------------------------------------------
Its: SR V.P. ADMIN
By: _______________________________________________
Its:
29
<PAGE>
EXHIBIT "A"
PREMISES
--------
<PAGE>
[FLOOR PLAN OF LEASED PREMISES APPEARS HERE]
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTION
-----------------
LOT 1 IN WEST CHICAGO INDUSTRIAL CENTER UNIT SEVEN-A BEING A RESUBDIVISION OF
WEST CHICAGO INDUSTRIAL CENTER UNIT 7, BEING A SUBDIVISION OF PART OF THE WEST
1/2 OF SECTION 33, TOWNSHIP 40 NORTH, RANGE 9, EAST OF THE THIRD PRINCIPAL
MERIDIAN, ACCORDING TO THE PLAT OF SAID RESUBDIVISION RECORDED FEBRUARY 18, 1975
AS DOCUMENT R75-06899, IN DUPAGE COUNTY, ILLINOIS.
PERMANENT INDEX NUMBER: 01-33-300-010
COMMONLY KNOWN AS: 1250 CAROLINA DRIVE, WEST CHICAGO, ILLINOIS
<PAGE>
EXHIBIT "C"
TENANT ESTOPPEL CERTIFICATE
---------------------------
Property Name: ___________________________________________________
("Property")
Tenant: ___________________________________________________
To: ___________________________________________________
DEFINITIONS:
- -----------
Lease Date: ___________________________________________________
Landlord: ___________________________________________________
Tenant: ___________________________________________________
Security Deposit: ___________________________________________________
Date of Possession: ___________________________________________________
Rent Commencement Date: ___________________________________________________
Monthly Base Rent: ___________________________________________________
Annual Base Rental Amount: ___________________________________________________
Monthly Deposits: ___________________________________________________
Term: ___________________________________________________
Termination Date: ___________________________________________________
Renewal Option(s): ___________________________________________________
Square Footage: ___________________________________________________
Use: ___________________________________________________
Tenants Address For Notices: ___________________________________________________
["Purchaser"] ["Lender"] proposes to [purchase the Property] [finance the
Property] and this Tenant Estoppel Certificate is to be made and delivered in
connection with that [purchase] [financing].
The undersigned Tenant under the above-referenced lease dated as of the
Lease Date between Landlord and Tenant ("Lease"), certifies, represents,
confirms and agrees in favor of [Purchaser] [Lender] the following:
<PAGE>
1. The above-described Lease has not been cancelled, modified, assigned,
extended or amended and contains the entire agreement between Landlord and
Tenant except as follows:
2. Rent has been paid to ___________________________________. There is
no Prepaid Rent. The amount of the Security Deposit is as set forth above, which
is currently being held by Landlord.
3. Tenant took possession of the leased premises on the Date of
Possession, and commenced to pay rent on the Rent Commencement Date, in the
amount of the Monthly Base Rent, each payable in advance. Our current Annual
Base Rental Amount is as set forth above, payable in equal monthly installments,
subject to percentage rental, common area maintenance charges, escalation
charges and other charges in accordance with the terms and provisions of the
Lease, which as of the date hereof total the Monthly Deposit Amount, each
payable in equal monthly installments in advance. We are currently in occupancy
of the leased premises. No "discounts", "free rent", "discounted rent" or
"abatements of rent" have been agreed to or are in effect.
4. The Lease is for the Term set forth above and ending on the
Termination Date, and we have the Renewal Option(s) set forth above.
5. All space and improvements covered by the Lease have been completed
and furnished to the satisfaction of Tenant, all conditions required under the
Lease have been met, and Tenant has accepted and taken possession of the leased
premises on the Date of Possession as set forth above and presently occupies the
leased premises, presently consisting of the Square Footage as set forth above.
6. The Lease is (a) in full force and effect, and (b) free from default
by both Landlord and Tenant; and we have no claims, liens, charges or credits
against Landlord or offsets against rent.
7. The undersigned has not assigned or sublet the Lease, nor does the
undersigned hold the Property under assignment or sublease.
8. There are no other agreements written or oral, between the undersigned
and Landlord with respect to the Lease and/or the leased premises and building.
Landlord has satisfied all commitments, arrangements or understandings made to
induce Tenant to enter into the Lease, and Landlord is not in any respect in
default in the performance of the terms and provisions of the Lease, nor is
there now any fact or condition which, with notice or lapse of time or both,
would become such a default.
9. The leased premises are currently being used for the Use set forth
above.
10. Tenant is maintaining (free of default) all insurance policies that
the Lease requires Tenant to maintain.
11. Neither Landlord nor [Purchaser] [Lender] nor any of their respective
successor or assigns, has or will have any personal liability of any kind or
nature under or in connection with the Lease; and, in the event of a default by
Landlord or [Purchaser] [Lender] under the Lease, Tenant shall look solely to
Landlord's or [Purchaser's] [Lender's] interest in the building in which the
leased premises are located.
12. Tenant is not in any respect in default under the terms and provisions
of the Lease (nor is there now any fact or condition which, with notice or lapse
of time or both, would become such a default), and Tenant has not assigned,
transferred or hypothecated its interest under the Lease.
13. Tenant (i) does not have any option or preferential right to purchase
all or any part of the leased premises or all or any part of the building of
which the leased premises are a part; and (ii) does not have any right, title or
interest with respect to the leased premises other than as lessee under the
Lease.
2
<PAGE>
14. We understand that [Purchaser] [Lender] is planning to [purchase]
[finance] the Property on which the leased premises is located to Purchaser, and
we agree to make all payments required under the Lease to [Purchaser] [Lender]
upon our receipt of notice from Landlord and/or [Purchaser] [Lender]. Further,
upon receipt of such notice, we will thereafter look to [Purchaser] [Lender] and
not Landlord as the landlord under the Lease. We agree to give all notices
required to be given by us to Landlord under the Lease to [Purchaser] [Lender]
upon our receipt of said notice.
15. The statements contained herein may be relied upon by [Purchaser]
[Lender] and by any prospective purchaser or lender of the Property.
16. If Tenant is a Corporation, the undersigned is a duly appointed
officer of the corporation signing this Agreement, and is the incumbent in the
office indicated under his or her name. If Tenant is a partnership or joint
venture, the undersigned is a duly appointed partner or officer of the
partnership or joint venture signing this certificate. In any event, the
undersigned individual is duly authorized to execute this Agreement on behalf of
Tenant.
17. Tenant (a) executes this certificate with the understanding that
[Purchaser] [Lender] is contemplating [purchasing] [financing] the Property, and
that if [Purchaser] [Lender] [purchases] [finances] the Property, [Purchaser]
[Lender] will do so in material reliance on this certificate; and (b) agrees
that the certifications and representations made herein shall survive such
acquisition.
18. The current address to which all notices to Tenant as required under
the Lease should be sent is the Tenant's Address for Notices.
19. [Purchaser's] [Lender's] rights hereunder shall inure to its
successors and assigns.
IN WITNESS WHEREOF, Tenant has executed this estoppel certificate as of
this ________ day of ________________________, 199___.
_________________________, a _____________________
By: ______________________________________________
Its:
3
<PAGE>
EXHIBIT "D"
LANDLORD'S WORK
---------------
1. Divide the Premises from the remaining area of the Building.
2. Install separate electric, gas, water and sewer lines and meters for
the Premises.
<PAGE>
[MAP OF LEASED PREMISES AND SURROUNDING AREA APPEARS HERE]
5
<PAGE>
Exhibit 10.41
================================================================================
SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
================================================================================
BNY FINANCIAL CORPORATION
(AS LENDER AND AS AGENT)
WITH
WINCUP HOLDINGS, INC.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
RADNOR HOLDINGS CORPORATION
(BORROWERS)
================================================================================
October 15, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
I. DEFINITIONS....................................................................... 1
1.1. Accounting Terms.......................................................... 1
1.2. General Terms............................................................. 1
1.3. Uniform Commercial Code Terms............................................. 17
1.4. Certain Matters of Construction........................................... 17
(b) Holdings Borrowing Base.............................................. 17
(f) Discretionary Rights................................................. 18
1.2. Procedure for Borrowing................................................... 18
1.3. Disbursement of Advance Proceeds.......................................... 20
1.4. Intentionally Omitted..................................................... 20
1.5. Maximum Advances; Repayment of Excess Advances............................ 20
1.6. Repayment of Advances..................................................... 20
1.7. Intentionally Omitted..................................................... 21
1.8. Statement of Account...................................................... 21
1.9. Letters of Credit......................................................... 21
1.10. Issuance of Letters of Credit............................................. 21
1.11. Requirements For Issuance of Letters of Credit............................ 22
1.12. Additional Payments....................................................... 23
1.13. Manner of Borrowing and Payment........................................... 23
III. INTEREST AND FEES................................................................. 26
3.1. Interest.................................................................. 26
3.2. Letter of Credit Fees..................................................... 26
3.3. (a) Closing Fee.......................................................... 27
(b) Facility Fee...................................................... 27
(c) Agency Fee........................................................ 27
3.4. (a) Collateral Evaluation Fee............................................ 27
(b) Collateral Monitoring Fee......................................... 27
3.5. Computation of Interest and Fees.......................................... 27
3.6. Maximum Charges........................................................... 27
3.7. Increased Costs........................................................... 28
3.8. Basis For Determining Interest Rate Inadequate or Unfair.................. 28
3.9. Capital Adequacy.......................................................... 29
IV. COLLATERAL: GENERAL TERMS........................................................ 30
4.1. Acknowledgement and Grant of Security Interests........................... 30
4.2. Perfection of Security Interest........................................... 30
4.3. Disposition of Collateral................................................. 30
4.4. Preservation of Collateral................................................ 31
4.5. Ownership of Collateral................................................... 31
4.6. Defense of Agent's and Lender's Interests................................. 31
4.7. Books and Records......................................................... 32
4.8. Financial Disclosure...................................................... 32
4.9. Compliance with Laws...................................................... 32
4.10. Inspection of Premises.................................................... 32
4.11. Insurance................................................................. 32
4.12. Failure to Pay Insurance.................................................. 33
4.13. Payment of Taxes.......................................................... 33
4.14. Payment of Leasehold Obligations.......................................... 34
4.15. Receivables............................................................... 34
(a) Nature of Receivables................................................ 34
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(b) Solvency of Customers................................................ 34
(c) Locations of Borrower................................................ 34
(d) Collection of Receivables............................................ 34
(e) Notification of Assignment of Receivables............................ 34
(f) Power of Agent to Act on Borrowers' Behalf........................... 35
(g) No Liability......................................................... 35
(h) Establishment of a Lockbox Account, Dominion Account................. 35
(i) Adjustments.......................................................... 36
4.16. Inventory................................................................. 36
4.17. Maintenance of Equipment.................................................. 36
4.18. Exculpation of Liability.................................................. 36
4.19. Environmental Matters..................................................... 36
V. REPRESENTATIONS AND WARRANTIES.................................................... 37
5.1. Authority................................................................. 37
5.2. Formation and Qualification............................................... 38
5.3. Survival of Representations and Warranties................................ 38
5.4. Tax Returns............................................................... 38
5.5. Financial Statements...................................................... 38
5.6. Corporate Name............................................................ 39
5.7. O.S.H.A. and Environmental Compliance..................................... 39
5.8. Solvency; No Litigation, Violation, Indebtedness or Default............... 40
5.9. Patents, Trademarks, Copyrights and Licenses.............................. 41
5.10. Licenses and Permits...................................................... 41
5.11. Default of Indebtedness................................................... 41
5.12. No Default................................................................ 41
5.13. No Burdensome Restrictions................................................ 41
5.14. No Labor Disputes......................................................... 41
5.15. Margin Regulations........................................................ 42
5.16. Investment Company Act.................................................... 42
5.17. Disclosure................................................................ 42
5.18. Delivery of Acquisition Agreement......................................... 42
5.19. Swaps..................................................................... 42
5.20. Conflicting Agreements.................................................... 42
5.21. Application of Certain Laws and Regulations............................... 42
5.22. Business and Property of Borrower......................................... 42
5.23. Acquisition............................................................... 43
VI. AFFIRMATIVE COVENANTS............................................................. 43
6.1. Payment of Fees........................................................... 43
6.2. Conduct of Business and Maintenance of Existence and Assets............... 43
6.3. Violations................................................................ 43
6.4. Government Receivables.................................................... 43
6.5. Net Worth................................................................. 44
6.6. Current Ratio............................................................. 44
6.7. Fixed Charge Coverage..................................................... 44
6.8. Interest Coverage......................................................... 44
6.9. Net Income................................................................ 44
6.10. Execution of Supplemental Instruments..................................... 44
6.11. Payment of Indebtedness................................................... 44
6.12. Standards of Financial Statements......................................... 44
6.13. Exercise of Rights........................................................ 44
VII. NEGATIVE COVENANTS................................................................ 45
7.1. Merger, Consolidation, Acquisition and Sale of Assets..................... 45
7.2. Creation of Liens......................................................... 45
7.3. Guarantees................................................................ 45
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
7.4. Investments............................................................... 45
7.5. Loans..................................................................... 46
7.6. Capital Expenditures...................................................... 46
7.7. Dividends................................................................. 46
7.8. Indebtedness.............................................................. 47
7.9. Nature of Business........................................................ 47
7.10. Transactions with Affiliates.............................................. 47
7.11. Leases.................................................................... 47
7.12. Subsidiaries.............................................................. 47
7.13. Fiscal Year and Accounting Changes........................................ 47
7.14. Pledge of Credit.......................................................... 48
7.15. Amendment of Agreement of Limited Partnership, Etc........................ 48
7.16. Compliance with ERISA..................................................... 48
7.17. Senior Notes.............................................................. 48
7.18. Intentionally Omitted..................................................... .
7.19. Intentionally Omitted..................................................... .
7.20. Prepayment of Indebtedness................................................ 48
VIII. CONDITIONS PRECEDENT.............................................................. 49
8.1. Conditions to Initial Advances............................................ 49
(a) Notes............................................................... 49
(b) Filings, Registrations and Recordings............................... 49
(c) Proceedings of Borrowers............................................ 49
(d) Incumbency Certificates of Borrowers................................ 49
(e) Certificates........................................................ 49
(f) Good Standing Certificates.......................................... 50
(g) Legal Opinion....................................................... 50
(h) No Litigation....................................................... 50
(i) Financial Condition Opinions........................................ 50
(j) Collateral Examination.............................................. 50
(k) Fees................................................................ 50
(l) Pro Forma Financial Statements...................................... 50
(m) Other Documents..................................................... 50
(q) Payment Instructions................................................ 50
(s) Consents............................................................ 51
(t) No Material Adverse Change.......................................... 51
(v) Contract Review..................................................... 51
(w) Closing Certificate................................................. 51
(x) Borrowing Base...................................................... 51
(z) Agreements.......................................................... 51
(aa) Acquisition......................................................... 51
(n) Other Documents..................................................... 52
(o) Insurance........................................................... 52
(u) Leasehold Agreements................................................ 52
8.2. Conditions to Each Advance................................................ 52
(a) Representations and Warranties...................................... 52
(b) No Default.......................................................... 52
(c) Maximum Advances.................................................... 52
IX. INFORMATION AND GENERAL PARTNER................................................... 52
9.1. Disclosure of Material Matters............................................ 53
9.2. Schedules................................................................. 53
9.3. Intentionally Omitted..................................................... 53
9.4. Litigation................................................................ 53
9.5. Material Occurrences...................................................... 53
9.6. Government Receivables.................................................... 54
9.7. Annual Financial Statements............................................... 54
9.8. Quarterly Financial Statements............................................ 54
9.9. Monthly Financial Statements.............................................. 54
9.10. Other Reports............................................................. 55
9.11. Additional Information.................................................... 55
9.12. Projected Operating Budget................................................ 55
9.13. Intentionally Omitted..................................................... 55
9.14. Notice of Suits, Adverse Events........................................... 55
9.15. ERISA Notices and Requests................................................ 55
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
9.16. Additional Documents...................................................... 56
X. EVENTS OF DEFAULT................................................................. 56
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT........................................ 59
11.1. Rights and Remedies....................................................... 59
11.2. Agent's Discretion........................................................ 59
11.3. Setoff.................................................................... 60
11.4. Rights and Remedies not Exclusive......................................... 60
11.5. Actions in Concert........................................................ 60
XII. WAIVERS AND JUDICIAL PROCEEDINGS.................................................. 60
12.1. Waiver of Notice.......................................................... 60
12.2. Delay..................................................................... 60
12.3. Jury Waiver............................................................... 60
XIII. EFFECTIVE DATE AND TERMINATION.................................................... 61
13.1. Term...................................................................... 61
13.2. Termination............................................................... 61
XIV. REGARDING AGENT................................................................... 61
14.1. Appointment............................................................... 61
14.2. Nature of Duties.......................................................... 62
14.3. Lack of Reliance on Agent and Resignation................................. 62
14.4. Certain Rights of Agent................................................... 63
14.5. Reliance.................................................................. 63
14.6. Notice of Default......................................................... 63
14.7. Indemnification........................................................... 63
14.8. Agent in its Individual Capacity.......................................... 64
14.9. Delivery of Documents..................................................... 64
14.10. Borrowers' Undertaking to Agent........................................... 64
XV. MISCELLANEOUS..................................................................... 64
15.1. Governing Law............................................................. 64
15.2. Entire Understanding...................................................... 64
15.3. Successors and Assigns; Participations; New Lenders....................... 65
15.4. Application of Payments................................................... 67
15.5. Indemnity................................................................. 67
15.6. Notice.................................................................... 67
15.7. Survival.................................................................. 68
15.8. Severability.............................................................. 68
15.9. Expenses.................................................................. 68
15.10. Injunctive Relief......................................................... 69
15.11. Consequential Damages..................................................... 69
15.12. Captions.................................................................. 69
15.13. Construction.............................................................. 69
XVI. BORROWING AGENCY.................................................................. 69
16.1. Borrowing Agency Provisions............................................... 69
16.2. Waiver of Subrogation..................................................... 70
XVII. CROSS-GUARANTY.................................................................... 70
17.1. Cross Guaranty............................................................ 70
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
17.2. Contribution with Respect to Guaranty Obligations......................... 70
17.3. Obligations Absolute...................................................... 71
17.4. Waiver.................................................................... 72
17.5. Recovery.................................................................. 72
17.6. Liability Cumulative...................................................... 73
</TABLE>
v
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 2.9 - Form of Letter of Credit and Security Agreement
Exhibit 5.5(b) - Financial Projections
Exhibit 8.1(i) - Form of Officers' Certificate
Exhibit 15.3 - Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1.2 - Permitted Encumbrances
Schedule 4.5 - Locations of Equipment and Inventory
Schedule 4.15(c) - Location of Borrowers' Executive Offices
Schedule 4.20 - Financing Statements
Schedule 5.2(a) - Formation and Qualification
Schedule 5.2(b) - Subsidiaries
Schedule 5.4 - Federal Tax Identification Numbers
Schedule 5.6 - Corporate Names
Schedule 5.8(b) - Pending Litigation
Schedule 5.8(d) - Multiemployer Plans
Schedule 5.9 - Licenses, Trademarks, Patents, Copyrights, Source Code
Escrow Agreements
Schedule 5.10 - Licenses and Permits
Schedule 5.14 - Labor Disputes
Schedule 7.3 - Guarantees
Schedule 8.1(y) - Compliance Certificate
vi
<PAGE>
SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
Amended and Restated Revolving Credit and Security Agreement dated as
of October 15, 1997 between, WINCUP HOLDINGS, INC. ("Wincup"), SP ACQUISITION
CO. ("Acquisition"), STYROCHEM INTERNATIONAL, INC. ("StyroChem") and RADNOR
HOLDINGS CORPORATION ("Radnor") (Wincup, Acquisition, StyroChem and Radnor each,
a "Borrower" and jointly and severally, the "Borrowers"), BNY FINANCIAL
CORPORATION ("BNYFC"),a corporation organized under the laws of the State of New
York, NATIONSBANK, N.A., a national banking association ("Nationsbank") and
each of the other financial institutions which are and such financial
institutions which become a party hereto pursuant to Section 15.3 (BNYFC,
Nationsbank and such other financial institutions, collectively, the "Lenders"
and individually a "Lender") and BNYFC, as administrative and collateral agent
for the Lenders (BNYFC, in such capacity, the "Agent").
B A C K G R O U N D
-------------------
Holdings, Wincup, Wincup Holdings, L.P., Acquisition, Styrochem and
Radnor entered into an Amended and Restated Revolving Credit, Term Loan and
Security Agreement dated as of December 5, 1996 (as same may have been amended,
modified or supplemented, the "Existing Loan Agreement"). By execution of this
Agreement, Wincup, Acquisition, Styrochem, Radnor, Agent and Lenders wish to
amend and restate the Existing Loan Agreement on the terms and conditions
hereinafter set forth.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Wincup, Acquisition, StyroChem, Radnor, Agent and Lenders hereby
agree as follows:
I. DEFINITIONS.
-----------
1.1. Accounting Terms. As used in this Agreement or any certificate,
----------------
report, note or other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.2 or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 to the extent not defined, shall
have the respective meanings given to them under GAAP; provided, however,
-------- -------
whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of the audited
financial statements of Borrowers on a consolidated basis for the fiscal period
ended June 30, 1997.
1.2. General Terms. For purposes of this Agreement the following terms
-------------
shall have the following meanings:
"Acquisition" shall mean SP Acquisition Co., a corporation
-------------
organized and existing
1
<PAGE>
existing under the laws of the State of Delaware.
"Acquisition Agreement" shall mean the Stock Purchase Agreement
---------------------
including all exhibits and schedules thereto dated as of October 28, 1996 among
Richard Davidovich, Richard Davidovich Charitable Trust, James River Paper
Company, Inc., Grupo Industrial Hermes, S.A. de C.V., E.M. Rosenthal, Rozanne
Rosenthal, Ashli M. Rosenthal Trust, Benjamin A. Rosenthal Trust, Madelyn E.
Rosenthal Trust, JMC Family Investment Ltd. Partnership and Richard C. Penshorn
(collectively, "Sellers") as sellers and Radnor as buyer.
"Advances" shall mean and include the Revolving Advances and the
--------
Letters of Credit.
"Advance Rates" shall have the meaning set forth in Section 2.1(a)
-------------
hereof.
"Affiliate" of any Person shall mean (a) any Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a partner,
shareholder, director or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the securities having ordinary voting power
for the election of directors of such Person, or (y) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
-------------------
to the higher of (i) the Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"Applicable Margin" for any period shall be determined by the ratio of
-----------------
Funded Indebtedness to EBITDA calculated for the most recent fiscal quarter with
respect to the four fiscal quarters then ended which shall be subject to
adjustment from time to time as set forth in Section 3.1. The Applicable Margin
with respect to Eurodollar Rate Loans, Domestic Rate Loans and the Facility Fee
provided for in Section 3.3(b) hereof, as the case may be, shall be the
percentage set forth below as corresponds to the applicable ratio set forth
below:
<TABLE>
<CAPTION>
Funded Indebtedness Domestic Eurodollar Facility
------------------- -------- ---------- --------
To EBITDA Rate Margin Rate Margin Fee
--------- ----------- ----------- ------
<S> <C> <C> <C>
Greater than 5.0 to 1.0 .50% 2.00% .50%
Greater than 4.1 to 1.0 .25% 1.75% .375%
But equal to or less than
5.0 to 1.0
Greater than 3.1 to 1.0 0% 1.50% .25%
But equal to or less than
4.1 to 1.0
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C>
Greater than 2.1 to 1.0 0% 1.25% .125%
But equal to or less than
3.1 to 1.0
Equal to or less than 0% 1.00% .125%
2.1 to 1.0
</TABLE>
"Authority" shall have the meaning set forth in Section 4.19(d).
---------
"Average Monthly Eurodollar Rate" shall mean, as to any one month
-------------------------------
Interest Period, the average one month LIBOR as published in the Wall Street
Journal over the course of such one month Interest Period.
"Bank" shall mean The Bank of New York.
----
"Blocked Accounts" shall have the meaning set forth in Section
----------------
4.15(h).
"BNY UK" shall mean BNY Financial Ltd.
------
"Borrower" or "Borrowers" shall have the meaning set forth in the
-------- ---------
preamble to this Agreement and shall include all permitted successors and
assigns of such Persons.
"Borrowers on a consolidated basis" shall mean the consolidation
---------------------------------
in accordance with GAAP of the accounts or other items of Borrowers.
"Borrowing Agent" shall mean Radnor.
---------------
"Business Day" shall mean with respect to Eurodollar Rate Loans,
------------
any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with respect to all other loans, any day other than a day on which
commercial banks in New York or Baltimore, Maryland are authorized or required
by law to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)(S)9601 et seq.
------
"Change of Control" shall mean (a) the occurrence of any event
-----------------
(whether in one or more transactions) which results in a transfer of control of
any Borrower to a Person who is not an Original Owner or an Affiliate of an
Original Owner or (b) any merger or consolidation of or with any Borrower or
sale or transfer of all or substantially all of the property or assets of any
Borrower with or to a Person that is not a Borrower hereunder. For purposes of
this definition, "control of Borrower" shall mean the power, direct or indirect,
(x) to vote 50% or more of the securities having ordinary voting power for the
election of directors of any Borrower or (y) to direct or cause the direction of
the management and policies of Borrower, by contract or otherwise.
"Change of Ownership" shall mean (a) any transfer (whether in one
-------------------
or more
3
<PAGE>
transactions) of ownership of 50% or more of the common stock of any Borrower
(including for the purposes of the calculation of percentage ownership, any
shares of common stock into which any capital stock of any Borrower held by any
Original Owner is convertible or for which any such shares of the capital stock
of any Borrower or of any other Person may be exchanged and any shares of common
stock issuable to its Parent upon exercise of any warrants, options or similar
rights which may at the time of calculation be held by such Original Owners) to
a Person who is neither (at the time of such transfer) an Original Owner nor an
Affiliate of an Original Owner or (b) any merger, consolidation or sale of
substantially all of the property or assets of any Borrower with or to a Person
that is not a Borrower hereunder.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
-------
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, any Borrower or any of its Affiliates.
"Code" shall mean the Internal Revenue Code of 1986, as amended
----
from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
----------
(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all of each Borrower's right, title and interest in
and to (i) all merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of each Borrower's rights with respect
to Inventory as a consignor, a consignee, an unpaid vendor, mechanic, artisan,
or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower
from any Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement; (v) all of each
Borrower's contract rights, rights of payment which have been earned under a
contract right, instruments, documents, chattel paper, warehouse receipts,
deposit accounts, money and securities; (vi) if and when obtained by any
Borrower, all real and personal property of third parties in which such Borrower
has been granted a lien or security interest as security for the payment or
enforcement of Receivables; and (vii) any other goods, personal property or real
property now owned or hereafter acquired in which any Borrower has expressly
granted a security interest or may in the future grant a security interest to
Agent for the ratable benefit of the Lenders hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between Agent and any
Borrower;
4
<PAGE>
(e) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (whether owned by any Borrower or in which it has an interest),
computer programs, tapes, disks and documents relating to (a), (b), (c) or (d)
of this Paragraph; and
(f) all proceeds and products of (a), (b), (c), (d), (e) and (f)
in whatever form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.
"Commitment Percentage" of any Lender shall mean the percentage
---------------------
set forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 15.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the
------------------------------
form of Exhibit 15.3 hereto, properly completed and otherwise in form and
------------
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all licenses, permits,
--------
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
Borrower's business, including, without limitation, any Consents required under
all applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest
-------------
Rate or the Default Rate.
"Controlled Group" shall mean all members of a controlled group of
----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Current Assets" at a particular date, shall mean all cash, cash
--------------
equivalents, accounts and inventory of Radnor on a Consolidated Basis and all
other items which would, in conformity with GAAP, be included under current
assets on a balance sheet of Radnor on a Consolidated Basis as at such date;
provided, however, that such amounts shall not include (a) any amounts for any
- -------- -------
Indebtedness owing by an Affiliate of Radnor or any of its consolidated
subsidiaries, unless such Indebtedness arose in connection with the sale of
goods or rendition of services in the ordinary course of business and would
otherwise constitute current assets in conformity with GAAP, (b) any shares of
stock issued by an Affiliate of Radnor or any of its consolidated subsidiaries,
or (c) the cash surrender value of any life insurance policy.
"Current Liabilities" at a particular date, shall mean all amounts
-------------------
which would, in conformity with GAAP, be included under current liabilities on a
balance sheet of Radnor on a Consolidated Basis as at such date, but in any
event including, without limitation, the amounts of (a) all Indebtedness of any
Borrower payable on demand, or, at the option of the Person to whom such
5
<PAGE>
Indebtedness is owed, not more than twelve (12) months after such date, (b) any
payments in respect of any Indebtedness of any Borrower (whether installment,
serial maturity, sinking fund payment or otherwise) required to be made not more
than twelve (12) months after such date, (c) all reserves in respect of
liabilities or Indebtedness payable on demand or, at the option of the Person to
whom such Indebtedness is owed, not more than twelve (12) months after such
date, the validity of which is not contested at such date, and (d) all accruals
for federal or other taxes measured by income payable within a twelve (12) month
period.
"Customer" shall mean and include the account debtor with
--------
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with any
Borrower, pursuant to which any Borrower is to deliver any personal property or
perform any services.
"Debt Payments" shall mean and include all cash actually expended
-------------
by Radnor on a Consolidated Basis to make (a) total interest payments on any
Indebtedness, plus, (b) scheduled principal payments on all Indebtedness.
----
"Default" shall mean an event which, with the giving of notice or
-------
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1
------------
hereof.
"Depository Accounts" shall have the meaning set forth in Section
-------------------
4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c)
---------
hereof.
"Dollars" and the sign "$" shall mean lawful money of the United
-------
States of America.
"Domestic Rate Loan" shall mean any Advance that bears interest
------------------
based upon the Alternate Base Rate.
"EBITDA" shall mean the net income of Radnor on a Consolidated
------
Basis plus interest expense, taxes, depreciation and amortization deducted in
calculating net income for such period.
"Effective Date" shall mean October 15, 1997 or such other date as
--------------
may be agreed to by the parties hereto.
"Eligible Inventory" shall mean and include Inventory excluding
------------------
work in process, with respect to each Borrower, valued at the lower of cost or
market value, determined on a first-in-first-out basis, which is not, in Agent's
opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate including, without limitation,
whether the Inventory is subject to a perfected, first priority security
interest in favor of Agent for the ratable benefit of the
6
<PAGE>
Lenders and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof.
"Eligible Receivables" shall mean and include, with respect to
--------------------
each Borrower, each Receivable arising in the ordinary course of such Borrower's
business and which Agent, in its sole credit judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem appropriate. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent's first priority perfected security interest for
the ratable benefit of the Lenders and no other Lien other than Permitted
Encumbrances, and is evidenced by an invoice, bill of lading or other
documentary evidence satisfactory to Agent. In addition, no Receivable shall be
an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate
of any Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date;
(c) twenty-five percent (25%) or more of the Receivables from the
Customer are not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion;
(g) the sale to the Customer is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer's financial inability to pay;
7
<PAGE>
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower effectuates an assignment of its right to payment of such Receivable to
Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise
-- --- -- ---
complied with other applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped
and delivered to and accepted by the Customer or the services giving rise to
such Receivable have not been performed by the applicable Borrower and accepted
by the Customer or the Receivable otherwise does not represent a final sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim to the extent of such offset, deduction, defense,
dispute or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Receivable is contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with a Customer
for any deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the rendition of services has
not been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Receivable is not payable to a Borrower; or
(q) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
-----------------------
Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
------------------
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
---------
Borrower's goods (excluding Inventory) whether now owned or hereafter acquired
and wherever located
8
<PAGE>
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Escrow Agreement" shall mean the Environmental Escrow Agreement
----------------
dated December 5, 1996 among Radnor, Richard Davidovich and Duane, Morris &
Heckscher, as escrow agent.
"Eurodollar Rate Loan" shall mean an Advance at any time that
--------------------
bears interest based on the Eurodollar Rate or the Average Monthly Eurodollar
Rate.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the
---------------
then current Interest Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher 1/100 of one (1%) percent)
equal to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus
the aggregate of the rates (expressed as a decimal) of reserve requirements
current on the day that is two Business Days prior to the beginning of the
Interest Period (including without limitation basic, supplemental, marginal and
emergency reserves) under any regulation promulgated by the Board of Governors
of the Federal Reserve System (or any other governmental authority having
jurisdiction over the Bank) as in effect from time to time, dealing with reserve
requirements prescribed for Eurocurrency funding including any reserve
requirements with respect to "Eurocurrency liabilities" under Regulation D of
the Board of Governors of the Federal Reserve System.
"European Borrowers" shall mean, collectively, StyroChem Europe,
------------------
StyroChem Finland, Thermisol Denmark, Thermisol Finland and Thermisol Sweden.
"European Collateral" shall mean all of the assets of each of the
-------------------
European Borrowers which are held as collateral for the European Obligations
pursuant to the European Security Documents.
"European Obligations" shall have the meaning given to the term
--------------------
"Obligations" under the European Supplement.
"European Security Documents" shall mean each agreement executed
---------------------------
by a European Borrower in favor of BNY UK, as agent, pursuant to which BNY UK,
as agent, is granted a lien upon the European Collateral as security for the
European Obligations.
"European Supplement" shall mean that certain supplement to this
---------------------
Agreement among the European Borrowers and BNY UK pursuant to which BNY UK
agrees to fund loans to the European Borrowers up to an aggregate Dollar
equivalent of $10,000,000.
"Event of Default" shall mean the occurrence and continuance of
----------------
any of the events set forth in Article X hereof.
9
<PAGE>
"Federal Funds Rate" shall mean, for any day, the weighted average
------------------
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by the Bank.
"Fixed Charge Coverage" for any period shall mean the ratio for
---------------------
such period of (1) EBITDA to (2) all Debt Payments plus (a) the aggregate amount
----
of capital expenditures actually made plus (b) the aggregate amount of cash
----
payments of taxes made.
"Formula Amount" shall have the meaning set forth in Section
--------------
2.1(a) hereof.
"Funded Indebtedness" means as to any Person and its Subsidiaries
on a consolidated basis, as of any date of determination, (i) the aggregate of
all Indebtedness for Borrowed Money of such Person and its Subsidiaries, whether
secured or unsecured (but excluding, without duplication, loans by such Person
to one or more of its Subsidiaries), having a final maturity (or which by the
terms thereof is renewable or extendible at the option of the obligor for a
period ending) more than one year after that date, including current maturities
of long-term Indebtedness for Borrowed Money (as determined in accordance with
GAAP), less (ii) the aggregate amount of all cash balances and cash equivalents
of such Person and/or any of its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each Borrower
-------------------
all of such Borrower's general intangibles, whether now owned or hereafter
acquired including, without limitation, all choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, quality control
procedures, trademarks, service marks, trade secrets, goodwill, copyrights,
design rights, registrations, licenses, franchises, customer lists, tax refunds,
tax refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Receivables by a Customer, all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables).
"Governmental Body" shall mean any nation or government, an state
-----------------
or other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Hazardous Discharge" shall have the meaning set forth in Section
-------------------
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any flammable explosives,
-------------------
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or toxic substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), RCRA or any other applicable Environmental Law
------
and in the
10
<PAGE>
regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
----------------
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Indebtedness" of a Person at a particular date shall mean all
------------
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness
of such Person resulting from the acquisition by such Person of any assets
subject to any Lien shall be deemed, for the purposes hereof, to be the
equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred.
"Indebtedness for Borrowed Money" of a person means at any time
the sum at such time of (a) Indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services, (b) any obligations of
such Person in respect of letters of credit, banker's or other acceptances or
similar obligations issued or created for the account of such Person, (c) lease
obligations of such Person with respect to capital leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person or a member of Controlled Group to a Multiemployer Plan; and (h) any
obligations, liabilities or indebtedness, contingent or otherwise, under or in
connection with, any interest rate or currency swap agreements, cap, floor, and
collar agreements, currency spot, foreign exchange and forward contracts and
other similar agreements and arrangements; but excluding trade and other
accounts payable in the ordinary course of business.
"Indenture" shall mean the Indenture dated as of December 5, 1996
---------
between Radnor, as issuer, Wincup, Wincup L.P., Acquisition and StyroChem as
guarantors and First Union National Bank, as trustee, as amended through the
date hereof.
"Interest Coverage" for any period shall mean the ratio of (1)
-----------------
EBITDA to (2) Total Interest.
"Interest Period" shall mean the period provided for any
---------------
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Borrower all of such
---------
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
11
<PAGE>
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Inventory Advance Rate" shall have the meaning ascribed to such
----------------------
term in Section 2.1(a)(ii)
"James River" shall mean James River Paper Company, Inc.
-----------
"Lender" and "Lenders" shall have the meaning ascribed to such
------ -------
term in the Preamble, each Purchasing Lender and shall include each person which
is a transferee, successor or assign of any Lender or any Purchasing Lender.
"Letters of Credit" shall have the meaning set forth in Section
-----------------
2.9.
"Letter of Credit Fees" shall have the meaning set forth in
---------------------
Section 3.2.
"LIBOR" shall mean for any Eurodollar Rate Loan for the then
-----
current Interest Period relating thereto, the rate per annum quoted by the Bank
two (2) Business Days prior to the first day of such Interest Period for the
offering by the Bank to prime commercial banks in the London interbank
Eurodollar market of Dollar deposits in immediately available funds for a period
equal to such Interest Period and in an amount equal to the amount of such
Eurodollar Rate Loan.
"Lien" shall mean any mortgage, deed of trust, pledge,
----
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect on
-----------------------
(a) the condition, operations, assets, business or prospects of the applicable
Person or Persons, (b) any Borrower's ability to pay the Obligations in
accordance with the terms thereof, (c) the value of the Collateral, the Liens on
the Collateral or the priority of any such Lien, or (d) the practical
realization of the benefits of Agent and Lenders' rights and remedies under this
Agreement and the Other Documents, all as determined by the Required Lenders in
the good faith exercise of their sole and absolute discretion.
"Maximum Loan Amount" shall mean $30,000,000.
-------------------
"Monthly Advances" shall have the meaning set forth in Section 3.1
----------------
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
------------------
in Sections 3(37) and 4001(a)(3) of ERISA.
12
<PAGE>
"Net Worth" at a particular date, shall mean the aggregate amount of
---------
all assets of Radnor on a Consolidated Basis as may properly be classified as
such in accordance with GAAP consistently applied and such other assets as are
properly classified as "intangible assets", less (b) the aggregate amount of all
Indebtedness of Radnor on a Consolidated Basis.
"Notes" shall mean collectively, the Revolving Credit Notes.
-----
"Obligations" shall mean and include any and all of each Borrower's
-----------
Indebtedness and/or liabilities to Agent or any of the Lenders or any
corporation that directly or indirectly controls or is controlled by or is under
common control with any Lender of every kind, nature and description, direct or
indirect, secured or unsecured, joint, several, joint and several, absolute or
contingent, due or to become due, now existing or hereafter arising, contractual
or tortious, liquidated or unliquidated under this Agreement or under any Other
Document and all obligations of any Borrower to Agent or the Lenders to perform
acts or refrain from taking any action under this Agreement or any Other
Document.
"Other Documents" shall mean the Notes, the European Supplement the
---------------
Questionnaire and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed and/or
delivered by any Borrower to Agent or any Lender in respect of the transactions
contemplated by this Agreement.
"Parent" shall mean with respect to any Person, a corporation or other
------
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the right by
-----------
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender.
"Payment Office" shall mean initially 1290 Avenue of the Americas, New
--------------
York, New York 10104; thereafter, such other office of Agent, if any, which it
may designate by notice to Borrowing Agent and each Lender to be the Payment
Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for
----------------------
the ratable benefit of the Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
-------- ----
priority of the Liens in favor of Agent for the ratable benefit of the Lenders
or the value of the assets in which Agent has such a Lien and a stay of
enforcement of any such Lien for the ratable benefit of the Lenders shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5; (d) deposits or pledges to secure obligations under worker's compensation,
social security or similar laws, or under unemployment insurance; (e) deposits
or pledges to secure bids, tenders, contracts (other than
13
<PAGE>
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of any Borrower's business; (f) judgment Liens that have been stayed or bonded
and mechanics', worker's, materialmen's or other like Liens arising in the
ordinary course of any Borrower's business with respect to obligations which are
not due or which are being contested in good faith by the applicable Borrower;
(g) Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof, provided that (x) any such lien shall not encumber any
other property of any Borrower and (y) the aggregate amount of Indebtedness
secured by such Liens incurred as a result of such purchases during any fiscal
year shall not exceed the amount provided for in Section 7.6; and (g) Liens
disclosed on Schedule 1.2.
------------
"Person" shall mean any individual, sole proprietorship, partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
----
Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Prepayment Date" shall have the meaning set forth in Section 13.1
---------------
hereof.
"Prime Rate" shall mean the prime commercial lending rate of the Bank
----------
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by the Bank as
a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by the Bank to any particular class or
category of customers of the Bank.
"Pro Forma Balance Sheet" shall have the meaning set forth in
-----------------------
Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth
------------------------------
in Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
-----------
hereof.
"Purchasing Lender" shall have the meaning set forth in Section
-----------------
15.3 hereof.
"Questionnaire" shall mean the Documentation Information Questionnaire
-------------
and the responses thereto provided by Borrowers and delivered to Agent and/or
its counsel.
"Radnor" shall mean Radnor Holdings Corporation, a corporation
------
organized and existing under the laws of the State of Delaware.
14
<PAGE>
"Radnor on a Consolidated Basis" shall mean the consolidation in
------------------------------
accordance with GAAP of the accounts or other items of Radnor and its
Subsidiaries.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
----
U.S.C. (S)(S) 6901 et seq., as same may be amended from time to time.
------
"Receivables" shall mean and include as to each Borrower all of such
-----------
Borrower's accounts, contract rights, instruments (including those evidencing
indebtedness among Borrowers and its Affiliates), documents, chattel paper,
general intangibles relating to accounts, drafts and acceptances, and all other
forms of obligations owing to such Borrower arising out of or in connection with
the sale or lease of Inventory or the rendition of services, all guarantees and
other security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to the Agent for the
ratable benefit of the Lenders hereunder.
"Receivables Advance Rate" shall have the meaning set forth in
------------------------
Section 2.1(a) hereof.
"Related Person" shall mean as to any Person, any other Person which,
--------------
together with such Person, is treated as a single employer under Section 414(c)
of the Code.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
-------
hereof.
"Reportable Event" shall mean a reportable event described in Section
----------------
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty one
----------------
percent (51%) of the Advances or if no Advances are outstanding, fifty one
percent (51%) of the Commitment Percentages.
"Revolving Advances" shall mean Advances made other than Letters
------------------
of Credit.
"Revolving Credit Notes" shall mean the promissory notes referred
----------------------
to in Section 2.1 hereof.
"Revolving Interest Rate" shall mean an interest rate per annum equal
-----------------------
to (a) the sum of the Alternate Base Rate plus the Applicable Margin with
respect to Domestic Rate Loans, (b) the sum of the Eurodollar Rate plus the
Applicable Margin with respect to Eurodollar Rate Loans (other than Eurodollar
Rate Loans made pursuant to Section 2.2(h) hereof) or (c) the sum of the Average
Monthly Eurodollar Rate plus the Applicable Margin with respect to Eurodollar
Rate Loans made pursuant to Section 2.2(h) hereof..
"Second Indenture" shall mean the Indenture dated as of October 15,
----------------
1997 between Radnor, as Issuer, Wincup, Acquisition and Styrochem and Radnor
Management, Inc. as guarantors and First Union National Bank, as trustee.
"Second Senior Notes" shall mean the 10% Series B Senior Notes due
-------------------
2003
15
<PAGE>
issued by Radnor pursuant to the Second Indenture in conjunction with the
Transactions and any notes issued in exchange or substitution therefor.
"Settlement Date" shall mean the Effective Date and thereafter
---------------
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"Senior Notes" shall mean the 10% Senior Notes due 2003 issued by
------------
Radnor pursuant to the Indenture in conjunction with the transactions
contemplated by the Acquisition Agreement and any notes issued in exchange or
substitution therefor.
"StyroChem" shall mean StyroChem International, Inc., a corporation
---------
organized and existing under the laws of the State of Texas.
"StyroChem Europe" shall mean StyroChem Europe (the Netherlands)
----------------
B.V., a Netherlands corporation.
"StyroChem Europe Acquisition Agreement" shall mean the Sale of Assets
--------------------------------------
Agreement among Radnor, StyroChem Finland, Thermisol Finland, Thermisol Sweden,
Thermisol Denmark, Neste Oy, Isora Oy, Neste Cellplast AB, and Neste Thermisol
A/S pursuant to which Radnor acquired, through StyroChem Europe, all of the
polystyrene and conversion operations of Neste Oy.
"StyroChem Finland" shall mean StyroChem Finland Oy, a corporation
-----------------
organized under the laws of Finland.
"Subsidiary" shall mean a corporation or other entity of whose shares
----------
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Term" shall mean the Effective Date through October 15, 2002.
----
"Termination Event" shall mean (i) a Reportable Event with respect to
-----------------
any Plan or Multiemployer Plan; (ii) the withdrawal of either Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any event or condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of either Borrower or any member of the Controlled Group from a
Multiemployer Plan.
16
<PAGE>
"Thermisol Denmark" shall mean Thermisol Denmark ApS,
-----------------
a corporation organized under the laws of Denmark.
"Thermisol Finland" shall mean Thermisol Finland Oy, a corporation
-----------------
organized under the laws of Finland.
"Thermisol Sweden" shall mean Thermisol Sweden AB, a corporation
----------------
organized under the laws of Sweden.
"Total Interest" for any period shall mean the accrued and unpaid
--------------
interest obligations of Radnor on a Consolidated Basis with respect to its
outstanding Indebtedness during such period.
"Toxic Substance" shall mean and include any material present on any
---------------
real property owned by any Borrower or any leasehold interests of any Borrower
which has been shown to have significant adverse effect on human health or which
is subject to regulation under the Toxic Substances Control Act (TSCA), 15
U.S.C. (S)(S) 2601 et seq., applicable state law, or any other applicable
------
Federal or state laws now in force or hereafter enacted relating to toxic
substances. "Toxic substance" includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transferee" shall have the meaning set forth in Section 15.3(b)
----------
hereof.
"Transactions" shall have the meaning set forth in Section 5.5
------------
hereof.
"Undrawn Availability" at a particular date shall mean an amount equal
--------------------
to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Loan Amount,
minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all
- -----
amounts due and owing to Borrowers' trade creditors which are outstanding more
than sixty (60) days past the due date therefor.
"Week" shall mean the time period commencing with a Wednesday and
----
ending on the following Tuesday.
"Wincup" shall mean Wincup Holdings, Inc., a corporation organized
------
under the laws of the State of Delaware.
"Wincup L.P." shall mean Wincup Holdings, L.P., a limited partnership
-----------
organized under the laws of the State of Delaware which was dissolved effective
July 7, 1997 pursuant to that certain Certificate of Dissolution dated August
25, 1997.
"Working Capital" at a particular date, shall mean the excess, if any,
---------------
of Current Assets over Current Liabilities at such date.
1.3. Uniform Commercial Code Terms. All terms used herein and defined
-----------------------------
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
17
<PAGE>
1.4. Certain Matters of Construction. The terms "herein", "hereof"
-------------------------------
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
---- -----
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements to which Agent is a party, including, without
limitation, references to any of the Other Documents shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
ADVANCES, PAYMENTS
- ------------------
2.1. (a) Borrowing Base. Subject to the terms and conditions
--------------
set forth in this Agreement, each Lender, severally and not jointly, agrees to
make Revolving Advances to Borrowers in accordance with the procedures provided
for herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
minus the undrawn amount of outstanding Letters of Credit issued on behalf of
- -----
Borrowers or (y) the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b)
hereof ("Receivables Advance Rate"), of Eligible Receivables of Borrowers, plus
----
(ii) the lesser of (x) $15,000,000 or (y) up to 60%,
subject to the provisions of Section 2.1(b) hereof ("Inventory Advance Rate"),
of Eligible Inventory of Borrowers (the Receivables Advance Rate and the
Inventory Advance Rate shall be referred to, collectively, as the "Advance
Rates"), minus
-----
(iii) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, minus
-----
(iv) the undrawn or unreimbursed amount of outstanding
Letters of Credit issued on behalf of Borrowers.
The sum of the amounts derived from (x) the sum of Sections
2.1(a)(y)(i) plus 2.1(a)(y)(ii) minus (y) the amount of Section 2.1(a)(y)(iii)
---- -----
at any time and from time to time shall be referred to as the "Formula Amount".
The Revolving Advances shall otherwise be evidenced by a Revolving Credit Note
in the form attached hereto as Exhibit 2.1.
(b) Discretionary Rights. The Advance Rates may be increased or
--------------------
with the consent of the Required Lenders, decreased by Agent at any time and
from time to time in the exercise of its reasonable discretion. Borrowers
consent to any such increases or decreases and acknowledge that decreasing the
Advance Rates or increasing the reserves may limit or restrict Advances
requested by any Borrower.
2.2. Procedure for Borrowing.
-----------------------
18
<PAGE>
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, an Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or any Lender, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or any Lender, and such request shall be irrevocable. Any request for an Advance
shall be deemed reduced automatically and without notice so as not to be in
excess of, after giving effect to the requested Advance, an amount which would
cause the aggregate amount of all Advances to be greater than the lesser of the
Maximum Loan Amount or the Formula Amount.
(b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, it shall give Agent at
least three (3) Business Days' prior written notice; specifying (i) the date of
the proposed borrowing (which shall be a Business Day), (ii) the amount on the
date of such Advance to be borrowed, which amount shall be an integral multiple
of $1,000,000, and (iii) the duration of the first Interest Period therefor.
Interest Periods for Eurodollar Loans shall be for one (1), two (2), three (3)
or six (6) months. There shall not be outstanding more than five (5) Eurodollar
Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as a Borrower may elect as set forth in (b)(iii) above provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be the next preceding or succeeding Business
Day as is Bank's custom in the market to which such Eurodollar Rate Loan
relates;
(ii) no Interest Period shall end after the last day of the
Term; and
(iii) any Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to clause (i) above) end on the
last day of such calendar month.
Borrowing Agent shall elect the initial Interest Period applicable to
a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan or Domestic
Rate Loan convert any such loan into a loan of another type in the same
aggregate principal amount provided that any conversion of a Eurodollar Rate
Loan
19
<PAGE>
shall be made only on the last Business Day of the then current Interest Period
applicable to such Eurodollar Rate Loan. If Borrower desires to convert a loan,
Borrowing Agent shall give the Agent not less than three (3) Business Days'
prior written notice, specifying the date of such conversion, the loans to be
converted and if the conversion is from a Domestic Rate Loan to any other type
of loan, the duration of the first Interest Period therefor.
(e) Borrowers may prepay the Advances in accordance with the
provisions of Section 13.1 upon payment of the early termination fee set forth
in Section 13.1 with accrued interest on the principal being prepaid to the date
of such repayment. In the event that any prepayment of a Eurodollar Rate Loan is
required or permitted on a date other than the last Business Day of the then
current Interest Period with respect thereto Borrowers shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
any Lender may sustain or incur as a consequence of any prepayment or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including (but not limited to) any interest payable by Agent or
any Lender to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this subsection (g), the term "Lender" shall include any Lender and the office
or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar
Rate Loans, the obligation of any Lender to make Eurodollar Rate Loans hereunder
shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate
Loans are then outstanding, promptly upon request from Agent, either pay all
such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not applicable to such Eurodollar
Rate Loan, Borrowers shall pay such Lender, upon such Lender's request, such
amount or amounts as may be necessary to compensate such Lender for any loss or
expense sustained or incurred by such Lender in respect of such Eurodollar Rate
Loan as a result of such payment or conversion, including (but not limited to)
any interest or other amounts payable by such Lender to lenders of funds
obtained by such Lender in order to make or maintain such Eurodollar Rate Loan.
A certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent to Borrower shall be conclusive absent manifest
error; provided, each Lender shall use its best efforts to minimize or avoid any
such additional payment.
(h) Anything in Section 2.2(b) to the contrary notwithstanding, any
Borrower may obtain a Eurodollar Rate Loan upon at least three (3) Business
Days' prior written notice for an Interest Period of one month with interest on
such Eurodollar Rate Loans to be charged at the Average Monthly Eurodollar Rate.
Borrowing Agent shall specifically provide in the prior written notice that
interest is to be charged at the Average Monthly Eurodollar Rate; otherwise,
interest shall be charged at the Eurodollar Rate for Eurodollar Rate Loans
having an Interest Period of one month.
20
<PAGE>
2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed
--------------------------------
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or any of the
Lenders, shall be charged to the applicable Borrower's account on Agent's books.
During the Term, Borrowers may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested on behalf of any
Borrower or deemed to have been requested by such Borrower under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the extent the
Lenders make such Revolving Advances, be made available to such Borrower on the
day so requested by way of credit to such Borrower's operating account at the
Bank, or such other bank as Borrowing Agent may designate following notification
to Agent, in federal funds or other immediately available funds or, with respect
to Revolving Advances deemed to have been requested, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.
2.4. Intentionally Omitted.
---------------------
2.5. Maximum Advances; Repayment of Excess Advances. The
----------------------------------------------
aggregate balance of Revolving Advances outstanding at any time to Borrowers
shall not exceed the lesser of (a) Maximum Loan Amount less outstanding Letters
of Credit or (b) the Formula Amount.
2.6. Repayment of Advances.
---------------------
(a) The Advances shall be due and payable in full on the last day
of the Term subject to earlier prepayment as herein provided.
(b) Borrowers recognize that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit a Borrower's account
as of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after receipt by Agent of good funds with respect to such items
of payment. Agent is not, however, required to credit any Borrower's account for
the amount of any item of payment which is unsatisfactory to Agent and Agent may
charge such Borrower's account for the amount of any item of payment which is
returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging the
applicable Borrower's account or by making Advances as provided in Section 2.2
hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
21
<PAGE>
2.7. Intentionally Omitted.
---------------------
2.8. Statement of Account. Agent shall maintain, in accordance with
--------------------
its customary procedures, a loan account in the name of each Borrower in which
shall be recorded the date and amount of each Advance made by Lenders and the
date and amount of each payment in respect thereof; provided, however, the
-------- -------
failure by Agent to record the date and amount of any Advance shall not
adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing
Agent a statement showing the accounting for the Advances made, payments made or
credited in respect thereof, and other transactions between Lenders and each
Borrower, during such month. The monthly statements shall be deemed correct and
binding upon Borrowers in the absence of manifest error and shall constitute an
account stated between Lenders and Borrowers unless Agent receives a written
statement of a Borrower's specific exceptions thereto within thirty (30) days
after such statement is received by Borrowing Agent. The records of Agent with
respect to the loan account shall be prima facie evidence of the amounts of
----- -----
Advances and other charges thereto and of payments applicable thereto, absent
manifest error.
2.9. Letters of Credit. (a) Subject to the terms and conditions
-----------------
hereof, Agent shall issue or cause the issuance of standby and documentary
letters of credit for Wincup and StyroChem ("Letters of Credit") provided,
--------
however, that Agent will not be required to issue or cause to be issued Letters
- -------
of Credit to the extent that the face amount of such Letters of Credit would
then cause the outstanding Advances (with the requested Letter of Credit being
deemed to be outstanding for purposes of this calculation) to exceed the lesser
of (A) the Maximum Loan Amount or (B) the Formula Amount.
(b) The maximum amount of outstanding (i) Letters of Credit that
are standby letters of credit hereunder shall not exceed $5,000,000 in the
aggregate at any time and (ii) Letters of Credit that are documentary letters of
credits hereunder shall not exceed $1,000,000 in the aggregate at any time.
(c) All disbursements or payments related to Letters of Credit
shall be deemed to be Revolving Advances and shall bear interest at the
Revolving Interest Rate for Domestic Rate Loans (unless and until converted to a
Eurodollar Rate Loan); and to the extent not drawn upon, Letters of Credit that
have not been drawn upon shall not bear interest. Letters of Credit shall be
subject to the terms and conditions set forth in the Application and Agreement
for Letter of Credit attached hereto as Exhibit 2.9.
-----------
2.10. Issuance of Letters of Credit.
-----------------------------
(a) Borrowing Agent on behalf of Wincup or StyroChem may request
Agent to issue or cause the issuance of a Letter of Credit by delivering to
Agent at the Payment Office, Agent's standard form of Letter of Credit and
Security Agreement together with Bank's standard form of Letter of Credit
Application (collectively, the "Letter of Credit Application") completed to the
satisfaction of Agent; and, such other certificates, documents and other papers
and information as Agent may reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide
for the
22
<PAGE>
payment of sight drafts when presented for honor thereunder in accordance with
the terms thereof and when accompanied by the documents described therein and
(ii) have an expiry date not later than twelve (12) months after such Letter of
Credit's date of issuance and in no event later than the last day of the Term.
Each Letter of Credit Application and each Letter of Credit shall be subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof and, to the extent not inconsistent therewith, the laws of the
State of New York.
2.11. Requirements For Issuance of Letters of Credit.
----------------------------------------------
(a) In connection with the issuance of any Letter of Credit,
Borrowers shall indemnify, save and hold Agent and each Lender harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent and any Lender, and expenses and reasonable attorneys' fees incurred by
Agent or any Lender arising out of, or in connection with, any Letter of Credit
to be issued or created for a Borrower. Borrowers shall be bound by Agent's or
any issuing or accepting bank's regulations and good faith interpretations of
any Letter of Credit issued or created for its account, although this
interpretation may be different from its own;, and, neither Agent nor any
Lender, the bank which opened the Letter of Credit, nor any of its
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's or any Lender's or such correspondents' willful misconduct or
gross (not mere) negligence.
(b) Borrowing Agent shall authorize and direct any bank which
issues a Letter of Credit to name the applicable Borrower as the "Account Party"
therein and to deliver to Agent all instruments, documents, and other writings
and property received by the bank pursuant to the Letter of Credit and to accept
and rely upon Agent's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit, the application therefor or any
acceptance therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority, (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct or gross (not mere)
negligence. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount equal
to the product of such Lender's Commitment Percentage times the aggregate amount
of all disbursements made with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided
23
<PAGE>
participation in each Revolving Advance made as a consequence of such
disbursement. In the event that at the time a disbursement is made the unpaid
balance of Revolving Advances exceeds or would exceed, with the making of such
disbursement, the lesser of the Maximum Loan Amount or the Formula Amount, and
such disbursement is not reimbursed by Borrowers within two (2) Business Days,
Agent shall promptly notify each Lender and upon Agent's demand each Lender
shall pay to Agent such Lender's proportionate share of such unreimbursed
disbursement together with such Lender's proportionate share of Agent's
unreimbursed costs and expenses relating to such unreimbursed disbursement. Upon
receipt by Agent of a repayment from Borrowers of any amount disbursed by Agent
for which Agent had already been reimbursed by the Lenders, Agent shall deliver
to each of the Lenders that Lender's pro rata share of such repayment. Each
Lender's participation commitment shall continue until the last to occur of any
of the following events: (A) Agent ceases to be obligated to issue Letters of
Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding
and uncancelled or (C) all Persons (other than Borrowers) have been fully
reimbursed for all payments made under or relating to Letters of Credit.
2.12. Additional Payments. Any sums expended by Agent or any Lender due
-------------------
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to such Borrower's account as a Revolving Advance and added to the
Obligations, provided Agent shall promptly thereafter provide to Borrowing Agent
a copy of documentation supporting such charges.
2.13. Manner of Borrowing and Payment.
-------------------------------
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of the Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of the Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set-off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.13(a) and (b) hereof, commencing with the first Business Day
following the Effective Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by Borrowers on account of Revolving Advances
shall be applied first to those Revolving Advances made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with the first
Settlement Date following the Effective Date, Agent and the Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week
(if any), then each Lender shall provide Agent with funds in an amount equal to
its Commitment Percentage of the difference between (w) such Revolving Advances
and (x) such repayments and (II) if the aggregate amount of repayments applied
to outstanding Revolving Advances during such Week
24
<PAGE>
exceeds the aggregate amount of new Revolving Advances made during such Week,
then Agent shall provide each Lender with funds in an amount equal to its
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the
applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or any Transferee (a "benefitted Lender")
shall at any time receive any payment of all or part of its Advances, or
interest thereon, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily or by set-off) in a greater proportion than any
such payment to and Collateral received by any other Lender, if any, in respect
of such other Lender's Advances, or interest thereon, and such greater
proportionate payment or receipt of Collateral is not expressly permitted
hereunder, such benefitted Lender shall purchase for cash from the other Lenders
such portion of each such other Lender's Advances, or shall provide such other
Lender with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such Collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
- -------- -------
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrowers a corresponding amount. Agent will promptly notify
Borrowing Agent of its receipt of any such notice from a Lender. If such amount
is made available to Agent on a date after a Settlement Date, such Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the domestic rate per annum then applicable to Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent's
-------- -------
right to such recovery shall not prejudice or otherwise adversely affect any
Borrower's rights (if any) against such Lender.
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<PAGE>
(f) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
Commitment Percentage of any Advance or (y) notifies either Agent or Borrowers
that it does not intend to make available its Commitment Percentage of any
Advance (if the actual refusal would constitute a breach by such Lender of its
obligations under this Agreement) (each, a "Lender Default"), all rights and
obligations hereunder of such Lender (a "Defaulting Lender") as to which a
Lender Default is in effect and of the other parties hereto shall be modified to
the extent of the express provisions of this Section 2.13(f) while such Lender
Default remains in effect.
(i) Revolving Advances shall be allocated pro rata among
--- ----
Lenders (the "Non-Defaulting Lenders") which are not Defaulting Lenders in
accordance with their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Revolving Advances
--- ----
required to be advanced by any Lender shall be increased as a result of such
Lender Default. Amounts received in respect of principal of Advances shall be
applied to reduce Advances of each Lender pro rata based on the aggregate of the
--- ----
outstanding Advances of all Lenders at the time of such application; provided
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Lender that is not a Defaulting Lender exceeds such Lender's Commitment
Percentage of all Advances then outstanding.
(ii) Lenders shall participate in Letters of Credit on the
basis of their respective pro rata shares, and no participation or reimbursement
--- ----
obligation of any Lender shall be increased as a result of a failure of any
Defaulting Lender to reimburse Agent with respect to any amounts drawn on or
otherwise payable with respect to any Letters of Credit (the amount that any
such Defaulting Lender has failed to reimburse is hereinafter referred to as
such Defaulting Lender's "Unreimbursed Amount"). Until such Defaulting Lender
has reimbursed Agent for any Unreimbursed Amount owed by it, all payments and
other amounts received from any source with respect to the Obligations or
otherwise under or in connection with this Agreement (including any letter of
credit fees) which would otherwise be payable to such Defaulting Lender will
instead be paid to Agent for application to such Unreimbursed Amount until such
Unreimbursed Amount has been paid in full. A Defaulting Lender shall not be
entitled to receive any portion of the letter of credit fees or any other fees
payable in connection with this Agreement, or any indemnity arising from its
agreement to make Revolving Advances and/or participate in Letters of Credit
hereunder.
(iii) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement or the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, solely for purposes of the
definition of "Required Lenders", a Defaulting Lender shall be deemed not to be
a Lender and not to have Advances outstanding.
(iv) Other than as expressly set forth in this Section
2.13(f), the rights and obligations of a Defaulting Lender (including the
obligation to indemnify Agent) and the other parties hereto shall remain
unchanged. Nothing in this Section 2.13(f) shall be deemed to release any
Defaulting Lender from its obligations under this Agreement or the Other
Documents, shall alter such
26
<PAGE>
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(v) In the event a Defaulting Lender retroactively cures, to
the satisfaction of Agent, the breach which caused such Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
-----------------
3.1. Interest. Interest on Advances shall be payable in arrears on the
--------
last day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar
Rate Loans with an Interest Period in excess of three months, at the earlier of
(a) the last day of each three month period from the date of the commencement of
such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest
charges shall be computed on the actual principal of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to the applicable
Contract Rate. Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate with
respect to Domestic Rate Loans shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of such change in the
Alternate Base Rate during the time such change or changes remain in effect.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Obligations shall bear interest at the applicable
Revolving Interest Rate plus two (2%) percent per annum (the "Default Rate").
So long as no Default or Event of Default shall have occurred and be continuing,
the Applicable Margin shall be increased or decreased, as the case may be, as of
the first day of each month following the fiscal quarter reported upon in the
financial statements delivered pursuant to Sections 9.8 and 9.9 hereof,
commencing with fiscal quarter ending June 30, 1998, based upon the ratio of
Funded Indebtedness to EBITDA with respect to the four (4) fiscal quarters then
ended as reported upon in the applicable financial statements.
3.2. Letter of Credit Fees.
---------------------
Borrowers shall pay Agent (i) for the ratable benefit of the
Lenders for issuing or causing the issuance of a Standby Letter of Credit, a fee
computed at a rate per annum of one and three quarters percent (1.75%) on the
outstanding amount thereof from time to time, (ii) for the ratable benefit of
the Lenders for issuing or causing the issuance of a Documentary Letter of
Credit, a fee computed at a rate per annum of one and one half percent (1.50%)
and (iii) Bank's other customary charges payable in connection with Letters of
Credit as in effect from time to time (which charges shall be furnished to
Borrowers by Agent upon request). Such fees and charges shall be payable in the
case of any Letter of Credit, on its opening monthly thereafter in advance and
upon each increase in the outstanding amount thereof. Any such charge in effect
at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in Bank's prevailing charges
for that type of transaction. All Letter of Credit Fees payable hereunder shall
be deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.
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<PAGE>
3.3. (a) Closing Fee. Upon the execution of this Agreement, Borrower
-----------
shall pay to Agent for the ratable benefit of the Lenders a closing fee of
$100,000.
(b) Facility Fee. If, for any month during the Term, the average
------------
daily unpaid balance of the Revolving Advances for each day of such month plus
outstanding Letters of Credit does not equal the Maximum Loan Amount, then
Borrower shall pay to Agent for the ratable benefit of the Lenders a fee at a
rate equal to .375% per annum on the amount by which the Maximum Loan Amount
exceeds such average daily unpaid balance plus outstanding Letters of Credit.
Such fee shall be payable to Agent in arrears on the last day of each month and
on the last day of the Term. So long as no Default or Event of Default shall
have occurred and be continuing, the Applicable Margin with respect to the this
facility fee shall be increased or decreased, as the case may be, as of the
first day of each month following the fiscal quarter reported upon in the
financial statements delivered pursuant to Sections 9.8 and 9.9 hereof,
commencing with fiscal quarter ending June 30, 1998, based upon the ratio of
Funded Indebtedness to EBITDA with respect to the four (4) fiscal quarters then
ended as reported upon in the applicable financial statements.
(c) Agency Fee. Borrower shall pay to Agent (for the sole benefit
----------
of Agent) an agency fee of $90,000 per annum payable to Agent on the Effective
Date and on each anniversary date thereafter during the Term. The agency fee
shall be deemed earned in full on the date when same is due and payable
hereunder and shall not be subject to rebate or proration upon termination of
this Agreement for any reason.
3.4. (a) Collateral Evaluation Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) a collateral evaluation fee equal to $2,500 per month
payable on the first day of each month commencing on the first day of the month
following the Effective Date and on the first day of each month thereafter
during the Term. The collateral evaluation fee shall be deemed earned in full
on the date when same is due and payable hereunder and shall not be subject to
rebate or proration upon termination of this Agreement for any reason.
(b) Collateral Monitoring Fee. Borrower shall pay to Agent (for
-------------------------
the sole benefit of Agent) on the first day of each month following any month in
which Agent performs any collateral monitoring - namely any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Agent and which monitoring is undertaken by Agent or for Agent's
benefit - a collateral monitoring fee in an amount equal to $750 per day for
each person performing such monitoring, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis. In
addition, Borrowers agree to pay to NationsBank, N.A. (for so long as it is a
Lender hereunder) such collateral monitoring fee on the same terms and
conditions set forth above with respect to one collateral monitoring field
examination per year provided that Borrowers' obligation to make such payment to
NationsBank, N.A. shall not exceed $5,000 per year.
3.5. Computation of Interest and Fees. Interest and fees hereunder
--------------------------------
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
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<PAGE>
3.6. Maximum Charges. In no event whatsoever shall interest and other
---------------
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Agent or any Lender has
received interest and other charges hereunder in excess of the highest rate
permissible hereto, such excess amount shall be first applied to any unpaid
principal balance owed by Borrowers, and if the then remaining excess amount is
greater than the previously unpaid principal balance, the Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
3.7. Increased Costs. In the event that any applicable law, treaty or
---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Eurodollar Rate Loan or change the basis
of taxation of payments to Agent or any Lender of principal, fees, interest or
any other amount payable hereunder or under any Other Documents (except for
changes in the rate of tax on the overall net income of Agent or any Lender by
the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement, any Other
Documents or any Eurodollar Rate Loan;
and the result of any of the foregoing is to increase the cost to Agent or
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be , provided that the
foregoing shall not apply to increased costs which are reflected in the
Alternate Base Rate or the Eurodollar Rate, as the case may be. Agent or such
Lender shall certify the amount of such additional cost or reduced amount to
Borrowing Agent, and such certification shall be conclusive absent manifest
error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the
--------------------------------------------------------
event that Agent or any Lender shall have determined that:
29
<PAGE>
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan;
Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, the Lenders shall have no obligation to make an
affected type of Eurodollar Rate Loan or maintain outstanding affected
Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic
Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of
Eurodollar Rate Loan.
3.9. Capital Adequacy.
----------------
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender may
use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with
30
<PAGE>
respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
IV. COLLATERAL: GENERAL TERMS
--------------------------
4.1. Acknowledgement and Grant of Security Interests.
-----------------------------------------------
(a) Each Borrower hereby acknowledges, confirms and agrees that
Agent for the ratable benefit of Lenders has and shall continue to have a lien
upon and security interest in all Collateral heretofore granted to Agent
pursuant to the Existing Loan Agreement to secure the Obligations, and, to the
extent not otherwise granted thereunder or under the Other Documents or
otherwise granted to or held by Agent, Borrowers hereby pledge and assign to
Agent for the ratable benefit of Lenders and grant to Agent for the ratable
benefit of Lenders a continuing security interest to secure the Obligations in,
all of the Collateral, wherever located, whether in any Borrower's possession or
in the possession and control of a third party for any Borrower's or Agent's or
any Lender's account. All of each Borrower's ledger sheets, files, records,
books of account, business papers and documents relating to the Collateral
shall, until delivered to or removed by Agent, be kept by such Borrower in trust
for Agent for the ratable benefit of Lenders.
(b) The liens and security interests of Agent for the ratable
benefit of Lenders in the Collateral shall be deemed to be continuously
perfected from the earliest date of the granting of such liens and security
interests, whether hereunder, under the Other Documents, or under the Existing
Loan Agreement.
4.2. Perfection of Security Interest. Each Borrower shall take all
-------------------------------
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest for the ratable benefit of the Lenders in the
Collateral or to enable Agent to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to (i) immediately
discharging all Liens other than Permitted Encumbrances, (ii) obtaining
landlords' or mortgagees' lien waivers, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping
or marking, in such manner as Agent may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to the Required
Lenders, relating to the creation, validity, perfection, maintenance or
continuation of Agent's security interest for the ratable benefit of the Lenders
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements covering the Collateral signed by Agent
instead of Borrower in accordance with Section 9-402(2) of the Uniform
Commercial Code as adopted in the State of New York. All charges, expenses and
fees Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrower's account as a Revolving Advance and added
to the Obligations, or, at the Agent's
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<PAGE>
option, shall be paid to Agent for the ratable benefit of the Lenders
immediately upon demand.
4.3. Disposition of Collateral. Each Borrower will safeguard and
-------------------------
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) the disposition or transfer of obsolete
and worn-out Equipment or Equipment no longer useful in the ordinary course of
business during any fiscal year having an aggregate fair market value of not
more than $250,000.
4.4. Preservation of Collateral. Following the occurrence and during
--------------------------
the continuance of an Event of Default, in addition to the rights and remedies
set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as
Agent deems necessary to protect Agent's and Lenders' interest in and to
preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b)
may employ and maintain at any Borrower's premises a custodian who shall have
full authority to do all acts necessary to protect Agent's and Lenders'
interests in the Collateral; (c) may lease warehouse facilities to which Agent
may move all or part of the Collateral; (d) may use any Borrower's owned or
leased lifts, hoists, trucks and other facilities or equipment for handling or
removing the Collateral; and (e) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any Borrower's owned or leased property. Each Borrower
shall cooperate fully with all of Agent's efforts to preserve the Collateral and
will take such actions to preserve the Collateral as Agent may direct. All of
Agent's expenses of preserving the Collateral, including any expenses relating
to the bonding of a custodian, shall be charged to the Borrowers' accounts as a
Revolving Advance in such manner as Agent deems appropriate and added to the
Obligations.
4.5. Ownership of Collateral. With respect to the Collateral, at the
-----------------------
time the Collateral becomes subject to Agent's security interest for its benefit
and for the ratable benefit of the Lenders: (a) each Borrower shall be the sole
owner of and fully authorized and able to sell, transfer, pledge and/or grant a
first security interest in each and every item of the Collateral to Agent for
its benefit and for the ratable benefit of the Lenders; and, except for
Permitted Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (d) each
Borrower's Inventory shall be located as set forth on Schedule 4.5 and shall not
------------
be removed from such location(s) without the prior written consent of Agent
except with respect to the sale of Inventory in the ordinary course of business.
4.6. Defense of Agent's and Lender's Interests. Until (a) payment and
-----------------------------------------
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's and Lenders' interests in the Collateral shall continue in
full force and effect. During such period no Borrower shall, without Required
Lenders' prior written consent, pledge, sell (except Inventory in the ordinary
course of business), assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. Each Borrower shall defend Agent and
Lenders' interests in the Collateral against any and all persons whatsoever. At
any time following the occurrence and during the continuance of an Event of
Default and a demand by Agent for payment of all Obligations, Agent shall have
the right to take possession of
32
<PAGE>
the indicia of the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Borrowers shall, upon demand, assemble it in the
best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and the
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law. Each
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest for its
benefit and for the ratable benefit of the Lenders to deliver same to Agent
and/or subject to Agent's order and if they shall come into any Borrower's
possession, they, and each of them, shall be held by Borrower in trust as
Agent's trustee, and such Borrower, as the case may be, will immediately deliver
them to Agent in their original form together wit any necessary endorsement.
4.7. Books and Records. Each Borrower (a) shall keep proper books of
-----------------
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables as the case may be, advances
and investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance with,
or as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers.
4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes
--------------------
and directs all accountants and auditors employed by Borrowers at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any
Borrower's financial statements, trial balances or other accounting records of
any sort in the accountant's or auditor's possession, and to disclose to Agent
and each Lender any information such accountants may have concerning any
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to Borrowers, whether
made by a Borrower or otherwise; however, Agent and each Lender will attempt to
obtain such information or materials directly from Borrowers, as the case may
be, prior to obtaining such information or materials from such accountants or
such authorities.
4.9. Compliance with Laws. Each Borrower shall comply in all material
--------------------
respects with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof or to the operation of such Borrower's business the non-compliance
with which could have a Material Adverse Effect on such Borrower. Each Borrower
may, however, contest or dispute any acts, rules, regulations, orders and
directions of those bodies or officials in any reasonable manner, provided that
any related lien is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of the Lenders to protect Agent's Lien on or
security interest in the Collateral. The Collateral at all times shall be
maintained in accordance with the requirements of all insurance carriers which
provide insurance with respect to the Collateral so that
33
<PAGE>
such insurance shall remain in full force and effect.
4.10. Inspection of Premises. At all reasonable times Agent and each
----------------------
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from any Borrower's books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of their
respective businesses. Agent, any Lender and their agents may enter upon any
Borrower's premises at any time during business hours and at any other
reasonable time, and from time to time without prior notice, for the purpose of
inspecting the Collateral and any and all records pertaining thereto and the
operation of their respective businesses.
4.11. Insurance. Each Borrower shall bear the full risk of any loss of
---------
any nature whatsoever with respect to the Collateral. At Borrowers' own cost
and expense in amounts and with carriers acceptable to Agent, each Borrower
shall (a) keep all insurable properties and properties in which it has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and for
such amounts, as is customary in the case of companies engaged in similar
businesses including, without limitation, business interruption insurance;, (b)
maintain a bond in such amounts as is customary in the case of companies engaged
in similar businesses insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrowers
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which it is engaged in business; (e) furnish Agent with (i) copies of all
policies and evidence of the maintenance of such policies by the renewal thereof
at least thirty (30) days before any expiration date, and (ii) appropriate loss
payable endorsements in form and substance satisfactory to Agent, naming Agent
as a co-insured and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a), and (b) above, and providing (A)
that all proceeds thereunder in excess of $100,000 shall be payable to Agent for
the ratable benefit of the Lenders, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be cancelled,
amended or terminated unless at least thirty (30) days' prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent or any Borrower to make payment for such loss in
excess of $100,000 to Agent and not to a Borrower and Agent jointly. If any
insurance losses are paid by check, draft or other instrument payable to a
Borrower and Agent jointly, Agent may endorse such Borrower's name thereon and
do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. All loss recoveries received
by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine; provided, upon any
--------
Borrower's request such proceeds shall be disbursed to such Borrower for the
restoration of damaged property if such proceeds together with other amounts
provided by such Borrower are sufficient to fully restore such property to its
condition prior to the casualty loss. Any surplus shall be paid by Agent to
Borrowers or applied as may be otherwise required by law. Any deficiency
thereon shall be paid by Borrowers, to Agent, on demand.
4.12. Failure to Pay Insurance. If any Borrower shall fail to obtain
------------------------
insurance as
34
<PAGE>
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor for such Borrower's
account, and charge such Borrower's account therefor and such expenses so paid
shall be part of the Obligations, provided Agent shall promptly thereafter
provide to such Borrower documentation supporting such charges.
4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes,
----------------
assessments and other Charges lawfully levied or assessed upon any Borrower or
any of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between any
Borrower and Agent or any Lender which Agent or any Lender may be required to
withhold or pay or if any taxes, assessments, or other Charges remain unpaid
after the date fixed for their payment, or if any claim shall be made which, in
Agent's or Lender's opinion, may possibly create a valid Lien on the Collateral,
Agent may without notice to such Borrower pay the taxes, assessments or other
Charges and Borrowers hereby indemnify and hold Agent and each Lender harmless
in respect thereof. The amount of any payment by Agent under this Section 4.13
shall be charged to the applicable Borrower's accounts as a Revolving Advance
and added to the Obligations and, until a Borrower shall furnish Agent with an
indemnity therefor (or supply Agent with evidence satisfactory to Agent that due
provision for the payment thereof has been made), Agent may hold without
interest any balance standing to any Borrower's credit and Agent shall retain
its security interest in any and all Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Each Borrower shall at all
--------------------------------
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request, will provide evidence of having done so.
4.15. Receivables.
-----------
(a) Nature of Receivables. Each of the Receivables shall be a bona
---------------------
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of such Borrower, or work, labor or services theretofore
rendered by Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with such Borrower's standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of
---------------------
Borrowers' knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Borrowers. Each Borrower's chief executive office
----------------------
and the office at which each maintains its books and records pertaining to
Receivables is the address set forth
35
<PAGE>
on Schedule 4.15(c) hereto. Until written notice is given to Agent by Borrowing
----------------
Agent of any other office at which it keeps its records pertaining to
Receivables all such records shall be kept at such offices.
(d) Collection of Receivables. Until a Borrower's authority to do
-------------------------
so is terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default), Borrower will, at their sole
cost and expense, but on Agent's behalf and for Agent's account, collect as
Agent's property and in trust for Agent all amounts received on Receivables, and
shall not commingle such collections with its respective funds or use the same
except to pay Obligations. Each Borrower shall, upon request, deliver to Agent
or the Blocked Account in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(e) Notification of Assignment of Receivables. At any time
-----------------------------------------
following the occurrence and during the continuance of an Event of Default or a
Default, Agent shall have the right to send notice of the assignment of, and
Agent's security interest in, the Receivables to any and all Customers or any
third party holding or otherwise concerned with any of the Collateral.
Thereafter, Agent shall have the sole right to collect the Receivables, take
possession of the Collateral, or both, for the ratable benefit of the Lenders.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrower's accounts and added to the Obligations.
(f) Power of Agent to Act on Borrowers' Behalf. Agent shall have
------------------------------------------
the right to receive, endorse, assign and/or deliver in the name of Agent, or
any Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as its respective attorney
with power (A) at any time following the occurrence and during the continuance
of an Event of Default hereunder (i) to endorse its name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign its name on any invoice or bill of lading relating to
any of the Receivables, drafts against Customers or assignments of Receivables;
(iii) to demand payment of the Receivables; (iv) to enforce payment of the
Receivables by legal proceedings or otherwise; (v) to exercise all of its rights
and remedies with respect to the collection of the Receivables and any other
Collateral; (vi) to settle, adjust, compromise, extend or renew the Receivables;
(vii) to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (viii) to prepare, file and sign its name on a proof of claim in
bankruptcy or similar document against any Customer; (ix) to prepare, file and
sign its name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (B) at any time (i) to
send verifications of Receivables to any Customer; (ii) to sign its name on all
financing statements or any other documents or instruments deemed necessary or
appropriate by Agent to preserve, protect, or perfect Agent's interest in the
Collateral and to file same; (iii) to do all other acts and things necessary to
carry out this Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of omission or commission nor for any error of judgment or mistake of fact
or of law, unless done maliciously or with gross (not mere) negligence; this
power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right
36
<PAGE>
at any time following the occurrence and during the continuance of an Event of
Default, to change the address for delivery of mail addressed to any Borrower to
such address as Agent may designate.
(g) No Liability. Neither Agent nor any Lender shall, under any
------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence and during the
continuance of an Event of Default Agent may, without notice or consent from any
Borrower, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. Agent is authorized and empowered to accept
following the occurrence and during the continuance of an Event of Default the
return of the goods represented by any of the Receivables, without notice to or
consent by any Borrower, all without discharging or in any way affecting the
Obligations hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
----------------------------------------------------
proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrowers into a lockbox account, dominion account or such other "blocked
account" ("Blocked Accounts") as Agent may require pursuant to an
arrangement with such bank(s) as may be selected by Borrowers and be acceptable
to Agent. Borrowers shall issue to any such bank, an irrevocable letter of
instruction directing said bank to transfer such funds so deposited to Agent,
either to any account maintained by Agent at said bank or by wire transfer to
appropriate account(s) of Agent. All funds deposited in such "blocked account"
shall immediately become the property of Agent, and Borrowers shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Agent assumes no responsibility for such "blocked account"
arrangement including, without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, Agent may establish depository accounts ("Depository Accounts")
in the name of Agent at a bank or banks for the deposit of such funds and
Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent in lieu of depositing
same to the Blocked Accounts.
(i) Adjustments. No Borrower will, without Agent's consent,
-----------
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any material returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of such Borrower, as the case may be.
4.16. Inventory. All Inventory has been, and will be, produced by
---------
Borrowers with the Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations and orders thereunder.
4.17. Maintenance of Equipment. The Equipment shall be maintained in
------------------------
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrower shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation.
37
<PAGE>
4.18. Exculpation of Liability. Nothing herein contained shall be
------------------------
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof,
unless such shortage, discrepancy, damage, loss or destruction results from the
gross (not mere) negligence or willful misconduct of Agent or Lenders. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by any Borrower of any of the terms
and conditions thereof.
4.19. Environmental Matters. (a) Borrowers will ensure that all real
---------------------
property owned or occupied by Borrowers remains in compliance in all material
respects with all Environmental Laws and they will not place or permit to be
placed any Hazardous Substances on any such property except as not prohibited by
applicable law or appropriate governmental authorities.
(b) Borrowers will establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
(c) Promptly upon the written request of Agent from time to time,
Borrowers shall provide Agent, at Borrowers' expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within any real property owned or
occupied by a Borrower. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee
the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such
estimates, individually or in the aggregate, exceed $100,000, Agent shall have
the right to require Borrowers to post a bond, letter of credit or other
security reasonably satisfactory to Agent to secure payment of these costs and
expenses.
(d) Borrowers shall defend and indemnify Agent and the Lenders and
hold Agent, the Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or the Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances,
whether or not the same originates or emerges from any real property owned or
occupied by a Borrower or any contiguous real estate, except to the extent such
loss, liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers'
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at any real property owned or occupied by a
Borrower, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any Hazardous
Substances. Borrowers' obligations and the indemnifications hereunder shall
survive the termination of this Agreement.
(e) For purposes of Sections 4.19 and 5.7, all references to any
real property
38
<PAGE>
owned or occupied by a Borrower shall be deemed to include all of Borrower's
right, title and interest in and to its owned and leased premises.
4.20. Except as respects the financing statements filed by Agent and the
financing statements described on Schedule 4.20, no financing statement covering
-------------
any of the Collateral or any proceeds thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each Borrower represents and warrants as follows:
5.1. Authority. It has full power, authority and legal right to enter
---------
into this Agreement and the Other Documents and perform its respective
Obligations hereunder and thereunder. The execution, delivery and performance
hereof and of the Other Documents (a) are within its respective corporate
powers, have been duly authorized, are not in contravention of law or the terms
of any Borrower's by-laws, certificate of incorporation or other applicable
documents relating to the formation or conduct of its respective business or of
any material agreement or undertaking to which it is a party or by which it is
bound, and (b) will not conflict with nor result in any breach in any of the
provisions of or constitute a default under or result in the creation of any
Lien except Permitted Encumbrances upon any of its respective assets under the
provisions of any agreement, charter document, instrument, by-law, or other
instrument to which it or its property is a party or by which it may be bound.
5.2. Formation and Qualification. (a) Each is duly formed and in good
---------------------------
standing under the laws of its state of incorporation or formation and is
qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) which constitute all states in which qualification and good
- ---------------
standing are necessary for each to conduct its business and own its property and
where the failure to so qualify could have a Material Adverse Effect. Each
Borrower has delivered to Agent true and complete copies of its certificate of
incorporation and/or by-laws and each will promptly notify Agent of any
amendment or changes thereto.
(b) The only Subsidiaries of Borrowers are listed on Schedule
--------
5.2(b).
- -------
5.3. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties of each Borrower contained in this Agreement and the Other
Documents shall be true at the time of the execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
5.4. Tax Returns. Each Borrower's federal tax identification number is
-----------
set forth on Schedule 5.4. Borrowers have each filed all federal, state and
------------
local tax returns and other reports it is required by law to file and has paid
all taxes, assessments, fees and other governmental charges that are due and
payable. The provision for taxes on the books of Borrowers are adequate for all
years not closed by applicable statutes, and for its current fiscal year, and no
Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.
39
<PAGE>
5.5. Financial Statements.
--------------------
(a) The pro forma balance sheet of Radnor on a Consolidated Basis
(the "Pro Forma Balance Sheet") furnished to Agent and the Lenders on the
Effective Date reflects the consummation of the transactions contemplated by the
Second Acquisition Agreement, the Second Indenture and under this Agreement (the
"Transactions") and are accurate, complete and correct and fairly reflect in all
material respects the financial condition of Radnor on a Consolidated Basis as
of the Effective Date after giving effect to the Transactions, and have been
prepared in accordance with GAAP, consistently applied. The Pro Forma Balance
Sheet has been certified as accurate, complete and correct in all material
respects by the Chief Financial Officer of Radnor. All financial statements
referred to in this subsection 5.5(a), including the related schedules and notes
thereto, have been prepared, in accordance with GAAP, except as may be disclosed
in such financial statements.
(b) The twelve-month cash flow projections of Radnor on a
Consolidated Basis and their projected balance sheets as of the Effective Date,
copies of which have been previously submitted to Agent and the Lenders (the
"Projections") were prepared by the Chief Financial Officer of each Borrower,
are based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect such Borrower's judgment based on
present circumstances of the most likely set of conditions and course of action
for the projected period. The Projections together with the Pro Forma Balance
Sheet of Borrowers on a consolidated basis, are referred to as the "Pro Forma
Financial Statements".
(c) The balance sheets of each Borrower as of June 30, 1997, and
the related statements of income, changes in stockholder's equity, and changes
in cash flow for the period ended on such date, which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied and
present fairly the financial position of each Borrower at such date and the
results of their operations for such period. Since June 30, 1997 there has been
no change in the condition, financial or otherwise, of any Borrower as shown on
the balance sheets as of such date, except changes in the ordinary course of
business, none of which individually or in the aggregate has caused a Material
Adverse Effect.
5.6. Corporate Name. No Borrower has been known by any other corporate
--------------
name in the past five years and does not sell Inventory under any other name
except as set forth on Schedule 5.6, nor has any Borrower been the surviving
------------
entity of a merger or consolidation or acquired all or substantially all of the
assets of any Person during the preceding five (5) years, except for (i) the
dissolution of Wincup L.P., (ii) the acquisition of certain assets of Wincup
L.P. from James River and Wincup., (iii) the acquisition of stock of Acquisition
pursuant to the Acquisition Agreement and (iv) the acquisition by Radnor of the
limited partnership interest of James River in Wincup L.P.
5.7. O.S.H.A. and Environmental Compliance.
-------------------------------------
Except as disclosed in the Phase I and Phase II environmental reports
prepared by Dames & Moore and Conestoga Rovers & Associates and delivered to
Agent on or before the Effective Date:
(a) Each Borrower has duly complied in all material respects with,
and the
40
<PAGE>
the facilities, business, assets, property and leaseholds of each are in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; there have been no outstanding citations, notices
or orders of material non-compliance issued to Borrower or relating to its
business, assets, property, leaseholds or equipment under any such laws, rules
or regulations.
(b) Each Borrower has been issued all required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any Borrower's premises; (i) there are no
underground storage tanks or polychlorinated biphenyls on any Borrower's
premises; (ii) none of Borrower's premises have ever been used as a treatment,
storage or disposal facility of Hazardous Waste; and (iii) no Hazardous
Substances are present on any Borrower's premises, excepting such quantities as
are handled in accordance with all applicable manufacturer's instructions and
governmental regulations and in proper storage containers and as are necessary
for the operation of the commercial business of any Borrower or its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
-----------------------------------------------------------
(a) After giving effect to the Transactions, each Borrower will
be solvent, able to pay its respective debts as they mature, have capital
sufficient to carry on its respective business and all businesses in which it is
about to engage, and (i) as of the Effective Date, the fair present saleable
value of its assets, calculated on a going concern basis, is in excess of the
amount of its liabilities and (ii) subsequent to the Effective Date, the fair
saleable value of its assets (calculated on a going concern basis) will be in
excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b) or the Pro Forma
---------------
Financial Statements, no Borrower has (i) any pending or threatened litigation,
arbitration, actions or proceedings which involve the possibility of having a
Material Adverse Effect on such Borrower or on its ability to perform this
Agreement, and (ii) any liabilities nor indebtedness other than the Obligations.
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect which could have a Material Adverse
Effect on such Borrower and no Borrower is in violation of any order of any
court, governmental authority or arbitration board or tribunal which could have
a Material Adverse Effect on such Borrower.
(d) No Borrower nor any member of the Controlled Group maintains
or contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
---------------
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
---------------
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from
41
<PAGE>
federal income tax under Section 501(a) of the Code, (iii) no Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and no Borrower
nor any member of the Controlled Group knows of any facts or circumstances which
would materially change the value of such assets and accrued benefits and other
liabilities, (vi) no Borrower nor any member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan, (vii) no Borrower nor any member of a Controlled
Group has incurred any liability for any excise tax arising under Section 4972
or 4980B of the Code, and no fact exists which could give rise to any such
liability, (viii) no Borrower nor any member of the Controlled Group nor any
fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited
transaction" described in Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would constitute or result in a Termination Event
with respect to any such Plan which is subject to ERISA, (ix) Borrower and each
member of the Controlled Group has made all contributions due and payable with
respect to each Plan, (x) there exists no event described in Section 4043(b) of
ERISA, for which the thirty (30) day notice period contained in 29 CFR (S)2615.3
has not been waived, (xi) no Borrower nor any member of the Controlled Group has
any fiduciary responsibility for investments with respect to any plan existing
for the benefit of persons other than employees or former employees of Borrowers
and any member of the Controlled Group, and (xii) no Borrower nor any member of
the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent
--------------------------------------------
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
set forth on Schedule 5.9, are valid and have been duly registered or filed with
------------
all appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, design rights tradename, trade secret or license
and Borrower is not aware of any grounds for any challenge, except as set forth
in Schedule 5.9 hereto. Each patent, patent application, patent license,
------------
trademark, trademark application, trademark license, service mark, service mark
application, service mark license, copyright, copyright application and
copyright license owned or held by any Borrower and all trade secrets used by
any Borrower consist of original material or property developed by such Borrower
or was lawfully acquired by such Borrower from the proper and lawful owner
thereof. Each of such items has been maintained so as to preserve the value
thereof from the date of creation or acquisition thereof. With respect to all
software used by any Borrower, such Borrower is in possession of all source and
object codes related to each piece of software or is the beneficiary of a source
code escrow agreement, each such source code escrow agreement being listed on
Schedule 5.9 hereto.
- ------------
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each
-------------------- -------------
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in
42
<PAGE>
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits could have a Material
Adverse Effect.
5.11. Default of Indebtedness. No Borrower is in default in the payment
-----------------------
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12. No Default. No Borrower is in default in the payment or
----------
performance of any of its material contractual obligations and no Default has
occurred.
5.13. No Burdensome Restrictions. No Borrower is party to any contract
--------------------------
or agreement the performance of which could have a Material Adverse Effect. No
Borrower has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.
5.14. No Labor Disputes. No Borrower is involved in any labor dispute;
-----------------
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
-------------
5.15. Margin Regulations. No Borrower is engaged, nor will either of
------------------
them engage, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U or Regulation G of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the
proceeds of any Advance will be used for "purchasing" or "carrying" "margin
stock" as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act. No Borrower is an "investment company"
----------------------
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is either entity controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Borrower in
----------
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
any Borrower or which reasonably should be known to any Borrower which such
Borrower has not disclosed to Agent in writing with respect to the transactions
contemplated by the Contribution Agreements or this Agreement which could
reasonably be expected to have a Material Adverse Effect.
5.18. Delivery of Acquisition Agreement; Indenture. Agent and Lenders
--------------------------------------------
have received complete copies of the Acquisition Agreement and the Indenture
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof. None
of such
43
<PAGE>
documents and agreements has been amended or supplemented, nor have any of the
provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to Agent and Lenders.
5.19. Swaps. No Borrower is a party to, nor will it be a party to, any
-----
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.20. Conflicting Agreements. No provision of any mortgage, indenture,
----------------------
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations. No Borrower nor any
-------------------------------------------
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22. Business and Property of Borrowers. Upon and after the Effective
----------------------------------
Date, Borrowers propose to engage substantially only in the business of
manufacturing and/or distributing polystyrene beads and disposable products sold
to or through the food service industry and activities necessary to conduct the
foregoing. On the Effective Date, each Borrower will own all the property and
possess all of the rights and Consents necessary for the conduct of its
business.
5.23. Acquisition. Each Borrower has acquired all of its assets and
-----------
property in accordance with all applicable statutes and laws, such property is
free and clear of all Liens other than Permitted Encumbrances.
VI. AFFIRMATIVE COVENANTS.
---------------------
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary
---------------
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge the accounts of Borrowers for all such fees and
expenses, provided Agent shall promptly thereafter provide Borrowing Agent with
copies of supporting documentation.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
-----------------------------------------------------------
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear
44
<PAGE>
and tear excepted and except as may be disposed of in accordance with the terms
of this Agreement), including, without limitation, all licenses, patents,
copyrights, design rights, tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity of any intellectual
property right or other right included in the Collateral; (b) keep in full force
and effect its existence and comply in all material respects with the laws and
regulations governing the conduct of its business; and (c) make all such reports
and pay all such franchise and other taxes and license fees and do all such
other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof.
6.3. Violations. Promptly notify Agent in writing of any violation of
----------
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which may have a Material Adverse
Effect on any Borrower.
6.4. Government Receivables. Take all steps necessary to protect
----------------------
Agent's and Lenders' interest in the Collateral under the Federal Assignment of
Claims Act or other applicable state or local statutes or ordinances and deliver
to Agent appropriately endorsed, any instrument or chattel paper connected with
any arising out of contracts between any Borrower and the United States, any
state or any department, agency or instrumentality of any of them.
6.5. Net Worth. Cause to be maintained Net Worth in an amount not less
---------
than the amounts set forth below as of the dates set forth below:
<TABLE>
<CAPTION>
Date Amount
---- ======
<S> <C>
12-31-97 $ 7,000,000
12-31-98 $ 8,000,000
12-31-99 $ 9,000,000
12-31-00 $10,000,000
12-31-01 $10,000,000
12-31-02 $10,000,000
</TABLE>
6.6. Current Ratio. Cause to be maintained a ratio of Current Assets
-------------
to Current Liabilities of not less than 1.00 to 1.00 at the end of each fiscal
quarter.
6.7. Fixed Charge Coverage. Cause to be maintained a Fixed Charge
---------------------
Coverage for Radnor on a Consolidated Basis equal to or greater than 1.00 to
1.00 as at the end of each fiscal quarter for the most recent four fiscal
quarters then ended.
6.8. Interest Coverage. Cause to be maintained an Interest Coverage
-----------------
for Radnor on a Consolidated Basis equal or greater than 1.25 to 1.00 as at the
end of each fiscal quarter for the most recent four fiscal quarters then ended.
6.9. Net Income. Achieve net income (excluding non-cash extraordinary
----------
items) of at least $1 in each fiscal year for Radnor on a Consolidated Basis.
6.10. Execution of Supplemental Instruments. Execute and deliver to
-------------------------------------
Agent from time
45
<PAGE>
to time, upon demand, such supplemental agreements, statements, assignments and
transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may request, in order that the full intent of this
Agreement may be carried into effect.
6.11. Payment of Indebtedness. Pay, discharge or otherwise satisfy at
-----------------------
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its material
obligations and liabilities of whatever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Agent and the Lenders.
6.12. Standards of Financial Statements. Cause all financial statements
---------------------------------
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
those to which GAAP is applicable to be complete and correct in all material
respects (subject, in the case of interim financial statements, to normal year-
end audit adjustments) and to be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as concurred in by such reporting accountants or officer, as the case may be,
and disclosed therein).
6.13. Exercise of Rights. Enforce all of its rights under the
------------------
Contribution Agreements, the Acquisition Agreement, the Escrow Agreement and all
documents executed in connection therewith including, but not limited to, all
indemnification rights and pursue all remedies available to it with diligence
and in good faith in connection with the enforcement of any such rights.
6.14 Landlord Waivers; Bailee Letters. Not later than (45) days
--------------------------------
following the effective date, Borrower shall deliver acknowledgements from each
landlord or bailee that executed a landlord's waiver or bailee letter,
respectively in favor of Agent acknowledging the continuing effectiveness of
such landlord's waiver or bailee letter.
VII. NEGATIVE COVENANTS.
------------------
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
-----------------------------------------------------
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person (other than another Borrower) or acquire all or a
substantial portion of the assets or stock of any Person (other than another
Borrower) or permit any other Person (other than another Borrower) to
consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of all or any
material part of its properties or assets, except in the ordinary course of its
business.
7.2. Creation of Liens. Create or suffer to exist any Lien or transfer
-----------------
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
46
<PAGE>
7.3. Guarantees. Become liable upon the obligations of any Person by
----------
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders
or to any Affiliate of Lenders) except (a) as disclosed on Schedule 7.3, (b) the
------------
endorsement of checks in the ordinary course of business and (c) guaranties not
to exceed a liability of $5,000,000 in the aggregate at any one time.
7.4. Investments. Purchase or acquire obligations or stock of, or any
-----------
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency; (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof; and (e) investments in one or more Subsidiaries, joint ventures
or other Affiliates in an aggregate sum not to exceed the sum of (i) 50% of the
cumulative net income of Borrowers on a consolidated basis plus (ii) $3,000,000;
provided, at the time of such investment (x) no Event of Default has occurred or
- --------
would occur after giving effect to such payment and (y) and after giving effect
to such investment Undrawn Availability is more than $2,000,000.
7.5. Loans. Make advances, loans or extensions of credit to any
-----
Person, including without limitation, any Parent, Subsidiary or Affiliate except
with respect to (a) the extension of commercial trade credit in connection with
the sale of Inventory in the ordinary course of its business, (b) loans to its
employees in the ordinary course of business not to exceed the aggregate amount
of $100,000 at any time outstanding provided, the provisions of this subclause
(b) shall not prohibit any loans to an irrevocable life insurance trust
established by Michael T. Kennedy ("Insurance Trust") for the purposes of paying
annual premiums on the life insurance policies owned by the Insurance Trust on
the life of Michael T. Kennedy in an aggregate amount not to exceed $700,000
outstanding at any one time, (c) loans to a Subsidiary so long as (i) such loan
or advance is evidenced by a promissory note and such note is assigned to Agent
as collateral security for the Obligations and (ii) at the time of such loan no
Event of Default has occurred or would occur after giving effect to such loan or
advance, (d) loans to StyroChem International, Ltd. in an aggregate amount not
to exceed $4,000,000 at any time outstanding so long as (i) after giving effect
to any such loan or advance Undrawn Availability is more than $2,000,000 and
(ii) at the time of such loan no Event of Default has occurred or would occur
after giving effect to such loan or advance and (f) loans to Affiliates of the
Borrowers not to exceed $5,000,000 in the aggregate.
7.6. Capital Expenditures. Contract for, purchase or make any
--------------------
expenditure or commitments for fixed or capital assets (including capitalized
leases) in an amount in excess of the amounts set forth below for the fiscal
years set forth below with respect to Radnor on a Consolidated Basis:
<TABLE>
<CAPTION>
Fiscal Year Ended Amount
----------------- ------
<S> <C>
12-31-97 $15,000,000
</TABLE>
47
<PAGE>
<TABLE>
<S> <C>
12-31-98 21,000,000
12-31-99 16,800,000
12-31-00 13,900,000
12-31-01 9,900,000
12-31-02 7,400,000
</TABLE>
7.7. Dividends; Distributions. Declare, pay or make any dividend or
------------------------
distribution to any of its shareholders or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any of its capital
stock except, so long as (a) a notice of termination with regard to this
Agreement shall not be outstanding and (b) if Undrawn Availability is less than
$5,000,000 the purpose for such distribution shall be as set forth in writing to
Lenders at least ten (10) days prior to such distribution and such distribution
shall in fact be used for any of the following purposes: (i) any Borrower shall
be permitted to make distributions to any of its shareholders who are Borrowers
hereunder to enable Radnor to make its regularly scheduled payments of interest
on the Senior Notes and the Second Senior Notes if (x) the aggregate amount of
such distributions do not exceed the interest payments then required to be paid
by Radnor on the Senior Notes or the Second Senior Notes, as the case may be,
and (y) at the time of and after giving effect to any such distribution no Event
of Default has occurred or would occur; and (ii) any Borrower shall be permitted
to make distributions to any of its shareholders for any purpose if (x) at the
time of and after giving effect to such distribution no Event of Default has
occurred or would occur, (y) in the event that Borrowers have Revolving Advances
outstanding hereunder in excess of $2,000,000 at the time of such distribution,
after giving effect to such distribution Undrawn Availability is more than
$2,000,000 and (z) in the event such distribution is made by Radnor, after
giving effect to such distribution, the aggregate amount of all payments or
distributions made by Radnor during such fiscal year does not exceed 50% of the
net income of Radnor on a Consolidated Basis for the immediately preceding
fiscal year.
7.8. Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders; (ii) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof; (iii) Indebtedness due under the guaranties issued in
respect of the Senior Notes and the Second Senior Notes; and (iv) Indebtedness
in a maximum aggregate amount outstanding not greater than $10,000,000 for all
Borrowers. Notwithstanding the foregoing, Borrowers may incur Indebtedness in
excess of the foregoing amounts if, after giving pro forma effect to the
incurrence of such Indebtedness, Interest Coverage for each of the four fiscal
quarters most recently ended would equal or exceed 2.0 to 1.0 if calculated as
if such Indebtedness was outstanding for the entire four quarter period.
7.9. Nature of Business. Substantially change the nature of the
------------------
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. Transactions with Affiliates. Directly or indirectly, purchase,
----------------------------
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions disclosed in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate provided, the provisions of this Section 7.10 shall not prohibit any
payments to Radnor Management,
48
<PAGE>
Inc. ("Management") in accordance with the provisions of the Management Services
Agreement dated as of December 18, 1996 among Management, Borrowers, Styrochem
International, Ltd. and Styrochem FSC, Ltd. ("Management Agreement") in an
aggregate amount not to exceed the actual Expenses under and as defined in the
Management Agreement.
7.11. Leases. Enter as lessee into any lease arrangement for real or
------
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $6,000,000 in any one fiscal year.
7.12. Subsidiaries.
------------
(a) Form any Subsidiary unless (A) (i) such Subsidiary expressly
joins in this Agreement as a borrower and becomes jointly and severally liable
for the obligations of Borrowers hereunder and under any other agreement between
Borrowers, Agent and Lenders and (ii) Agent shall have received all documents,
including legal opinions, it may reasonably require to establish compliance with
each of the foregoing conditions or (B) such Subsidiary is formed pursuant to
the provisions of Section 7.4 hereof.
(b) Enter into any partnership, joint venture or similar
arrangement unless the amount invested therein is less than $5,000,000 in the
aggregate in any fiscal year.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
----------------------------------
December 31 or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14. Pledge of Credit. Now or hereafter pledge any Lender's credit on
----------------
any purchases or for any purpose whatsoever or use any portion of any Advance in
or for any business other than Borrower's business as conducted on the date of
this Agreement.
7.15. Amendment of Certificate of Incorporation, Etc. Amend, modify or
----------------------------------------------
waive any material term or material provision of its Certificate of
Incorporation, By-laws the Senior Notes or the Second Senior Notes.
7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of
---------------------
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d); (ii) engage, or
---------------
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code; (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code; (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA; (v) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d); (vi) incur, or permit any
---------------
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (vii)
49
<PAGE>
fail promptly to notify the Agent of the occurrence of any Termination Event;
(viii) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the requirements of ERISA or the Code or other applicable laws in
respect of any Plan; (ix) fail to meet, or permit any member of the Controlled
Group to fail to meet, all minimum funding requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan.
7.17. Senior Notes. At any time, directly or indirectly, pay, prepay,
------------
repurchase, redeem, retire or otherwise acquire, or make any payment on account
of any principal of, interest on or premium payable in connection with the
repayment or redemption of the Senior Notes, except that Radnor may (i) pay all
regularly scheduled payments of interest on the Senior Notes so long as no Event
of Default has occurred or would occur after giving effect to such payment and
(ii) repurchase Senior Notes so long as after giving effect to such repurchase
Undrawn Availability of the Borrowers under this Agreement is not less than
$15,000,000.
7.18. Second Senior Notes. At any time, directly or indirectly, pay,
-------------------
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium payable in connection with
the repayment or redemption of the Second Senior Notes, except that Radnor may
(i) pay all regularly scheduled payments of interest on the Second Senior Notes
so long as no Event of Default has occurred or would occur after giving effect
to such payment and (ii) repurchase Second Senior Notes so long as after giving
effect to such repurchase Undrawn Availability of the Borrowers under this
Agreement is not less than $15,000,000.
7.19. Prepayment of Indebtedness. At any time, directly or indirectly,
--------------------------
prepay any Indebtedness (other than to Agent and the Lenders), or repurchase,
redeem, retire or otherwise acquire any Indebtedness of Borrower, except Senior
Notes and Second Senior Notes in accordance with Section 7.17 or 7.18.
VIII. CONDITIONS PRECEDENT.
--------------------
8.1. Conditions to Initial Advances. The agreement of Lenders to make
------------------------------
the initial Advances requested to be made on the Effective Date is subject to
the satisfaction, or waiver by Required Lenders, immediately prior to or
concurrently with the making of such Advances, of the following conditions
precedent:
(a) Ratification Agreement. Agent shall have received a
----------------------
Ratification Agreement duly executed and delivered by Borrowers pursuant to
which Borrowers reaffirm and ratify certain ancillary documents delivered in
connection with the Existing Loan Agreement.
(b) Notes. Agent shall have received the Notes duly executed and
-----
delivered by an authorized officer of Borrowers;
(c) Filings, Registrations and Recordings. Each document
-------------------------------------
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded
50
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in order to create, in favor of Agent for its benefit and for the ratable
benefit of the Lenders, a perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto;
(d) Proceedings of Borrowers. Agent shall have received a copy of
------------------------
the resolutions in form and substance reasonably satisfactory to Agent, of the
Board of Directors of Borrowers, authorizing (i) the execution, delivery and
performance of this Agreement, the Notes, any related agreements, the
Acquisition Agreement, the Senior Notes the Second Senior Notes and all
documents executed in connection therewith (collectively the "Documents") and
(ii) the granting by Borrowers of the security interests in and liens upon the
Collateral in each case certified by the President of each Borrower as of the
Effective Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(e) Incumbency Certificates of Borrowers. Agent shall have
------------------------------------
received a certificate of the Secretary of each Borrower, dated the Effective
Date, as to the incumbency and signature of the officers of each Borrower
executing this Agreement, any certificate or other documents to be delivered by
it pursuant hereto, together with evidence of the incumbency of such officer;
(f) Certificates. Agent shall have received a copy of the
------------
Articles or Certificate of Incorporation, and all amendments to the foregoing,
certified by the Secretary of State together with copies of the by-laws and
shareholders agreements of each Borrower, as applicable, certified as accurate
and complete by the general partner or secretary of each Borrower;
(g) Good Standing Certificates. Agent shall have received good
--------------------------
standing certificates for each Borrower dated not more than ten (10) days prior
to the Effective Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of formation and each jurisdiction
where the conduct of a Borrower's business activities or the ownership of its
properties necessitates qualification;
(h) Legal Opinion. Agent shall have received the executed legal
-------------
opinions of Duane Morris & Heckscher and such other counsel as may be required
by the Lenders in form and substance satisfactory to the Lenders which shall
cover such matters incident to the transactions contemplated by this Agreement,
the Contribution Agreements, the Acquisition Agreement, the Notes, and related
agreements as Agent may reasonably require and Borrowers hereby authorize and
direct such counsel to deliver such opinions to Agent and the Lender;
(i) No Litigation. (i) No litigation, investigation or proceeding
-------------
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of the Agent, is
deemed material or (B) which if adversely determined, could, in the reasonable
opinion of the Agent, have a
51
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Material Adverse Effect on any Borrower; and (ii) no injunction, writ,
restraining order or other order of any nature materially adverse to any
Borrower or the conduct of its business or inconsistent with the due
consummation of the Transactions shall have been issued by any Governmental
Body;
(j) Financial Condition Opinions. Agent shall have received an
----------------------------
executed Officers' Certificate in the form of Exhibit 8.1(i).
--------------
(k) Collateral Examination. Agent shall have completed Collateral
----------------------
examinations and received appraisals as shall be required by the Lenders with
respect to the Receivables, Inventory and General Intangibles the results of
which shall be satisfactory in form and substance to the Agent;
(l) Fees. Agent shall have received all fees payable to Agent and
----
to the Lenders on or prior to the Effective Date pursuant to Article III hereof;
(m) Pro Forma Financial Statements. Agent and Lenders shall have
------------------------------
received a copy of the Pro Forma Financial Statements which shall be
satisfactory in all respects to Lenders;
(n) Other Documents. Agent and Lenders shall have received final
---------------
executed copies of the StyroChem Europe Acquisition Agreement, the Second Senior
Notes and the Second Indenture and all related agreements, documents and
instruments as in effect on the Effective Date all of which shall be in form and
substance satisfactory to Agent and Lenders and shall provide, among other
things, for such indemnifications and consents as Agent or any Lender deems
reasonably necessary and the transactions contemplated by such documentation
shall be consummated concurrently with the making of the initial Advance
hereunder;
(o) Payment Instructions. Agent shall have received written
--------------------
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(p) Consents. Agent shall have received any and all Consents
--------
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(q) No Material Adverse Change. (i) since June 30, 1997 (a) no
--------------------------
material adverse change shall have occurred in the condition, financial or
otherwise, operations, properties or prospects of any Borrower, (b) no material
damage or destruction shall have occurred to any of the Collateral and no
material depreciation in the value thereof, (c) no material adverse deviation
shall have occurred from the forecasts and projections previously delivered to
Agent and (d) no event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect on any Borrower shall have occurred
and (ii) no representations made or information supplied to Agent or the Lenders
shall have been proven to be inaccurate or misleading in any material respect;
(r) Contract Review. Agent shall have reviewed all material
---------------
contracts of each Borrower including, without limitation, leases, union
contracts, labor contracts, vendor supply
52
<PAGE>
contracts, license agreements and distributorship agreements and such contracts
and agreements shall be satisfactory in all respects to Agent;
(s) Closing Certificate. Agent shall have received closing
-------------------
certificate signed by the Chief Financial Officer of Borrower dated as of the
date hereof, stating that (i) all representations and warranties made by each as
set forth in this Agreement and the other Documents are true and correct on and
as of such date, (ii) Borrowers are on such date in compliance with all the
terms and provisions set forth in this Agreement and the other Documents and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(t) Borrowing Base. Agent and Lenders shall have received
--------------
evidence from Borrowers that the aggregate amount of Eligible Receivables and
Eligible Inventory is sufficient in value and amount to support Revolving
Advances and Letters of Credit in the amount requested by Borrower on the
Effective Date and, so that after giving effect to the initial Advances
hereunder, Borrowers shall have Undrawn Availability of at least $5,000,000;
(u) Agreements. Agent and Lenders shall have received copies of
----------
all agreements evidencing the obligations of any Borrower with respect to its
Indebtedness for borrowed money, which agreements shall be in form and substance
satisfactory to Agent and shall set forth the conditions on which (i) such
Borrower may make and the holder(s) of such indebtedness may receive payments
with respect thereto and (ii) the holder(s) of such indebtedness may accelerate
such obligations, commence any action against or otherwise exercise any rights
or enforce any remedies against such Borrower, which conditions shall be
satisfactory in form and substance to Agent in its discretion.
(v) StyroChem Europe Acquisition. Agent and Lenders shall have
----------------------------
received evidence satisfactory to them that Borrowers have acquired all of the
assets pursuant to the Styrochem Acquisition Agreement in accordance with all
applicable laws and that such assets are free and clear of all Liens other than
Permitted Encumbrances (as defined in the European Supplement).
(w) European Supplement. Evidence satisfactory to Agent that the
-------------------
European Supplement has been duly authorized, executed and delivered to BNY UK.
(x) Other Documents. Agent shall have received the executed Other
---------------
Documents, each in form and substance satisfactory to Lenders;
(y) Insurance. Agent shall have received in form and substance
---------
satisfactory to Agent, certified copies of each Borrower's casualty insurance
policies evidencing coverage on all Collateral in such amounts, with such
carriers and covering such risks as is acceptable to Agent, together with loss
payable endorsements on Agent's standard form of loss payee endorsement naming
Agent as loss payee, and certified copies of each Borrower's liability insurance
policies, together with endorsements naming Agent as an additional or co-
insured;
(z) Leasehold Agreements. Agent shall have received landlord,
--------------------
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased or owned by any Borrower at which Inventory is located;
53
<PAGE>
8.2. Conditions to Each Advance. The agreement of Lenders to make any
--------------------------
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by Borrower in or pursuant to this Agreement and any related
agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any related agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date except as such representations
and warranties are modified in a manner consistent with this Agreement;
(b) No Default. No Event of Default or Default shall have
----------
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the transactions
contemplated by the Acquisition Agreement and the Senior Notes; provided,
--------
however that Lenders in their sole discretion, may continue to make Advances
- -------
notwithstanding the existence of an Event of Default or Default and that any
Advances so made shall not be deemed a waiver of any such Event of Default or
Default; and
(c) Maximum Advances. In the case of any Revolving Advances
----------------
requested to be made or Letters of Credit to be issued, after giving effect
thereto, the aggregate Revolving Advances and outstanding Letters of Credit
shall not exceed the maximum Revolving Advances permitted under Section 2.1
hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION.
-----------
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning
------------------------------
thereof, report to Agent all matters materially affecting the value,
enforceability or collectibility of any portion of the Collateral including,
without limitation, any Borrower's reclamation or repossession of, or the return
to any Borrower of, a material amount of goods or claims or disputes asserted by
any Customer or other obligor.
9.2. Schedules. Deliver to Agent and if requested, the Lenders, on or
---------
before the fifteenth (15th) day of each month as and for the prior month (a)
accounts receivable ageings, (b) accounts payable schedules and (c) Inventory
reports for each Borrower; provided, if Undrawn Availability is less than (x)
--------
$4,000,000 with respect to all Borrowers or (y) $2,000,000 with respect to
54
<PAGE>
StyroChem or Wincup, individually, Borrowers shall provide Agent with daily
reports of sales, collections, credits issued, debits or other adjustments made
by any Borrower with respect to Receivables. In addition, each Borrower will
deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may require including, without
limitation, trial balances and test verifications. Agent shall have the right
to confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect
its interests hereunder. The items to be provided under this Section are to be
in form satisfactory to Agent and executed by each Borrower and delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the Collateral, and any Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
9.3. Intentionally Omitted.
---------------------
9.4. Litigation. Promptly notify Agent and Lenders in writing of any
----------
litigation, suit or administrative proceeding affecting any Borrower, whether or
not the claim is covered by insurance, and of any suit or administrative
proceeding, which may have a Material Adverse Effect on any Borrower.
9.5. Material Occurrences. Promptly notify Agent and Lenders in
--------------------
writing upon the occurrence of (a) any Event of Default or Default; (b) any
event of default or (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Senior Notes; (d)
any event, development or circumstance whereby any financial statements or other
reports furnished to Agent or any Lender fail in any material respect to present
fairly, in accordance with GAAP consistently applied, the financial condition or
operating results of any Borrower as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as provided in Section 4971
of the Internal Revenue Code, could subject Borrower to a tax imposed by Section
4971 of the Internal Revenue Code; (f) each and every default by any Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (g) any other development in the business or affairs of any Borrower which
might reasonably be expected to be materially adverse; in each case describing
the nature thereof and the action such Borrower proposes to take with respect
thereto.
9.6. Government Receivables. Notify Agent immediately if any of the
----------------------
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent and the Lenders within
---------------------------
ninety (90) days after the end of each fiscal year of Borrowers, financial
statements of Radnor on a consolidated and consolidating basis, including, but
not limited to, statements of income and stockholders' equity and cash flow from
the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification
55
<PAGE>
by an independent certified public accounting firm selected by Borrower and
satisfactory to Agent (the "Accountants"). The report of such accounting firm
shall be accompanied by a statement of such accounting firm certifying that (i)
they have caused this Agreement to be reviewed, (ii) in making the examination
upon which such report was based either no information came to their attention
which to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Borrowers' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6
and 7.11 hereof. In addition, the reports shall be accompanied by a certificate
of each Borrower's Chief Financial Officer which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by such Borrower with respect to such event and, such
certificate shall have appended thereto calculations which set forth Borrowers'
compliance with the requirements or restrictions imposed by Sections 6.5, 6.6,
6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Agent and Lenders within
------------------------------
30 days after the end of each fiscal quarter, an unaudited balance sheet of
Radnor on a Consolidated Basis and unaudited statements of income and
stockholders' equity and cash flow reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal year end adjustments. The reports
shall be accompanied by a certificate of each Borrower's Chief Financial Officer
which shall state that, based on an examination sufficient to permit him to make
an informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by such Borrower
with respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Agent and Lenders within
----------------------------
thirty (30) days after the end of each month, an unaudited balance sheet of
Radnor on a consolidated and consolidating basis and unaudited statements of
income and stockholders' equity and cash flow reflecting results of operations
from the beginning of the fiscal year to the end of such month and for such
month, prepared on a basis consistent with prior practices and complete and
correct in all material respects, subject to normal year end adjustments. The
reports shall be accompanied by a certificate of each Borrower's Chief Financial
Officer which shall state that, based on an examination sufficient to permit him
to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by such
Borrower with respect to such event and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and 7.11
hereof.
9.10. Other Reports. Furnish Agent and Lenders as soon as available,
-------------
but in any event within ten (10) days after the issuance thereof, (i) with
copies of such financial statements, reports and returns as Borrower shall send
to its stockholders and (ii) copies of all notices sent pursuant to the
56
<PAGE>
Senior Notes.
9.11. Additional Information. Furnish Agent and Lenders with such
----------------------
additional information as Agent and Lenders shall reasonably request in order to
enable Agent and Lenders to determine whether the terms, covenants, provisions
and conditions of this Agreement and the Notes have been complied with by
Borrowers including, without limitation and without the necessity of any request
by Agent or any Lender, (a) copies of all environmental audits and reviews, (b)
at least thirty (30) days prior thereto, notice of any Borrower's opening of any
new office or place of business or any Borrower's closing of any existing office
or place of business, and (c) promptly upon learning thereof, notice of any
labor dispute to which any Borrower may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any
labor contract to which any Borrower is a party or by which any Borrower is
bound.
9.12. Projected Operating Budget. Furnish Agent and Lenders, no later
--------------------------
than (x) ninety (90) days following the Effective Date and (y) thirty (30) days
prior to the beginning of each fiscal year commencing with fiscal year 1998, a
month by month projected operating budget and cash flow of Radnor on a
Consolidated Basis for such fiscal year (including an income statement for each
month and a balance sheet as at the end of the last month in each fiscal
quarter), such projections to be accompanied by a certificate signed by each
Borrower's Chief Financial Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past
budgets and financial statements and that such officer has no reason to question
the reasonableness of any material assumptions on which such projections were
prepared, provided that such projections for the 1998 fiscal year shall be due
January 31, 1999.
9.13. Intentionally Omitted.
---------------------
9.14. Notice of Suits, Adverse Events. Furnish Agent and Lenders with
-------------------------------
prompt notice of (i) any lapse or other termination of any Consent issued to
Borrowers by any Governmental Body or any other Person that is material to the
operation of any Borrower's business, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower, or if copies thereof are
requested by Agent or any Lender, and (iv) copies of any material notices and
other communications from any Governmental Body or Person which specifically
relate to any Borrower.
9.15. ERISA Notices and Requests. Furnish Agent and Lenders with
--------------------------
immediate written notice in the event that (i) any Borrower or any member of the
Controlled Group knows or has reason to know that a Termination Event has
occurred, together with a written statement describing such Termination Event
and the action, if any, which Borrower or member of the Controlled Group has
taken, is taking, or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, Department of Labor
or PBGC with respect thereto, (ii) Borrower, or any member of the Controlled
Group knows or has reason to know that a prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Internal Revenue Code) has occurred
together with a written statement describing such transaction and the action
which such Borrower or any member of the Controlled Group has taken, is taking
or proposes to take with respect thereto, (iii)
57
<PAGE>
a funding waiver request has been filed with respect to any Plan together with
all communications received by Borrower, or any member of the Controlled Group
with respect to such request, (iv) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions
to any Plan to which such Borrower or any member of the Controlled Group was not
previously contributing shall occur, (v) any Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (vi) any Borrower or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Internal Revenue Code, together with copies of each such letter;
(vii) any Borrower or any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with copies of each
such notice; (viii) any Borrower or any member of the Controlled Group shall
fail to make a required installment or any other required payment under Section
412 of the Internal Revenue Code on or before the due date for such installment
or payment; (ix) any Borrower or any member of the Controlled Group knows that
(a) a Multiemployer Plan has been terminated, (b) the administrator or plan
sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to Agent, upon request,
--------------------
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
-----------------
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or any Other Document when due;
10.2. any representation or warranty made or deemed made by any Borrower
in this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due or when requested, or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property;
10.5. (i) a failure or neglect of any Borrower to perform, keep or
observe any term,
58
<PAGE>
provision, condition or covenant, contained in Sections 4.7, 4.8, 4.9, 4.14,
4.17, 4.19, 6.1, 6.2, 6.3, and 6.9 hereof which is not cured within thirty (30)
days from the occurrence of such failure or neglect; or (ii) failure or neglect
of any Borrower to perform, keep or observe any other term, provision,
condition, covenant herein contained, or contained in any other agreement or
arrangement, now or hereafter entered into between any Borrower, Agent and the
Lenders after expiration of all applicable grace periods;
10.6. any judgment in excess of $300,000 is rendered against any
Borrower or judgment liens filed against any Borrower of judgments in excess of
$1,000,000 in the aggregate are rendered against all Borrowers for an amount
which within thirty (30) days of such rendering or filing is not either
satisfied, stayed or discharged of record;
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within forty five (45)
days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
10.8. any Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.9. any Subsidiary of any Borrower or any Guarantor, shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within forty five (45) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. any change in the condition or affairs (financial or otherwise) of
any Borrower which in Agent's opinion impairs the Collateral or the ability of
any Borrower to perform its Obligations under this Agreement;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. an event of default has occurred and been declared under the
Senior Notes which default shall not have been cured or waived within any
applicable grace period;
10.13. a default of the obligations of any Borrower under any other
agreement to which
59
<PAGE>
it is a party shall occur which materially adversely affects its condition,
affairs or prospects (financial or otherwise) which default is not cured within
any applicable grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Borrower, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;
10.15. any Change of Ownership or Change of Control shall have occurred;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or Borrower shall so claim in
writing to Agent;
10.17. (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent, trademark or tradename of any
Borrower, the continuation of which is material to the continuation of any
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(c) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement could reasonably be expected
to have a Material Adverse Effect on any Borrower;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body or the title and rights of any Borrower shall have become the
subject matter of litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
10.19. the operations of any Borrower's manufacturing facilities are
interrupted at any time for more than fourteen (14) consecutive days, or if any
Borrower's manufacturing capacity is reduced by 25% as a result of such an
interruption of operations (other than permanent interruptions resulting from
planned closing of up to three (3) plants) unless such Borrower shall (i) be
entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive twelve (12) month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if any Borrower shall be receiving the proceeds of business
interruption insurance for a period of thirty (30) consecutive days; or
10.20. an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events
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or conditions, any Borrower or any member of the Controlled Group shall incur,
or in the opinion of Lender be reasonably likely to incur, a liability to a Plan
or the PBGC (or both) which, in the reasonable judgment of the Required Lenders,
could have a Material Adverse Effect on any Borrower.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
------------------------------------------
11.1. Rights and Remedies. Upon the occurrence of (i) an Event of
-------------------
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and the
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances. Upon the occurrence of any Event of
Default, Agent may, and at the direction of the Required Lenders shall, exercise
any and all other rights and remedies provided for herein, under the Uniform
Commercial Code and at law or equity generally, including, without limitation,
the right to foreclose the security interests granted herein and to realize upon
any Collateral by any available judicial procedure and/or to take possession of
and sell any or all of the Collateral with or without judicial process. Agent
may enter any Borrower's premises or other premises without legal process and
without incurring liability to any Borrower therefor, and Agent may thereupon,
or at any time thereafter, in its discretion without notice or demand, take the
Collateral and remove the same to such place as Agent may deem advisable and
Agent may require Borrowers to make the Collateral available to Agent at a
convenient place. With or without having the Collateral at the time or place of
sale, Agent may sell the Collateral, or any part thereof, at public or private
sale, at any time or place, in one or more sales, at such price or prices, and
upon such terms, either for cash, credit or future delivery, as Agent may elect.
Except as to that part of the Collateral which is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Agent shall give Borrowers reasonable notification of such sale or
sales, it being agreed that in all events written notice mailed to Borrowing
Agent at least five (5) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by each Borrower. In connection
with the exercise of the foregoing remedies, Agent is granted permission to use
(a) all of each Borrower's trademarks, trade styles, trade names, patents,
patent applications, licenses, franchises and other proprietary rights which are
used in connection with Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods without cost to Agent. The proceeds realized from the sale of any
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and attorneys' fees and expenses incurred by Agent for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second, to interest due upon any of the Obligations; and, third, to
the principal of the Obligations. If any deficiency shall arise, each Borrower
shall remain liable to Agent and the Lenders therefor.
11.2. Agent's Discretion. Agent shall have the right in its sole
------------------
discretion, but with the consent of the Required Lenders to determine which
rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect
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thereto and such determination will not in any way modify or affect any of
Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which Agent or any Lender
------
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any of Borrowers'
property held by Agent and such Lender or by the Bank to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The enumeration of the
---------------------------------
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. Actions in Concert. Anything in this Agreement to the contrary
------------------
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including, without limitation, exercising any right of
set-off) without first obtaining the prior written consent of Agent and Required
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of the Agent and the Required Lenders.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
--------------------------------
12.1. Waiver of Notice. Each Borrower each hereby waives notice of non-
----------------
payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. Delay. No delay or omission on Agent's or any Lender's part in
-----
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
-----------
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT
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ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
------------------------------
13.1. Term. This Agreement, which shall inure to the benefit of and
----
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the last day of the Term unless
sooner terminated as herein provided. Borrower may terminate this Agreement at
any time upon ninety (90) days' prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full and this
Agreement is terminated prior to the last day of the Term (the date of such
prepayment hereinafter referred to as the "Prepayment Date"), Borrower shall pay
an early termination fee to Agent for the ratable benefit of the Lenders in an
amount equal to (x) $1,200,000 if the Prepayment Date occurs from the Effective
Date to and including the date immediately preceding the first anniversary of
the Effective Date, (y) $800,000 if the Prepayment Date occurs from the first
anniversary of the Effective Date to and including the date immediately
preceding the second anniversary of the Effective Date, and (z) $400,000 if the
Prepayment Date occurs on or after the second anniversary of the Effective Date
to and including the date immediately preceding the third anniversary of the
Effective Date. Notwithstanding the foregoing, if any Lender or any Affiliate
of a Lender shall enter into a recapitalization or refinancing arrangement with
Borrowers upon the termination of this Agreement, the aforementioned early
termination fee shall be reduced by an amount equal to such Lender's Commitment
Percentage of the applicable early termination fee and such Lender's ratable
portion of the remaining balance of the early termination fee shall be $0.
13.2. Termination. The termination of the Agreement shall not affect
-----------
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and the Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrowers have been paid or performed in full after the
termination of this Agreement or Borrowers have furnished Agent and the Lenders
with an indemnification satisfactory to Agent and the Lenders with respect
thereto. Accordingly, each Borrower waives any rights which it may have under
Section 9-404(1) of the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such UCC termination statements to Borrowers, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds.
XIV. REGARDING AGENT.
---------------
14.1. Appointment. Each Lender hereby designates BNYFC to act as Agent
-----------
for such Lender under this Agreement and the Other Documents. Each Lender
hereby irrevocably authorizes
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Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees (except the fees set forth in Sections 3.3(a)(i), 3.3(c),
3.4(a) and 3.4(b) charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through its agents
or employees. As to any matters not expressly provided for by this Agreement
(including without limitation, collection of the Notes) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
-------- -------
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities
----------------
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross negligence (but not mere
negligence) or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Borrower to perform its respective obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower or General Partner.
The duties of Agent as respects the Advances to any Borrower shall be mechanical
and administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement except as expressly set forth
herein.
14.3. Lack of Reliance on Agent and Resignation. Independently and
-----------------------------------------
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
Borrowers. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any Other
Document, or of the
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financial condition of each Borrower, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Notes, the Other Documents or the financial
condition of each Borrower, or the existence of any Event of Default or any
Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowers and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions from
-----------------------
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and shall be fully
--------
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6. Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or any
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be directed by the Required Lenders;
provided, that, unless and until Agent shall have received such directions,
- -------- ----
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and
---------------
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs,
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expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent in performing its duties hereunder, or
in any way relating to or arising out of this Agreement or any Other Document;
provided that, Lenders shall not be liable for any portion of such liabilities,
- -------- ----
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's willful misconduct or gross
(not mere) negligence.
14.8. Agent in its Individual Capacity. With respect to the obligation
--------------------------------
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrowers as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. Delivery of Documents. To the extent Agent receives documents and
---------------------
information from any Borrower pursuant to the terms of this Agreement, Agent
will promptly furnish such documents and information to Lenders.
14.10. Borrowers' Undertaking to Agent. Without prejudice to their
-------------------------------
respective obligations to the Lenders under the other provisions of this
Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time
to time on demand all amounts from time to time due and payable by it for the
account of Agent or the Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand shall pro
---
tanto satisfy Borrowers' obligations to make payments for the account of the
- -----
Lenders or the relevant one or more of them pursuant to this Agreement.
XIV. MISCELLANEOUS.
-------------
15.1. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Borrower each accepts for itself
and in connection with its properties, generally and unconditionally, the non-
exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 15.6. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of the Agent to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any
--------------------
Borrower against the Agent or Lenders involving, directly or indirectly, any
matter or claim in any way arising
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out of, related to or connected with this Agreement or any related agreement,
shall be brought only in a federal or state court located in the City of New
York, State of New York.
15.2. Entire Understanding. (a) This Agreement and the documents
--------------------
executed concurrently herewith contain the entire understanding between
Borrowers, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower's, Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Each Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and each Borrower may, subject to the provisions of this
Section 15.2 (b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of the Lenders, Agent or any Borrower
thereunder or the conditions, provisions or terms thereof or waiving any Event
of Default thereunder, but only to the extent specified in such written
agreements; provided, however, that no such supplemental agreement shall, (x)
-------- -------
amend Sections 6.5, 6.6, 6.7, 6.8 and 7.6 without the consent of 67% of the
Lenders or (y) without the consent of all the Lenders:
(i) increase or decrease the Commitment Percentage of any
Lender or the Maximum Loan Amount or the Advance Rates.
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrowers to Agent or Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 15.2(b).
(iv) release any Collateral during any calendar year having
an aggregate value in excess of $100,000.
(v) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each of the Lenders and
shall be binding upon Borrowers, the Lenders and Agent and all future holders of
the Obligations. In the case of any waiver, Borrowers, Agent and the Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent
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thereon.
15.3. Successors and Assigns; Participations; New Lenders.
---------------------------------------------------
(a) This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, each Lender, all future holders of the Notes and
their respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and Required Lenders.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to the Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrowers be required to pay any such amount arising from the
same circumstances and with respect to the same Advances or other Obligations
payable hereunder to both such Lender and such Transferee. Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits, moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this Agreement and the Other Documents to one or more additional
banks or financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender,
the transferor Lender, and Agent and delivered to Agent for recording provided
no Purchasing Lender shall be sold an aggregate commitment of less than
$5,000,000. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage as
set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents. Each Borrower hereby consent to
the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Each Borrower shall execute and deliver
such further documents and do such further acts and things in order to
effectuate the foregoing.
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(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and each Borrower, Agent and Lenders may treat
each Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrowers, or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $2500 payable by the applicable Purchasing Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrowers which has been delivered to such Lender by or on behalf of any
Borrower pursuant to this Agreement or in connection with such Lender's credit
evaluation of Borrowers.
15.4. Application of Payments. Agent shall have the continuing and
-----------------------
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that
any Borrower makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
15.5. Indemnity. Each Borrower shall indemnify Agent and each Lender
---------
and their officers, employees and agents from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against Agent or any Lender in any litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
15.6. Notice. Any notice or request hereunder may be given to any
------
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with telephone communication
to a duly authorized officer of the recipient confirming its receipt as
subsequently confirmed by registered or certified mail. Any notice or other
communication required or permitted pursuant to this Agreement shall be deemed
given (a) when personally delivered to any officer of the party to whom it is
69
<PAGE>
addressed, (b) on the earlier of actual receipt thereof or three (3) days
following posting thereof by certified or registered mail, postage prepaid, or
(c) upon actual receipt thereof when sent by a recognized overnight delivery
service or (d) upon actual receipt thereof when sent by telecopier to the number
set forth below with telephone communication confirming receipt and subsequently
confirmed by registered, certified or overnight mail to the address set forth
below, in each case addressed to each party at its address set forth below or at
such other address as has been furnished in writing by a party to the other by
like notice:
(A) If to Agent or BNY Financial Corporation
BNYFC at: 1290 Avenue of the Americas
New York, New York 10104
Attention: Anthony Viola
Telephone: (212) 408-4096
Telecopier: (212) 408-4317
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118
Attention: Steven J. Seif, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
(B) If to a Lender other than Agent, as specified on the signature
pages hereof
(C) If to a Borrower: c/o Radnor Holdings Corporation
Three Radnor Corporate Center
Suite 300
100 Matsonford Road
Radnor, Pennsylvania 19087
Attention: Michael T. Kennedy
Telephone: (610) 995-2568
Telecopier: (610) 995-2697
with a copies to: Duane Morris & Heckscher
One Liberty Place
Philadelphia, Pennsylvania 19103
Attention: Stephen Teaford, Esq.
Telephone: (215) 979-1220
Telecopier: (215) 979-1020
15.7. Survival. The obligations of Borrowers under Sections 2.2(f),
--------
3.7, 3.8, 3.9, 14.7 and 15.5 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
15.8. Severability. If any part of this Agreement is contrary to,
------------
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed
70
<PAGE>
omitted to the extent so contrary, prohibited or invalid, but the remainder
hereof shall not be invalidated thereby and shall be given effect so far as
possible.
15.9. Expenses. All costs and expenses including, without limitation,
--------
reasonable attorneys' fees and disbursements incurred by Agent, any Lender and
Agent on behalf of the Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's or any Lender's transactions with any Borrower, or (e) in connection
with any advice given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements, may be charged to
Borrowers' accounts and shall be part of the Obligations.
15.10. Injunctive Relief. Each Borrower recognizes that, in the event
-----------------
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent and the Lenders; therefore, Agent and each Lender, if Agent or
such Lender so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving that actual damages are
not an adequate remedy.
15.11. Consequential Damages. Neither Agent nor Lenders nor any agent or
---------------------
attorney for any of them shall be liable to any Borrower for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12. Captions. The captions at various places in this Agreement are
--------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.11. Counterparts; Telecopied Signatures. This Agreement may be
-----------------------------------
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
15.13. Construction. The parties acknowledge that each party and its
------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
XVI. BORROWING AGENCY.
----------------
16.1. Borrowing Agency Provisions.
---------------------------
(a) Each Borrower hereby irrevocably designates Borrowing Agent
to be its
71
<PAGE>
attorney and agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
to Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
16.2. Waiver of Subrogation. Each Borrower expressly waives any and all
---------------------
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVII. CROSS-GUARANTY.
--------------
17.1. Cross Guaranty. Each Borrower hereby acknowledges and agrees that
--------------
such Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to each other Borrower, Agent and Lenders the full
and prompt payment of, all Obligations owed or hereafter owing by each other
Borrower. Each Borrower further agrees to pay all costs and expenses including,
without limitation, all court costs and reasonable attorneys' and paralegals'
fees and expenses, paid or incurred by Lender in endeavoring to collect all or
any part of the Obligations from, or in prosecuting any action against, such
Borrower or any other guarantor of all or any part of the Obligations.
72
<PAGE>
17.2. Contribution with Respect to Guaranty Obligations.
-------------------------------------------------
(a) To the extent that any Borrower shall make a payment under
this Section 17 of all or any of the Obligations for which such Borrower is not
primarily liable (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by the other Borrower,
exceeds the amount which such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Borrower's "Allocable Amount" (as defined
below) (in effect immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of all of the Borrowers in effect immediately prior
to the making of such Guarantor Payment, then such Borrower shall be entitled to
----
receive contribution and indemnification payments from, and be reimbursed by,
the other Borrower for the amount of such excess, pro rata based upon their
--- ----
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
(b) As of any date of determination, the "Allocable Amount" of
--------- ------
any Borrower shall be equal to the maximum amount of the claim which could then
be recovered from such Borrower under this Section 17 without rendering such
claim voidable or avoidable under Section 548 of chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This subsection 17.2 is intended only to define the relative
rights of the Borrowers and nothing set forth in this subsection 17.2 is
intended to or shall impair the obligations of the Borrowers, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement, and nothing contained in this
subsection 17.2 shall limit the liability of any Borrower to pay the Obligations
for which it is primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of any
Borrower to which such contribution and indemnification is owing.
17.3. Obligations Absolute. The liability of each Borrower to Agent and
--------------------
Lenders hereunder shall not be affected or impaired by any of the following: (a)
the validity or enforceability of the Obligations or any part thereof, or of the
Note or other instrument or document evidencing all or any part of the
Obligations, (b) the absence of any attempt to collect the Obligations from a
Borrower or any other guarantor or other action to enforce the same, (c) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all Obligations; (d) one or more extensions or renewals of
Obligations (whether or not for longer than the original period) or any
modification of the interest rates, fees, maturities or principal amount of, or
other contractual terms applicable to any Obligations; (e) any waiver or
indulgence granted to a Borrower, any delay or lack of diligence in the
enforcement of Obligations, or any failure to institute proceedings, file a
claim, give any required notices or otherwise protect any Obligations; (f) any
full or partial release of, compromise or settlement with, or agreement not to
sue a Borrower or any guarantor or other person liable in respect of any
Obligations; (g) any release, surrender, cancellation or other discharge of any
evidence of any of the Obligations or the acceptance of any instrument in
renewal or substitution therefore; (h) any failure to obtain collateral security
(including rights of setoff) for any of the Obligations, or to obtain or
maintain the proper or sufficient creation and perfection thereof, or to
establish the priority thereof,
73
<PAGE>
or to preserve, protect, insure care for, exercise or enforce any collateral
security; (i) any collection, sale, lease or disposition of, or any other
foreclosure or enforcement of or realization on, any collateral security; (j)
any assignment, pledge or other transfer of any of the Obligations or any
evidence thereof; (k) any manner, order or method of application of any payments
or credits upon any of the Obligations; (l) Agent's or any Lender's election, in
any case or proceedings under the Bankruptcy Code of the application of Section
1111(b)(2) thereof, (xiii) any borrowing or grant of a Lien by a Borrower as
debtor in possession under Section 364 of the Bankruptcy Code and (m) the
disallowance under the Bankruptcy Code of all or any portion of Agent's or such
Lender's claim for repayment of the Obligations. Each Borrower hereby waives any
and all legal and equitable defenses and discharges available to a surety
guarantor, or accommodation co-obligor.
Each Borrower hereby assumes responsibility for keeping itself informed
of the financial condition of the other Borrower, and any and all endorsers and
other guarantors of any agreement, instrument or document evidencing or security
all or any part of the Obligations and of all other circumstances bearing upon
the risk of nonpayment of the Obligations or any part thereof that diligent
inquiry would reveal, and each Borrower hereby agrees that neither Agent nor any
Lender shall have any duty to advise such Borrower of information regarding such
condition or any such circumstances. Each Borrower hereby acknowledges
familiarity with the other Borrower's financial condition and has not relied on
any statements by Agent or Lenders in obtaining such information. In the event
Agent or any Lender, in its sole discretion, undertakes at any time or from time
to time to provide any such information to a Borrower, it shall not be under any
obligation (i) to undertake any investigation with respect thereto, (ii) to
disclose any information which, pursuant to accepted or reasonable credit
practices, Agent wishes to maintain confidential or (iii) to make any other or
future disclosures of such information, or any other information, to such
Borrower.
17.4. Waiver. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, AGENT OR ANY
------
LENDER MAY, AT ITS SOLE ELECTION, PROCEED DIRECTLY, WITHOUT NOTICE, AGAINST A
BORROWER TO COLLECT AND RECOVER ALL OR ANY PART OF THE OBLIGATIONS WITHOUT FIRST
PROCEEDING AGAINST THE OTHER BORROWER, ANY OTHER GUARANTOR, OR ANY COLLATERAL
FOR THE OBLIGATIONS.
EACH BORROWER ALSO WAIVES ALL SETOFFS AND COUNTERCLAIMS AND ALL
PRESENTMENTS, DEMANDS FOR PERFORMANCE, NOTICES OF NONPERFORMANCE, PROTESTS,
NOTICES OF PROTEST, NOTICES OF DISHONOR, AND NOTICES OF ACCEPTANCE OF THIS
GUARANTY. EACH BORROWER FURTHER WAIVES ALL NOTICES OF THE EXISTENCE, CREATION
OR INCURRING OF NEW OR ADDITIONAL INDEBTEDNESS, ARISING EITHER FROM ADDITIONAL
LOANS EXTENDED TO THE OTHER BORROWERS OR OTHERWISE, AND EXCEPT FOR NOTICES
EXPRESSLY REQUIRED HEREUNDER, ALSO WAIVES ALL NOTICES THAT THE PRINCIPAL AMOUNT,
OR ANY PORTION THEREOF, OR ANY INTEREST ON ANY AGREEMENT, INSTRUMENT OR DOCUMENT
EVIDENCING OR SECURING ALL OR ANY PART OF THE OBLIGATIONS IS DUE, NOTICES OF ANY
AND ALL PROCEEDINGS TO COLLECT FROM THE MAKER, ANY ENDORSER OR ANY OTHER
GUARANTOR OF ALL OR ANY PART OF THE OBLIGATIONS, OR FROM ANY OTHER PERSON, AND
TO THE EXTENT PERMITTED BY LAW, NOTICES OF EXCHANGE, SALE, SURRENDER OR OTHER
HANDLING OF ANY COLLATERAL GIVEN TO AGENT AND LENDERS TO SECURE PAYMENT OF THE
74
<PAGE>
OBLIGATIONS.
17.5. Recovery. Each Borrower agrees that, to the extent that the other
--------
Borrower makes a payment or payments to Agent or any Lender, or receives any
proceeds of Collateral, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to such other Borrower, its estate, trustee, receiver
or any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Obligations or the part thereof which has been paid, reduced or satisfied by
such amount shall be reinstated and continued in full force and effect as of the
date such initial payment, reduction or satisfaction occurred, and this cross
guaranty shall continue to be in existence and full force and effect,
irrespective of whether any evidence of the Obligations has been surrendered or
cancelled.
75
<PAGE>
17.6. Liability Cumulative. The liability of the Borrowers under this
--------------------
Section 17 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the Other Documents
to which such Borrower is a party or in respect of any Obligations or obligation
of the other Borrower, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.
Each of the parties has signed this Agreement as of the day and year
first above written.
WINCUP HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its:
----------------------------------
SP ACQUISITION CO.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its:
----------------------------------
STYROCHEM INTERNATIONAL, INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its:
----------------------------------
RADNOR HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its:
----------------------------------
BNY FINANCIAL CORPORATION, as Lender
and as Agent
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: V.P.
----------------------------------
Commitment Percentage: 50%
NATIONSBANK, N.A., as Lender
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: V.P.
----------------------------------
Commitment Percentage: 50%
76
<PAGE>
STATE OF )
) ss.
COUNTY OF )
On this day of October, 1997, before me personally came Michael T.
Kennedy, to me known, who, being by me duly sworn, did depose and say that he is
the President of SP Acquisition Co., the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the board of directors of said corporation.
NOTARY PUBLIC
STATE OF )
) ss.
COUNTY OF )
On this day of October, 1997, before me personally came Michael T.
Kennedy, to me known, who, being by me duly sworn, did depose and say that he is
the President of StyroChem International, Inc, the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
NOTARY PUBLIC
STATE OF )
) ss.
COUNTY OF )
On this day of October, 1997, before me personally came Michael T.
Kennedy, to me known, who, being by me duly sworn, did depose and say that he is
the President of Radnor Holdings, Inc., the corporation described in and which
executed the foregoing instrument and that he signed his name thereto by order
of the board of directors of said corporation.
NOTARY PUBLIC
77
<PAGE>
STATE OF )
) ss.
COUNTY OF )
On this day of October, 1997, before me personally came
, to me known, who, being by me duly sworn, did depose
and say that he is the of the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
NOTARY PUBLIC
78
<PAGE>
STATE OF )
) ss.
COUNTY OF )
On this day of October, 1997, before me personally came
, to me known, who, being by me duly sworn, did
depose and say that he is the of , the
corporation described in and which executed the foregoing instrument and that he
signed his name thereto by order of the board of directors of said corporation.
NOTARY PUBLIC
79
<PAGE>
1
Exhibit 10.68
NESTE SERVICE AGREEMENT
BY AND BETWEEN
NESTE OY,
a company organized and existing under the laws of Finland,
having an office at
P.O.Box 20, Keilaniemi, FIN-02151 Espoo, Finland,
hereinafter referred to as "NESTE"
AND
STYROCHEM FINLAND OY,
a company organized and existing under the laws of Finland,
hereinafter referred to as "STYROCHEM"
AND
RADNOR HOLDINGS CORPORATION,
a company organized and existing under the laws of
the state of Delaware United States of America,
having an office at
Three Radnor Corporation Center, Suite 300, Radnor, Pennsylvania, 19087 U.S.A.,
as Guarantor under Article 15 hereof.
Dated as of 15 October, 1997
(the "Effective Date")
WHEREAS; NESTE has transferred to STYROCHEM its polystyrene business;
WHEREAS; STYROCHEM requires certain commercial services for a transitory
period so as to ensure the continuity of the said business and
has requested NESTE to provide these services;
WHEREAS; NESTE is willing to provide these Services, the scope and the
extent of which is determined by this Agreement and reasonable
business practice;
WHEREAS; STYROCHEM's polystyrene site and NESTE's Porvoo Works are
integrated plants with regard to certain services and this
integration lays the basis for a prolonged co-operation in
certain types of services.
NOW THEREFORE, in consideration of the foregoing, STYROCHEM and NESTE agree
as follows:
<PAGE>
2
ARTICLE 1 - DEFINITIONS
-----------------------
1.1 The following capitalized words and phrases shall have the meanings
described below:
1.1.1 "Affiliate": means in relation to any Party:
a) any person which owns and controls more than fifty per
cent (50%) of the capital stock and voting rights of such
Party;
b) any person more than fifty per cent (50%) of the capital
stock and voting rights of which are owned and controlled
by such Party; or
c) any person more than fifty per cent (50%) of the capital
stock and voting rights of which are owned and controlled
by one or more persons qualifying as Affiliates under a)
or b) above.
1.1.2 "Agreement" means this Agreement and the Appendices attached
hereto which form an integral part hereof.
1.1.3 "Month": means a calendar month commencing on the first day
of that month.
1.1.4 "Porvoo Works": oil refinery, chemical plants and other
facilities owned or operated by NESTE in Porvoo.
1.1.5 "Service(s)": the service(s) to be provided by NESTE and its
Affiliates to STYROCHEM and its Affiliates. Following is a
listing of these commercial services:
1. Services provided by Neste Corporate Services.
1.a. Services related to work and spare time.
1.a.1. Payroll Computation Services.
1.a.2. Personnel Register Services.
1.a.3. Travel Bill Verification Services.
1.a.4. Catering Services.
1.a.5. Personnel Club Services.
1.a.6. Services Related to Sports and Exercise.
1.a.7. Services Related to Transportation to
and from Work.
1.b. Administration Services.
1.b.1. Document Services.
1.b.2. Office Services.
1.b.2.1. Mail and Messenger Services.
1.b.2.2. Office Equipment Services.
1.b.2.3. Rental Service of Copying
Machines.
1.b.2.4. Storage, Distribution and
Packaging Services.
1.b.3. Transportation and Car Management
Services.
1.b.4. Telephone Central Services.
1.c. Real Property and Premises Services.
<PAGE>
3
1.c.1. Personnel Housing Services.
1.c.2. Cleaning Services.
1.c.3. Waste Management Services.
1.c.4. Road Maintenance Services.
1.c.5. Security and Surveillance Services.
1.c.6. Work Time Management Services.
1.d. Occupational Health Services.
1.e. Information Services.
1.f. Development Services.
2. Services provided by Neste Chemicals.
2.a. EHSQ Services.
2.b. Purchase Services.
2.c. Maintenance Services.
2.d. Bookkeeping and Accounting.
3. Services provided by Neste Oils.
3.a. Fire Fighting and Fire Protection Services.
3.b. Harbour Services.
3.c. Warehouse Services.
4. Services provided by Neste's other units.
4.a. Environment and Industrial Hygiene Services.
4.b. Technology Services.
4.c. Neste Data Services.
4.c.1. Services Related to Information Systems.
4.c.2. End User Support Services.
4.c.3. Telecommunication Services.
5. Service provided by any of the above.
5.a. Service Relative to Exchange of Experts.
1.1.6 "Third Party": any person, firm or company other than NESTE,
STYROCHEM or an Affiliate.
ARTICLE 2 - AGREEMENT PERIOD
----------------------------
2.1 This Agreement shall enter into force on the Effective Date hereof and
shall remain in force and effect for so long as any Service is provided
hereunder, subject to Article 2.3. Except as set forth in Article 2.2,
this Agreement shall continue as to a specific Service until the 31st of
December 1998 and subsequently in one (1) year periods at a time
thereafter; provided, however, that (a) STYROCHEM may terminate any such
Service during any such one (1) year period by at least three (3)
months' prior written notice to NESTE, in which case such Service will
terminate at the end of such three (3) month notice period; and (b)
NESTE may terminate any such Service during any such one (1) year period
by at least six (6) months' prior written notice to STYROCHEM, in which
case such Service will terminate at the end of the ongoing one (1) year
period.
<PAGE>
4
2.2 If stipulated otherwise in the Annexes, this Agreement shall continue
being in force and binding upon the Parties with regard to a specific
Service rendered to STYROCHEM under this Agreement, for the Service and
for the period mentioned in that Annex only.
2.3 This Agreement may be terminated in its entirety pursuant to Article 10.
ARTICLE 3 - SERVICES
--------------------
3.1 During the Agreement Period, NESTE agrees to make available and provide
to STYROCHEM the Services and STYROCHEM shall take from NESTE the same,
in accordance with and subject to the terms and conditions of this
Agreement and reasonable business practice.
The performance of the Services will be carried out by NESTE's
personnel.
3.2 Neither NESTE nor any of its employees or agents shall be considered an
employee or agent of STYROCHEM, nor shall any partnership, co-venture or
joint employer relationship be created by virtue of this Agreement or of
its performance.
NESTE will instruct its personnel involved in providing the Services to
STYROCHEM of the necessity of performing such Services in a professional
and conscientious manner consistent with the customary business practice
and the standards normally expected during their employment.
3.3 In the performance of the Services at the Porvoo Complex NESTE
undertakes to comply with all applicable laws and regulations and with
NESTE's established codes of practice generally in force in NESTE and in
no event shall NESTE be obliged to do anything hereunder in violation of
any law or permit or in conflict with NESTE's status as an independent
contractor.
Either Party and its personnel shall, whenever entering the other
Party's facilities for the purpose of performing their obligations under
this Agreement, abide by the safety and security procedures in force at
such facilities, provided that each Party shall deliver to the other a
copy of the relevant procedures in effect upon the date of this
Agreement and the other Party shall have acknowledged that it has
received such copy. Each Party shall inform the other of any change to
such procedures after such date.
ARTICLE 4 - FINANCIAL CHARGES
-----------------------------
NESTE will provide the Services to STYROCHEM at fees determined in the
Annexes and subject to the addition of value added tax at the applicable
rate. Adjustment of the fees shall be made annually upon mutual
agreement of the Parties.
<PAGE>
5
ARTICLE 5 - INVOICES AND PAYMENTS
---------------------------------
NESTE shall send a monthly invoice to STYROCHEM for the Services as
specified in the Annexes.
ARTICLE 6 - LIABILITY AND HOLD HARMLESS AND INSURANCE
-----------------------------------------------------
6.1 NESTE or its employees will not be liable for any loss or damage to
STYROCHEM arising out of or in connection with the performance of the
Services, save when due to gross negligence or willful misconduct or
NESTE's failure to comply with applicable laws and regulations.
6.2 Neither Party shall be liable to the other for any indirect or
consequential damages arising from or in connection with a breach of
this Agreement or its negligence in the performance of its obligations
under this Agreement.
ARTICLE 7 - HARDSHIP
--------------------
If there should occur extraordinary circumstances beyond the control of
the Parties hereto, unforeseeable at the time this Agreement was
concluded and which profoundly alter the relative rights and obligations
of this Agreement to the detriment of one of the Parties, by increasing
that Party's contractual obligations in an excessive way, the Parties
shall seek to modify this Agreement in an equitable fashion in order to
reestablish the balance of their reciprocal duties, while protecting
their respective interests.
ARTICLE 8 - FORCE MAJEURE
-------------------------
8.1 Neither Party shall be under any liability to the other due to the first
Party being delayed or hindered in or prevented from performing any or
all of its obligations under this Agreement, other than payments under
this Agreement, by reason of fire, explosion, accident, flood, war,
riot, labor dispute, strike, lockout, plant breakdown or any other cause
(whether or not of the same nature as the foregoing) beyond the
reasonable control of the Party in question.
8.2 If either Party is unable to perform any of its obligations under this
Agreement by reason of any of the causes mentioned above in this Article
8 or if either Party considers it likely that it may become so unable
then that Party shall as soon as possible notify the other Party of this
fact and the reasons thereof and as soon as possible and at the latest
within thirty (30) days of the initial notification informing to the
best of its knowledge of the estimated extent and duration of such
inability.
8.3 Each Party shall use all reasonable endeavors to remedy its inability to
perform its obligations under this Agreement where such inability is
caused by reason of any of the causes mentioned above in this Article 8.
This does not, however, imply that either Party should be forced to
terminate a strike
<PAGE>
6
or similar industrial action by accepting demands which they otherwise
would have rejected .
ARTICLE 9 - CONFIDENTIALITY
---------------------------
9.1 A Party (the "Recipient") shall not use for its own purposes any
proprietary information (including trade secrets and confidential
information) of the other Party or any of the Affiliates of the other
Party (the "Disclosing Party"). The Recipient shall not divulge any such
proprietary information of the Disclosing Party to any Third Party
except (i) to those employees, agents, independent contractors and
representatives of the Recipient who, and only to the extent that they,
require knowledge of the same in connection with the obligations set out
in this Agreement; (ii) as required to comply with applicable laws,
regulations, ordinances, decrees, or judicial or administrative orders;
(iii) to the extent such information has become generally available to
the public for reasons other than as a result of a disclosure by the
Recipient; (iv) to the extent such information has become available to
the Recipient on a non-confidential basis from a source other than the
Disclosing Party, unless the Recipient knew or reasonably should have
known that such source owed to the Disclosing Party a confidentiality
obligation with respect to such information and (v) as otherwise agreed
by the Parties in writing.
9.2 In the event that this Agreement is terminated for any reason then the
duties under sub-clause 9.1 hereof (including the exceptions thereto)
shall survive the termination of this Agreement and shall continue in
full force and effect for five (5) years following such termination. At
the time of such termination, each Party shall use all reasonable
endeavours to return to the other all documents in its possession, which
contain proprietary information of the other Party.
ARTICLE 10 - EARLY TERMINATION
------------------------------
If at any time during the term of this Agreement, including any renewed
periods either STYROCHEM or NESTE (the "Breaching Party"):
10.1 shall pass a resolution for winding up or if a Court shall make an order
to that effect (otherwise than for the purpose of amalgamation or
reconstruction), or
10.2 shall be in material breach of any of the terms of this Agreement (for
example, but not limited to, delay in payment) and shall not remedy such
breach within thirty (30) days from the receipt by it of written notice
from the other of them (the "Non-breaching Party") of such breach (or if
such Breaching Party shall be diligently pursuing a cure of such breach,
then within sixty (60) days from the receipt of notice of breach),
then the Non-breaching Party shall be entitled (without prejudice to its
other rights and remedies) to terminate this Agreement with immediate
effect upon written notice to the Breaching Party.
<PAGE>
7
ARTICLE 11 - ASSIGNMENT
-----------------------
11.1 Neither Party shall be permitted to assign this Agreement without the
prior written consent of the other Party, which shall not be
unreasonably withheld. This Agreement shall inure to the benefit of, and
be binding upon the parties hereto and their respective successors and
permitted assigns.
Notwithstanding the preceding provisions of this Article 11, either
Party may assign the benefit and burden of this Agreement to an
Affiliate of such Party; provided that
a) such Affiliate agrees in writing to assume the obligations of
the assigning Party hereunder; and
b) in the case of an assignment to an Affiliate of StyroChem
Finland Oy, the guarantee in Article 15 continues to apply; and
c) in the case of an assignment to an Affiliate of Neste Oy, Neste
Oy shall remain liable with the assignee Affiliate.
ARTICLE 12 - APPLICABLE LAW
---------------------------
This Agreement shall be governed by and construed in all respects by the
laws of Finland.
ARTICLE 13 - DISPUTE RESOLUTION CLAUSE
--------------------------------------
13.1 The parties hereto shall endeavour to solve amicably any dispute
arising under this Agreement.
Any disputes arising under this Agreement, which cannot be solved by
amicable means, shall be submitted to arbitration according to the
rules of Arbitration of the Finnish Central Chamber of Commerce.
Notwithstanding the above, the arbitrators shall be nominated as
follows: Each party shall nominate one arbitrator within fifteen (15)
days from the date notice was first given by the other party of that
party's intention to have the matter submitted to arbitration, together
with its nomination of an arbitrator.
The arbitrators so nominated shall agree upon a third arbitrator as
chairman of the arbitral tribunal within fifteen (15) days of the
nomination of the second arbitrator. Failing nomination of an
arbitrator by one of the parties, or agreement on the chairman by the
two arbitrators within the time specified, the Finnish Central Chamber
of Commerce shall, in accordance with the rules of arbitration of the
Finnish Central Chamber of Commerce appoint the arbitrator and/or the
chairman.
The arbitral award rendered in accordance with Finnish law shall be
final and enforceable.
<PAGE>
8
The arbitrators shall conduct the matter at their own discretion. The
arbitrators shall, unless the parties otherwise agree, convene in
Helsinki, FINLAND. The proceedings shall be conducted in the English
language.
ARTICLE 14 - GENERAL
--------------------
14.1 No termination, cancellation, modification, amendment, deletion,
addition or other change in this Agreement or any provision hereof, or
waiver of any right or remedy herein provided, shall be effective for
any purposes unless specifically set forth in writing signed by the
Party or Parties to be bound thereby. The waiver of any right or remedy
in respect of any occurrence or event on one occasion shall not be
deemed a waiver of such right or remedy in respect of such occurrence or
event on other occasions.
14.2 Whenever under the provision of this Agreement any notice or
communication is required to be given or sent by any Party to the other
Party such notice or communication shall be in English and addressed as
follows unless otherwise agreed:
(a) in the case of NESTE:
Neste Oy
Neste Chemicals
P.O.Box 20
Keilaniemi
FIN-02151 Espoo
FINLAND
Telefax: +358 - 204 50 5205
for the attention of Kyosti Sysio, Corporate Vice President
(b) in the case of STYROCHEM:
RADNOR HOLDINGS CORPORATION
Three Radnor Corporate Center
Suite 300
Radnor
Pennsylvania
19087 U.S.A
Telefax: +1 610 995 2697
for the attention of Michael T. Kennedy, President
Each notice to be given hereunder shall be delivered by courier,
telefax, hand or mail (postage prepaid). Either Party may change its
address specified above by giving written notice to the other Party of
such change.
<PAGE>
9
ARTICLE 15 - PARENT COMPANY GUARANTEE
-------------------------------------
Radnor Holdings Corporation hereby guarantees any obligations of
STYROCHEM or its successors, permitted assignees or permitted
transferees, set forth in this Agreement and undertakes to fulfil them
as its own.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
initialed on each page and executed as of the day and year first written
above, in two originals, and each of the Parties acknowledges receipt of
one original.
NESTE OY STYROCHEM FINLAND OY
By: /S/ Kyosti Sysio By: /S/ Michael V. Valenza
-------------------------- --------------------------
Name: Kyosti Sysio Name: Michael V. Valenza
------------------------ ------------------------
Title: Sr. VP Title: Sr. VP
----------------------- -----------------------
RADNOR HOLDINGS CORPORATION
as Guarantor under Article 15 of
this Agreement
By: /S/ Michael V. Valenza
-----------------------------------
Name: Michael V. Valenza
---------------------------------
Title: Sr. VP
--------------------------------
<PAGE>
10
Annex 1.a.1.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated on the 15th of October, 1997.
PAYROLL SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The service includes payroll management of the Client's personnel in Porvoo
and Kokemaki, in the current scope of the service. Salaries are paid on the
1st and 15th day of each month.
2. Foundation costs.
For the execution of the Services described a new company has to be founded
in the IT-systems causing a foundation expence of FIM 20.000, which will be
paid by the Client. In case the foundation costs are less than FIM 20.000,-
the charge will be corrected accordingly.
3. Obligations of the Service Provider.
The Provider ensures that the Client receives all payroll information, as
laid down by the applicable Finnish regulation, as well as payroll
documentation of current quality, in compliance with all applicable laws and
regulations.
4. Obligations of the Client.
The Client shall deliver all necessary personnel information to the Provider
in conformity with Neste's requirements relative to payroll management.
5. Service Price.
The Client shall pay for the Service an amount of one hundred and ten (110)
Finnish markkas per person per month.
6. Terms of Payment.
Invoiced monthly, payable in arrear.
7. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice. If after this transitional period StyroChem
faces serious difficulty in implementing a Service of its own, then the
Parties shall negotiate to find a feasible solution in order to overcome such
difficulty.
8. Contact Persons.
Aila Auvinen: the Service Provider.
Pekka Suhonen: the Client.
<PAGE>
11
Annex 1.a.2.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SERVICES RELATED TO PERSONNEL REGISTER
Service Provider: Neste's Corporate Services.
1. Service Description.
The Provider shall maintain the personnel register service in regard to
Client's employees in accordance with applicable laws and regulations.
2. Obligations of the Service Provider.
The Provider ensures the good functioning of personnel register services as
laid down by the applicable Finnish regulation and other basic services in
relation to the personnel register.
3. Obligations of the Client.
The Client shall deliver the information needed for the register.
4. Service Price.
The Client shall pay for the Service an amount of forty (40) Finnish markkas
per person per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice. If after this transitional period StyroChem
faces serious difficulty in implementing a Service of its own, then the
Parties shall negotiate to find a feasible solution in order to overcome such
difficulty.
7. Contact Persons.
Sirpa Salmela: the Service Provider.
Pekka Suhonen: the Client.
<PAGE>
12
Annex 1.a.3.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
TRAVEL BILL VERIFICATION SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The service includes the verification of travel bills of the Client's
personnel using a travel bill information system and the development and
training of a panel of secretaries attached thereto. The travel bill system
is connected to the register of personnel and payroll systems.
2. Obligations of the Service Provider.
The Provider ensures the compensation of travel expenses and the payment of
allowances in accordance with the Client's regulations, directives of tax
collection authorities and collective agreements.
The Provider shall inform and advise the Client in fields related to travel
and allowances and provide training in the use of the secretary panel.
The Provider shall approve the payment for hours spent travelling in
accordance with the stipulations of the collective agreements.
Should the Client revert to use of a personnel register of his own, the
Provider is under no obligation to connect travel bill verification to that
system .
3. Obligations of the Client.
The Client shall deliver the travel bills to verification with their
attachments as laid down by the Client's Travel Code.
The Client is responsible for all travel insurances.
The rules and regulations of the Client concerning travel shall be delivered
to the Provider by the Client.
4. Service Price.
The Client shall pay for the Service an amount of thirty-seven (37) Finnish
markkas per verified travel bill.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice. If after this transitional period StyroChem
faces serious difficulty in implementing a Service of its own, then the
Parties shall negotiate to find a feasible solution in order to overcome such
difficulty.
7. Contact Persons.
The Service Provider: Sirpa Hakkinen.
The Client: Pekka Suhonen.
<PAGE>
13
Annex 1.a.4.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
CATERING SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The service includes the provision of catering services, i.e. shift and
regular lunch at the Porvoo Works. Special arrangements are to be agreed upon
case by case.
2. Obligations of the Service Provider.
The Provider shall acquire all necessary technical equipment in order to
fulfill its obligations laid herein at its own expense and shall take care of
its insurance, regular service and repair as well as its upgrade. The
Provider shall not be responsible for any other investment in the Client's
premises.
The Provider shall be responsible for the delivery of shift meals.
It is the Provider who shall primarily take contact and co-operate with the
representatives of the canteen keeper in matters relative to lunch and shift
meals and see to the performance of the obligations of the canteen keeper as
laid down in a separate contract.
3. Obligations of the Client.
The Client shall provide free of charge the facilities and the needed room
for the kitchen, the canteen, the storage space as well as recreational
facilities for the personnel. The Client shall also ensure the maintenance of
the said facilities with the exception of cleaning. The Client shall bear the
cost of water, lighting, heating and power in these premises.
The Client shall provide the shift meal sites with the necessary equipment
and maintenance.
4. Service Price.
The Client shall pay for the Service to the Provider an amount of seven (7)
Finnish markkas per lunch. The Client shall pay directly to Amica, a third-
party service provider the price of meals in accordance with the number of
lunches provided. Guests and special services are to be taken into account in
a separate agreement at agreed prices.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Service Provider: Sirpa Hakkinen.
The Client: Helja Takamaki.
<PAGE>
14
Annex 1.a.5.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
PERSONNEL CLUB SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The personnel of the Client is entitled to participate in the activities of
the personnel clubs supported by the Provider and to use property and
equipment owned or otherwise held by the Provider for such activity.
2. Obligations of the Service Provider.
The Provider shall support and supervise club activity, maintain the
property and equipment in the use of clubs and shall be responsible for the
contracts by which the Provider owns or holds property or equipment meant for
this purpose.
3. Obligations of the Client.
The Client shall respect the Code of Conduct of the Provider relative to
club activity.
4. Service Price.
The Client shall pay for the Service an amount of twenty-five (25) Finnish
markkas per person per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Service Provider: Matti Soini.
The Client: Tom Johansson.
<PAGE>
15
Annex 1.a.6.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SERVICES RELATIVE TO SPORTS AND EXERCISE
Service Provider: Neste's Corporate Services.
1. Service Description.
Client's personnel is entitled to take part in sports events and campaigns
organized by the Provider and to use and rent the sports facilities of the
Provider, as well as those of third parties with whom the Provider has a
contract, at a subvented price. The latter facilities include swimming pools,
training centres and tennis, squash and badminton halls.
2. Obligations of the Service Provider.
The Provider is responsible for the organization of sports events and
campaigns, contracts on the sports facilities and publicity.
3. Obligations of the Client.
The Client shall be responsible for the direct expenses such as
participation fees, travel and outfit costs resulting from official events
organized in the Client's name.
4. Service Price.
The Client shall pay for the Service an amount of twenty-five (25) Finnish
markkas per person per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
Matti Soini: the Service Provider.
Tom Johansson: the Client.
<PAGE>
16
Annex 1.a.7.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SERVICES RELATIVE TO TRANSPORT TO AND FROM WORK
Service Provider: Neste's Corporate Services.
1. Service Description.
The service includes the provision of transportation to and from work for
Client's personnel at the Porvoo Works in the current scope of such activity.
2. Obligations of the Service Provider.
The Provider determines the itineraries and schedules together with the
traffic contractors and sees to the performance of the obligations of the
said contractors. The Provider informs Client's personnel of any changes in
itineraries or schedules.
3. Service Price.
The Client shall pay for the Service an amount of two hundred fifty-five
(255) Finnish markkas per person per month.
4. Terms of Payment.
Invoiced monthly, payable in arrear.
5. Duration.
As per Article 2.1 of this Agreement.
6. Contact Persons.
Sirpa Hakkinen: the Service Provider.
Helja Takamaki: the Client.
<PAGE>
17
Annex 1.b.1
- -----------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
DOCUMENT SERVICES.
Service provider: Neste's Corporate Services.
1. Service Description.
The Service is divided in three separate fields. The first, form supply
service, comprises:
. supply of forms (assessment of the Client's needs,
design, printing, storage and distribution of forms);
. supply of electronic forms (as above, but user support
is provided as well);
. development of form and documentation systems.
The second, publications, consists of:
. publication design, digital editing of pictures,
production of slides and overhead projector films and
production of digital maps;
. photograph archives;
. production of business cards;
The third consists of services related to archives and copying, as follows:
. maintenance of technical archives;
. copying as needed.
2. Obligations of the Service Provider.
Provider shall take care of providing the above mentioned services to the
Client.
3. Obligations of the Client.
The Client will provide the record material to be archived.
4. Service Price.
In fields of form supply service and publications, the Client shall be
invoiced on the basis of realized costs (workmanship per working hours,
material costs and any subcontracted work). Central archive service shall be
charged per person employed by the unit. Technical archive service shall be
charged on the basis of realized costs by each unit, divided proportionately
by the number of documents. The copying service charges per assignment and a
distribution fee, per hours of work, in accordance with the price list of the
unit.
The fees are to be agreed on the basis of internal pricing.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration
As per Article 2.1 of this Agreement.
7. Contact Persons
The Service Provider: Ulla Sorsa.
<PAGE>
18
The Client: Aimo Kauhaniemi.
<PAGE>
19
Annex 1.b.2.1
- -------------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
MAIL AND MESSENGER SERVICES
Service provider: Neste's Corporate Services.
1. Service Description.
Office Services provided to the Client are divided into three fields: Mail
and Messenger Services, Office Equipment Services and a Storage Service. Mail
and Messenger Services consist of:
. collecting, sorting and distribution of mail in the Client's
offices, as well as the transportation of mail to and from the
Porvoo Post Office;
. messenger service.
Are included, at the Client's option:
. mass distribution service;
. journal circulation;
. filing service.
2. Obligations of the Service Provider.
The Provider shall render the Services mentioned hereinabove. Mail shall be
transported and distributed at most three times a day. The internal postal
connections to Keilaniemi and to Naantali shall be maintained. Mail is
distributed primarily to pigeonholes which the Client has procured in the
Client's premises. The Provider procures other equipment needed in the
execution of the service. Essential changes to distribution areas and in the
amount of pigeonholes shall be negotiated separately.
3. Obligations of the Client.
The Client shall designate adequate and suitable premises for the execution
of the work and the Client shall give the postmen clearance passes needed for
the collection and the delivery of mail.
4. Service Price.
The total price of mail collection, sorting and distribution and the
messenger service described above is in the beginning of the agreement period
shall be agreed separately on the basis of internal pricing. The Price is
determined on the basis of work hours of messengers and other personnel,
postal fees and transportation equipment needed.
The price of the optional services shall be agreed separately.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
<PAGE>
20
7. Contact Persons.
The Service Provider: Jouko Suutari.
The Client: Mervi Vyrynen.
<PAGE>
21
Annex 1.b.2.2.
- --------------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
OFFICE EQUIPMENT SERVICES
Service provider: Neste's Corporate Services.
1. Service Description.
The Service consists of concentrated acquisition, storage and distribution of
office equipment in the Kilpilahti area as well as recycling services. The
office equipment shall be delivered to the Client in accordance with the
Client's orders and as an internal transportation.
2. Obligations of the Service Provider.
The ordered equipment shall be delivered to the area mainly by post.
Acquisition of the equipment shall be performed on the basis of annual
agreements.
3. Obligations of the Client.
The Client shall take care of the possible further transportation of the
equipment to the Client's premises.
4. Service Price.
The Service shall be priced by the ordered equipment and shall comprise fees
due to handling of orders, storage, distribution and bill verification. A
recycling fee is included in the Service Price. The Price shall be agreed
later on the basis of internal pricing.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Service Provider: Jouko Suutari.
The Client: Mervi Vyrynen
<PAGE>
22
Annex 1.b.2.3.
- --------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
RENTAL SERVICE OF COPYING MACHINES
Service provider: Neste's Corporate Services.
1. Service Description.
The agreement consists of renting copying machines with their mounting,
maintenance and colour material.
2. Obligations of the Service Provider.
Provider shall be responsible in the extent of this Agreement that the Client
has available proper and reliable copying machines.
3. Obligations of the Client.
The Client shall make necessary room for the copying machine in accordance
with his needs. The Client shall also give a clearance pass for the
maintenance personnel of the machine.
4. Service Price.
The Service Price shall be charged per copied page, as agreed separately on
the basis of internal pricing. Materials are charged as used by the Client.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Jouko Suutari
The Client: Mervi Vyrynen.
<PAGE>
23
Annex 1.b.2.4. (if applicable)
- --------------------------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
STORAGE, DISTRIBUTION AND PACKAGING SERVICES.
1. Service Description.
The Service consists of:
. receiving services;
. storage services;
. distribution services;
. packaging services.
2. Service Price.
Reception services are charged by the time used for handling of a specific
delivery per hours of work. Storage services are charged by metres of shelf
room taken by the stored object or by platform, at rates to be agreed
respectively. Distribution and packaging shall be priced per hours of work.
Any material and/or delivery costs are added.
3. Terms of Payment.
Invoiced monthly, payable in arrear
4. Duration
As per Article 2.1 of this Agreement.
5. Contact Persons
The Provider: Jouko Suutari.
The Client: Aimo Kauhaniemi.
<PAGE>
24
Annex 1.b.3.
- ------------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
TRANSPORTATION AND CAR MANAGEMENT SERVICES.
Service provider: Neste's Corporate Services.
1. Service Description.
The Service comprises:
. personnel and service car stock service, e.g. acquisition,
management and mobile phone installations;
. transportation of personnel and small-sized goods by Neste- and
third-party-owned vehicles.
2. Obligations of the Service Provider.
The Service shall be provided efficiently, in a professional manner and in
accordance with the applicable safety regulations.
3. Obligations of the Client.
To provide the necessary information in time and to pay due attention to
safety regulations.
4. Service Price.
A Neste-owned car, with a driver, is charged at a rate to be agreed per hour.
A Neste-owned car, driven by the Client's employee, is charged at a rate to
be agreed per kilometre. Third-party-owned vehicles cost an amount equal to
the contract price stipulated in the contract with this third party. Such
Price shall be determined on the basis on internal pricing.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice. If after this transitional period StyroChem
faces serious difficulty in implementing a Service of its own, then the
Parties shall negotiate to find a feasible solution in order to overcome such
difficulty.
7. Contact Persons.
The Provider: Jouko Suutari.
The Client: Mervi Vyrynen.
<PAGE>
25
Annex 1.b.4.
- ------------
to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
TELEPHONE CENTRAL SERVICES.
Service provider: Neste's Corporate Services.
1. Service Description.
Is included the services of the Porvoo Complex switch unit, including
telephone call connections, information service, a default notice service,
maintenance of related computer applications and management of telefax
messages, as well as procurement of internal and external catalogues.
2. Obligations of the Service Provider.
The Provider shall answer for the good operation of the telephone central in
the extent of the current practice.
3. Obligations of the Client.
The Client shall inform the switch board of relevant changes, for example in
the Client's personnel.
4. Service Price.
The Service Price is charged at a rate to be agreed per white collar employee
employed by the Client. The Price does not include call charges. Any third
party operator charges calls directly from the Client.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Eija Sebelja.
The Client: Mervi Vyrynen.
<PAGE>
26
Annex 1.c.1
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to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October 1997.
SERVICES RELATED TO PERSONNEL HOUSING
Service Provider: Neste's Corporate Services.
1. Service Description.
Provider leases to the Client 14 flats, or such other number of flats as may
be agreed later by the Parties. The lease agreements between Provider and
Client shall be made in accordance with the Tenancy Act (especially chapter
10), in accordance with other decisions, stipulations and directions given by
the Dwellings' authorities, and in accordance with Provider's standard form
of lease agreement and current policies.
2. Obligations of the Service Provider.
The Provider shall take all measures needed at the beginning and at the end
of a tenancy, such as drawing up the lease agreements and the maintenance of
the flats in accordance with the lease agreements.
3. Obligations of the Client.
The Client shall sublease the flats to its employees as company-owned flats.
Current rent rates paid by the employees is set forth as Employees Rent in
Appendix A.
4. Service Price.
The Client shall pay to the Provider the currently Valid Rent (see Appendix
A) and the Service Fee. The Service Fee is 10 % of the monthly invoiced
rents. Possible rent rates paid by the employees is set forth in the lease
agreements.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Leena Varis.
The Client: Aimo Kauhaniemi.
<PAGE>
27
Annex 1.c.2.
- ------------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
CLEANING SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The cleaning of premises located at the Porvoo Works in offices and
production facilities, as defined in Appendix 1, at the current level of
quality.
2. Obligations of the Service Provider.
The Provider shall provide the service in accordance with the stipulations of
this contract, paying due regard to security regulations in force in the
area. The Provider shall also ensure the adequate training of the personnel
and the constant development of the Service.
3. Obligations of the Client.
The Client shall provide the cleaners with the space needed for storage and
maintenance and recreational facilities as well as adequate passes for entry
to the premises. The Client shall pay a fee as defined in article 4 below.
4. Service Price.
The Client shall pay for the Service an amount of forty-two thousand four
hundred and thirty (42.430) Finnish markkas per month. This price is
calculated on the basis of the amount of square metres cleaned and includes,
for the offices, the cleaning work, supervision, material and equipment as
well as the sanitation necessities; for the production facilities, the
cleaning work, supervision, material, the equipment and the cleaning work
during weekends.
Additional work not listed herein shall be conducted at a mutually agreed
price or at a price of one hundred and twenty (120) Finnish markkas per hour
which includes the cleaning work, supervision and cleaning equipment.
5. Terms of Payment.
Invoiced monthly, payable in advance.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice.
7. Contact Persons.
Helena Virkkula (the Service Provider).
Aimo Kauhaniemi (the Client).
<PAGE>
28
Annex 1.c.3
- -----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
WASTE MANAGEMENT SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The Service consists of waste management in Client's premises at the Porvoo
Works in accordance with the respective waste management plans relative to
community and dumping-area-cleared industrial waste, as well as special waste
and waste for utility purpose as mentioned in the waste management plan. In
addition, the Client has the possibility to bring hazardous waste generated
in his activities to an intermediate landing for storage and transfer to
further processing for an additional fee.
2. Obligations of the Service Provider.
The Provider shall take care of the containers for community and
dumping-area-cleared industrial waste, as well as the emptying of the said
containers and the transportation of such waste to the dumping area. The
Provider shall also bear the communal waste processing costs.
The collection of waste for utility purposes shall be conducted in the
following manner. With regard to paper collection, a container shall be
delivered at each post of work, and collection boxes shall be placed nearby.
From there on, the paper shall be transported in order to be recycled at
least once in two weeks. As for paperboard collection, any paperboard left by
the said boxes, as well as package paperboard collected to the containers
shall be transported in order to be recycled as needed. Glass collected to
the containers located in the laboratories shall be transported for
recycling. Waste timber may be transported by the Provider to a storage area
next to the petrochemical factories. In the said area the Provider shall be
responsible for its good order, the chipping of timber and the transportation
of chipped timber to the incineration plant.
The Provider shall inform the Client monthly, in writing, of the quantity of
waste per container as well as that of special waste, classed by department.
3. Obligations of the Client.
The Client shall ensure that no unsuitable or inappropriate waste will be
transported to the dumping area. The Client shall, at his own expense, take
care of collection, loading, weighing and transportation of special waste to
the dumping area. A Waste Declaration (form no. 811) shall be filled for each
delivery of special waste. The Client shall, at his own expense, transport
waste timber produced at his facilities to a collection area. The Client
shall deliver his hazardous waste for intermediate landing in accordance with
the instructions of the person in charge.
The Client shall pay a fee as defined in article 4 below.
4. Service Price.
The Client shall pay for the Service an amount of four hundred and fifty
(450,00) Finnish markkas per metric ton of community and industrial waste,
and five hundred
<PAGE>
29
and ten (510,00) Finnish markkas per metric ton of special waste. Costs
resulting from storage, packing and forwarding of hazardous waste are
included in the aforementioned fees. The transportation and the destruction
of hazardous waste are invoiced directly from the Client by Ekokem. These
Prices shall be renegotiated and applicable six (6) months after the
Effective Date.
The prices shall be adjusted at the end of each year in accordance with the
change in costs such as communal processing charges, waste transportation
fees and wage costs if the said costs rise by more than five (5) per cent.
All collection of waste for utility purposes are included in the prices.
5. Terms of Payment.
Invoiced monthly, payable in arrear in accordance with the waste report. The
storage of hazardous waste is invoiced, when the lot of waste has been sent.
Value-added tax shall be added to such invoice at the current rate.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
Urpo Tikka (the Service Provider.)
Aimo Kauhaniemi (the Client).
<PAGE>
30
Annex 1.c.4
- -----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
ROAD MAINTENANCE SERVICES.
Service Provider: Neste's Corporate Services.
1. Service Description.
The Service consists of road and parking area maintenance outside industrial
areas in road areas owned by Neste to the agreed extent. Maintenance includes
removal of snow in the yard, sanding, salting, garbage collection on the
banks, removal of sand in coated areas, patching of coating, dragging,
garbage collection in the yard, mending of road painting, maintenance of
traffic signs and lighting in the road areas.
2. Obligations of the Service Provider.
The Provider shall ensure that the execution of the work described in article
1 above is conducted at the right time and as economically as possible.
3. Obligations of the Client.
Is not included in the price and the Client shall repair at his own expense
any coating, parapets etc. damaged by construction or repair work. The Client
shall pay a fee to the Provider as defined in article 4 below.
4. Service Price.
The Client shall pay for the Service an amount of two thousand eight hundred
(2.800) Finnish markkas per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
Vesa Visnen (the Service Provider.)
Aimo Kauhaniemi (the Client).
<PAGE>
31
Annex 1.c.5
- -----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SECURITY AND SURVEILLANCE SERVICES.
Service Provider: Neste's Corporate Services.
1. Service Description.
The Service consists of guarding work, operational management, surveillance
in accordance with the instructions and regulations to be given,
communication and reporting, keeping up with the development of industrial
security services and further development of the Service as well as services
related to clearance passes. Local surveillance is ensured by one (1)
security officer at Polystyreeni/Norlatex gate, eleven (11) hours a day, from
6 a.m. until 5 p.m. and one (1) security officer at the license bureau, six
(6) hours a day, from 7 a.m. until 1 p.m. Area surveillance is ensured by one
(1) car unit with one (1) security officer at all times and by another car
unit with one (1) managing security officer. Additional surveillance may be
conducted. Such surveillance shall be invoiced separately.
2. Obligations of the Service Provider.
The Provider shall ensure that the work is executed with due professional
skill, in accordance with the agreed instructions and regulations and at the
agreed level of security. Additional security and surveillance work may be
conducted at Client's request, as needed. Security personnel shall be duly
equipped with uniforms, in conformity with the regulations of the Ministry of
Interior and the circumstances in which the work takes place, as well as the
RIS 21 (Road Information System) management system. A written report on
observations and actions taken shall be produced by the personnel during the
shift. The said report shall then be delivered to the Client. The personnel
shall also verify and file surveillance information relative to the work.
Technical equipment used in the work and owned by the Provider shall be
tested daily. Any detected defect or malfunction shall be reported in writing
to the Client.
3. Obligations of the Client.
The Client shall provide the industrial security service with the maps, the
schedules, the instructions and the regulations in relation to surveillance,
the driving permissions needed in the area and the necessary keys, as well as
the surveillance and recreational facilities for the personnel. The Client
conducts all investment in and maintenance of gates and other surveillance
facilities at his own expense. The Client shall see to the good functioning
of technical equipment and surveillance facilities used by the security
personnel and owned by the Provider. In the event of defect or malfunction,
the Client shall see to the swift repair of such equipment or facility. The
Client shall also ensure that the industrial security service is duly
informed about the persons in charge of the said equipment and facilities as
well as their deputies in order to be able to provide them with the
malfunction reports and start the repair work as swiftly as possible. The
Client shall also pay a fee to the Provider as defined in article 4 below.
4. Service Price.
The Client shall pay for the Service an amount of eighteen thousand four
hundred and seventy-five (18.475,00) Finnish markkas per month. Should the
real costs of
<PAGE>
32
the service change, the Provider has the right to adjust the price
accordingly each year. Such adjustments shall take into account the situation
at the end of the year.
5. Terms of Payment.
Invoiced monthly, payable in arrear. Any additional work not included in the
price shall be invoiced by realized costs.
6. Duration.
As per Article 2.1 of this Agreement.
7. Other.
Co-operation. Daily co-operation shall be conducted directly between the
Client and the industrial security service. In the discussions on the
development and contracts, the negotiating parties shall be the
representatives of the Client and the Housing and Real Estate Services. Co-
operation on the whole area is being developed by a Security Committee,
meeting at least four (4) times a year. Its mission is defined in Appendix I.
8. Contact Persons.
Jyrki Karppala (the Service Provider.)
Aimo Kauhaniemi (the Client).
<PAGE>
33
Annex 1.c.6
- -----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
WORK TIME MANAGEMENT SERVICES.
Service Provider: Neste's Corporate Services.
1. Service Description.
The Service is integrated, i.e. the Client will be provided with work time
and lunch registration, access control and telephone central information
service in the premises of the production facilities, as well as system
maintenance and support attached thereto, both the personnel and the
transmission of data included. In addition, a consultancy service shall be
installed in order to develop and optimize the use of such integrated system.
In order to meet the Client's needs, should they change or new ones emerge,
the Provider will propose a solution by making a specific offer including the
description of the steps to be taken, the schedule and the cost of the
project.
2. Obligations of the Service Provider.
The Provider shall provide a twenty-four-hour registration service, a
mainframe computer system with sufficient capacity, a maintenance service for
defective or malfunctioning equipment covered by the maintenance agreement
which shall repair such equipment within one working day counted from the
notification of the presence of such faulty equipment. In principle, the said
service covers all equipment in the use of the service unit, i.e. all
equipment not installed in a stationary manner to buildings, gates, as are,
for instance, work time and access control terminals and readers. All
communication equipment linking the terminals to the mainframe computer are
owned by the Provider. All cabling, gates and equipment needed for electric
locking are owned by the Client. The Client is bound by the limits of
maintenance obligations as defined in the service agreement (0016/69/KHK)
between the system provider (Inter Marketing) and the service provider.
3. Obligations of the Client.
The Client shall provide an environment suitable for the equipment located in
the Client's premises and ensure the continuity of electric current. The
Client shall inform the Provider or a telephone repair service of any
disruptions within one working day in order to keep the service
uninterrupted. The Client shall pay the Provider a fee, as stipulated in
article 4 of this Annex below.
4. Service Price.
The Client shall pay for the Service an amount of twenty-three (23,00)
Finnish markkas per access key per month. Any work not in the scope of basic
work time reports or system maintenance and support shall be invoiced
separately and charged at a rate of three hundred (300) Finnish markkas per
working hour. Any costs resulting from additions to the system (e.g. readers,
tailored applications) installed solely for the use of the Client shall be
born exclusively by the Client. As the Provider is responsible for the good
functioning of the system as a whole, all additions to the system must be
approved by the Provider. It is advisable that the Client makes good use of
the Provider's expertise in various stages of projects related to the system.
<PAGE>
34
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Co-operation.
In further negotiations on development and contracts the parties shall be
the Client and the representatives of the local services.
8. Contact Persons.
The Service Provider: Lauri Hallamki.
The Client: Aimo Kauhaniemi.
<PAGE>
35
Annex 1.d.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
OCCUPATIONAL HEALTH SERVICES
Service Provider: Neste's Corporate Services.
1. Service Description.
The Service is an integrated occupational health service at the Porvoo Works,
conducted in accordance with the good occupational health practices. The
Service includes the compulsory occupational health services, as laid down by
the Law, as well as other health services which includes medical inspection
and treatment by a general practitioner.
The terms of this contract may be subject to amendment if the Medical
Insurance Act or other regulations related to occupational health are altered
by the authorities or if the costs change essentially.
All employees in a permanent relationship with the Client (including
pensioners) are covered by this contract. Employees in a fixed-term relation
with the Client are entitled to the services provided directly by the
occupational health service since the beginning of the relation.
2. The Obligation of the Provider.
The Provider shall ensure the availability of the Services and make annually
a Compensation Application to the Governmental Pension Agency.
3. Obligations of the Client.
The Client shall deliver to the Provider the personal data of employees as
mutually agreed and keep the Provider informed of changes in personnel. No
personal admission note or payment commitment is required of the employees as
a condition of the provision of the service. The Client shall name a mutually
agreed number of First Aid Cupboard Managers responsible for their good order
and supply.
4. Service Price.
The service price shall be determined as follows:
. the medical calls ensured by the Occupational Health Service of the
Provider shall be charged as per Appendix I;
. services which are not call-based and laid down by the law shall be
provided by the Occupational Health Service of the Provider at a
charge of sixty-nine point zero four (69,04) Finnish markkas per
person per month;
. costs due to services in relation to occupational health laid down
by the law, provided by third parties and supervised and
intermediated by the Occupational Health Service shall be born by
the Client. Recourse to the said service is allowed only by personal
admission note by the Occupational Health Service.
. accidental care shall be charged at nine point thirty (9,30) Finnish
markkas per person per month.
. costs due to investment in machinery of dental care are shared in
proportion of the Client's employees of the total number of
employees in the area. A special report shall be produced in the
event of such project.
<PAGE>
36
Should an employee cancel his call less than one (1) day before the intended
call, the Provider has the right to charge fifty (50) per cent of the list
price of such call. Should the call not be cancelled at all, the regular list
price shall be applicable.
5. Terms of Payment.
Basic costs are invoiced monthly, the basis of which shall be the number of
employees in that month. Calls to occupational health personnel shall be
invoiced in arrear not later than the 8th of the next month.
6. Duration.
As per Article 2.1 of this Agreement.
7. Co-operation.
In further negotiations on development and contracts the parties shall be the
Client and the representatives of the local services.
8. Contact Persons.
Jorma Heikkil: the Provider.
Aimo Kauhaniemi: the Client.
<PAGE>
37
Annex 1.e.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
INFORMATION SERVICES.
1. Service Description.
Information Services support the operation of Neste Group's business units by
the means of information gathering and analysis. The necessary information is
provided at required speed and in a cost-efficient manner, in accordance with
particular service contracts.
The products include information searches, tailor-made newsletters or one-
time reports on specific topics (optional), internal databases on the Neste
Information Channel (optional), a price database on oil and petrochemical
products (optional), guidance to independent information gathering as well as
library services (acquisition of publications, circulation of journals and a
collection of annual reports).
2. Obligations of the Provider.
Rendering of the services described above, the extent of which is to be
agreed.
3. Obligations of the Client.
The Client shall pay the Service Price.
4. The Service Price.
The Service shall be charged at three hundred and fifty (350) Finnish markkas
per hour of work. Any external costs are added. Optional services as agreed.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Marja Ingelin.
The Client: Aimo Kauhaniemi.
<PAGE>
38
Annex 1.f.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
DEVELOPMENT SERVICES.
1. Service Description.
The Service consists of:
. assessment of individual employees and managers:
Work Style and Motivation Analysis (PAPI), Preference inventories
of work roles.
Personality Assessment (Myers Briggs Type Indicator), in order to
facilitate team building by means of understanding differences in
personalities. Development Centers, personnel analysis by co-
ordinated assessment of key personnel, organized together with
outside consultants which can be tailor made as requested by the
Client;
. recruitment services comprising recruitment planning and selection;
. language training services:
Language testing and training programmes (both intensive and long-
term) planning, selection of trainers and supervision, costs
depending on programme;
. Management Development planning Consultation in identification of key
competences, potential evaluation and development planning.
2. Obligations of the Service Provider.
The Provider shall render the Services in an efficient and professional
manner, in accordance with the needs of the Client.
3. Obligations of the Client.
The Client shall pay the Service Price for the used Services and provide
the necessary information.
4. Service Price.
Assessment: five hundred (500) Finnish markkas (PAPI) or two hundred (200)
Finnish markkas (MTBI). Development centers shall costs six thousand (6.000)
Finnish markkas. Recruitment services are charged at forty-five (45) Finnish
markkas per hour per each employee in the unit.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Kirsti Tenhola
The Client: Aimo Kauhaniemi.
<PAGE>
39
Annex 2.a.
- ---------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
EHSQ Services
Service provider: Neste Chemicals.
1. Service Description.
. Safety Management Services for the Porvoo and Kokemaki plants
. Environment Engineering Services for the Porvoo and Kokemaki plants
. Quality Management Services for Porvoo and Kokemaki plants in the current
scope of practice.
2. Obligations of the Service Provider.
The Provider ensures that these services are of good quality. The Provider's
personnel shall have the competence to perform the Services and shall operate
according to instructions and powers given by the Client. The Provider shall
not change the main resources without notice to the Client and shall operate
according to the laws and regulations of safety and occupational health.
Client and Provider shall together decide if outside consultants are
necessary in major assignments. The Provider shall be impartial when choosing
suppliers and shall act in a manner that the free competition does not be
disturbed.
3. Obligations of the Client.
The Client shall use The Services when they are competitive and do its best
to arrange for providers' clients and representatives a visit to its
establishments.
4. Service Price.
The Client shall pay for the local EHSQ services three hundred thousand
(300.000) Finnish Markkas per year. Other related services are priced
according to their realization, at three hundred and fifteen (315) Finnish
markkas per hour of work.
5. Terms of payment.
Invoiced monthly, payable thirty (30) days after the arrival of the invoice.
The prices shall be determined annually. The collective bargain shall be
taken into account separately if it differs from the annual period. An
interest will be charged after the time of maturity.
6. Duration.
Eight (8) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice.
7. Contact Persons.
The Provider: Reijo Hartolahti.
The Client: Aimo Kauhaniemi.
<PAGE>
40
Annex 2.b.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
Purchase Services
Service provider: Neste Chemicals.
1. Service Description.
The Provider shall provide to the Client with the following Services in
Porvoo and Kokemaki plants in the fields of activity of
. Raw Materials and Additive Purchasing
. Transport Purchasing
. Maintenance Material Purchasing and transport expertise of dangerous
substances
. Secretary of Buyers and Logistics in the current scope of practice.
2. Obligations of the Service Provider.
The Provider shall provide these services in their present scope and ensure
that they are of good quality. The Provider's personnel shall perform the
Services and operate in accordance with the instructions and powers given by
the Client. The Provider shall not change the key resources without notice to
the Client and shall operate in accordance with the laws of safety and
occupational health. The Client and the Provider shall assess together the
need of outside consultancy in major projects. The Provider shall be
impartial when choosing suppliers and shall act so as not to hamper free
competition.
3. Obligations of the Client.
The Client shall use the Services when they are competitive and do its best
to arrange visits for the Provider's clients and representatives to the
Client's establishments at the Provider's request.
4. Service Price.
The Client shall pay for
. the Services of the Purchasing Group an amount of four hundred and
twenty-five thousand six hundred (425.600) Finnish Markkas per year.
. the Client shall pay for the extra Purchasing Service an amount of two
hundred (200) Finnish markkas per hour of work.
. other costs according to realization of those services.
. its behalf of the costs of common commitments.
5. Terms of payment.
Invoiced monthly, payable thirty (30) days after the arrival of the invoice.
The prices shall be determined annually. Collective agreements shall be taken
into account separately, should their term not be annual. An interest will be
charged after the time of maturity.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice.
<PAGE>
41
7. Contact Persons.
The Provider: Juha Sipila.
The Client: Aimo Kauhaniemi.
<PAGE>
42
Annex 2.c.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
MAINTENANCE SERVICES
Service provider: Neste Chemicals Division.
1. Service Description.
The Service consists of
- Maintenance Services of electrical equipment, machinery and instruments
- Inspection Services for the Porvoo Plant
- Storage Services for the Porvoo and Kokemaki plants in the current scope
of practice.
2. Obligations of the Service Provider.
The Provider shall render these services in their present scope and ensure
that these services are of good quality. The Provider's personnel shall have
the competence to perform the Services and shall operate according to
instructions and powers given by the Client. The Provider shall not change
the main resources without a notice to the Client and shall operate according
to the laws and regulations of safety and occupational health. Client and
Provider shall together decide if consultants are necessary in major
assignments. The Provider shall be impartial when choosing suppliers and
shall act in a manner that the free competition does not be disturbed.
3. Obligations of the Client.
The Client shall use The Services when they are competitive and do its best
to arrange for providers' clients and representatives a visit to its
establishments.
4. Service Price.
The Client shall pay for
. the Maintenance Services an amount of two hundred (200) Finnish markkas
per hour;
. the Inspection Services an amount of eighty-eight thousand (88.000)
Finnish markkas per year;
. the Storage Services an amount according to the use of services.
5. Terms of payment.
Invoiced monthly, payable thirty (30) days after the arrival of the invoice.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Provider: Voitto Pulkkinen.
The Client: Aimo Kauhaniemi.
<PAGE>
43
Annex 2.d.
- ----------
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
BOOKKEEPING AND ACCOUNTING
1. Service Description.
The Service includes bookkeeping and accounting for a transitional period
with the current accounting chart and Neste's corporate information systems
ESIDEAL and GL:M. Bookkeeping shall comprise:
. purchase invoicing (preliminary booking entries, acceptance,
accounting, entries into the computation system, payments);
. ledgers (both debtors' and creditors');
. bank account management and treasury (handling of account statements,
foreign currencies, travel bill payments);
. property accounting;
. other operations (various invoices, installation of computation
systems, VAT accounting, preliminary taxation, social charges,
bookkeeping of product sales invoicing and balance in accordance with
the Finnish legislation).
2. Obligations of the Service Provider.
The Provider shall take care of the Service in the extent described above
in accordance with the good accounting practice and applicable Finnish
legislation.
3. Obligations of the Client.
The Client shall ensure the adequacy of appreciations of current assets.
The Client shall pass all information needed for accounting to the
Provider.
4. Service Price.
Personnel resources: forty thousand (40.000) Finnish markkas per month.
Computation systems:
. Corporate Administration Service Fee: thirty thousand(30.000)
Finnish markkas per month;
. Operating Costs: twenty thousand (20.000) Finnish markkas per
month;
. Software License Fee for GL:M, if applicable;
. the Client will charge the Provider for the downstream bookkeeping
operations in 1997 the amount of twenty thousand (20.000) Finnish
markkas per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice. If after this transitional period
StyroChem faces serious difficulty in implementing a Service of its own,
then the Parties shall negotiate to find a feasible solution in order to
overcome such difficulty.
<PAGE>
44
7. Contact Persons.
The Service Provider: Leena Uutela.
The Client: Pekka Suhonen.
<PAGE>
45
Annex 3.a.
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to the Neste Service Agreement between Neste Oy (the Provider) and
StyroChem Finland Oy (the Client) dated the 15th of October, 1997.
FIRE FIGHTING AND FIRE PROTECTION SERVICE
Service Provider: Neste Oil
1. Service Description.
Neste shall continue centralized fire fighting and fire protection services
in the Porvoo Works. The service includes fire prevention, inspection and
auditing, a fire alarm system, an ambulance service, fire and rescue
activities, fire equipment services, fire expert services as well as oil and
chemicals defence. If the Client reverts to a third party service provider,
Neste's consent is necessary. Such consent shall not be unreasonably
withheld, provided that the said third party meets Neste's reasonable
requirements as to expertise and Neste's reasonable safety regulations.
2. Service Price.
The Client shall pay an amount equal to four hundred and forty-eight thousand
(448.000) Finnish markkas per year for fire fighting and five thousand
(5.000) Finnish markkas per year for Chemical Equipment Production Fund. The
cost of the fire brigade is on the basis of actual insurance values. High-
risk or low-risk activities may cause this fee to be adjusted. The Client is
entitled to audit the costs for the Service.
3. Terms of Payment.
Three (3) times a year, payable in arrear, within thirty (30) days of the
date of invoice.
4. Duration.
The provision of the service shall start at the Effective Date of the
Agreement and continue for ten (10) years thereafter or until terminated in
writing by the Client, giving the Provider a notice period of three (3)
years.
5. Contact Persons.
Jouko Korkeakoski: the Provider
Aimo Kauhaniemi: the Client.
<PAGE>
46
Annex 3.b.
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to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
HARBOUR SERVICES
Service Provider: Neste Oil.
1. Service Description.
Neste shall maintain and offer all harbour services needed by the Client
through all its harbours at Neste's Porvoo Works.
2. Obligations of the Service Provider.
Responsibility is divided between the Provider and the Client in accordance
with international and national custom.
The Client delivers the goods to the agreed harbour area, and shall bear the
related costs as well as the responsibility for the maintenance of
transferring facilities and equipment. Starting from the XCV or EOV valves,
whichever is earlier, the responsibility lies on the Provider.
Outside the fenced harbour area, the Provider's responsibility covers
firelines and posts, docks, harbour's waters, electric tracings, roads,
lighting, fences, gates, surveillance and security and buildings.
The Provider shall be responsible for maintenance of cargo lines and
equipment but not for their renewal or repair which are considered as
investment. The Provider generally bears the cost of investment, save the
cargo lines or facilities in connection with cargo transfers, in which case
the Provider's burden is limited to investment in equipment located after the
XCV or EOV valves, whichever is earlier. If the said investment requires fire
fighting, sea or land environment protection equipment, the Harbour's
(Provider's) share is fifty (50) percent. The same applies to regulations
laid down by the Authorities which alter or add to the obligations of the
harbour.
3. Obligations of the Client.
The Client shall be responsible for preparing of cargo lines for loading and
unloading, including taking samples, recycling, returns and the resulting
costs. Outside the fenced harbour area, the Client shall see to maintenance
of its own facilities and pipelines.
The Client receiving deliveries through the harbour has the obligation to
collect, at its own expense, waste produced by washing of tanks and/or
pipelines. The need for such activities is assessed on the basis of the
Provider's safety regulations.
4. Service Price.
A Port Due, based on the amount of goods passing through the harbour, is
charged from the Client. It comprises a service fee increased by any costs
due to investment and other capital costs.
Dues for 1997 are:
<PAGE>
47
. import and export (including domestic) of crude oil and oil
products: two point sixty-five (2,65) Finnish markkas per metric
ton;
. import (including domestic) of chemical products, chemical
compounds and gases: fifteen point forty (15,40) Finnish markkas
per metric ton;
. export (including domestic) of chemical products, chemical
compounds and gases: seven point sixty (7,60) Finnish markkas per
metric ton;
. import and export (including domestic) of plastics products:
fourteen point eighty (14,80) Finnish markkas per metric ton.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
The Client, its legal successors and assignees have the right to use all
harbours at the Porvoo Works for its industrial activities in accordance with
this Agreement at the price defined in article 4 above. To the extent
possible such rights of the Client shall be formalized through and subject to
any easement and/or other registrations required by the Client. Separate
agreements have been signed with regard to the access and use of harbour and
such easements.
7. Specific Agreement.
Subject to principles contained in this Annex 3.b. and the Agreement and the
provisions contained in other agreements between the parties (such as Utility
Agreement) and taking into account the present practice within Neste, the
Parties shall agree upon the detailed provisions with respect to i.a.
allocation of responsibility and liability related to the harbour, such
provisions to be incorporated into separate agreement(s).
8. Contact Persons.
Erkki Kotiranta: the Provider
Aimo Kauhaniemi: the Client.
Annex 3.c.
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<PAGE>
48
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
WAREHOUSE SERVICES
Service Provider: Neste Oil.
1. Service Description.
Neste Oy concerning Oil refinery storage and StyroChem Finland Oy have agreed
to offer Warehouse Services to each other. They have also agreed for "the
principle of balanced cross usage" of their storages. The pricing of the
material is based on (the weighted average storage price of the item plus 10%
capital cost added with VAT).
2. Service Price.
In case of a bigger difference in the number of yearly deliveries a fee to be
agreed by the Parties, per each additional delivery, shall be paid by the
Party which has received more services. The Parties shall check this yearly
balance of deliveries during each January. The possible service price for the
coming year shall be agreed before November 1.
3. Terms of Payment.
In accordance with the main contract.
4. Duration.
As per Article 2.1 of this Agreement.
5. Contact Persons.
Tom Fyrqvist: the Provider
Aimo Kauhaniemi: the Client.
Annex 4.a.
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<PAGE>
49
to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SERVICES RELATED TO ENVIRONMENT AND INDUSTRIAL HYGIENE
Service Provider: Neste Oy
1. Service Description.
The function of the Environment and Industrial Hygiene Unit is to conduct and
plan research concerning the environment and industrial hygiene at Neste Oy
and to assess the need for research. The service also includes assistance and
consulting in unexpected situations.
Basic services are agreed upon in an annual plan. They include:
. Environmental Research: environmental follow-up studies (notably
air quality), noise level measurements and other research, as
mutually agreed;
. Industrial Hygiene Research: basic field studies and measurements
(chemical, physical and biological agents), participation in risk
assessment, information service, guidance and testing of monitoring
equipment;
. Comments, communication and public relations management, follow-up
of regulations and standards related to the aforementioned fields,
in some cases participation in their preparation;
. Unexpected needs for research not included in the plan, the costs
of which do not exceed that of two to three days' work;
. Participation in training, as agreed.
All activities during the planned year cannot be covered beforehand. The
price of additional projects is to be agreed separately.
2. The Obligations of the Provider.
The Provider renders the Services in the extent described above.
3. Service Price.
The Client shall pay for the Service an amount determined in the annual plan
in accordance with the units internal pricing practices. A proposal for costs
to the Client is made every year with the budget. The price includes variable
and fixed costs as well as capital costs and is based on the estimated amount
of work. For information purposes only, 1996 prices were based on 530 hours,
and the resulting annual price was approximately 185.000 FIM.
4. Terms of Payment.
The Service Price shall be invoiced monthly the basis of which is mutually
agreed and be payable in arrear.
5. Duration.
As per Article 2.1 of this Agreement, with the exception that this Service
cannot be terminated by StyroChem at any time other than at the end of a
fiscal year. The Parties recognize that representatives of the provider and
Client are currently meeting to evaluate which of the services listed above
are required by law and which services are at the election of Client.
Provider and Client shall mutually develop a plan for the
<PAGE>
50
provision of agreed services during fiscal year 1998 based on the results of
these discussions.
6. Contact Persons.
Riitta Viinanen: the Provider.
Aimo Kauhaniemi: the Client.
<PAGE>
51
Annex 4.b.
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to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
TECHNOLOGY SERVICES
Service provider: Neste's Technology services.
Service Description.
1. The services provided by the Neste Corporate Technology Unit.
2. Obligations of the Service Provider.
The Provider shall render services related to analytical research, technical
support, information management and r&d services. The Client has the right to
use these Services in accordance with a specific agreement made separately
each time.
3. Obligations of the Client.
The Client shall pay the Service Price.
4. Service Price.
The Service Price may consist of workmanship, charged per hour of work and/or
a fixed price, as described in the Technology Unit Price List. The Price of
turn key agreements and projects not included in the list are determined case
by case.
The Price list shall be made available to the Client. The Prices are based on
the Provider's present cost structure according to the directives of Neste
Corporation. All the prices are exclusive of VAT.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
Lars Gadda and Jukka Ukkonen (the Provider).
Tom Johansson (the Client).
<PAGE>
52
Annex 4.c.1.
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to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
SERVICES RELATIVE TO INFORMATION SYSTEMS
1. Service Description.
Neste Data's services to the Client's Polystyrene Plant at the Porvoo Works
and the Kokemaki Plant include:
. system maintenance such as maintenance readiness in accordance with
agreed urgency levels, correction of software errors, user support
and telephone consultation, provision of updated manuals and other
documentation;
. system development, based on a separate agreement. The information
systems for which the Service Provider shall be responsible for shall
be:
. the logistics systems (order handling, warehouse and production
operations, quality control);
. the maintenance systems (spare parts inventory management, raw
material management, work order management, maintenance cost
accounting). This Service does not include Isora's information
systems. Any consultation needed by the Client in these plants shall
be given under Annex 5.
2. Obligations of the Service Provider.
The Services described in Article 1 above shall be provided in accordance
with the current practice, as defined in the Service Agreements between Neste
Data and Neste Polystyrene, if the stipulations stated therein are not in
contradiction with the stipulations of this Agreement.
3. Obligations of the Client.
The Client shall pay the Service Price.
4. Service Price.
Maintenance of Logistics systems shall cost thirtyseven thousand and five
hundred (37.500) Finnish markkas per month. The Maintenance system service
shall be charged at eight thousand and three hundred and fourty (8.340)
Finnish markkas per month. The price of any development shall be determined
separately per the Neste Data Price List.
5. Terms of Payment.
Monthly in arrear.
6. Duration.
Six (6) months from the Effective Date unless terminated by the Client with
thirty (30) days written notice.
7. Contact Persons.
The Service Provider: Matti Nieminen.
The Client: Aimo Kauhaniemi.
<PAGE>
53
Annex 4.c.2.
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to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
END USER SUPPORT SERVICES
1. Service Description.
Neste Data's End User Support Services to the Client's Polystyrene Plant at
the Porvoo Works consists of help desk services, other user support, back
office support as well as local and wide area network support. This Service
does not include Isora or Kokemaki's information systems. Any consultation
needed by the Client in these plants shall be given under Annex 5.
2. Obligations of the Service Provider.
The Services described in Article 1 above shall be provided in accordance
with the current practice, as defined in the Service Agreements between Neste
Data and Neste Polystyrene, if the stipulations stated therein are not in
contradiction with the stipulations of this Agreement.
3. Obligations of the Client.
The Client shall pay the Service Price.
4. Service Price.
End user support services are charged at three hundred ninety (390) Finnish
markkas per hour. The Price does not include any investment, hardware
maintenance, program licenses or data- or telecommunication fees. At the
Client's option, electronic mail service can be provided at a cost of two
thousand and five hundred (2.500) Finnish markkas per year per mailbox for
Porvoo Works as well as StyroChem Finland Oy, ThermiSol Finland Oy, ThermiSol
Denmark ApS and ThermiSol Sweden AB.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
The Service Provider: Kari Keskiivari.
The Client: Aimo Kauhaniemi.
<PAGE>
54
Annex 4.c.3.
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to the Neste Service Agreement Between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th of October, 1997.
TELECOMMUNICATION SERVICES
Service provider: Neste Data.
1. Service Description.
The Service consists of:
. network maintenance such as troubleshooting, cable laying and repair,
documentation on network routing and cable localization;
. switchboard system maintenance, including acquisition of telephones;
installation, repair, support; procurement of material; subscription
card installation; troubleshooting; maintenance and installation of
the staff location network; receiver procurement and service; voice
mail; and applications related to telephony;
. cellular phones and long-distance staff location (procurement,
installation, Privatel service, repair and end-user support);
. telefax services (procurement, installation, transfer, repair, user
support)
. connection register (switchboard network, general cabled network,
cellular phones, long-distance staff location);
. service agreements with third party telephone operators;
. service development and application design.
2. Obligations of the Service Provider.
The Provider renders the Services hereinabove in accordance with the methods
and the schedules agreed upon with the Client. The Provider sees to the
sufficient number of personnel as well as the requirements related to
professional skill and equipment.
These Services are to be rendered during usual working hours, with the
exception of system updates. Service availability shall be ensured by means
of wireless communication systems and duty arrangements. Outside working
hours, messages are received by telefax and voice mail. The home numbers as
well as the cellular phone numbers of experts shall be given to the Client
without obligation.
Troubleshooting during working hours shall be started immediately.
The Provider shall supervise and take part in troubleshooting and repair of
telecommunications systems for which the responsibility lies mainly on third
party operators, such as switchboard network and Privatel. Any reimbursement
due to defaults in the said systems shall be transferred to the Client by the
Provider. Operators' emergency numbers shall be given to Client's disposal.
Additional services are provided if the needed resources are available. Such
services shall be invoiced as agreed.
3. Obligations of the Client.
The Client shall inform the Provider of any change of importance in the
environment related to telephony and any future needs. The Client shall
provide the necessary information on the system and help in troubleshooting.
The Client ensures that agreed regulations are followed by Client's
personnel.
<PAGE>
55
4. Service Price.
One hundred and eighteen (118) Finnish markkas per analogue extension per
month and one hundred twenty-seven (127) Finnish markkas per digital
extension per month.
5. Terms of Payment.
Invoiced monthly, payable in arrear.
6. Duration.
As per Article 2.1 of this Agreement.
7. Contact Persons.
Jorma Veikkolainen (the Provider).
Mervi Vayrynen (the Client).
<PAGE>
56
Annex 5.a.
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to the Neste Service Agreement between Neste Oy (the Provider) and StyroChem
Finland Oy (the Client) dated the 15th October, 1997.
SERVICES RELATED TO EXCHANGE OF EXPERTS
Service Provider: any division or business unit within Neste Group.
1. Service Description.
Neste Oy and StyroChem Oy have agreed to exchange experts, directly in
connection with the acquisition, at the conditions set out in this Annex. The
service consists of the provision of expertise in short-term projects (from 1
to 14 days). The conditions for the exchange of experts in projects longer
than 14 days are to be agreed separately. The Provider is under no obligation
to render expertise in excess of the current extent and scope of practice.
2. Obligations of the Service Provider.
A Party is obliged to provide such expertise especially when, in
consideration of the acquisition, know-how has remained solely in the hands
of this Party.
3. Service Price.
The Client shall pay for the Service as follows:
. four hundred and ten (410) Finnish markkas per working hour of
special expertise;
. three hundred and fifty (350) Finnish markkas per working hour of
labour consultant;
. three hundred and twenty (320) Finnish markkas per working hour of
white-collar worker or expert;
. two hundred and eighty (280) Finnish markkas per working hour of
blue-collar worker or comparable.
Value-added tax is not included in these figures.
4. Duration.
As per Article 2.1 of this Agreement.
5. Contact Persons.
Pertti Silantera: The Provider
Aimo Kauhaniemi: the Client.
<PAGE>
Exhibit 10.69
LAND LEASE AGREEMENT
by and between
Neste Oy,
a Finnish Company having its head office at
Keilaniemi, SF-02150 Espoo, Finland
(hereinafter referred to as "Neste"),
and
Styrochem Finland Oy,
a Finnish Company having an office at
Kilpilahti, FIN-06100 Porvoo, Finland
(hereinafter referred to as the "Lessee"),
and
Radnor Holdings Corporation,
a Delaware Corporation having an office at
Three Radnor Corporation Center, Suite 300, Radnor, Pennsylvania, 19087
U.S.A.
as Guarantor under Article 15 hereof
Dated as of 15 October, 1997.
WITNESSETH
WHEREAS Neste and the Lessee, among others, have entered into a Sale of
Assets Agreement dated as of September 17, 1997 (hereinafter referred to
as the "Main Agreement"). This Agreement is subject to the Main
Agreement whereby Neste agreed, among other things, to transfer Neste's
polystyrene ("Polystyrene") plant in Kulloo, Porvoo (hereinafter
referred to as the "Plant");
WHEREAS, Neste is the owner of the land on which the Plant is located
(the "Real Property");
WHEREAS, Neste wishes to lease to the Lessee the Real Property for the
manufacture of Polystyrene and the running of the associated business
and the Lessee wishes to occupy the Real Property;
<PAGE>
NOW, THEREFORE, both parties hereby agree as follows:
DEFINITIONS:
The following capitalized words and phrases shall have the meanings
described below:
"Affiliate": means in relation to any Party:
a) any person which owns and controls more than fifty per
cent (50%) of the capital stock and voting rights of
such Party;
b) any person more than fifty per cent (50%) of the capital
stock and voting rights of which are owned and
controlled by such Party; or any
c) person more than fifty per cent (50%) of the capital
stock and voting rights of which are owned and
controlled by one or more persons qualifying as
Affiliates under a) or b) above.
"Agreement" means this Agreement and the Appendices attached hereto
which form an integral part hereof.
1. LEASED PROPERTY
Neste hereby agrees to lease out and the Lessee hereby agrees to accept
the lease of the Real Property being the parcel of approximately (77130
+ 6860) 83.990 square metres in Porvoo as described in the map appended
hereto as Appendix 1 and forming part of the registered units numbers
----------
1:62, 4:109, 4:81 and 4:82. The Lessee has the option (the "Option") to
extend the said Real Property by a parcel of approximately 46680 square
metres (the "Opted Real Property"), as described on the said map,
subject to conditions hereinunder. After the Lessee has exercised such
Option the term "Real Property" shall incorporate both the original Real
Property and the Opted Real Property, and all rights and obligations
provided for in this Agreement shall apply to this Real Property.
2. PURPOSES OF THE LEASE
The Real Property leased under Article 1 hereof, will be used by the
Lessee for the sole purpose of operating the Plant to manufacture
Polysytrene and related products and/or products which use or
incorporate such Polystyrene and/or related products and managing and
running the associated business.
3. LESSEE'S RIGHTS TO POSSESSION OF LAND
3.1 Without prejudice to the obligations and rights of the parties pursuant
to the Neste Service Agreement dated as of the date hereof (hereinafter
referred to the "Neste Service Agreement"), and subject to the Main
Agreement, Neste hereby represents and warrants that the Lessee has the
full rights to
2
<PAGE>
possession and use of the Real Property throughout the term of this
agreement as it may deem proper for the fulfillment of the purposes of
the lease specified in Article 2 above, including without limitation the
right to improve the Real Property, install machinery, equipment or
tooling, construct any building or structure, including the right of the
Lessee to design, control construction and recruit engineers, architects
or any other person relating to the said construction without having to
obtain Neste's authorization or consent unless mandatory safety or
environmental regulations require it (in which case Neste's consent will
not be unreasonably withheld).
3.2 In the case where it is necessary to make contact with any government
agency to obtain any government approval or license for construction of
the Plant or license for operating the business or manufacturing
Polystyrene, the Lessee shall be responsible therefor in its own name
and with its own expense. However, in a case where Neste's consent is
required for the acquisition of the said licenses or government
approval, Neste agrees to cooperate with and facilitate the Lessee in
all respects, including granting such consent without limitation, where
required.
4. LEASE PERIOD
4.1 The period of the lease shall be thirty (30) years from the date of
Closing (as defined in the Main Agreement).
4.2 Neste covenants that upon the expiration of the lease under Article 4.1,
if the Lessee wishes to renew the lease, Neste will renew this Agreement
for an additional period requested by Lessee (provided such additional
period shall not exceed sixty-nine (69) years) upon the same terms and
conditions hereof, with the exception of the amount of the rent to be
paid under this Agreement which shall then be renegotiated (but in no
event shall exceed fair market price) and with such modifications as may
be required to comply with applicable laws. In order to renew such rent
period, (i) the Lessee shall give to Neste prior notice not less than
twelve (12) months before the expiration date of the lease period under
Article 4.1 and (ii) the Lessee must not be in material breach of any of
the provisions of this Agreement.
4.3 The Option shall be valid as of the date hereof until the lease period,
whether original or renewed, has expired.
4.4 The Parties agree that at the expiration of the initial term of this
Agreement the Parties shall also discuss in good faith the alternative
of Lessee purchasing the Real Property outright for a purchase price to
be negotiated but in no event to exceed the fair market value of the
Real Property.
5. RENT AND RENTAL PAYMENT
5.1 The rent shall be one (1) Finnish Markka per annum, payable to Neste
each year on or before the 5th of November. Lessee will reimburse any
real estate taxes borne by Neste as a result of ownership of the Real
Property, such reimbursement to be made on an annual basis within thirty
(30) days after
3
<PAGE>
receipt by Lessee of a notice from Neste specifying the amount to be
reimbursed.
5.2 The rent for the Opted Real Property shall be agreed separately, on the
basis of the fair market value of such real property.
6. DELIVERY OF REAL PROPERTY
Neste shall deliver the Real Property under Article 1 hereof to the
Lessee, in good condition to enable the Lessee to conduct the operations
referred to in Article 2, and subject to the terms of the Main Agreement
without any liens or charges or mortgages or encumbrances on or against
the title of the same throughout the term of this lease, including any
agreement which might prejudice or impair the rights of the Lessee to
use or enjoy the full benefit of such Real Property.
7. NESTE'S COVENANTS
Neste covenants with the Lessee that the Lessee is entitled to take out
a mortgage on the Real Property (pysyvyyskiinnitys vuokraoikeuden
vakuudeksi) in surety of this Agreement and the rights of the Lessee
under and in connection with this Agreement without hearing Neste.
8. LESSEE'S COVENANTS
The Lessee covenants with Neste as follows:
8.1 that the Lessee shall punctually pay the rent in full as may fall due
throughout the period of this Agreement;
8.2 that the Lessee shall not keep illegal material or merchandise on the
Real Property;
8.3 that the Lessee shall strictly comply with the laws, rules, orders and
regulations of the government, state and local authorities as well as
reasonable general safety rules established from time to time by Neste
affecting the general operations and facilities in Neste's Porvoo works.
Neste shall keep the Lessee informed of the said rules prior to the
rules taking effect;
8.4 that the Lessee must keep the Real Property in good condition according
to what is customary in the field of industry of the Lessee at its own
expense throughout the term of this Agreement and shall not commit any
waste upon the Real Property and shall keep the Real Property and the
property thereon in accordance with applicable local regulations
concerning building, zoning, fire, health and other ordinances and
Neste's reasonable general rules regarding such matters provided Lessee
is informed of all such rules prior to such rules taking effect;
4
<PAGE>
8.5 that the Lessee shall not sublease the Real Property, either wholly or
partially, to a third person. The Lessee shall have the right to
sublease any building situated on the Real Property, provided that the
Lessor shall have given its prior written consent for such sublease,
which consent shall not be unreasonably withheld;
8.6 that the Lessee shall not suffer the Real Property or any erection or
improvement on the Plant to become subject to any lien, charge or
encumbrance whatsoever, other than a mortgage as set out in Article 7.
For the avoidance of doubt, nothing in this Agreement shall prevent the
Lessee from granting a business mortgage (yrityskiinnitys) in respect of
movable assets of the Lessee located on the Real Property, nor granting
other security interest in respect of movable property to secure any
financing obtained by the Lessee;
8.7 that Lessee shall immediately upon termination of this Agreement release
the Real Property from any mortgage or other security interest it has
taken out on the Real Property.
9. TAXES AND FEES
The lessor shall be responsible for all real estate taxes related to the
ownership of the Real Property which shall be reimbursed to the Lessor
in accordance with Article 5.
10. USE OF ROADS AND TERMINAL
Neste shall permit the Lessee reasonable rights to use the roads that
give access to the Real Property and to use the nearest available
railway terminal.
11. NESTE'S RIGHT TO TERMINATE THE AGREEMENT
Neste shall have the right to terminate this Agreement upon the
occurrence of any of the following events during the period of the lease
under this Agreement:
11.1 The Lessee does not pay the rent required to be paid under the
provisions of this Agreement and such non-payment is occurring more than
thirty (30) days from the date Neste sends written notice to the Lessee
reminding the Lessee of such non-payment and threatening to terminate
this Agreement if such non-payment continues;
11.2 The Lessee neglects, omits to perform, does not observe or comply with
any provision of this Agreement, provided that, so long as such failure
or omission of the Lessee is continuing, Neste shall first give a
written notice informing such cause to the Lessee and the Lessee does
not rectify or remedy the cause thereof within thirty (30) days from the
date of the receiving of such notice. However, if the Lessee commences
the rectification or remedy within the said thirty (30) days and has
completed the rectification
5
<PAGE>
or remedy of such cause within Neste's reasonably specified time in such
notice which in no event shall be less than ninety (90) days thereafter,
it shall not be deemed a breach of this Agreement on the part of the
Lessee. Neste shall have no right to give the notice nor terminate this
Agreement after a date three (3) months from the date Neste became aware
of such failure or omission;
11.3 The Lessee becomes bankrupt by judgement of the court or the whole
facilities situated on the Real Property or the rights under this
Agreement have been seized or attached by judgement or court order,
provided however that Neste may not so terminate this Agreement if the
Lessee provides adequate security in respect of the obligations of the
Lessee under this Agreement;
11.4 The Lessee ceases the commercial manufacture of Polystyrene or related
products or products using or incorporating polystyrene or any such
related product in the Plant.
12. LESSEE'S RIGHT TO TERMINATE THE AGREEMENT
The Lessee shall have the right to terminate this Agreement upon the
occurrence of any of the following events during the period of the lease
under this Agreement:
12.1 Neste neglects, omits to perform, does not observe or comply with any
provision of this Agreement, provided that the Lessee shall first give a
written notice informing such cause to Neste and Neste does not rectify
or remedy the cause thereof within thirty (30) days from the date of
receipt of such notice. However, if Neste commences the rectification or
remedy within the said thirty (30) days and has completed the
rectification or remedy of such cause within the Lessee's specified time
in such notice which in no event shall be less than ninety (90) days
thereafter, it shall not be deemed a breach of this Agreement on the
part of Neste.
However, if the Lessee chooses not to exercise its right to terminate
this Agreement under the preceding paragraph, it may rectify or remedy
such cause or may authorize a third person to do so. In this instance,
Neste shall be responsible for and promptly pay, at the Lessee's
request, all expenses incurred by the Lessee in connection therewith.
12.2 The Real Property and/or any structure thereon, either wholly or
partially, is, for reasons not attributable to the Lessee, expropriated,
seized, attached or under possession whatsoever by law, notification or
order of the government, judgement or court order.
12.3 The Real Property and/or any structure thereon is in a totally
unsuitable condition for the purposes of the lease which is caused by
fire, flood, war, riot, calamity, force majeure or any event or act,
except those resulting from the negligence or willful act of the Lessee
or resulting from the Lessee's breach of the provisions of this
Agreement.
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13. RIGHTS OF NESTE UPON TERMINATION OF THIS AGREEMENT
Upon any termination of this Agreement, Neste shall have an option to
repossess the buildings and other assets and general purpose equipment
in the Plant at a price to be agreed between the parties. If such
agreement is not reached between the parties within 30 days from any
termination of this Agreement, the Lessee is obligated at his cost to
remove any and all buildings together with any and all machines,
equipment or tooling used therefor, in or on the Real Property (other
than such buildings, machines and equipment located on the leased
property as of the date hereof) not later than 120 days from the said 30
day period so that the Real Property is left to Neste in a condition
free from such properties (other than such buildings, machines or
tooling located on the leased property as of the date hereof). Subject
to any rights that Lessee may have against Neste under the Main
Agreement, the Lessee shall leave the leased property to Neste free from
waste, toxic materials and other environmental liabilities attributable
to the lease period, including the original and renewed lease period (if
any).
14. GENERAL TERMS AND CONDITIONS
14.1 Should any provision of this Agreement be held invalid or unenforceable
under any applicable law, the other provisions of this Agreement shall
be binding on the parties as if such provision were not included therein
and the parties, according to their intent at the date of signature of
this Agreement, shall mutually agree upon modifications of such
provision to the extent necessary to render it lawful and enforceable.
14.2 This Agreement is executed in two originals by the parties hereto. In
the event that this Agreement is translated into Finnish or any other
language, and any inconsistency of interpretations results therefrom,
the Agreement in English shall take precedent and be controlling between
the parties hereto.
14.3 This Agreement sets forth the entire agreement and understanding between
the parties and supersedes any and all prior negotiations, discussions
and agreements between the parties with regards to the subject matter
contained herein.
14.4 Neither Party shall be permitted to assign this Agreement without the
prior written consent of the other Party, which shall not be
unreasonably withheld. This Agreement shall inure to the benefit of, and
be binding upon the parties hereto and their respective successors and
permitted assigns.
Notwithstanding the preceding provisions of this Article 14.4, either
Party may assign the benefit and burden of this Agreement to an
Affiliate of such Party; provided that
a) such Affiliate agrees in writing to assume the obligations of the
assigning Party hereunder; and
b) in the case of an assignment to an Affiliate of StyroChem Finland
Oy, the guarantee in Article 15 continues to apply; and
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c) in the case of an assignment to an Affiliate of Neste Oy, Neste
Oy shall remain liable with the assignee Affiliate.
14.5 This Agreement shall become effective on the Closing Date as defined in
the Main Agreement.
14.6 This Agreement shall be governed and construed in accordance with the
Land Lease law and other laws of Finland.
The Parties hereto shall endeavour to solve amicably any dispute arising
under this Agreement.
Any disputes arising under this Agreement, which cannot be solved by
amicable means, shall be submitted to arbitration according to the rules
of Arbitration of the Finnish Central Chamber of Commerce.
Notwithstanding the above, the arbitrators shall be nominated as
follows: Each party shall nominate one arbitrator within fifteen (15)
days from the date notice was first given by the other party of that
party's intention to have the matter submitted to arbitration, together
with that party's nomination of an arbitrator. The arbitrators so
nominated shall agree upon a third arbitrator as chairman of the
arbitral tribunal within fifteen (15) days of the nomination of the
second arbitrator. Failing nomination of an arbitrator by one of the
parties, or agreement on the chairman by the two arbitrators within the
time specified, the Finnish Central Chamber of Commerce shall, in
accordance with the rules of arbitration of the Finnish Central Chamber
of Commerce appoint the arbitrator and/or the chairman.
The arbitral award rendered in accordance with Finnish law shall be
final and enforceable.
The arbitrators shall conduct the matter at their own discretion. The
arbitrators shall, unless the parties otherwise agree, convene in
Helsinki, Finland. The proceedings shall be conducted in the English
language.
14.7 In the event Neste attempts to sell all or a portion of the Real
Property during the term of this Agreement as a separate parcel of
property from the remainder of the Porvoo Site then lessee shall have a
right of first refusal to purchase such portion of the Real Property on
the same terms and conditions being offered by the potential purchasers.
14.8 All notices required or permitted to be given hereunder shall be in
writing in English and will be valid and sufficient if dispatched by
courier, telefax, registered mail, postage prepaid to the addresses
written below:
If to NESTE OY:
NESTE OY
Keilaniemi
SF-02150 ESPOO
FINLAND
Telefax: +358 204 505205
Attention: Kyosti Sysio, Senior Vice President
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If to STYROCHEM:
RADNOR HOLDINGS CORPORATION
Three Radnor Corporate Center
Suite 300
Radnor
Pennsylvania
19087 U.S.A
Telefax: +1 610 995 2697
Attention: Michael T. Kennedy, President
or to such address as either party shall have specified by a notice in
writing given to the other party in the manner set forth above. Notices
given as herein provided shall be deemed to be effective upon receipt.
15. PARENT COMPANY GUARANTEE
Radnor Holdings Corporation hereby irrevocably guarantees any obligation
of the Lessee and its successors permitted assignees and permitted
transferees, set forth in this Agreement and undertakes to fulfill them
as its own obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives or officers as of the
year and date first above written.
NESTE OY STYROCHEM FINLAND OY
By: /s/ KYOSTI SYSIO By: /s/ MICHAEL V. VALENZA
------------------------ ------------------------
Name: KYOSTI SYSIO Name: MICHAEL V. VALENZA
---------------------- ----------------------
Title: SR. VP Title: SR. VP
--------------------- ---------------------
RADNOR HOLDINGS CORPORATION
as Guarantor under Article 15 hereof
By: /s/ MICHAEL V. VALENZA
------------------------
Name: MICHAEL V. VALENZA
----------------------
Title: SR. VP
--------------------
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[TOPOGRAPHIC MAP APPEARS HERE]
<PAGE>
Exhibit 10.70
PLANT LEASE - 195 TAMAL VISTA BOULEVARD,
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP,
Tenant
May 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
1. PARTIES................................................................. 1
2. PREMISES................................................................ 1
3. ACCEPTANCE.............................................................. 2
4. RENT.................................................................... 2
4.1 Base Rent.......................................................... 2
4.2 CPI Increase....................................................... 2
4.3 Late Charge........................................................ 3
5. SECURITY DEPOSIT........................................................ 3
6. TERM.................................................................... 3
7. USE, PURPOSE & COMPLIANCE WITH LAW...................................... 4
8. UTILITIES............................................................... 4
9. ASSIGNMENT & SUBLETTING................................................. 4
10. CONDITION OF PREMISES & REPAIRS......................................... 5
11. ALTERATIONS............................................................. 6
12. LIENS................................................................... 6
13. SIGNS................................................................... 7
14. RIGHT OF ENTRY.......................................................... 7
15. INDEMNIFICATION......................................................... 8
16. INSURANCE............................................................... 9
16.1 Liability Insurance................................................ 9
16.2 Casualty Insurance................................................. 9
16.3 Form of Policies................................................... 10
16.4 Waiver of Subrogation.............................................. 10
</TABLE>
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<TABLE>
<S> <C>
17. ESTOPPEL CERTIFICATE................................................... 10
18. COMPLIANCE WITH LAWS................................................... 11
19. DAMAGE BY FIRE OR OTHER CASUALTY....................................... 11
20. CONDEMNATION........................................................... 12
21. INVOLUNTARY TERMINATION................................................ 13
22. DEFAULT................................................................ 13
23. ATTORNEY'S FEES........................................................ 15
24. HOLDING OVER........................................................... 15
25. WAIVER................................................................. 16
26. ABANDONMENT............................................................ 16
27. PERSONAL PROPERTY, REAL PROPERTY, & OTHER TAXES........................ 16
28. PLATS & RIDERS......................................................... 17
29. SALE BY LANDLORD....................................................... 17
30. RIGHT OF LANDLORD TO PERFORM........................................... 17
31. SURRENDER OF PREMISES.................................................. 17
32. MORTGAGE REQUIREMENTS.................................................. 18
33. NOTICES................................................................ 18
34. ENTIRE AGREEMENT....................................................... 19
35. CONSENT................................................................ 19
36. ADDITIONAL PAYMENTS.................................................... 19
37. COVENANT OF QUIET ENJOYMENT............................................ 19
</TABLE>
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<TABLE>
<S> <C>
38. ADDITIONAL TERMS AND CONDITIONS........................................ 19
38.1 Environmental Inspection.......................................... 19
38.2 Financial Statements.............................................. 20
38.3 Brokers........................................................... 20
38.4 First Right of Negotiation to Purchase Building................... 20
</TABLE>
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PLANT LEASE - 195 TAMAL VISTA BOULEVARD,
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP,
Tenant
May 1, 1997
1. PARTIES
1.1 This Lease is entered into in the City of Corte Madera, County of
Marin, State of California, between HUNT BROTHERS LEASING, L.L.C., Landlord, and
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP, Tenant.
1.2 Landlord's predecessor in interest, Hunt Brothers Leasing, a
partnership, as landlord, and James River Paper Co., Inc., a Virginia
corporation, as tenant, are parties to a lease dated November 8, 1989, as
amended in August, 1992, covering the premises leased hereunder. Tenant is a
subtenant of said premises, pursuant to a sublease entered into between Tenant
and James River Paper Co., Inc. and pursuant to Landlord's Consent to Subleases
dated as of January 23, 1996 entered into between Landlord and James River Paper
Company, Inc. Upon the commencement of the term hereof, said lease, sublease and
consent shall be terminated in their entirety and shall be of no further force
or effect, with the exception that James River Paper Co., Inc. shall continue to
be obligated for all obligations accrued under said lease prior to said
termination date and Tenant shall continue to be obligated for all obligations
accrued under said sublease prior to said termination date.
1.3 With respect to the security deposit that was delivered to Landlord at
such time as the premises were originally subleased to Tenant, said security
deposit shall be applied to the security deposit payable hereunder pursuant to
paragraph 5 hereof, and any remaining balance shall be returned to Tenant (and
not to James River Paper Co., Inc.) upon the termination of said lease dated
November 8, 1989.
2. PREMISES
2.1 Landlord hereby leases to Tenant and Tenant hires from Landlord, under
the terms and conditions hereinafter set forth, those certain premises situated
in the City of Corte Madera, California, commonly known as 195 Tamal Vista
Boulevard, consisting of approximately 40,880 square feet, and as more fully
described in Exhibit "A", attached hereto and made a part hereof (the
"premises").
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3. ACCEPTANCE
Tenant accepts the premises in their "as is" condition and state of repair
and except as otherwise expressly provided herein, Landlord shall not be
required to do any work thereto.
4. RENT
4.1 Base Rent. Tenant shall pay to Landlord as rent in advance on the
---------
first day of each calendar month of the term of this Lease, without deduction,
offset, prior notice or demand, the sum of Twenty-Eight Thousand Five Hundred
Thirty-Six Dollars ($28,536) in lawful money of the United States. The rent
shall be paid at the address set out after the name of the Landlord at the end
of this Lease or such other address as shall be designated in writing by
Landlord. If the date of commencement or expiration of the term of this Lease
occurs on a day other than the first day of a calendar month, the rent at the
monthly rate shall be prorated upon the basis which the number of days of the
term of this Lease of such month bears to the total number of days in such
month.
4.2 CPI Increase. On July 1, 1998 and on each subsequent anniversary of
------------
the commencement date of the term of this Lease, the base rent payable for the
upcoming year shall be increased to an amount equal to the product of the
initial base rent of $28,536 multiplied by a fraction, the denominator of which
shall be the Consumer Price Index (as hereinafter defined) figure published for
June 1997, and the numerator of which shall be the Consumer Price Index figure
for June of the adjustment year (provided that such fraction shall not in any
event be less than 1). As used herein, the term "Consumer Price Index" shall
mean the United States Department of Labor's Bureau of Labor Statistics'
Consumer Price Index, All Urban Consumers, All-Items, for the San Francisco-
Oakland-San Jose area (1982-84=100), or the successor of such index, or if no
successor index is designated, then such other index as Landlord reasonably
shall designate. Should Landlord lack sufficient data to make the determination
specified herein on the date of any such adjustment, Tenant shall continue to
pay the monthly rent payable immediately prior to such adjustment date. As soon
as Landlord obtains the necessary data, it shall determine the rent payable from
and after such adjustment date and shall notify Tenant of the adjustment in
writing. Should the monthly rent for the period following such adjustment date
exceed the amount previously paid by Tenant for such period, Tenant shall
forthwith pay the difference to Landlord.
4.3 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 this Lease, Tenant shall pay a late charge equal to six
(6%) of such amount that is due. Tenant acknowledges that any late payments
will cause Landlord to incur costs and expenses not contemplated under the
Lease, including, but not limited to, administrative
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and collection costs, 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 Lease. In addition to the late charges
described herein, any payment made more than thirty (30) days after the due date
shall also bear interest from and after the expiration of such 30 day period,
until paid, at the rate of 1-1/2% per month.
5. SECURITY DEPOSIT
Upon Tenant's execution hereof, Tenant shall deposit with Landlord a sum
equal to $28,536 as security for Tenant's faithful performance of its
obligations under the Lease. 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 Lease, or
fails to perform any of the terms and conditions of the Lease, 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 Lease. Within fifteen (15) days after the term of the Lease
has expired and Tenant has vacated the Premises, provided Tenant is not then in
default on any of its obligations hereunder, Landlord shall return the security
deposit to Tenant.
6. TERM
The term of this Lease shall be for a period of seven (7) years commencing
on July 1, 1997 and terminating on June 30, 2004.
7. USE, PURPOSE & COMPLIANCE WITH LAW
7.1 Tenant shall use and occupy the premises during the term as a machine
assembly department and for the printing, storage, and handling of cups,
containers,
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straws, and other related products and for general office purposes, and all uses
reasonably incidental thereto, and for no other purpose without the prior
written consent of Landlord. Tenant shall not use or permit the premises or any
part thereof to be used for any purpose other than the purpose for which the
premises are leased.
7.2 No use shall be made or permitted to be made of the premises or acts
done by Tenant which will increase the existing rate of insurance on the
premises or cause the cancellation of any insurance policy covering the premises
or any part thereof. If any act on the part of Tenant or use of the premises by
Tenant shall cause any increase of Landlord's insurance, such additional expense
shall be paid by Tenant to Landlord upon demand. Tenant shall not sell or
permit to be kept, used or sold in or about the premises any article which may
be prohibited by the standard form of fire insurance policies.
7.3 Tenant shall not commit or suffer to be committed any waste upon the
premises or any public or private nuisance. Tenant shall not use the premises
or permit the premises to be used in whole or in part for any purpose or use
that is in violation of any of the laws, ordinances, regulations or rules of any
public authority or organization at any time. A judgment of any court of
competent jurisdiction or the admission by Tenant in any action or proceeding
against Tenant that Tenant has violated such laws, ordinances, regulations or
rules in the use of the premises shall be deemed to be a conclusive
determination of the fact as between Landlord and Tenant.
8. UTILITIES
Tenant shall pay for all water, gas, heat, light, power, telephone service,
sewer, garbage and other services or utilities supplied to the premises, whether
or not separately metered and whether or not billed to Landlord or Tenant.
9. ASSIGNMENT & SUBLETTING
9.1 Except as otherwise permitted pursuant to this paragraph 9.1, Tenant
shall not assign its interest in this Lease without the prior written consent of
Landlord, which consent Landlord may withhold in its sole, arbitrary and
absolute discretion. Notwithstanding the foregoing, Tenant may assign its
interest in this Lease to WinCup Holdings, Inc., a Delaware corporation,
provided that such assignment is consummated in connection with the transfer of
Tenant's business to said assignee. Said assignment is conditioned on said
assignee executing an assignment document in form and substance acceptable to
Landlord and which shall provide, among other things, that said assignee shall
assume all of the obligations of Tenant hereunder, as a direct obligation to
Landlord.
9.2 Tenant shall not sublet the premises or any part thereof, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided,
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however, that in all events, any such subletting shall comply with each and
every one of the following standards: (i) all rent and other sums payable under
this Lease must continue to be paid directly to Landlord by Tenant,
notwithstanding any such subletting; (ii) all insurance coverage provided by
Tenant hereunder shall not be adversely affected, or changed, as a result of any
such subletting; (iii) the subtenant's use of the premises shall not be
inappropriate or have any adverse impact on the premises, all as determined by
Landlord in its sole discretion; (iv) the subtenant must have adequate financial
resources, and have a good business reputation, all as determined by Landlord in
its reasonable discretion; and (v) any such subtenant must otherwise meet the
reasonable requirements of Landlord.
9.3 No consent to any assignment of this Lease, or any subletting of the
premises, shall be deemed to be a consent to any subsequent assignment of this
Lease or to any subletting of the premises. Any such assignment or subletting
shall be void and at the option of Landlord shall terminate this Lease.
9.4 No consent by Landlord to any assignment of this Lease, or any
subletting of the premises, shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether arising before or after the
assignment or subletting.
9.5 Tenant shall reimburse Landlord on demand for all costs, expenses, and
attorneys fees, incurred by Landlord in reviewing any proposal by Tenant to
assign this Lease or sublet all or any portion of the premises.
10. CONDITION OF PREMISES & REPAIRS
10.1 Landlord agrees to maintain and repair the roof, sidewalls and
foundation (including the structural integrity) of the premises. Landlord also
agrees to be responsible for the replacement, but not for the maintenance or
repair, of HVAC systems not subject to removal by Tenant at the expiration of
this Lease, at such times as said systems reach the end of their useful life.
Landlord shall not be responsible for the maintenance or repair of the interior
of the premises or any other part thereof except as set forth herein. Any
expense incurred in connection with the remodeling, repainting, altering or
redecorating of the premises shall be at the expense of and shall be paid for by
Tenant.
10.2 Tenant shall be deemed to have agreed by accepting occupancy that the
premises are in good order, condition and repair. Tenant shall, at Tenant's
sole cost and expense, keep and maintain the premises and appurtenances and
every part thereof (except that portion which Landlord has expressly agreed to
repair) including, but not limited to, the windows, skylights, parking areas,
sidewalks, landscaping, and the interior of the premises, in good and sanitary
order, condition and repair. Further, Tenant shall, at Tenant's sole cost and
expense, keep and maintain the heating, ventilating and air conditioning
equipment in good operating order and condition during the term of this
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Lease and shall provide regular maintenance thereto by a qualified serviceman.
Nothing herein shall be construed as requiring Tenant to repair any damage
caused by any act of God, war, riot or casualty, excepting, however, damage
attributable to the negligence or intentional act or omission of Tenant or to
Tenant's agents, servants, employees or invitees. Tenant further agrees to give
up and surrender the premises and every part thereof to Landlord at the
termination of the term of this Lease fully maintained and in good order and
repair, reasonable wear and tear excepted.
11. ALTERATIONS
11.1 Tenant shall not make or suffer to be made any alterations or
improvements to or of the premises or any part thereof without the written
consent of Landlord being first had and obtained. Any alterations, additions,
or improvements to or of the premises, including without limitation any
partitions (floor to ceiling), and all wall to wall installed carpeting, shall
at once become a part of the realty and belong to Landlord. Movable furniture,
equipment and trade fixtures shall remain the property of Tenant.
11.2 If Landlord consents to the making of any alterations, additions or
improvements to the premises by Tenant, the same shall be made by Tenant at
Tenant's sole cost and expense and any contractor or person elected by Tenant to
make the same must first be approved of in writing by Landlord. Upon the
expiration or sooner termination of the term, Tenant, upon demand by Landlord,
at Tenant's sole cost and expense, forthwith and with all due diligence shall
remove any alterations, additions or improvements made to the premises by Tenant
or its predecessors Handi-Kup and James River Paper Co., Inc. and designated by
Landlord to be removed, and Tenant forthwith and with all due diligence, at its
sole cost and expense, shall restore the premises to a standard shell warehouse
and repair any damage to the premises caused by such removal.
12. LIENS
Tenant shall keep the premises and building of which the premises are a
part free and clear from any liens from persons claiming by or through Tenant
and shall indemnify, hold harmless and defend Landlord from any liens and
encumbrances arising out of any work performed or material furnished by or at
the direction of Tenant. In the event any lien is filed, Tenant shall do all
acts necessary to discharge any lien within twenty (20) days of filing, or if
Tenant desires to contest any lien, then Tenant shall deposit with Landlord such
security as Landlord shall demand to insure the payment of the lien claim or
procure and record a lien release bond issued by a corporation authorized to
issue surety bonds in California in an amount equal to one and one-half times
the amount of the claim of lien. The bond shall meet the requirements of
California Civil Code Section 3143 and shall provide for the payment of any sums
that the claimant may recover on the claim (together with costs of suit, if it
recovers said costs in the action). In
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the event Tenant shall fail to pay any lien claim when due or shall fail to
provide the deposit or other security to Landlord, then Landlord shall have the
right to expend all sums necessary to discharge the lien claim, and Tenant shall
pay additional rental, when the next rental payment is due, all sums expended by
Landlord in discharging any lien, including attorney's fees and costs.
13. SIGNS
Except for any signs presently located on the premises, Tenant shall not
place or permit to be placed in, upon, about or outside the premises any signs
without the prior written consent of Landlord.
14. RIGHT OF ENTRY
14.1 Landlord and its agents shall have the right at any reasonable time
upon giving written notice to Tenant (which notice shall not be necessary in
case of an emergency) to enter upon the premises so long as it does not
interfere with the business activities of Tenant on the premises, for the
purpose of inspection, serving or posting notices, maintaining the premises,
making any necessary repairs, alterations or additions to any portion of the
premises (including the erection and maintenance of scaffolding, partitions and
repair of equipment as shall be required), complying with the laws, ordinances
and regulations, protecting the premises, or for any other lawful purpose,
including showing the premises to prospective purchasers or tenants and placing
on the premises usual "for rent" or "for lease" signs during the last nine (9)
months of the term.
14.2 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the premises, and other loss occasioned by such entry
unless caused by Landlord's gross negligence or willful misconduct. For each of
the aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency in order
to obtain entry to the premises, and any entry to the premises obtained by
Landlord by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into or detainer of
the premises or an eviction of Tenant from the premises or any portion thereof.
15. INDEMNIFICATION
15.1 Landlord shall be free of all liabilities and claims for damage by
reason of injury or death to any person or persons, including Tenant, or
property of any kind
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whatsoever and to whomsoever belonging, including Tenant from any cause or
causes whatsoever, except for any liability and claim arising out of the gross
negligence or intentional misconduct of Landlord, its agents or servants, while
in, upon, or connected in any way with the premises, during the term of this
Lease or any extension or renewal thereof, or any occupancy hereunder, and
Tenant hereby agrees to indemnify, save harmless and defend Landlord from all
liability, damages, loss, costs and obligations, including court costs and
counsel fees, on account of or arising out of or alleged to have arisen out of,
directly or indirectly, any such injuries, death or losses, however occurring,
unless the same shall have been caused by or result from the gross negligence or
intentional misconduct of Landlord, its agents or servants.
15.2 Tenant covenants and agrees to comply with all laws as hereinafter
defined relating to the storage, use, and disposal of hazardous materials on or
about the premises. For purposes of this section, "hazardous material" means and
includes any toxic or hazardous substance or waste, or ground or ground water
contamination, as defined in, or for purposes of, any federal, state, or local
statute, law, ordinance, code, rule, regulation, order, or decree, as now or at
any time hereafter in effect regulating, relating to, or imposing liability or
standards of conduct concerning any toxic or hazardous substance or waste
(hereinafter collectively referred to "laws"), including hazardous material
which must be removed or remediated prior to land development.
In the event Landlord or Tenant, during the term hereof, receives an
order or notification from any governmental or regulatory entity, or without an
order or notification otherwise becomes aware of the existence of a release or
threatened release of any hazardous material during the lease term or any
extension, in, on, or about the premises, Tenant, at its sole cost and expense,
shall immediately take such action as Landlord or the applicable governmental or
regulatory entity may deem appropriate or necessary to prevent any threatened
release or to remediate any release of hazardous materials.
Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all direct and indirect, actual and consequential, damages,
costs, expenses, losses, demands, claims, liabilities, judgments, causes of
action, proceedings or hearings, including all reasonable attorneys' fees and
costs of investigation which arise from the use, disposal, emission, discharge,
injection, spill, escape, leak, release, or threatened release of hazardous
materials on or about the premises during the term hereof or any extension
thereof.
As between Landlord and Tenant, the provisions of this section shall
survive the expiration or earlier termination of this Lease, including any lease
extension.
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16. INSURANCE
16. Liability Insurance. Tenant shall procure at its sole cost and
-------------------
expense and keep in full force and effect throughout the term of this Lease,
Commercial General Liability insurance protecting Landlord and Tenant, and
covering the use and occupancy of the premises and all areas adjacent thereto,
and the business operated by Tenant therein. Such insurance (i) shall include
broad form contractual liability insurance coverage insuring all of Tenant's
indemnity obligations under this Lease, (ii) shall have a minimum combined
single limit of liability (including umbrella coverage) of at least Ten Million
Dollars ($10,000,000), (iii) shall be written to apply to all bodily injury,
property damage, personal injury and other loss, however occasioned, occurring
during the policy term, (iv) shall be endorsed to add Landlord as an additional
insured, and (v) shall provide that such coverage is primary and that any
insurance maintained by Landlord is excess insurance only. Such insurance shall
also contain endorsements: (i) deleting any employee exclusion on personal
injury coverage; (ii) including employees as additional insureds; and (iii)
providing coverage for employer's automobile non-ownership liability. Tenant
shall also maintain Workers' Compensation insurance in accordance with
California law, and employers liability insurance with a limit no less than
$1,000,000 per employee and $1,000,000 per occurrence. The limits of said
Commercial General Liability insurance policy shall not limit the liability of
Tenant nor relieve Tenant of any obligations of Tenant otherwise existing under
this Lease. If at any time during the term, the amount or coverage of insurance
which Tenant is required to carry under this Section 16.1 is, in Landlord's
reasonable judgment, materially less than the amount or type of insurance
coverage typically carried by owners or lessees of properties which are similar
to and operated for similar purposes as the premises, Landlord shall have the
right to require Tenant to increase the amount or change the types of insurance
coverage required under this Section.
16. Casualty Insurance. Tenant further agrees to procure at its sole cost
------------------
and expense and keep in full force and effect throughout the term of this Lease,
a policy of "all risk" casualty insurance (ISO Form CP1030 or such other form as
is reasonably acceptable to Landlord), in the name of Landlord, with loss
payable to Landlord, insuring against loss or damage to the premises. Such
insurance shall be for the full replacement cost thereof, as agreed to by
Landlord and adjusted from time to time to reflect increased replacement costs,
and shall insure against all risks of direct physical loss or damage (except the
peril of earthquake), including coverage for any additional costs resulting from
debris removal and coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of the premises. Said policy shall
also contain an agreed valuation provision in lieu of any co-insurance clause,
and shall include coverage for the benefit of Landlord insuring the loss of the
full rental and other charges payable under this lease for not less than one
year. With respect to any deductibles, it is specifically agreed that Tenant
shall be responsible for paying all deductibles if a casualty occurs, unless
such casualty resulted from or was caused by the gross negligence or intentional
misconduct of Landlord or its agents or servants.
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16.3 Form of Policies. All insurance policies required to be carried under
----------------
this Lease shall be written by companies (i) rated A or better in "Best's
Insurance Guide" and (ii) authorized to do business in California, and shall
name any lenders or parties designated by Landlord as additional insureds. Any
deductible amounts under any insurance policies required hereunder shall be
subject to Landlord's prior written approval. Tenant shall deliver to Landlord
on or before the Commencement Date, and thereafter at least thirty (30) days
before the expiration date of expiring policies, or whenever there is a change
of insurers or insurance coverage, and at such other times as Landlord may
reasonably request, certified complete copies of its insurance policies, or, if
acceptable to Landlord, a certificate evidencing the same issued by the insurer
thereunder, and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates to Landlord in a prompt and timely manner,
Landlord may, at its option and in addition to Landlord's other remedies in the
event of a default by Tenant hereunder, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord as additional rent.
Any policy required to be maintained by Tenant under this Lease may be
maintained under a so-called "blanket policy" insuring other parties and/or
other locations, so long as the amount of insurance and type of coverage
required to be provided hereunder is not thereby diminished, changed or
adversely affected.
16.4 Waiver of Subrogation. Tenant and Landlord hereby release each other
---------------------
and their respective officers, agents and employees from any and all claims and
demands for loss, damage, expense or injury to the premises, as well as the
furnishings, fixtures and equipment located on the premises, which is caused by
or results from events or happenings which are the subject of casualty insurance
carried by the respective parties in force at the time of any such loss.
17. ESTOPPEL CERTIFICATE
Tenant and Landlord shall execute, acknowledge and deliver to the other
party at any time within ten (10) days after request by such party, a statement
in writing certifying, if such be the case, that this Lease is unmodified and in
full force and effect (or if there have been modifications that the same is in
full force and effect as modified), the date of commencement of this Lease, the
dates on which rent has been paid, and such other information as the requesting
party shall reasonably request.
18. COMPLIANCE WITH LAWS
Tenant, at Tenant's sole cost, shall comply with all laws, ordinances,
orders and regulations of all governmental authorities with respect to the use
and occupation of the premises, including but not limited to such items not
related to Tenant's particular use thereof. A judgment of any court of competent
jurisdiction or the admission by Tenant in
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any action or proceeding against Tenant that Tenant has violated any such laws,
ordinances, orders or regulations, shall be deemed to be conclusive as to
Landlord and Tenant.
19. DAMAGE BY FIRE OR OTHER CASUALTY
19.1 Except as otherwise provided herein, in the event of any damage
causing a partial or total destruction of the premises during the term of this
Lease from any cause that is an insured risk and provided the repairs can be
made under the applicable laws and regulations of governmental authorities,
Landlord shall repair said damage promptly; provided, however, that if such
destruction or damage is "major destruction or damage," Landlord may terminate
this Lease on 90 days' notice to Tenant. "Major destruction or damage"
hereunder shall refer to destruction of or damage to the premises, the
reasonable cost of repair of which exceeds two hundred fifty thousand dollars
($250,000). During any repair or restoration this Lease shall remain in full
force and effect and the rent payable under this Lease shall only be abated to
the extent such rent abatements are covered by insurance proceeds.
19.2 If the cause of such damage is not an insured risk, was not caused by
the gross negligence or intentional misconduct of Landlord, its agents or
servants, and the cost of repair is less than or equal to One Hundred Fifty
Thousand Dollars ($150,000.00) and provided such repairs can be made under the
applicable laws and regulations of governmental authorities, Tenant shall pay to
Landlord the cost of repairing such damage and Landlord shall cause such repair
to be made. If the cause of such damage is not an insured risk, was not caused
by the gross negligence or intentional misconduct of Landlord, its agents or
servants, and the cost of repair is more than One Hundred Fifty Thousand Dollars
($150,000.00), Tenant may elect not to pay the cost to repair such damage by
giving notice at any time within thirty (30) working days after the date of such
damage and terminating this Lease as of a date to be specified in such notice,
which date shall not be less than thirty (30) nor more than sixty (60) working
days after the giving of such notice; provided, however, if Landlord elects to
pay the additional cost over $150,000 to complete the repairs, Landlord shall
proceed to make the repairs and the Lease shall remain in full force and effect.
In the event of the giving of such notice of termination, this Lease and all
interest of Tenant in the premises shall terminate on the date so specified in
such notice, and the rent shall be paid up to date on such termination. Landlord
agrees to refund to Tenant any rent theretofore paid for any period of time
subsequent to such date. Landlord shall not be required to repair any injury or
damage by fire or other cause to the property of Tenant, or to make any repairs
to or replacements of any panelings, decorations, railing, floor coverings or
any improvements installed on the premises by Tenant. Landlord shall be
responsible for repairing all uninsured damage that was caused by or resulted
from the gross negligence or intentional misconduct of Landlord, its agents or
servants.
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19.3 All proceeds from any insurance policy or policies referred to in
Section 16 hereof, and any amounts agreed to as deductibles thereunder, payable
pursuant to this Section 19 shall be paid by Tenant to Landlord within ten (10)
days following the receipt of such proceeds by Tenant and before Landlord is
required to make any of the repairs.
19.4 In respect of any damage or destruction which Landlord is obligated to
repair or may elect to repair under the ter-ms of this paragraph the provisions
of any statute or law permitting Tenant to terminate this Lease are waived by
Tenant, and Tenant specifically waives the provisions of Sections 1932,
Subdivision 2, and 1933, Subdivision 4, of the Civil Code of California.
20. CONDEMNATION
20.1 If the whole or any part of the premises shall be taken for public or
quasi public use by right of eminent domain, with or without litigation, or
transferred by agreement in connection with such public or quasi-public use,
this Lease, as to the part so taken or condemned or transferred, shall terminate
as to the date title shall vest in the condemnor and the rent payable hereunder
shall be adjusted so that Tenant shall be required to pay for the remainder of
the term only such portion of the rent as the area in the part remaining after
the taking or condemnation bears to the area of the entire premises as of the
date title shall vest in condemnor.
20.2 Except as herein provided, all compensation of any form awarded upon
such condemnation or taking shall go to Landlord and Tenant shall have no claim
thereto, and Tenant hereby irrevocably assigns and transfers to Landlord any
right to compensation or damages to which Landlord may become entitled during
the term hereof by reason of the condemnation of all or part of the premises.
Notwithstanding the foregoing, Tenant reserves the right to file a separate
claim for moving expenses and any other compensation it is entitled to receive
as a result of such taking or condemnation and (i) which is not related to its
leasehold estate and (ii) does not reduce the compensation otherwise payable to
Landlord. Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease.
20.3 In the event any such taking or condemnation shall materially
interfere with Tenant's use of the premises, Tenant, upon not less than 60 days'
written notice to Landlord, shall have the right to terminate this Lease and
rent shall be payable only to the date Tenant vacates the premises.
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21. INVOLUNTARY TERMINATION
This Lease, at the option of Landlord and after the expiration of any
applicable cure period, shall immediately cease and terminate upon the happening
of any of the following events:
(a) The filing of a petition for any proceeding under the Bankruptcy Act
or any amendment thereto by Tenant.
(b) A finding or judgment of insolvency of Tenant which has become final.
(c) A general assignment for the benefit of creditors by Tenant.
(d) The levying of a writ of execution on a substantial portion of the
assets of Tenant located on the premises, which is not discharged within sixty
(60) days after the date of said levying.
Upon the happening of any such event and the expiration of the applicable
cure period, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned
or assignable by reason of any voluntary or involuntary bankruptcy proceedings
nor shall any rights or privileges hereunder be an asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
22. DEFAULT
22.1 If (a) Tenant's interest or any part of his interest, in this Lease be
assigned or transferred, either voluntarily or by operation of law, except with
Landlord's consent, or as provided in paragraph 9, or (b) Tenant, after notice
fails to remedy any default (1) in the payment of any sum due under this Lease
for ten (10) days, or (2) in the keeping of any other term, covenant or
condition of this Lease with all reasonable dispatch (within thirty (30) days or
such longer period as is reasonably necessary), then, in addition to any other
remedy Landlord may have by operation of law, Landlord shall have the right,
without any further demand or notice, either to terminate Tenant's right to
possession of the premises and thereby terminate this Lease or to have this
Lease continue in full force and effect with Tenant at all times having the
right to possession of the premises.
22.2 (A) Should Landlord elect to terminate Tenant's right to possession
of the premises and terminate this Lease, then Landlord shall have the immediate
right of entry and may remove all persons and property from the premises. Such
property to be removed may be stored in a public warehouse or elsewhere at the
cost and for the account of Tenant. Upon such termination, Landlord, in
addition to any other rights and remedies, shall be entitled to recover from
Tenant:
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(1) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(2) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(3) The worth at, the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss for such period that Tenant proves could be
reasonably avoided;
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform his obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom.
Any proof by Tenant under Subparagraphs (2) or (3) of Subdivision
(a) of Section 1951.2 of the California Civil Code of the amount of rental loss
that could be reasonably avoided shall be made in the following manner: Landlord
and Tenant shall each select a licensed real estate broker in the business of
renting property of the same type and use as the premises and in the same
geographic vicinity and such two real estate brokers shall select a third
licensed real estate broker and the three licensed real estate brokers so
selected shall determine the amount of rental loss that could be reasonably
avoided for the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto. As used herein, the term "time of award" shall
mean either the date upon which Tenant pays to Landlord the amount recoverable
by Landlord as hereinabove set forth or the date of entry of any determination,
order or judgment of any court or other legally constituted body, or of any
arbitrators determining the amount recoverable, whichever first occurs.
(B) Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, with Tenant retaining
the right to possession of the premises (notwithstanding the fact that Tenant
may have abandoned the leased premises), then Landlord, besides all other rights
and remedies Landlord may have at law or in equity, shall have the right to
relet the premises, or any part of the premises, as the agent and for the
account of Tenant upon such terms and conditions as Landlord may deem advisable,
in which event the rents received on such reletting shall be applied first to
the expenses of such reletting and collection, including necessary renovation
and alteration of the premises, reasonable attorney's fees, any real estate
commissions paid, and thereafter to payment of all sums due or to become due
Landlord under this Lease, and if a sufficient sum shall not be thus realized to
pay such sums and other charges, Tenant shall pay Landlord any deficiency
monthly, notwithstanding Landlord may have received rental in excess of the
rental stipulated in this Lease in previous or subsequent
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months, and Landlord may bring an action therefore as such monthly deficiency
shall arise. Notwithstanding any such election to have this Lease remain in
full force and effect, Landlord may at any time thereafter elect to terminate
Tenant's right to possession of said premises and thereby terminate this Lease
for any previous breach or default which remains uncured, or for any subsequent
breach or default.
22.3 The "worth at the time of award" of the amounts referred to in
subparagraphs (1) and (2) above is computed by allowing interest at the rate of
10% per annum. The worth at the time of award of the amount referred to in
subparagraph (3) above is computed by discounting such amount at the discount
rate of Federal Reserve Bank of San Francisco at the time of award, plus one
percent (1%).
23. ATTORNEY'S FEES
Tenant agrees that if Landlord is involuntarily made a defendant to any
litigation concerning this Lease or the premises by reason of any act or
omission of Tenant and not because of any act or omission of Landlord, then
Tenant shall hold harmless Landlord from all liability by reason thereof,
including reasonable attorney's fees incurred by Land lord, in such litigation
and all taxable court costs. If legal action shall be brought by either of the
parties hereto for the unlawful detainer of the premises, for the recovery of
any rent due under the provisions of this Lease, or because of any breach of any
term, covenant or provision hereof, the party prevailing in said action
(Landlord or Tenant as the case may be) shall be entitled to recover from the
party not prevailing costs of suit and a reasonable attorney's fee which shall
be fixed by the Judge of the Court.
24. HOLDING OVER
Any holding over after the expiration of the term of this Lease by Tenant
shall be deemed to be a tenancy from month to month upon the same terms and
conditions set forth herein, except that the monthly rent payable hereunder
pursuant to paragraph 4 shall be increased to 125% of such amount during any
such holding-over period.
25. WAIVER
No covenant, term or condition or the breach thereof shall be deemed
waived, except by written consent of Landlord, and any waiver or the breach of
any covenant, term or condition shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other covenant, term or
condition. Acceptance of all or any portion of rent at any time shall not be
deemed to be a waiver of any covenant, term or condition except as to the rent
payment accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent
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26. ABANDONMENT
Tenant shall not vacate or abandon the premises at any time during the term
hereof, and if Tenant shall abandon, vacate or surrender the premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the premises shall be deemed to be abandoned, at the option
of Landlord, except such property as may be mortgaged to Landlord.
27. PERSONAL PROPERTY, REAL PROPERTY, & OTHER TAXES
27.1 Tenant shall pay, before delinquency any and all taxes levied or
assessed and which become payable during the term hereof upon Tenant's
equipment, furniture, fixtures and other personal property located in the
premises, including carpeting installed by Tenant even though said carpeting has
become part of the leased premises; and any and all taxes or increases therein
levied or assessed on Landlord or Tenant by virtue of alterations, additions or
improvements to the premises made by Tenant after the date hereof. In the event
said taxes are charged to or paid or payable by Landlord, then Tenant shall
reimburse Landlord for all of such taxes paid by Landlord.
27.2 Tenant shall pay to Landlord, within thirty (30) days after receipt of
a bill therefor, all real property taxes, general and special assessments,
rates, charges, license fees, municipal liens, levys, excises, or imposts,
whether general or special, ordinary or extraordinary, of every kind (other than
inheritance, personal income or estate taxes) which may be levied, assessed,
charged, or imposed, or may become a lien or charge upon the premises, or upon
Tenant's estate hereby created, or upon Landlord by reason of its ownership of
the premises. Tenant's liability to pay any such real property taxes shall be
prorated on the basis of a 360-day year to account for any fractional period of
a fiscal tax year included in the term of this Lease.
28. PLATS & RIDERS
Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
29. SALE BY LANDLORD
In the event of a sale or conveyance by Landlord of the premises, the same
shall operate to release Landlord from any liability for any of the covenants or
conditions, express or implied, herein contained in favor of Tenant arising
after the date of such sale or conveyance, and in such event Tenant agrees to
look solely to the responsibility of the
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successor in interest of Landlord in and to this Lease. If any security be
given by Tenant to secure the faithful performance of all or any of the
covenants of this Lease on the part of Tenant, Landlord may transfer and/or
deliver the security, as such, to the successor in interest of Landlord, and
thereupon Landlord shall be discharged from any further liability in reference
thereto.
30. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be kept or performed by Tenant under any of
the term of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent, except as otherwise expressly
provided herein. If Tenant shall fail to pay any sum of money, other than rent,
required to be paid by it hereunder or shall fail to perform any other act on
its part to be performed hereunder, and such failure shall continue for thirty
(30) days after notice thereof by Landlord, Landlord may, but shall not be
obligated to, and without waiving any default of Tenant or releasing Tenant from
any obligations of Tenant hereunder, make any such payment or perform any such
act on Tenant's part to be made or performed as in this Lease provided. All sums
so paid by the Landlord and all necessary incidental costs, together with
interest thereon at 12% per annum from the date of such payment by the Landlord,
shall be paid to Landlord forthwith on demand, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of nonpayment thereof by Tenant as in the case of default by Tenant
in the payment of rent.
31. SURRENDER OF PREMISES
The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation thereof shall not work a merger, and, at the option of Landlord
shall terminate all or any existing subleases or subtenancies, or at the option
of Landlord may operate as an assignment to Landlord of any or all such
subleases or subtenancies.
32. MORTGAGE REQUIREMENTS
Landlord represents to Tenant that on the date this Lease is executed, the
premises are not encumbered by or subject to any mortgages, deeds of trust, or
ground leases. This Lease shall, however, be subject and subordinate at all
times to all ground or underlying leases which may hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever hereafter placed on or against said building and/or land or on or
against the Landlord's interest or estate therein or on or against any ground or
underlying lease without the necessity of having further instruments on the part
of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and
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agrees to execute and deliver, upon demand, such further reasonable instruments
evidencing such subordination of this Lease to such ground or underlying leases
and to the lien of any such mortgages or deeds of trust as may be required by
Landlord. Tenant hereby irrevocably appoints Landlord the attorney in fact of
the Tenant to execute and deliver any such instrument or instruments for or in
the name of Tenant. In the event any mortgagee shall elect to have this Lease a
prior lien to its mortgage, then and in such event upon such mortgagee notifying
the Tenant in writing to that effect, this Lease shall have priority of the lien
of such mortgage to the same extent as if the same have been placed on record
prior to such mortgage. In the event of any sale, assignment or hypothecation
of the building of which the demised premises are a part, and/or of any
leasehold interest therein by Landlord, a statement shall be required from
Tenant as to offsets against the Landlord, Tenant agrees to furnish said
statement to the party demanding the same accurately and promptly. In the event
of termination of any ground or underlying lease, or in the event of sale,
foreclosure or exercise of any power of sale under any mortgage or deed of trust
superior to this Lease or to which this Lease is subject or subordinate, Tenant
covenants and agrees that it will, upon request by the purchaser, attorn to the
purchaser upon any foreclosure or sale and recognize such purchaser as the
Landlord under this Lease, it being the intent hereof that if this Lease should
be terminated by such foreclosure or sale, it shall, upon request by the
purchaser be reinstated as a lease between the purchaser and the Tenant. Tenant
upon request of any party in interest, shall execute such reasonable instrument
or instruments as shall be requested to carry out the requirements of this
paragraph. Landlord will obtain non-disturbance agreements from all parties to
whose interest this Lease may hereafter be subordinated.
33. NOTICES
All notices or demands of any kind required or desired to be given to
Landlord or Tenant hereunder shall be in writing and shall be deemed delivered
twenty-four (24) hours after the notice or demand is deposited in the United
States mail, postage prepaid, and addressed to Tenant at the address of the
premises, whether or not Tenant has departed therefrom, abandoned or vacated the
premises and as to Landlord at the address designated after the name of the
Landlord at the end of this Lease, or such other address as shall be designated
by either party in compliance with the provisions of this paragraph.
34. ENTIRE AGREEMENT
This Lease constitutes the entire agreement between Landlord and Tenant and
no promises or representations, express or implied, either written or oral, not
herein set forth shall be binding upon or inure to the benefit of Landlord or
Tenant. This Lease shall not be modified by any oral agreement, either express
or implied, and all modifications shall be in writing and signed by both
Landlord and Tenant.
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35. CONSENT
Except as otherwise specifically set forth herein, whenever Landlord's
consent shall be required herein, such consent shall not be unreasonably
withheld or delayed.
36. ADDITIONAL PAYMENTS
Wherever Tenant is called upon to make additional payments under this Lease
in addition to those specified in paragraph 4, Landlord will deliver with the
invoice or bill therefor adequate detail showing Tenant's pro rata share.
37. COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant will quietly and peaceably have, hold and
enjoy the premises in accordance with the terms of this Lease throughout the
term from any person or entity claiming by or through Landlord, so long as
Tenant is not in default hereunder.
38. ADDITIONAL TERMS AND CONDITIONS
38.1 Environmental Inspection. Tenant shall, at its sole expense, submit
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to periodic inspections by Landlord or its agents, on reasonable notice, to
assure compliance by Tenant with all of the terms and conditions of the Lease,
including but not limited to, all laws, ordinances, and regulations applicable
to Tenant in its operation at the premises, and including, but not limited to,
those concerning environmental matters. In the event any "Phase 1" or
equivalent environmental inspection commissioned by Landlord shall disclose a
possibility of environmental contamination for which Tenant would be
responsible, Tenant shall (i) reimburse Landlord for the cost of such
inspection, (ii) pay for such additional inspections as may be necessary, and
(iii) pay for all costs and expenses as may be necessary to cause Tenant to
comply with this paragraph and paragraph 15.2. In the event any "Phase 1" or
equivalent environmental inspection concludes that Tenant is in compliance with
its environmental obligations under this Lease and that no further investigation
or inspection is required, the cost of such inspection shall be paid for by
Landlord.
38.2 Financial Statements. Tenant shall provide Landlord with its
--------------------
quarterly financial statements, and audited annual financial statements,
throughout the term of this Lease. Said quarterly statements shall be delivered
to Landlord within thirty (30) days after the end of the applicable quarter and
said audited annual financial statements shall be delivered to Landlord within
sixty (60) days after the end of the applicable fiscal year.
38.3 Brokers. Tenant represents and warrants that it has not dealt with
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any broker or agent in connection with the leasing transaction described herein.
Tenant
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covenants and agrees to pay, hold harmless, and indemnify Landlord from and
against any and all costs, expenses or liabilities for any compensation,
commission and charges claimed by any broker or agent with respect to this Lease
or the negotiation hereof with whom Tenant had dealings.
38.4 First Right of Negotiation to Purchase Building. Provided Tenant is
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not then in default beyond any applicable notice or grace periods under this
Lease, Tenant shall have a first right of negotiation to purchase the building
in which the premises are located ("Building") during the Term of this Lease on
the terms and conditions, set forth herein.
In the event Landlord desires to sell the Building, either separately
or in combination with other properties owned by Landlord and which are leased
by Tenant Landlord shall notify Tenant of such desire. Upon receiving such
notice, Tenant shall have thirty (30) days within which to negotiate with
Landlord for the purchase of the Building (or combination of Buildings) on such
terms and conditions as are acceptable to Landlord, and which may involve, among
other things, Tenant cooperating with Landlord so as to consummate the
transaction as a like-kind exchange to Landlord. In the event a written
agreement for the purchase and sale is not entered into within said thirty (30)
day period, Tenant shall have no further right of first negotiation (this
paragraph thereafter being null, void and of no further force or effect) and
Landlord shall be entitled to sell the Building to any other party on any other
terms in order to allow Landlord to maximize its return from its ownership of
the Building. It is specifically understood and agreed that Landlord may
thereafter enter into transactions on terms and conditions that are different
than those proposed to or by Tenant without incurring any liability or
obligation to Tenant. This first right of negotiation is intended solely to
allow the parties an opportunity to negotiate for the sale of the Building to
Tenant and is not intended to restrict the rights of either party in the event a
final and binding agreement does not result within the above-described thirty
(30) day time period as a result of negotiations initiated pursuant to this
paragraph. Landlord and Tenant do, however, agree that the above-referenced
negotiations shall be conducted in good faith and with due diligence.
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<PAGE>
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease the day and
year first above written.
LANDLORD TENANT
- -------- ------
HUNT BROTHERS LEASING, LLC WinCup Holdings, L.P., a Delaware
Limited Partnership
By: [SIGNATURE APPEARS HERE] By: WinCup Holdings, Inc.
- ----------------------------
General Partner
Landlord's Address for Notice:
240 Tamal Vista, Suite 250 By: [SIGNATURE APPEARS HERE]
-------------------------
Corte Madera, CA 94925 , President
Approved as Paragraphs 1.2 and 1.3: By: [SIGNATURE APPEARS HERE]
-------------------------
, Secretary
James River Paper Co., Inc.
By: [SIGNATURE APPEARS HERE]
-------------------------
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<PAGE>
EXHIBIT A
---------
[Map of Leased Premises Appears Here]
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<PAGE>
Exhibit 10.71
ENGINEERING LEASE - 201 TAMAL VISTA BOULEVARD,
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP
Tenant
May 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PARTIES............................................................. 1
2. PREMISES............................................................ 1
3. ACCEPTANCE.......................................................... 2
4. RENT................................................................ 2
4.1 Base Rent...................................................... 2
4.2 CPI Increase................................................... 2
4.3 Late Charge.................................................... 2
5. SECURITY DEPOSIT.................................................... 3
6. TERM................................................................ 3
7. USE, PURPOSE & COMPLIANCE WITH LAW.................................. 3
8. UTILITIES........................................................... 4
9. ASSIGNMENT & SUBLETTING............................................. 5
10. CONDITION OF PREMISES & REPAIRS..................................... 6
11. ALTERATIONS......................................................... 6
12. LIENS............................................................... 7
13. SIGNS............................................................... 7
14. RIGHT OF ENTRY...................................................... 7
15. INDEMNIFICATION..................................................... 8
16. INSURANCE........................................................... 9
16.1 Liability Insurance......................................... 9
16.2 Casualty Insurance.......................................... 10
16.3 Form of Policies............................................ 10
16.4 Waiver of Subrogation....................................... 10
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
17. ESTOPPEL CERTIFICATE.............................................. 11
18. COMPLIANCE WITH LAWS.............................................. 11
19. DAMAGE BY FIRE OR OTHER CASUALTY.................................. 11
20. CONDEMNATION...................................................... 12
21. INVOLUNTARY TERMINATION........................................... 13
22. DEFAULT........................................................... 13
23. ATTORNEY'S FEES................................................... 15
24. HOLDING OVER...................................................... 15
25. WAIVER............................................................ 16
26. ABANDONMENT....................................................... 16
27. PERSONAL PROPERTY, REAL PROPERTY, & OTHER TAXES................... 16
28. PLATS & RIDERS.................................................... 16
29. SALE BY LANDLORD.................................................. 17
30. RIGHT OF LANDLORD TO PERFORM...................................... 17
31. SURRENDER OF PREMISES............................................. 17
32. MORTGAGE REQUIREMENTS............................................. 17
33. NOTICES........................................................... 18
34. ENTIRE AGREEMENT.................................................. 19
35. CONSENT........................................................... 19
36. ADDITIONAL PAYMENTS............................................... 19
37. COVENANT OF QUIET ENJOYMENT....................................... 19
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
38. ADDITIONAL TERMS AND CONDITIONS..................................... 19
38.1 Environmental Inspection...................................... 19
38.2 Financial Statements.......................................... 20
38.3 Brokers....................................................... 20
38.4 First Right of Negotiation to Purchase Building............... 20
</TABLE>
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<PAGE>
ENGINEERING LEASE - 201 TAMAL VISTA BOULEVARD
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP,
Tenant
May 1, 1997
1. PARTIES
1.1 This Lease is entered into in the City of Corte Madera, County of
Marin, State of California, between HUNT BROTHERS LEASING, L.L.C., Landlord, and
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP, Tenant.
1.2 Landlord's predecessor in interest, Hunt Brothers Leasing, a
partnership, as landlord, and James River Paper Co., Inc., a Virginia
corporation, as tenant, are parties to a lease dated November 8, 1989, as
amended in August, 1992, covering the premises leased hereunder. Tenant is a
subtenant of said premises, pursuant to a sublease entered into between Tenant
and James River Paper Co., Inc. and pursuant to Landlord's Consent to Subleases
dated as of January 23, 1996 entered into between Landlord and James River Paper
Company, Inc. Upon the commencement of the term hereof, said lease, sublease
and consent shall be terminated in their entirety and shall be of no further
force or effect, with the exception that James River Paper Co., Inc. shall
continue to be obligated for all obligations accrued under said lease prior to
said termination date and Tenant shall continue to be obligated fro all
obligations accrued under said sublease prior to said termination date.
1.3 With respect to the security deposit that was delivered to Landlord at
such time as the premises were originally subleased to Tenant, said security
deposit shall be applied to the security deposit payable hereunder pursuant to
paragraph 5 hereof, and any remaining balance shall be returned to Tenant (and
not to James River Paper Co., Inc.) upon the termination of said lease dated
November 8, 1989.
2. PREMISES
Landlord hereby leases to Tenant, and Tenant hires from Landlord, under the
terms and conditions hereinafter set forth, those certain premises situated in
the City of Corte Madera, California, commonly known as the south side of the
building located at 201 Tamal Vista Boulevard, consisting of approximately 6,590
square feet, as more fully described in Exhibit "A", attached hereto, and made a
part hereof (the "premises").
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3. ACCEPTANCE
Tenant accepts the premises in their "as is" condition and state of repair
and except as otherwise expressly provided herein, Landlord shall not be
required to do any work thereto.
4. RENT
4.1 Base Rent. Tenant shall pay to Landlord as rent in advance on the
---------
first day of each calendar month of the term of this Lease, without deduction,
offset, prior notice or demand, the sum of Thirteen Thousand Three Hundred
Thirty Dollars ($13,330) in lawful money of the United States. The rent shall
be paid at the address set out after the name of the Landlord at the end of this
Lease or such other address as shall be designated in writing by Landlord. If
the date of commencement or expiration of the term of this Lease occurs on a day
other than the first day of a calendar month, the rent at the monthly rate shall
be prorated upon the basis which the number of days of the term of this Lease of
such month bears to the total number of days in such month.
4.2 CPI Increase. On July 1, 1998 and on each subsequent each anniversary
------------
of the commencement date of the term of this Lease, the base rent payable for
the upcoming year shall be increased to an amount equal to the product of the
initial base rent of $13,330 multiplied by a fraction, the denominator of which
shall be the Consumer Price Index (as hereinafter defined) figure published for
June 1997, and the numerator of which shall be the Consumer Price Index figure
for June of the adjustment year (provided that such fraction shall not in any
event be less than 1). As used herein, the term "Consumer Price Index" shall
mean the United States Department of Labor's Bureau of Labor Statistics'
Consumer Price Index, All Urban Consumers, All-Items, for the San Francisco-
Oakland-San Jose area (1982-84=100), or the successor of such index, or if no
successor index is designated, then such other index as Landlord reasonably
shall designate. Should Landlord lack sufficient data to make the determination
specified herein on the date of any such adjustment, Tenant shall continue to
pay the monthly rent payable immediately prior to such adjustment date. As soon
as Landlord obtains the necessary data, it shall determine the rent payable from
and after such adjustment date and shall notify Tenant of the adjustment in
writing. Should the monthly rent for the period following such adjustment date
exceed the amount previously paid by Tenant for such period, Tenant shall
forthwith pay the difference to Landlord.
4.3 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 this Lease, Tenant shall pay a late charge equal to six
percent (6%) of such amount that is due. Tenant acknowledges that any late
payments will cause Landlord to incur costs and expenses not contemplated under
the Lease, but not limited to, administrative and collection costs, 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
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<PAGE>
Tenant or prevent Landlord from exercising any rights or remedies available to
Landlord under the Lease. In addition to the late charges described herein, any
payment made more than thirty (30) days after the due date shall also bear
interest from and after the expiration of such 30 day period, until paid, at the
rate of 1-1/2% per month.
5. SECURITY DEPOSIT
Upon Tenant's execution hereof, Tenant shall deposit with Landlord a sum
equal to $13,330 as security for Tenant's faithful performance of its
obligations under the Lease. 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 Lease, or
fails to perform any of the terms and conditions of the Lease, 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 Lease. Within fifteen (15) days after the term of the Lease
has expired and Tenant has vacated the Premises, provided Tenant is not then in
default on any of its obligations hereunder, Landlord shall return the security
deposit to Tenant.
6. TERM
The term of this Lease shall be for a period of seven (7) years commencing
on July 1, 1997, and terminating on June 30, 2004.
7. USE, PURPOSE & COMPLIANCE WITH LAW
7.1 Tenant shall use and occupy the premises during the term for
engineering activities and research and development, and all uses reasonably
incidental thereto, and for
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<PAGE>
no other purpose without the prior written consent of Landlord. Tenant shall
not use or permit the premises or any part thereof to be used for any purpose
other than the purpose for which the premises are leased.
7.2 No use shall be made or permitted to be made of the premises or acts
done by Tenant which will increase the existing rate of insurance on the
premises or cause the cancellation of any insurance policy covering the premises
or any part thereof. If any act on the part of Tenant or use of the premises by
Tenant shall cause any increase of Landlord's insurance, such additional expense
shall be paid by Tenant to Landlord upon demand. Tenant shall not sell or
permit to be kept, used or sold in or about the premises any article which may
be prohibited by the standard form of fire insurance policies.
7.3 Tenant shall not commit or suffer to be committed any waste upon the
premises or any public or private nuisance. Tenant shall not use the premises
or permit the premises to be used in whole or in part for any purpose or use
that is in violation of any of the laws, ordinances, regulations or rules of any
public authority or organization at any time. A judgment of any court of
competent jurisdiction or the admission by Tenant in any action or proceeding
against Tenant that Tenant has violated such laws, ordinances, regulations or
rules in the use of the premises shall be deemed to be a conclusive
determination of fact as between Landlord and Tenant.
8. UTILITIES
Landlord, at Landlord's sole cost and expense, shall furnish the premises
during normal business hours, as shall be determined by Landlord by regulations
duly adopted by Landlord, and provided Tenant is not in default under any of the
provisions of this Lease, all water, gas, heat, light (including light bulbs and
tubes), electricity, sewage, air-conditioning, and janitorial service used in
the premises. The interruption or curtailment of any such services shall not
constitute constructive eviction and shall not entitle Tenant to the abatement
of rent or to any other claim against Landlord when such failure is caused by
accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord. Landlord shall not be liable under
any circumstances for loss of business or injury to property however occurring,
through or in connection with or incidental to failure to furnish any of the
foregoing, unless such failure is caused by the gross negligence or the willful
misconduct of Landlord. Tenant shall pay and provide for all services and
utilities not furnished by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus
or device in the premises which will in any way increase the amount of
electricity or water usually furnished or supplied for use of the premises for
general office purposes or connect with electric current, except through
existing electrical outlets in the premises, or water pipes, any apparatus or
device for the purposes of using electric current or water. If Tenant shall
require water or electric current in excess of that customarily furnished or
supplied for general office purposes, Tenant shall first procure the consent of
Landlord, and Landlord may but shall not be required to cause
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<PAGE>
an electric current or water meter to be installed in the premises so as to
measure the amount of excess electric current or water consumed by Tenant. The
cost of any such meter and of installation, maintenance and repair thereof shall
be paid by Landlord and Tenant agrees to pay to Landlord promptly upon demand
therefor the cost of all such excess water and electric current consumed, as
reasonably determined by Landlord or as shown by said meters, at the rates
charged for such services by the local public utility furnishing the same, plus
any additional expense incurred in keeping account of the excess electric
current or water so consumed.
9. ASSIGNMENT & SUBLETTING
9.1 Except as otherwise permitted pursuant to this paragraph 9.1, Tenant
shall not assign its interest in this Lease, without the prior written consent
of Landlord, which consent Landlord may withhold in its sole, arbitrary and
absolute discretion. Notwithstanding the foregoing, Tenant may assign its
interest in this Lease to WinCup Holdings, Inc., a Delaware corporation,
provided that such assignment is consummated in connection with the transfer of
Tenant's business to said assignee. Said assignment is conditioned on said
assignee executing an assignment document in form and substance acceptable to
Landlord and which shall provide, among other things, that said assignee shall
assume all of the obligations of Tenant hereunder, as a direct obligation to
Landlord.
9.2 Tenant shall not sublet the premises or any part thereof, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided, however, that in all events, any such subletting shall
comply with each and every one of the following standards: (i) all rent and
other sums payable under this lease must continue to be paid directly to
Landlord by Tenant, notwithstanding any such subletting; (ii) all insurance
coverage provided by Tenant hereunder shall not be adversely affected, or
changed, as a result of any such subletting; (iii) the subtenant's use of the
premises shall not be inappropriate or have any adverse impact on the premises,
all as determined by Landlord in its sole discretion; (iv) the subtenant must
have adequate financial resources, and have a good business reputation, all as
determined by Landlord in its reasonable discretion; and (v) any such subtenant
must otherwise meet the reasonable requirements of Landlord.
9.3 No consent to any assignment of this lease, or any subletting of the
premises, shall be deemed to be a consent to any subsequent assignment of this
lease or to any subletting of the premises. Any such assignment or subletting
shall be void and at the option of Landlord shall terminate this lease.
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<PAGE>
9.4 No consent by Landlord to any assignment of this lease, or any
subletting of the premises, shall relieve Tenant of any obligation to be
performed by Tenant under this lease, whether arising before or after the
assignment or subletting.
9.5 Tenant shall reimburse Landlord on demand for all costs, expenses, and
attorneys fees, incurred by Landlord in reviewing any proposal by Tenant to
assign this lease or sublet all or any portion of the premises.
10. CONDITION OF PREMISES & REPAIRS
Tenant shall be deemed to have agreed by accepting occupancy that the
premises are in good order, condition and repair. Tenant, at Tenant's expense,
shall keep the premises in good order, condition and repair, including all
fixtures and equipment installed by Tenant; provided, however, that Landlord
shall be responsible for providing general maintenance and repair services, as
are typically provided by landlords in connection with fully serviced office
buildings. In the event Tenant fails to maintain the premises as set forth
above, Landlord shall give Tenant notice to make such repairs. In the event
Tenant fails to do so, Landlord shall have the option to make such repairs at
the expense of Tenant. It is specifically understood and agreed that Landlord
has no obligation and has made no promises to alter, remodel, improve, repair,
decorate or paint the premises or any part thereof, except as set forth above in
connection with its obligation as a landlord of a fully serviced office
building.
11. ALTERATIONS
11.1 Tenant shall not make or suffer to be made any alterations or
improvements to or of the premises or any part thereof without the written
consent of Landlord being first had and obtained. Any alterations, additions,
or improvements to or of the premises, including without limitation any
partitions (floor to ceiling), and all wall to wall installed carpeting, shall
at once become a part of the realty and belong to Landlord. Movable furniture,
equipment and trade fixtures shall remain the property of Tenant.
11.2 If Landlord consents to the making of any alterations, additions or
improvements to the premises by Tenant, the same shall be made by Tenant at
Tenant's sole cost and expense and any contractor or person elected by Tenant to
make the same must first be approved of in writing by Landlord. Upon the
expiration or sooner termination of the term, Tenant, upon demand by Landlord,
at Tenant's sole cost and expense, forthwith and with all due diligence shall
remove any alterations, additions or improvements made by Tenant or its
predecessors after June 24, 1986, together with its special equipment, including
its special computer-related air conditioning units, and designated by Landlord
to be removed, and Tenant, forthwith and with all due diligence, at its sole
cost and expense, shall repair any damage to the premises caused by such
removal.
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12. LIENS
Tenant shall keep the premises and building of which the premises are a
part free and clear from any liens from persons claiming by or through Tenant
and shall indemnify, hold harmless and defend Landlord from any liens and
encumbrances arising out of any work performed or material furnished by or at
the direction of Tenant. In the event any lien is filed, Tenant shall do all
acts necessary to discharge any liens within twenty (20) days of filing, or if
Tenant desires to contest any lien, then Tenant shall deposit with Landlord such
security as Landlord shall demand to insure the payment of the lien claim or
procure and record a lien release bond issued by a corporation authorized to
issue surety bonds in California in an amount equal to one and one-half times
the amount of the claim of lien. The bond shall meet the requirements of
California Civil Code Section 3143 and shall provide for the payment of any sums
that the claimant may recover on the claim (together with costs of suit, if it
recovers said costs in the action). In the event Tenant shall fail to pay any
lien claim when due or shall fail to provide the deposit or other security to
Landlord, then Landlord shall have the right to expend all sums necessary to
discharge the lien claim, and Tenant shall pay additional rental, when the next
rental payment is due, all sums expended by Landlord in discharging any lien,
including attorney's fees and costs.
13. SIGNS
Except for any signs presently located on the premises, Tenant shall not
place or permit to be placed in, upon, about or outside the premises any signs
without the prior written consent of Landlord.
14. RIGHT OF ENTRY
14.1 Landlord and its agents shall have the right at any reasonable time
upon giving written notice to Tenant (notice shall not be necessary in case of
an emergency) to enter upon the premises so long as it does not interfere with
the business activities of Tenant on the premises, for the purpose of
inspection, serving or posting notices, maintaining the premises, making any
necessary repairs, alterations or additions to any portion of the premises
(including the erection and maintenance of scaffolding, partitions and repair of
equipment as shall be required), complying with the laws, ordinances and
regulations, protecting the premises, or for any other lawful purpose, including
showing the premises to prospective purchasers or tenants and placing on the
premises usual "for rent" or "for lease" signs during the last nine (9) months
of the term.
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14.2 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the premises, and other loss occasioned by such entry
unless caused by Landlord's gross negligence or willful misconduct. For each of
the aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency in order
to obtain entry to the premises, and any entry to the premises obtained by
Landlord by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into or detainer of
the premises or an eviction of Tenant from the premises or any portion thereof.
15. INDEMNIFICATION
15.1 Landlord shall be free of all liabilities and claims for damage by
reason of injury or death to any person or persons, including Tenant, or
property of any kind whatsoever and to whomsoever belonging, including Tenant,
from any cause or causes whatsoever, except for any liability and claim arising
out of the gross negligence or intentional misconduct of Landlord, its agents or
servants, while in, upon, or connected in any way with the premises, during the
term of this Lease or any extension or renewal thereof, or any occupancy
hereunder, and Tenant hereby agrees to indemnify, save harmless and defend
Landlord from all liability, damages, loss, costs and obligations, including
court costs and counsel fees, on account of or arising out of or alleged to have
arisen out of, directly or indirectly, any such injuries, death or losses,
however occurring, unless the same shall have been caused by or result from the
gross negligence or intentional misconduct of Landlord, its agents or servants.
15.2 Tenant covenants and agrees to comply with all laws as hereinafter
defined relating to the storage, use, and disposal of hazardous materials on or
about the premises. For purposes of this section, "hazardous material" means
and includes any toxic or hazardous substance or waste, or ground or ground
water contamination, as defined in, or for purposes of, any federal, state, or
local statute, law, ordinance, code, rule, regulation, order, or decree, as now
or at any time hereafter in effect, regulating, relating to, or imposing
liability or standards of conduct concerning any toxic or hazardous substance or
waste (hereinafter collectively referred to as "laws"), including hazardous
material which must be removed or remediated prior to land development.
In the event Landlord or Tenant, during the term hereof, receives an
order or notification from any governmental or regulatory entity, or without an
order or notification otherwise becomes aware of the existence of a release or
threatened release of any hazardous material during the Lease term or any
extension, in, on, or about the premise, Tenant, at its sole cost and expense,
shall immediately take such action as Landlord or the applicable governmental or
regulatory entity may deem appropriate or necessary to prevent any threatened
release or to remediate any release of hazardous materials.
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Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all direct and indirect, actual and consequential, damages,
costs, expenses, losses, demands, claims, liabilities, judgments, causes of
action, proceedings or hearings, including all reasonable attorneys' fees and
costs of investigation which arise from the use, disposal, emission, discharge,
injection, spill, escape, leak, release, or threatened release of hazardous
materials on or about the premises during the term hereof or any extension
thereof.
As between Landlord and Tenant, the provisions of this section shall
survive the expiration or earlier termination of this Lease, including any Lease
extension.
16. INSURANCE
16.1 Liability Insurance. Tenant shall procure at its sole cost and
-------------------
expense and keep in full force and effect throughout the term of this Lease,
Commercial General Liability Insurance protecting Landlord and Tenant, and
covering the use and occupancy of the premises and all areas adjacent thereto,
and the business operated by Tenant therein. Such insurance (i) shall include
broad form contractual liability insurance coverage insuring all of Tenant's
indemnity obligations under this Lease, (ii) shall have a minimum combined
single limit of liability (including umbrella coverage) of at least Ten Million
Dollars ($10,000,000), (iii) shall be written to apply to all bodily injury,
property damage, personal injury and other loss, however occasioned, occurring
during the policy term, (iv) shall be endorsed to add Landlord as an additional
insured, and (v) shall provide that such coverage is primary and that any
insurance maintained by Landlord is excess insurance only. Such insurance shall
also contain endorsements: (i) deleting any employee exclusion on personal
injury coverage; (ii) including employees as additional insured; and (iii)
providing coverage for employer's automobile non-ownership liability. Tenant
shall also maintain Workers' Compensation insurance in accordance with
California law, and employers liability insurance with a limit no less than
$1,000,000 per employee and $1,000,000 per occurrence. The limits of said
Commercial General Liability insurance policy shall not limit the liability of
Tenant nor relieve Tenant of any obligations of Tenant otherwise existing under
this Lease. If at any time during the term, the amount or coverage of insurance
which Tenant is required to carry under this Section 16.1 is, in Landlord's
reasonable judgment, materially less than the amount or type of insurance
coverage typically carried by owners or lessees of properties which are similar
to and operated for similar purposes as the premises, Landlord shall have the
right to require Tenant to increase the amount or change the types of insurance
coverage required under this Section.
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16.2 Casualty Insurance. Tenant further agrees to procure at its sole cost
------------------
and expense and keep in full force and effect throughout the term of this Lease,
a policy of "all risk" casualty insurance (ISO form CP1030 or such other form
as is reasonably acceptable to Landlord), in the name of Landlord, with loss
payable to Landlord, insuring against loss or damage to the premises. Such
insurance shall be for the full replacement cost thereof, as agreed to by
Landlord and adjusted from time to time to reflect increased replacement costs,
and shall insure against all risks of direct physical loss or damage (except the
peril of earthquake), including coverage for any additional costs resulting from
debris removal and coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of the premises. Said policy shall
also contain an agreed valuation provision in lieu of any co-insurance clause,
and shall include coverage for the benefit of Landlord insuring the loss of the
full rental and other charges payable under this lease for not less than one
year. With respect to any deductibles, it is specifically agreed that Tenant
shall be responsible for paying all deductibles if a casualty occurs, unless
such casualty resulted from or was caused by the gross negligence or intentional
misconduct of Landlord or its agents or servants.
16.3 Form of Policies. All insurance policies required to be carried
----------------
under this Lease shall be written by companies (i) rated A or better in "Best's
Insurance Guide" and (ii) authorized to do business in California, and shall
name any lenders or parties designated by Landlord as additional insureds. Any
deductible amounts under any insurance policies required hereunder shall be
subject to Landlord's prior written approval. Tenant shall deliver to Landlord
on or before the Commencement Date, and thereafter at least thirty (30) days
before the expiration date of expiring policies, or whenever there is a change
of insurers or insurance coverage, and at such other times as Landlord may
reasonably request, certified complete copies of its insurance policies, or, if
acceptable to Landlord, a certificate evidencing the same issued by the insurer
thereunder; and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates to Landlord in a prompt and timely manner,
Landlord may, at its option and in addition to Landlord's other remedies in the
event of a default by Tenant hereunder, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord as additional rent.
Any policy required to be maintained by Tenant under this Lease may be
maintained under a so-called "blanket policy" insuring other parties and/or
other locations, so long as the amount of insurance and type of coverage
required to be provided hereunder is not thereby diminished, changed or
adversely affected.
16.4 Waiver of Subrogation. Tenant and Landlord hereby release each
---------------------
other and their respective officers, agents and employees from any and all
claims and demands for loss, damage, expense or injury to the premises, as well
as the furnishings, fixtures and equipment located on the premises, which is
caused by or results from events or happenings which are the subject of casualty
insurance carried by the respective parties in force at the time of any such
loss.
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17. ESTOPPEL CERTIFICATE
Tenant and Landlord shall execute, acknowledge and deliver to the other
party at any time within ten (10) days after request by such party, a statement
in writing certifying, if such be the case, that this Lease is unmodified and in
full force and effect (or if there have been modifications that the same is in
full force and effect as modified), the date of commencement of this Lease, the
dates on which rent has been paid, and such other information as the requesting
party shall reasonably request.
18. COMPLIANCE WITH LAWS
Tenant, at Tenant's sole cost, shall comply with all laws, ordinances,
orders and regulations of all governmental authorities with respect to Tenant's
use and occupation of the premises. Landlord shall comply at its expense with
such items not related to Tenant's particular use of the Premises. A judgment
of any court of competent jurisdiction or the admission by Tenant in any action
or proceeding against Tenant that Tenant has violated any such laws, ordinances,
orders or regulations, shall be deemed to be conclusive as to Landlord and
Tenant.
19. DAMAGE BY FIRE OR OTHER CASUALTY
19.1 Except as otherwise provided herein, in the event of any damage
causing a partial or total destruction of the premises during the term of this
Lease from any cause that is an insured risk and provided the repairs can be
made under the applicable laws and regulations of governmental authorities,
Landlord shall repair said damage promptly; provided, however, that if such
destruction or damage is "major destruction or damage," Landlord may terminate
this Lease on 90 days' notice to Tenant. "Major destruction or damage"
hereunder shall refer to destruction of or damage to the premises, the
reasonable cost of repair of which exceeds two hundred fifty thousand dollars
($250,000). During any repair or restoration this Lease shall remain in full
force and effect and the rent payable under this Lease shall only be abated to
the extent such rent abatements are covered by insurance proceeds.
19.2 If the cause of such damage is not an insured risk, was not caused by
the gross negligence or intentional misconduct of Landlord, its agents or
servants, and the cost of repair is less than or equal to One Hundred Thousand
Dollars ($100,000.00) and provided such repairs can be made under the applicable
laws and regulations of governmental authorities, Tenant shall pay to Landlord
the cost of repairing such damage and Landlord shall cause such repair to be
made. If the cause of such damage is not an insured risk, was not caused by the
gross negligence or intentional misconduct of Landlord, its agents or servants,
and the cost of repair is more than One Hundred Thousand Dollars ($100,000.00),
Tenant may elect not to pay the cost to repair such damage by giving at any time
within thirty (30) working days after the date of such damage and terminating
this Lease as of a date to be specified in such notice, which date shall not be
less than thirty (30) nor more than sixty (60) working days after the giving of
such notice; provided, however, if Landlord elects to pay the additional cost
over $100,000 to complete the repairs, Landlord shall proceed to make the
repairs and the Lease shall remain in full force and effect. In
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the event of the giving of such notice of termination, this Lease and all
interest of Tenant in the premises shall terminate on the date so specified in
such notice, and the rent shall be paid up to date on such termination. Landlord
agrees to refund to Tenant any rent theretofore paid for any period of time
subsequent to such date. Landlord shall not be required to repair any injury or
damage by fire or other cause to the property of Tenant, or to make any repairs
to or replacements of any panelings, decorations, railing, floor coverings or
any improvements installed on the premises by Tenant. Landlord shall be
responsible for repairing all uninsured damage that was caused by or resulted
from the gross negligence or intentional misconduct of Landlord, its agents or
servants.
19.3 All proceeds from any insurance policy or policies referred to in
Section 16 hereof, and any amounts agreed to as deductibles thereunder, payable
pursuant to this Section 19 shall be paid by Tenant to Landlord within ten (10)
days following the receipt of such proceeds by Tenant and before Landlord is
required to make any of the repairs.
19.4 In respect of any damage or destruction which Landlord is obligated to
repair or may elect to repair under the terms of this paragraph, the provisions
of any statute or law permitted Tenant to terminate this Lease are waived by
Tenant, and Tenant specifically waives the provisions of Sections 1932,
Subdivision 2, and 1933, Subdivision 4, of the Civil Code of California.
20. CONDEMNATION
20.1 If the whole or any part of the premises shall be taken for public or
quasi-public use by right of eminent domain, with our without litigation, or
transferred by agreement in connection with such public or quasi-public use,
this Lease, as to the part so taken or condemned or transferred, shall terminate
as to the date title shall vest in the condemnor and the rent payable hereunder
shall be adjusted so that Tenant shall be required to pay for the remainder of
the term only such portion of the rent as the area in the part remaining after
the taking or condemnation bears to the area of the entire premises as of the
date title shall vest in condemnor.
20.2 Except as herein provided, all compensation of any form awarded upon
such condemnation or taking shall go to Landlord and Tenant shall have no claim
thereto, and Tenant hereby irrevocably assigns and transfers to Landlord any
right to compensation or damages to which Landlord may become entitled during
the term hereof by reason of the condemnation of all or part of the premises.
Notwithstanding the foregoing, Tenant reserves the right to file a separate
claim for moving expenses and any other compensation it is entitled to receive
as a result of such taking or condemnation and (i) which is not related to its
leasehold estate and (ii) does not reduce the compensation otherwise payable to
Landlord. Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease.
20.3 In the event any such taking or condemnation shall materially
interfere with Tenant's use of the premises, Tenant, upon not less and 60 days'
written notice to Landlord,
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shall have the right to terminate this Lease and rent shall be payable only to
the date Tenant vacates the premises.
21. INVOLUNTARY TERMINATION
This Lease, at the option of Landlord and after the expiration of any
applicable cure period, shall immediately cease and terminate upon the happening
of any of the following events:
(a) The filing of a petition for any proceeding under the Bankruptcy Act or
any amendment thereto by Tenant.
(b) A finding or judgment of insolvency of Tenant which has become final.
(c) A general assignment for the benefit of creditors by Tenant.
(d) The levying of a writ of execution on a substantial portion of the
assets of Tenant located on the premises, which is not discharged within sixty
(60) days after the date of said levying.
Upon the happening of any such event and the expiration of the applicable
cure period, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned
or assignable by reason of any voluntary or involuntary bankruptcy proceedings
nor shall any rights or privileges hereunder be as asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
22. DEFAULT
22.1 If (a) Tenant's interest or any part of his interest, in this Lease be
assigned or transferred, either voluntarily or by operation of law, except with
Landlord's consent, or as provided in paragraph 9, or (b) Tenant, after notice
fails to remedy any default (1) in the payment of any sum due under this Lease
for ten (10) days, or (2) in the keeping of any other term, covenant or
condition of this Lease with all reasonable dispatch (within thirty (30) days or
such longer period as is reasonably necessary), then, in addition to any other
remedy Landlord may have by operation of law, Landlord shall have the right,
without any further demand or notice, either to terminate Tenant's right to
possession of the premises and thereby terminate this Lease or to have this
Lease continue in full force and effect with Tenant at all times having the
right to possession of the premises.
22.2 (A) Should Landlord elect to terminate Tenant's right to possession
of the premises and terminate this Lease, then Landlord shall have the immediate
right of entry and may remove all persons and property from the premises. Such
property to be removed may be stored in a public warehouse or elsewhere at the
cost and for the account of Tenant. Upon such
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termination, Landlord, in addition to any other rights and remedies, shall be
entitled to recover from Tenant:
(1) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(2) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(3) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss for such period that Tenant proves could be
reasonably avoided;
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform his obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom.
Any proof by Tenant under Subparagraphs (2) or (3) of Subdivision
(a) of Section 1951.2 of the California Civil Code of the amount of rental loss
that could be reasonably avoided shall be made in the following manner: Landlord
and Tenant shall each select a licensed real estate broker in the business of
renting property of the same type and use as the premises and in the same
geographic vicinity and such two real estate brokers shall select a third
licensed real estate broker and the three licensed real estate brokers so
selected shall determine the amount of rental loss that could be reasonably
avoided for the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto. As used herein, the term "time of award" shall
mean either the date upon which Tenant pays to Landlord the amount recoverable
by Landlord as hereinabove set forth or the date of entry of any determination,
order or judgment of any court or other legally constituted body, or of any
arbitrators determining the amount recoverable, whichever first occurs.
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(B) Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, with Tenant retaining
the right to possession of the premises (notwithstanding the fact that Tenant
may have abandoned the leased premises), then Landlord, besides all other rights
and remedies Landlord may have at law or in equity, shall have the right to
relet the premises, or any part of the premises, as the agent and for the
account of Tenant upon such terms and conditions as Landlord may deem advisable,
in which event the rents received on such reletting shall be applied first to
the expenses of such reletting and collection, including necessary renovation
and alteration of the premises, reasonable attorney's fees, any real estate
commissions paid, and thereafter to payment of all sums due or to become due
Landlord under this Lease, and if a sufficient sum shall not be thus realized to
pay such sums and other charges, Tenant shall pay Landlord any deficiency
monthly, notwithstanding Landlord may have received rental in excess of the
rental stipulated in this Lease in previous or subsequent months, and Landlord
may bring an action therefore as such monthly deficiency shall arise.
Notwithstanding any such election to have this Lease remain in full force and
effect, Landlord may at any time thereafter elect to terminate Tenant's right to
possession of said premises and thereby terminate this Lease for any previous
breach or default which remains uncured, or for any subsequent breach or
default.
22.3 The "worth at the time of award" of the amount referred to in
subparagraphs (1) and (2) above is computed by allowing interest at the rate of
10% per annum. The worth at the time of award of the amount referred to in
subparagraph (3) above is computed by discounting such amount at the discount
rate of Federal Reserve Bank of San Francisco at the time of award, plus one
percent (1%).
23. ATTORNEY'S FEES
Tenant agrees that if Landlord is involuntarily made a defendant to any
litigation concerning this Lease or the premises by reason of any act or
omission of Tenant and not because of any act or omission of Landlord, then
Tenant shall hold harmless Landlord from all liability by reason thereof,
including reasonable attorney's fees incurred by Landlord, in such litigation
and all taxable court costs. If legal action shall be brought by either of the
parties hereto for the unlawful detainer of the premises, for the recovery of
any rent due under the provisions of this Lease, or because of any breach of any
term, covenant or provision hereof, the party prevailing in said action
(Landlord or Tenant as the case may be) shall be entitled to recover from the
party not prevailing costs of suit and a reasonable attorney's fee which shall
be fixed by the Judge of the Court.
24. HOLDING OVER
Any holding over after the expiration of the term of this Lease by Tenant
shall be deemed to be a tenancy from month to month upon the same terms and
conditions set forth herein, except that the monthly rent payable hereunder
pursuant to paragraph 4 shall be increased to 125% of such amount during any
such holding-over period.
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25. WAIVER
No covenant, term or condition or the breach thereof shall be deemed
waived, except by written consent of Landlord, and any waiver or the breach of
any covenant, term or condition shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other covenant, term or
condition. Acceptance of all or any portion of rent at any time shall not be
deemed to be a waiver of any covenant, term or condition except as to the rent
payment accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent.
26. ABANDONMENT
Tenant shall not vacate or abandon the premises at any time during the term
hereof, and if Tenant shall abandon, vacate or surrender the premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the premises shall be deemed to be abandoned, at the option
of Landlord, except such property as may be mortgaged to Landlord.
27. PERSONAL PROPERTY, REAL PROPERTY, & OTHER TAXES
Tenant shall pay, before delinquency any and all taxes levied or assessed
and which become payable during the term hereof upon Tenant's equipment,
furniture, fixtures and other personal property located in the premises,
including carpeting installed by Tenant even though said carpeting has become
part of the leased premises; and any and all taxes or increases therein levied
or assessed on Landlord or Tenant by virtue of alterations, additions or
improvements to the premises made by Tenant after the date hereof. In the event
said taxes are charged to or paid or payable by Landlord, then Tenant shall
reimburse Landlord for all such taxes paid by Landlord.
28. PLATS & RIDERS
Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
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29. SALE BY LANDLORD
In the event of a sale or conveyance by Landlord of the premises, the same
shall operate to release Landlord from any liability for any of the covenants or
conditions, express or implied, herein contained in favor of Tenant arising
after the date of such sale or conveyance, and in such event Tenant agrees to
look solely to the responsibility of the successor in interest of Landlord in
and to this Lease. If any security be given by Tenant to secure the faithful
performance of all or any of the covenants of this Lease on the part of Tenant,
Landlord may transfer and/or deliver the security, as such, to the successor in
interest of Landlord, and thereupon Landlord shall be discharged from any
further liability in reference thereto.
30. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be kept or performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent, except as otherwise expressly
provided herein. If Tenant shall fail to pay any sum of money, other than rent,
required to be paid by it hereunder or shall fail to perform any other act on
its part to be performed hereunder, and such failure shall continue for thirty
(30) days after notice thereof by Landlord, Landlord may, but shall not be
obligated to, and without waiving any default of Tenant or releasing Tenant from
any obligations of Tenant hereunder, make any such payment or perform any such
act on Tenant's part to be made or performed as in this Lease provided. All
sums so paid by the Landlord and all necessary incidental costs, together with
interest thereon at 12% per annum from the date of such payment by the Landlord,
shall be paid to Landlord forthwith on demand, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of nonpayment thereof by Tenant as in the case of default by Tenant
in the payment of rent.
31. SURRENDER OF PREMISES
The voluntary and other surrender of this Lease by Tenant or a mutual
cancellation thereof shall not work a merger, and, at the option of Landlord
shall terminate all or any existing subleases or subtenancies, or at the option
of Landlord may operate as an assignment to Landlord of any or all such
subleases or subtenancies.
32. MORTGAGE REQUIREMENTS
Landlord represents to Tenant that on the date this Lease is executed, the
premises are not encumbered by or subject to any mortgages, deeds of trust, or
ground leases. This Lease shall, however, be subject and subordinate at all
times to all ground or underlying leases which may hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever hereafter placed on or against said building and/or land or on or
against the Landlord's interest or estate therein or on or against any ground or
underlying lease without the necessity of having further instruments on the part
of Tenant to effectuate such subordination. Notwithstanding the
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foregoing, Tenant covenants and agrees to execute and deliver, upon demand, such
further reasonable instruments evidencing such subordination of this Lease to
such ground or underlying leases and to the lien of any such mortgages or deeds
of trust as may be required by Landlord. Tenant hereby irrevocably appoints
Landlord the attorney in fact of the Tenant to execute and deliver any such
instrument or instruments for or in the name of Tenant. In the event any
mortgagee shall elect to have this Lease a prior lien to its mortgage, then and
in such event, upon such mortgagee notifying the Tenant in writing to that
effect, this Lease shall have priority of the lien of such mortgage to the same
extent as if the sane have been placed on record prior to such mortgage. In the
event of any sale, assignment or hypothecation of the building of which the
demised premises are a part, and/or of any leasehold interest therein by
Landlord, a statement shall be required from Tenant as to offsets against the
Landlord, Tenant agrees to furnish said statement to the party demanding the
same accurately and promptly. In the event of termination of any ground or
underlying lease, or in the event of sale, foreclosure or exercise of any power
of sale under any mortgage or deed of trust superior to this Lease or to which
this Lease is subject or subordinate, Tenant covenants and agrees that it will,
upon request by the purchaser, attorn to the purchaser upon any foreclosure or
sale and recognize such purchaser as the Landlord under this Lease, it being the
intent hereof that if this Lease should be terminated by such foreclosure or
sale, it shall, upon request by the purchaser be reinstated as a Lease between
the purchaser and the Tenant. Tenant, upon request of any party in interest,
shall execute such reasonable instrument or instruments as shall be requested to
carry out the requirements of this paragraph. Landlord will obtain non-
disturbance agreements from all parties to whose interest this Lease may
hereafter be subordinated.
33. NOTICES
All notices or demands of any kind required or desired to be given to
Landlord or Tenant hereunder shall be in writing and shall be deemed delivered
twenty-four (24) hours after the notice or demand is deposited in the United
States mail, postage prepaid, and addressed to Tenant at the address of the
premises, whether or not Tenant has departed therefrom, abandoned or vacated the
premises and as to Landlord at the address designated after the name of the
Landlord at the end of this Lease, or such other address as shall be designated
by either party in compliance with the provisions of this paragraph.
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34. ENTIRE AGREEMENT
This Lease constitutes the entire agreement between Landlord and Tenant and
no promises or representations, express or implied, either written or oral, not
herein set forth shall be binding upon or inure to the benefit of Landlord or
Tenant. This Lease shall not be modified by any oral agreement, either express
or implied, and all modifications shall be in writing and signed by both
Landlord and Tenant.
35. CONSENT
Except as otherwise specifically set forth herein, whenever Landlord's
consent shall be required herein, such consent shall not be unreasonably
withheld or delayed.
36. ADDITIONAL PAYMENTS
Wherever Tenant is called upon to make additional payments under this Lease
in addition to those specified in paragraph 4, Landlord will deliver with the
invoice or bill therefor adequate detail showing Tenant's pro rata share.
37. COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant will quietly and peaceably have, hold and
enjoy the premises in accordance with the terms of this Lease throughout the
term from any person or entity claiming by or through Landlord, so long as
Tenant is not in default hereunder.
38. ADDITIONAL TERMS AND CONDITIONS
38.1 Environmental Inspection. Tenant shall, at its sole expense, submit
------------------------
to periodic inspections by Landlord or its agents, on reasonable notice, to
assure compliance by Tenant with all of the terms and conditions of the Lease,
including but not limited to, all laws, ordinances, and regulations applicable
to Tenant in its operation at the premises, and including, but not limited to,
those concerning environmental matters. In the event any "Phase 1" or
equivalent environmental inspection commissioned by Landlord shall disclose a
possibility of environmental inspection commissioned by Landlord shall disclose
a possibility of environmental contamination for which Tenant would be
responsible, Tenant shall (i) reimburse Landlord for the cost of such
inspection, (ii) pay for such additional inspections as may be necessary, and
(iii) pay for all costs and expenses as may be necessary, and (iii) pay for all
costs and expenses as may be necessary to cause Tenant to comply with this
paragraph and paragraph 15.2. In the event any "Phase 1" or equivalent
environmental inspection concludes that Tenant is in compliance with its
environmental obligations under this Lease and that no further investigation is
required, the cost of such inspection shall be paid for Landlord.
38.2 Financial Statements. Tenant shall provide Landlord with its
--------------------
quarterly financial statements, and audited annual financial statements,
throughout the term of this Lease. Said
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quarterly statements shall be delivered to Landlord within thirty (30) days
after the end of the applicable quarter and said audited annual financial
statements shall be delivered to Landlord within sixty (60) days after the end
of the applicable fiscal year.
38.3 Brokers. Tenant represents and warrants that it has not dealt with
-------
any broker or agent in connection with the leasing transaction described herein.
Tenant covenants and agrees to pay, hold harmless, and indemnify Landlord from
and against any and all costs, expenses or liabilities for any compensation,
commission and charges claimed by any broker or agent with respect to this Lease
or the negotiation hereof with whom Tenant had dealings.
38.4 First Right of Negotiation to Purchase Building. Provided Tenant is
-----------------------------------------------
not then in default beyond any applicable notice or grace periods under this
Lease, Tenant shall have a first right of negotiation to purchase the building
in which the premises are located ("Building") during the Term of this Lease on
the and conditions set forth herein.
In the event Landlord desires to sell the Building, either separately
or in combination with other properties owned by Landlord and which are leased
by Tenant, Landlord shall notify Tenant of such desire. Upon receiving such
notice, Tenant shall have thirty (30) days within which to negotiate with
Landlord for the purchase of the Building (or combination of Buildings) on such
terms and conditions as are acceptable to Landlord, and which may involve, among
other things, Tenant cooperating with Landlord so as to consummate the
transaction as a like-kind exchange to Landlord. In the event a written
agreement for the purchase and sale is not entered into within said thirty (30)
day period, Tenant shall have no further right of first negotiation (this
paragraph thereafter being null, void and of no further force or effect) and
Landlord shall be entitled to sell the Building to any other party on any other
terms in order to allow Landlord to maximize its return from its ownership of
the Building. It is specifically understood and agreed that Landlord may
thereafter enter into transactions on terms and conditions that are different
than those proposed to or by Tenant without incurring any liability or
obligation to Tenant. This first right of negotiation is intended solely to
allow the parties an opportunity to negotiate for the sale of the Building to
Tenant and is not intended to restrict the rights of either party in the event a
final and binding agreement does not result within the above-described thirty
(30) day time period as a result of negotiations initiated pursuant to this
paragraph. Landlord and Tenant do, however, agree that the above-referenced
negotiations shall be conducted in good faith and with due diligence.
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IN WITNESS WHEREOF Landlord and Tenant have executed this Lease the day and year
first above written.
LANDLORD TENANT
- -------- ------
HUNT BROTHERS LEASING, LLC WinCup Holdings, L.P., a Delaware Limited
Partnership
By: [SIGNATURE APPEARS HERE] By: WinCup Holdings, Inc.
--------------------------
General Partner
Landlord's Address for Notice:
By: [SIGNATURE APPEARS HERE]
-----------------------------
240 Tamal Vista, Suite 250 , President
Corte Madera, CA 94925
By: [SIGNATURE APPEARS HERE]
-----------------------------
, Secretary
Approved as Paragraphs 1.2 and 1.3:
James River Paper Co., Inc.
By: [SIGNATURE APPEARS HERE]
------------------------
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EXHIBIT A
---------
[Map of Leased Premises Appears Here]
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Exhibit 10.72
WAREHOUSE LEASE - 205 TAMAL VISTA BOULEVARD,
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP,
Tenant
May 1, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. PARTIES......................................................... 1
2. PREMISES........................................................ 1
3. ACCEPTANCE...................................................... 2
4. RENT............................................................ 2
4.1 Base Rent.................................................. 2
4.2 CPI Increase............................................... 2
4.3 Late Charge................................................ 2
5. SECURITY DEPOSIT................................................ 3
6. TERM............................................................ 3
7. USE, PURPOSE & COMPLIANCE WITH LAW.............................. 3
8. UTILITIES....................................................... 4
9. ASSIGNMENT & SUBLETTING......................................... 4
10. CONDITION OF PREMISES & REPAIRS................................. 5
11. ALTERATIONS..................................................... 6
12. LIENS........................................................... 6
13. SIGNS........................................................... 7
14. RIGHT OF ENTRY.................................................. 7
15. INDEMNIFICATION................................................. 7
16. INSURANCE....................................................... 9
16.1 Liability Insurance....................................... 9
16.2 Casualty Insurance........................................ 9
16.3 Form of Policies.......................................... 10
16.4 Waiver of Subrogation..................................... 10
</TABLE>
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<TABLE>
<S> <C>
17. ESTOPPEL CERTIFICATE............................................ 10
18. COMPLIANCE WITH LAWS............................................ 10
19. DAMAGE BY FIRE OR OTHER CASUALTY................................ 11
20. CONDEMNATION.................................................... 12
21. INVOLUNTARY TERMINATION......................................... 13
22. DEFAULT......................................................... 13
23. ATTORNEY'S FEES................................................. 15
24. HOLDING OVER.................................................... 15
25. WAIVER.......................................................... 15
26. ABANDONMENT..................................................... 16
27. PERSONAL PROPERTY, REAL PROPERTY, AND OTHER TAXES............... 16
28. PLATS & RIDERS.................................................. 16
29. SALE BY LANDLORD................................................ 16
30. RIGHT OF LANDLORD TO PERFORM.................................... 17
31. SURRENDER OF PREMISES........................................... 17
32. MORTGAGE REQUIREMENTS........................................... 17
33. NOTICES......................................................... 18
34. ENTIRE AGREEMENT................................................ 18
35. CONSENT......................................................... 19
36. ADDITIONAL PAYMENTS............................................. 19
37. COVENANT OF QUIET ENJOYMENT..................................... 19
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
38. ADDITIONAL TERMS AND CONDITIONS................................. 19
38.1 Environmental Inspection.................................. 19
38.2 Financial Statements...................................... 19
38.3 Brokers................................................... 19
38.4 First Right of Negotiation to Purchase Building........... 20
</TABLE>
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<PAGE>
WAREHOUSE LEASE - 205 TAMAL VISTA BOULEVARD,
CORTE MADERA, CALIFORNIA
HUNT BROTHERS LEASING, L.L.C.,
Landlord
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP
Tenant
May 1, 1997
1. PARTIES
1.1 This Lease is entered into in the City of Corte Madera, County of
Marin, State of California, between HUNT BROTHERS LEASING, L.L.C., Landlord, and
WINCUP HOLDINGS, L.P., A DELAWARE LIMITED PARTNERSHIP, Tenant.
1.2 Landlord's predecessor in interest, Hunt Brothers Leasing, a
partnership, as landlord, and James River Paper Co., Inc., a Virginia
corporation, as tenant, are parties to a lease dated November 8, 1989, as
amended in August, 1992, covering the premises leased hereunder. Tenant is a
subtenant of said premises, pursuant to a sublease entered into between Tenant
and James River Paper Co., Inc. and pursuant to Landlord's Consent to Subleases
dated as of January 23, 1996 entered into between Landlord and James River Paper
Company, Inc. Upon the commencement of the term hereof, said lease, sublease and
consent shall be terminated in their entirety and shall be of no further force
or effect, with the exception that James River Paper Co., Inc. shall continue to
be obligated for all obligations accrued under said lease prior to said
termination date and tenant shall continue to be obligated for all obligations
accrued under said sublease prior to said termination date and Tenant shall
continue to be obligated for all obligations accrued under said sublease prior
to said termination date.
1.3 With respect to the security deposit that was delivered to Landlord at
such time as the premises were originally subleased to Tenant, said security
deposit shall be applied to the security deposit payable hereunder pursuant to
paragraph 5 hereof, and any remaining balance shall be returned to Tenant (and
not to James River Paper Co., Inc.) upon the termination of said lease dated
November 8, 1989.
2. PREMISES
2.1 Landlord hereby leases to Tenant, and Tenant hires from Landlord,
under the terms and conditions hereinafter set forth, those certain premises
situated in the City of Corte Madera, California, commonly known as 205 Tamal
Vista Boulevard, consisting of approximately 38,000 square feet, and as more
fully described in Exhibit "A", attached hereto and made a part hereof (the
"premises").
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2.2 The "railroad siding" delineated on Exhibit "A" is not a portion
of the premises.
3. ACCEPTANCE
Tenant accepts the premises in their "as is" condition and state of repair
and except as otherwise expressly provided herein, Landlord shall not be
required to do any work thereto.
4. RENT
4.1 Base Rent. Tenant shall pay to Landlord as rent in advance on the
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first day of each calendar month of the term of this Lease, without deduction,
offset, prior notice or demand, the sum of Thirty Thousand Six Hundred Ninety-
Nine Dollars ($30,699) in lawful money of the United States. The rent shall be
paid at the address set out after the name of the Landlord at the end of this
Lease or such other address as shall be designated in writing by Landlord. If
the date of commencement or expiration of the term of this Lease occurs on a day
other than the first day of a calendar month, the rent at the monthly rate shall
be prorated upon the basis which the number of days of the term of this Lease of
such month bears to the total number of days in such month.
4.2 CPI Increase. On July 1, 1998 and on each subsequent anniversary of
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the commencement date of the term of this Lease, the base rent payable for the
upcoming year shall be increased to an amount equal to the product of the
initial base rent of $30,699 multiplied by a fraction, the denominator of which
shall be the Consumer Price Index (as hereinafter defined) figure published for
June 1997, and the numerator of which shall be the Consumer Price Index figure
for June of the adjustment year (provided that such fraction shall not in any
event be less than 1). As used herein, the term "Consumer Price Index" shall
mean the United States Department of Labor's Bureau of Labor Statistics'
Consumer Price Index, All Urban Consumers, All-Items, for the San Francisco
Oakland-San Jose area (1982-84=100), or the successor of such index, or if no
successor index is designated, then such other index as Landlord reasonably
shall designate. Should Landlord lack sufficient data to make the determination
specified herein on the date of any such adjustment, Tenant shall continue to
pay the monthly rent payable immediately prior to such adjustment date. As soon
as Landlord obtains the necessary data, it shall determine the rent payable from
and after such adjustment date and shall notify Tenant of the adjustment in
writing. Should the monthly rent for the period following such adjustment date
exceed the amount previously paid by Tenant for such period, Tenant shall
forthwith pay the difference to Landlord.
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4.3 Late Charge. If Tenant shall fail to pay within ten (10) days from
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when due and payable any rent or other amounts or charges which Tenant is
obligated to pay under this Lease, Tenant shall pay a late charge equal to six
percent (6%) of such amount that is due. Tenant acknowledges that any late
payments will cause Landlord to incur costs and expenses not contemplated under
the Lease, including, but not limited to, administrative and collection costs,
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 Lease. In addition to the late charges described herein, any
payment made more than thirty (30) days after the due date shall also bear
interest from and after the expiration of such 30 day period, until paid, at the
rate of 1-1/2% per month.
5. SECURITY DEPOSIT
Upon Tenant's execution hereof, Tenant shall deposit with Landlord a sum
equal to $30,699 as security for Tenant's faithful performance of its
obligations under the Lease. 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 Lease, or
fails to perform any of the terms and conditions of the Lease, 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 Lease. Within fifteen (15) days after the term of the Lease
has expired and Tenant has vacated the Premises, provided Tenant is not then in
default on any of its obligations hereunder, Landlord shall return the security
deposit to Tenant.
6. TERM
The term of this Lease shall be for a period of seven (7) years commencing
on July 1, 1997, and terminating on June 30, 2004.
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7. USE, PURPOSE & COMPLIANCE WITH LAW
7.1 Tenant shall use and occupy the premises during the term for the
production of cups, containers, straws, and other related products and for
general office purposes, and all uses reasonably incidental thereto, and for no
other purpose without the prior written consent of Landlord. Tenant shall not
use or permit the premises or any part thereof to be used for any purpose other
than the purpose for which the premises are leased.
7.2 No use shall be made or permitted to be made of the premises or acts
done by Tenant which will increase the existing rate of insurance on the
premises or cause the cancellation of any insurance policy covering the premises
or any part thereof. If any act on the part of Tenant or use of the premises by
Tenant shall cause any increase of Landlord's insurance, such additional expense
shall be paid by Tenant to Landlord upon demand. Tenant shall not sell or
permit to be kept, used or sold in or about the premises any article which may
be prohibited by the standard form of fire insurance policies.
7.3 Tenant shall not commit or suffer to be committed any waste upon the
premises or any public or private nuisance. Tenant shall not use the premises
or permit the premises to be used in whole or in part for any purpose or use
that is in violation of any of the laws, ordinances, regulations or rules of any
public authority or organization at any time. A judgment of any court of
competent jurisdiction or the admission by Tenant in any action or proceeding
against Tenant that Tenant has violated such laws, ordinances, regulations or
rules in the use of the premises shall be deemed to be a conclusive
determination of the fact as between Landlord and Tenant.
8. UTILITIES
Tenant shall pay for all water, gas, heat, light, power, telephone service,
sewer, garbage and other services or utilities supplied to the premises, whether
or not separately metered and whether or not billed to Landlord or Tenant.
9. ASSIGNMENT & SUBLETTING
9.1 Except as otherwise permitted pursuant to this paragraph 9.1, Tenant
shall not assign its interest in this Lease without the prior written consent of
Landlord, which consent Landlord may withhold in its sole, arbitrary and
absolute discretion. Notwithstanding the foregoing, Tenant may assign its
interest in this Lease to WinCup Holdings, Inc., a Delaware corporation,
provided that such assignment is consummated in connection with the transfer of
Tenant's business to said assignee. Said assignment is conditioned on said
assignee executing an assignment document in form and substance
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acceptable to Landlord and which shall provide, among other things, that said
assignee shall assume all of the obligations of Tenant hereunder, as a direct
obligation to Landlord.
9.2 Tenant shall not sublet the premises or any part thereof, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided, however, that in all events, any such subletting shall
comply with each and every one of the following standards: (i) all rent and
other sums payable under this Lease must continue to be paid directly to
Landlord by Tenant, notwithstanding any such subletting; (ii) all insurance
coverage provided by Tenant hereunder shall not be adversely affected, or
changed, as a result of any such subletting; (iii) the subtenant's use of the
premises shall not be inappropriate or have any adverse impact on the premises,
all as determined by Landlord in its sole discretion; (iv) the subtenant must
have adequate financial resources, and have a good business reputation, all as
determined by Landlord in its reasonable discretion; and (v) any such subtenant
must otherwise meet the reasonable requirements of Landlord.
9.3 No consent to any assignment of this Lease, or any subletting of the
premises, shall be deemed to be a consent to any subsequent assignment of this
Lease or to any subletting of the premises. Any such assignment or subletting
shall be void and at the option of Landlord shall terminate this Lease.
9.4 No consent by Landlord to any assignment of this Lease, or any
subletting of the premises, shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether arising before or after the
assignment or subletting.
9.5 Tenant shall reimburse Landlord on demand for all costs, expenses, and
attorneys fees, incurred by Landlord in reviewing any proposal by Tenant to
assign this lease or sublet all or any portion of the premises.
10. CONDITION OF PREMISES & REPAIRS
10.1 Landlord agrees to maintain and repair the roof, sidewalls and
foundation (including the structural integrity) of the premises. Landlord also
agrees to be responsible for the replacement, but not for the maintenance or
repair, of HVAC systems not subject to removal by Tenant at the expiration of
this Lease, at such times as said systems reach the end of their useful life.
Landlord shall not be responsible for the maintenance or repair of the interior
of the premises or any other part thereof except as set forth herein. Any
expense incurred in connection with the remodeling, repainting, altering or
redecorating of the premises shall be at the expense of and shall be paid for by
Tenant.
10.2 Tenant shall be deemed to have agreed by accepting occupancy that the
premises are in good order, condition and repair. Tenant shall, at Tenant's
sole cost and expense, keep and maintain the premises and appurtenances and
every part thereof (except
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that portion which Landlord has expressly agreed to repair) including, but not
limited to, the windows, skylights, parking areas, sidewalks, landscaping, and
the interior of the premises, in good and sanitary order, condition and repair.
Further, Tenant shall, at Tenant's sole cost and expense, keep and maintain the
heating, ventilating and air conditioning equipment in good operating order and
condition during the term of this Lease and shall provide regular maintenance
thereto by a qualified serviceman. Nothing herein shall be construed as
requiring Tenant to repair any damage caused by any act of God, war, riot or
casualty, excepting, however, damage attributable to the negligence or
intentional act or omission of Tenant or to Tenant's agents, servants, employees
or invitees. Tenant further agrees to give up and surrender the premises and
every part thereof to Landlord at the termination of the term of this Lease
fully maintained and in good order and repair, reasonable wear and tear
excepted.
11. ALTERATIONS
11.1 Tenant shall not make or suffer to be made any alterations or
improvements to or of the premises or any part thereof without the written
consent of Landlord being first had and obtained. Any alterations, additions,
or improvements to or of the premises, including without limitation any
partitions (floor to ceiling), and all wall to wall installed carpeting, shall
at once become a part of the realty and belong to Landlord. Movable furniture,
equipment and trade fixtures shall remain the property of Tenant.
11.2 If Landlord consents to the making of any alterations, additions or
improvements to the premises by Tenant, the same shall be made by Tenant at
Tenant's sole cost and expense and any contractor or person elected by Tenant to
make the same must first be approved of in writing by Landlord. Upon the
expiration or sooner termination of the term, Tenant, upon demand by Landlord,
at Tenant's sole cost and expense, forthwith and with all due diligence shall
remove any alterations, additions or improvements made to the premises by Handi-
Kup Company, or James River Paper Co., Inc. or their successors and related to
the operation of their business; including, but not limited to, plastic bead
storage tanks, enclosed surface mounted oil storage tanks, outside heat
exchangers and cooling towers, roof mounted pollution control equipment related
to boiler emissions, railroad loading dock, and other external facilities
specific to Tenant's operations. In addition, Tenant, forthwith and with all due
diligence, at its sole cost and expense, shall repair any damage to the premises
caused by such removal, and shall return said premises to Landlord in good
condition and repair, reasonable wear and tear excepted.
12. LIENS
Tenant shall keep the premises and building of which the premises are a
part free and clear from any liens from persons claiming by or through Tenant
and shall indemnify,
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hold harmless and defend Landlord from any liens and encumbrances arising out of
any work performed or material finished by or at the direction of Tenant. In
the event any lien is filed, Tenant shall do all acts necessary to discharge any
lien within twenty (20) days of filing, or if Tenant desires to contest any
lien, then Tenant shall deposit with Landlord such security as Landlord shall
demand to insure the payment of the lien claim or procure and record a lien
release bond issued by a corporation authorized to issue surety bonds in
California in an amount equal to one and one-half times the amount of the claim
of lien. The bond shall meet the requirements of California Civil Code Section
3143 and shall provide for the payment of any sums that the claimant may recover
on the claim (together with costs of suit, if it recovers said costs in the
action). In the event Tenant shall fail to pay any lien claim when due or shall
fail to provide the deposit or other security to Landlord, then Landlord shall
have the right to expend all sums necessary to discharge the lien claim, and
Tenant shall pay additional rental, when the next rental payment is due, all
sums expended by Landlord in discharging any lien, including attorney's fees and
costs.
13. SIGNS
Except for any signs presently located on the premises, Tenant shall not
place or permit to be placed in, upon, about or outside the premises any signs
without the prior written consent of Landlord.
14. RIGHT OF ENTRY
14.1 Landlord and its agents shall have the right at any reasonable time
upon giving written notice to Tenant (which notice shall not be necessary in
case of an emergency) to enter upon the premises so long as it does not
interfere with the business activities of Tenant on the premises, for the
purpose of inspection, serving or posting notices, maintaining the premises,
making any necessary repairs, alterations or additions to any portion of the
premises (including the erection and maintenance of scaffolding, partitions and
repair of equipment as shall be required), complying with the laws, ordinances
and regulations, protecting the premises, or for any other lawful purpose,
including showing the premises to prospective purchasers or tenants and placing
on the premises usual "for rent" or "for lease" signs during the last nine (9)
months of the term.
14.2 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the premises, and other loss occasioned by such entry
unless caused by Landlord's gross negligence or willful misconduct. For each of
the aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use
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any and all means which Landlord may deem proper to open said doors in an
emergency in order to obtain entry to the premises, and any entry to the
premises obtained by Landlord by any of said means, or otherwise, shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into or detainer of the premises or an eviction of Tenant from the
premises or any portion thereof.
15. INDEMNIFICATION
15.1 Landlord shall be free of all liabilities and claims for damage by
reason of injury or death to any person or persons, including Tenant or property
of any kind whatsoever and to whomsoever belonging, including Tenant from any
cause or causes whatsoever, except for any liability and claim arising out of
the gross negligence or intentional misconduct of Landlord, its agents or
servants, while in, upon, or connected in any way with the premises, during the
term of this Lease or any extension or renewal thereof, or any occupancy
hereunder, and Tenant hereby agrees to indemnify, save harmless and defend
Landlord from all liability, damages, loss, costs and obligations, including
court costs and counsel fees, on account of or arising out of or alleged to have
arisen out of, directly or indirectly, any such injuries, death or losses,
however occurring, unless the same shall have been caused by or result from the
gross negligence or intentional misconduct of Landlord, its agents or servants.
15.2 Tenant covenants and agrees to comply with all laws as hereinafter
defined relating to the storage, use, and disposal of hazardous materials on or
about the premises. For purposes of this section, "hazardous material" means
and includes any toxic or hazardous substance or waste, or ground or ground
water contamination, as defined in, or for purposes of, any federal, state, or
local statute, law, ordinance, code, rule, regulation, order, or decree, as now
or at any time hereafter in effect, regulating, relating to, or imposing
liability or standards of conduct concerning any toxic or hazardous substance or
waste (hereinafter collectively referred to "laws"), including hazardous
material which must be removed or remediated prior to land development.
In the event Landlord or Tenant, during the term hereof, receives an
order or notification from any governmental or regulatory entity, or without an
order or notification otherwise becomes aware of the existence of a release or
threatened release of any hazardous material during the lease term or any
extension, in, on, or about the premises, Tenant, at its sole cost and expense,
shall immediately take such action as Landlord or the applicable governmental or
regulatory entity may deem appropriate or necessary to prevent any threatened
release or to remediate any release of hazardous materials.
Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all direct and indirect, actual and consequential, damages,
costs, expenses, losses, demands, claims, liabilities, judgments, causes of
action, proceedings or hearings,
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including all reasonable attorneys' fees and costs of investigation which arise
from the use, disposal, emission, discharge, injection, spill, escape, leak,
release, or threatened release of hazardous materials on or about the premises
during the term hereof or any extension thereof.
As between Landlord and Tenant, the provisions of this section shall
survive the expiration or earlier termination of this Lease, including any lease
extension.
16. INSURANCE
16.1 Liability Insurance. Tenant shall procure at its sole cost and
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expense and keep in full force and effect throughout the term of this Lease,
Commercial General Liability insurance protecting Landlord and Tenant and
covering the use and occupancy of the premises and all areas adjacent thereto,
and the business operated by Tenant therein. Such insurance (i) shall include
broad form contractual liability insurance coverage insuring all of Tenant's
indemnity obligations under this Lease, (ii) shall have a minimum combined
single limit of liability (including umbrella coverage) of at least Ten Million
Dollars ($10,000,000), (iii) shall be written to apply to all bodily injury,
property damage, personal injury and other loss, however occasioned, occurring
during the policy term, (iv) shall be endorsed to add Landlord as an additional
insured, and (v) shall provide that such coverage is primary and that any
insurance maintained by Landlord is excess insurance only. Such insurance shall
also contain endorsements: (i) deleting any employee exclusion on personal
injury coverage; (ii) including employees as additional insureds; and (iii)
providing coverage for employer's automobile non-ownership liability. Tenant
shall also maintain Workers' Compensation insurance in accordance with
California law, and employers liability insurance with a limit no less than
$1,000,000 per employee and $1,000,000 per occurrence. The limits of said
Commercial General Liability insurance policy shall not limit the liability of
Tenant nor relieve Tenant of any obligations of Tenant otherwise existing under
this Lease. If at any time during the term, the amount or coverage of insurance
which Tenant is required to carry under this Section 16.1 is, in Landlord's
reasonable judgment, materially less than the amount or type of insurance
coverage typically carried by owners or lessees of properties which are similar
to and operated for similar purposes as the premises, Landlord shall have the
right to require Tenant to increase the amount or change the types of insurance
coverage required under this Section.
16.2 Casualty Insurance. Tenant further agrees to procure at its sole cost
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and expense and keep in full force and effect throughout the term of this Lease,
a policy of "all risk" casualty insurance (ISO Form CP1030 or such other form as
is reasonably acceptable to Landlord), in the name of Landlord, with loss
payable to Landlord, insuring against loss or damage to the premises. Such
insurance shall be for the full replacement cost thereof, as agreed to by
Landlord and adjusted from time to time to reflect increased replacement costs,
and shall insure against all risks of direct physical loss or damage
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(except the peril of earthquake), including coverage for any additional costs
resulting from debris removal and coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of the premises. Said
policy shall also contain an agreed valuation provision in lieu of any co-
insurance clause, and shall include coverage for the benefit of Landlord
insuring the loss of the full rental and other charges payable under this lease
for not less than one year. With respect to any deductibles, it is specifically
agreed that Tenant shall be responsible for paying all deductibles if a casualty
occurs, unless such casualty resulted from or was caused by the gross negligence
or intentional misconduct of Landlord or its agents or servants.
16.3 Form of Policies. All insurance policies required to be carried under
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this Lease shall be written by companies (i) rated A or better in "Best's
Insurance Guide" and (ii) authorized to do business in California, and shall
name any lenders or parties designated by Landlord as additional insureds. Any
deductible amounts under any insurance policies required hereunder shall be
subject to Landlord's prior written approval. Tenant shall deliver to Landlord
on or before the Commencement Date, and thereafter at least thirty (30) days
before the expiration date of expiring policies, or whenever there is a change
of insurers or insurance coverage, and at such other times as Landlord may
reasonably request, certified complete copies of its insurance policies, or, if
acceptable to Landlord, a certificate evidencing the same issued by the insurer
thereunder; and, in the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates to Landlord in a prompt and timely manner,
Landlord may, at its option and in addition to Landlord's other remedies in the
event of a default by Tenant hereunder, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord as additional rent.
Any policy required to be maintained by Tenant under this Lease may be
maintained under a so-called "blanket policy" insuring other parties and/or
other locations, so long as the amount of insurance and type of coverage
required to be provided hereunder is not thereby diminished, changed or
adversely affected.
16.4 Waiver of Subrogation. Tenant and Landlord hereby release each other
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and their respective officers, agents and employees from any and all claims and
demands for loss, damage, expense or injury to the premises, as well as the
furnishings, fixtures and equipment located on the premises, which is caused by
or results from events or happenings which are the subject of casualty insurance
carried by the respective parties in force at the time of any such loss.
17. ESTOPPEL CERTIFICATE
Tenant and Landlord shall execute, acknowledge and deliver to the other
party at any time within ten (10) days after request by such party, a statement
in writing certifying, if such be the case, that this Lease is unmodified and in
full force and effect (or if there have been modifications that the same is in
full force and effect as modified), the date of
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commencement of this Lease, the dates on which rent has been paid, and such
other information as the requesting party shall reasonably request.
18. COMPLIANCE WITH LAWS
Tenant at Tenant's sole cost, shall comply with all laws, ordinances,
orders and regulations of all governmental authorities with respect to the use
and occupation of the premises, including but not limited to such items not
related to Tenant's particular use thereof. A judgment of any court of
competent jurisdiction or the admission by Tenant in any action or proceeding
against Tenant that Tenant has violated any such laws, ordinances, orders or
regulations, shall be deemed to be conclusive as to Landlord and Tenant.
19. DAMAGE BY FIRE OR OTHER CASUALTY
19.1 Except as otherwise provided herein, in the event of any damage
causing a partial or total destruction of the premises during the term of this
Lease from any cause that is an insured risk and provided the repairs can be
made under the applicable laws and regulations of governmental authorities,
Landlord shall repair said damage promptly; provided, however, that if such
destruction or damage is "major destruction or damage," Landlord may terminate
this Lease on 90 days' notice to Tenant. "Major destruction or damage"
hereunder shall refer to destruction of or damage to the premises, the
reasonable cost of repair of which exceeds two hundred fifty thousand dollars
($250,000). During any repair or restoration this Lease shall remain in full
force and effect and the rent payable under this Lease shall only be abated to
the extent such rent abatements are covered by insurance proceeds.
19.2 If the cause of such damage is not an insured risk, was not caused by
the gross negligence or intentional misconduct of Landlord, its agents or
servants, and the cost of repair is less than or equal to One Hundred Fifty
Thousand Dollars ($150,000.00) and provided such repairs can be made under the
applicable laws and regulations of governmental authorities, Tenant shall pay to
Landlord the cost of repairing such damage and Landlord shall cause such repair
to be made. If the cause of such damage is not an insured risk, was not caused
by the gross negligence or intentional misconduct of Landlord, its agents or
servants, and the cost of repair is more than One Hundred Fifty Thousand Dollars
($150,000.00), Tenant may elect not to pay the cost to repair such damage by
giving notice at any time within thirty (30) working days after the date of such
damage and terminating this Lease as of a date to be specified in such notice,
which date shall not be less than thirty (30) nor more than sixty (60) working
days after the giving of such notice; provided, however, if Landlord elects to
pay the additional cost over $150,000 to complete the repairs, Landlord shall
proceed to make the repairs and the Lease shall remain in full force and effect.
In the event of the giving of such notice of
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termination, this Lease and all interest of Tenant in the premises shall
terminate on the date so specified in such notice, and the rent shall be paid up
to date on such termination. Landlord agrees to refund to Tenant any rent
theretofore paid for any period of time subsequent to such date. Landlord shall
not be required to repair any injury or damage by fire or other cause to the
property of Tenant, or to make any repairs to or replacements of any panelings,
decorations, railing, floor coverings or any improvements installed on the
premises by Tenant. Landlord shall be responsible for repairing all uninsured
damage that was caused by or resulted from the gross negligence or intentional
misconduct of Landlord, its agents or servants.
19.3 All proceeds from any insurance policy or policies referred to in
Section 16 hereof, and any amounts agreed to as deductibles thereunder, payable
pursuant to this Section 19 shall be paid by Tenant to Landlord within ten (10)
days following the receipt of such proceeds by Tenant and before Landlord is
required to make any of the repairs.
19.4 In respect of any damage or destruction which Landlord is obligated
to repair or may elect to repair under the terms of this paragraph, the
provisions of any statute or law permitting Tenant to terminate this Lease are
waived by Tenant, and Tenant specifically waives the provisions of Sections
1932, Subdivision 2, and 1933, Subdivision 4, of the Civil Code of California.
20. CONDEMNATION
20.1 If the whole or any part of the premises shall be taken for public or
quasi-public use by right of eminent domain, with or without litigation, or
transferred by agreement in connection with such public or quasi-public use,
this Lease, as to the part so taken or condemned or transferred, shall terminate
as to the date title shall vest in the condemnor and the rent payable hereunder
shall be adjusted so that Tenant shall be required to pay for the remainder of
the term only such portion of the rent as the area in the part remaining after
the taking or condemnation bears to the area of the entire premises as of the
date title shall vest in condemnor.
20.2 Except as herein provided, all compensation of any form awarded upon
such condemnation or taking shall go to Landlord and Tenant shall have no claim
thereto, and Tenant hereby irrevocably assigns and transfers to Landlord any
right to compensation or damages to which Landlord may become entitled during
the term hereof by reason of the condemnation of all or part of the premises.
Notwithstanding the foregoing, Tenant reserves the right to file a separate
claim for moving expenses and any other compensation it is entitled to receive
as a result of such taking or condemnation and (i) which is not related to its
leasehold estate and (ii) does not reduce the compensation otherwise payable to
Landlord. Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease.
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<PAGE>
20.3 In the event any such taking or condemnation shall materially
interfere with Tenant's use of the premises, Tenant, upon not less than 60 days'
written notice to Landlord, shall have the right to terminate this Lease and
rent shall be payable only to the date Tenant vacates the premises.
21. INVOLUNTARY TERMINATION
This Lease, at the option of Landlord and after the expiration of any
applicable cure period, shall immediately cease and terminate upon the happening
of any of the following events:
(a) The filing of a petition, for any proceeding under the Bankruptcy Act
or any amendment thereto by Tenant.
(b) A finding or judgment of insolvency of Tenant which has become final.
(c) A general assignment for the benefit of creditors by Tenant.
(d) The levying of a writ of execution on a substantial portion of the
assets of Tenant located on the premises, which is not discharged within sixty
(60) days after the date of said levying.
Upon the happening of any such event and the expiration of the applicable
cure period, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned
or assignable by reason of any voluntary or involuntary bankruptcy proceedings
nor shall any rights or privileges hereunder be an asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
22. DEFAULT
22.1 If (a) Tenant's interest or any part of his interest in this Lease be
assigned or transferred, either voluntarily or by operation of law, except with
Landlord's consent, or as provided in paragraph 9, or (b) Tenant after notice
fails to remedy any default (i) in the payment of any sum due under this Lease
for ten (10) days, or (ii) in the keeping of any other term, covenant or
condition of this Lease with all reasonable dispatch (within thirty (30) days or
such longer period as is reasonably necessary), then, in addition to any other
remedy Landlord may have by operation of law, Landlord shall have the right,
without any further demand or notice, either to terminate Tenant's right to
possession of the premises and thereby terminate this Lease or to have this
Lease continue in full force and effect with Tenant at all times having the
right to possession of the premises.
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<PAGE>
22.2(A) Should Landlord elect to terminate Tenant's right to possession of
the premises and terminate this Lease, then Landlord shall have the immediate
right of entry and may remove all persons and property from the premises. Such
property to be removed may be stored in a public warehouse or elsewhere at the
cost and for the account of Tenant. Upon such termination, Landlord, in addition
to any other rights and remedies, shall be entitled to recover from Tenant:
(1) The worth at the time of award of the unpaid rent which had been
earned at the time of termination;
(2) The worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(3) The worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss for such period that Tenant proves could be reasonably avoided;
(4) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom.
Any proof by Tenant under Subparagraphs (2) or (3) of Subdivision (a)
of Section 1951.2 of the California Civil Code of the amount of rental loss that
could be reasonably avoided shall be made in the following manner: Landlord and
Tenant shall each select a licensed real estate broker in the business of
renting property of the same type and use as the premises and in the same
geographic vicinity and such two real estate brokers shall select a third
licensed real estate broker and the three licensed real estate brokers so
selected shall determine the amount of rental loss that could be reasonably
avoided for the balance of the term of this Lease after the time of award. The
decision of the majority of said licensed real estate brokers shall be final and
binding upon the parties hereto. As used herein, the term "time of award" shall
mean either the date upon which Tenant pays to Landlord the amount recoverable
by Landlord as hereinabove set forth or the date of entry of any determination,
order or judgment of any court or other legally constituted body, or of any
arbitrators determining the amount recoverable, whichever first occurs.
(B) Should Landlord, following any breach or default of this Lease by
Tenant, elect to keep this Lease in full force and effect, with Tenant retaining
the right to possession of the premises (notwithstanding the fact that Tenant
may have abandoned the leased premises), then Landlord, besides all other rights
and remedies Landlord may have at law or in equity, shall have the right to
relet the premises, or any part of the premises, as the agent and for the
account of Tenant upon such terms and conditions as Landlord
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<PAGE>
may deem advisable, in which event the rents received on such reletting shall be
applied first to the expenses of such reletting and collection, including
necessary renovation and alteration of the premises, reasonable attorney's fees,
any real estate commissions paid, and thereafter to payment of all sums due or
to become due Landlord under this Lease, and if a sufficient sum shall not be
thus realized to pay such sums and other charges, Tenant shall pay Landlord any
deficiency monthly, notwithstanding Landlord may have received rental in excess
of the rental stipulated in this Lease in previous or subsequent months, and
Landlord may bring an action therefore as such monthly deficiency shall arise.
Notwithstanding any such election to have this Lease remain in full force and
effect, Landlord may at any time thereafter elect to terminate Tenant's right to
possession of said premises and thereby terminate this Lease for any previous
breach or default which remains uncured, or for any subsequent breach or
default.
22.3 The "worth at the time of award" of the amounts referred to in
subparagraphs (1) and (2) above is computed by allowing interest at the rate of
10% per annum. The worth at the time of award of the amount referred to in
subparagraph (3) above is computed by discounting such amount at the discount
rate of Federal Reserve Bank of San Francisco at the time of award, plus one
percent (1%).
23. ATTORNEY'S FEES
Tenant agrees that if Landlord is involuntarily made a defendant to any
litigation concerning this Lease or the premises by reason of any act or
omission of Tenant and not because of any act or omission of Landlord, then
Tenant shall hold harmless Landlord from all liability by reason thereof,
including reasonable attorney's fees incurred by Landlord, in such litigation
and all taxable court costs. If legal action shall be brought by either of the
parties hereto for the unlawful detainer of the premises, for the recovery of
any rent due under the provisions of this Lease, or because of any breach of any
term, covenant or provision hereof, the party prevailing in said action
(Landlord or Tenant as the case may be) shall be entitled to recover from the
party not prevailing costs of suit and a reasonable attorney's fee which shall
be fixed by the Judge of the Court.
24. HOLDING OVER
Any holding over after the expiration of the term of this Lease by Tenant
shall be deemed to be a tenancy from month to month upon the same terms and
conditions set forth herein, except that the monthly rent payable hereunder
pursuant to paragraph 4 shall be increased to 125% of such amount during any
such holding-over period.
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<PAGE>
25. WAIVER
No covenant, term or condition or the breach thereof shall be deemed
waived, except by written consent of Landlord, and any waiver or the breach of
any covenant, term or condition shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other covenant term or
condition. Acceptance of all or any portion of rent at any time shall not be
deemed to be a waiver of any covenant term or condition except as to the rent
payment accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent.
26. ABANDONMENT
Tenant shall not vacate or abandon the premises at any time during the term
hereof, and if Tenant shall abandon, vacate or surrender the premises, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Tenant and left on the premises shall be deemed to be abandoned, at the option
of Landlord, except such property as may be mortgaged to Landlord.
27. PERSONAL PROPERTY, REAL PROPERTY, AND OTHER TAXES
27.1 Tenant shall pay, before delinquency any and all taxes levied or
assessed and which become payable during the term hereof upon Tenant's equipment
furniture, fixtures and other personal property located in the premises,
including carpeting installed by Tenant even though said carpeting has become
part of the leased premises; and any and all taxes or increases therein levied
or assessed on Landlord or Tenant by virtue of alterations, additions or
improvements to the premises made by Tenant after the date hereof. In the event
said taxes are charged to or paid or payable by Landlord, then Tenant shall
reimburse Landlord for all of such taxes paid by Landlord.
27.2 Tenant shall pay to Landlord, within thirty (30) days after receipt
of a bill therefor, all real property taxes, general and special assessments,
rates, charges, license fees, municipal liens, levies, excises, or imposts,
whether general or special, ordinary or extraordinary, of every kind (other than
inheritance, personal income or estate taxes) which may be levied, assessed,
charged, or imposed, or may become a lien or charge upon the premises, or upon
Tenant's estate hereby created, or upon Landlord by reason of its ownership of
the premises. Tenant's liability to pay any such real property taxes shall be
prorated on the basis of a 360-day year to account for any fractional period of
a fiscal tax year included in the term of this Lease.
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<PAGE>
28. PLATS & RIDERS
Clauses, plats and riders, if any, signed by Landlord and Tenant and
endorsed on or affixed to this Lease are a part hereof.
29. SALE BY LANDLORD
In the event of a sale or conveyance by Landlord of the premises, the same
shall operate to release Landlord from any liability for any of the covenants or
conditions, express or implied, herein contained in favor of Tenant arising
after the date of such sale or conveyance, and in such event Tenant agrees to
look solely to the responsibility of the successor in interest of Landlord in
and to this Lease. If any security be given by Tenant to secure the faithful
performance of all or any of the covenants of this Lease on the part of, Tenant,
Landlord may transfer and/or deliver the security, as such, to the successor in
interest of Landlord, and thereupon Landlord shall be discharged from any
further liability in reference thereto.
30. RIGHT OF LANDLORD TO PERFORM
All covenants and agreements to be kept or performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent, except as otherwise expressly
provided herein. If Tenant shall fail to pay any sum of money, other than rent,
required to be paid by it hereunder or shall fail to perform any other act on
its part to be performed hereunder, and such failure shall continue for thirty
(30) days after notice thereof by Landlord, Landlord may, but shall not be
obligated to, and without waiving any default of Tenant or releasing Tenant from
any obligations of Tenant hereunder, make any such payment or perform any such
act on Tenant's part to be made or performed as in this Lease provided. All sums
so paid by the Landlord and all necessary incidental costs, together with
interest thereon at 12% per annum from the date of such payment by the Landlord,
shall be paid to Landlord forthwith on demand, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of nonpayment thereof by Tenant as in the case of default by Tenant
in the payment of rent.
31. SURRENDER OF PREMISES
The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation thereof shall not work a merger, and, at the option of Landlord
shall terminate all or any existing subleases or subtenancies, or at the option
of Landlord may operate as an assignment to Landlord of any or all such
subleases or subtenancies.
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<PAGE>
32. MORTGAGE REQUIREMENTS
Landlord represents to Tenant that on the date this Lease is executed, the
premises are not encumbered by or subject to any mortgages, deeds of trust, or
ground leases. This Lease shall, however, be subject and subordinate at all
times to all ground or underlying leases which may hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of an mortgages or deeds of trust in any amount or amounts
whatsoever hereafter placed on or against said building and/or land or on or
against the Landlord's interest or estate therein or on or against any ground or
underlying lease without the necessity of having further instruments on the part
of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and agrees to execute and deliver, upon demand, such further
reasonable instruments evidencing such subordination of this Lease to such
ground or underlying leases and to the lien of any such mortgages or deeds of
trust as may be required by Landlord. Tenant hereby irrevocably appoints
Landlord the attorney in fact of the Tenant to execute and deliver any such
instrument or instruments for or in the name of Tenant. In the event any
mortgagee shall elect to have this Lease a prior lien to its mortgage, then and
in such event, upon such mortgagee notifying the Tenant in writing to that
effect, this Lease shall have priority of the lien of such mortgage to the same
extent as if the same have been placed on record prior to such mortgage. In the
event of any sale, assignment or hypothecation of the building of which the
demised premises are a part and/or of any leasehold interest therein by
Landlord, a statement shall be required from Tenant as to offsets against the
Landlord, Tenant agrees to furnish said statement to the party demanding the
same accurately and promptly. In the event of termination of any ground or
underlying lease, or in the event of sale, foreclosure or exercise of any power
of sale under any mortgage or deed of trust superior to this Lease or to which
this Lease is subject or subordinate, Tenant covenants and agrees that it will,
upon request by the purchaser, attorn to the purchaser upon any foreclosure or
sale and recognize such purchaser as the Landlord under this Lease, it being the
intent hereof that if this Lease should be terminated by such foreclosure or
sale, it shall, upon request by the purchaser be reinstated as a lease between
the purchaser and the Tenant. Tenant, upon request of any party in interest,
shall execute such reasonable instrument or instruments as shall be requested to
carry out the requirements of this paragraph. Landlord will obtain non-
disturbance agreements from all parties to whose interest this Lease may
hereafter be subordinated.
33. NOTICES
All notices or demands of any kind required or desired to be given to
Landlord or Tenant hereunder shall be in writing and shall be deemed delivered
twenty-four (24) hours after the notice or demand is deposited in the United
States mail, postage prepaid, and addressed to Tenant at the address of the
premises, whether or not Tenant has departed therefrom, abandoned or vacated the
premises and as to Landlord at the address designated
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<PAGE>
after the name of the Landlord at the end of this Lease, or such other address
as shall be designated by either party in compliance with the provisions of this
paragraph.
34. ENTIRE AGREEMENT
This Lease constitutes the entire agreement between Landlord and Tenant and
no promises or representations, express or implied, either written or oral, not
herein set forth shall be binding upon or inure to the benefit of Landlord or
Tenant. This Lease shall not be modified by any oral agreement, either express
or implied, and all modifications shall be in writing and signed by both
Landlord and Tenant.
35. CONSENT
Except as otherwise specifically set forth, whenever Landlord's consent
shall be required herein, such consent shall not be unreasonably withheld or
delayed.
36. ADDITIONAL PAYMENTS
Wherever Tenant is called upon to make additional payments under this Lease
in addition to those specified in paragraph 4, Landlord will deliver with the
invoice or bill therefor adequate detail showing Tenant's pro rata share.
37. COVENANT OF QUIET ENJOYMENT
Landlord covenants that Tenant will quietly and peaceably have, hold and
enjoy the premises in accordance with the terms of this Lease throughout the
term from any person or entity claiming by or through Landlord, so long as
Tenant is not in default hereunder.
38. ADDITIONAL TERMS AND CONDITIONS
38.1 Environmental Inspection. Tenant shall, at its sole expense, submit
------------------------
to periodic inspections by Landlord or its agents, on reasonable notice, to
assure compliance by Tenant with all of the terms and conditions of the Lease,
including but not limited to, all laws, ordinances, and regulations applicable
to Tenant in its operation at the premises, and including, but not limited to,
those concerning environmental matters. In the event any "Phase 1" or
equivalent environmental inspection commissioned by Landlord shall disclose a
possibility of environmental contamination for which Tenant would be
responsible, Tenant shall (i) reimburse Landlord for the cost of such
inspection, (ii) pay for such additional inspections as may be necessary, and
(iii) pay for all costs and
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expenses as may be necessary to cause Tenant to comply with this paragraph and
paragraph 15.2. In the event any "Phase I" or equivalent environmental
inspection concludes that Tenant is in compliance with its environmental
obligations under this Lease and that no further investigation or inspection is
required, the cost of such inspection shall be paid for by Landlord.
38.2 Financial Statements. Tenant shall provide Landlord with its
--------------------
quarterly financial statements, and audited annual financial statements,
throughout the term of this Lease. Said quarterly statements shall be delivered
to Landlord within thirty (30) days after the end of the applicable quarter and
said audited annual financial statements shall be delivered to Landlord within
sixty (60) days after the end of the applicable fiscal year.
38.3 Brokers. Tenant represents and warrants that it has not dealt with
-------
any broker or agent in connection with the leasing transaction described herein.
Tenant covenants and agrees to pay, hold harmless, and indemnify Landlord from
and against any and all costs, expenses or liabilities for any compensation,
commission and charges claimed by any broker or agent with respect to this Lease
or the negotiation hereof with whom Tenant had dealings.
38.4 First Right of Negotiation to Purchase Building. Provided Tenant is
-----------------------------------------------
not then in default beyond any applicable notice or grace periods under this
Lease, Tenant shall have a first right of negotiation to purchase the building
in which the premises are located ("Building") during the Term of this Lease on
the terms and conditions set forth herein.
In the event Landlord desires to sell the Building, either separately or in
combination with other properties owned by Landlord and which are leased by
Tenant, Landlord shall notify Tenant of such desire. Upon receiving such
notice, Tenant shall have thirty (30) days within which to negotiate with
Landlord for the purchase of the Building (or combination of Buildings) on such
terms and conditions as are acceptable to Landlord, and which may involve, among
other things, Tenant cooperating with Landlord so as to consummate the
transaction as a like-kind exchange to Landlord. In the event a written
agreement for the purchase and sale is not entered into within said thirty (30)
day period, Tenant shall have no further right of first negotiation (this
paragraph thereafter being null, void and of no further force or effect) and
Landlord shall be entitled to sell the Building to any other party on any other
terms in order to allow Landlord to maximize its return from its ownership of
the Building. It is specifically understood and agreed that Landlord may
thereafter enter into transactions on terms and conditions that are different
than those proposed to or by Tenant without incurring any liability or
obligation to Tenant. This first right of negotiation is intended solely to
allow the parties an opportunity to negotiate for the sale of the Building to
Tenant and is not intended to restrict the rights of either party in the event a
final and binding agreement does not result within the above-described thirty
(30) day time period as a result of negotiations initiated
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pursuant to this paragraph. Landlord and Tenant do, however, agree that the
above referenced negotiations shall be conducted in good faith and with due
diligence.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of the
day and year first above written.
LANDLORD TENANT
- -------- ------
HUNT BROTHERS LEASING, LLC WinCup Holdings, L.P., a Delaware
Limited Partnership
By: [SIGNATURE APPEARS HERE] By: WinCup Holdings, Inc.
------------------------ General Partner
July 18, 1997
Landlord's Address for Notice: By: [SIGNATURE APPEARS HERE]
------------------------
240 Tamal Vista, Suite 250 , President
Corte Madera, CA 94925
By: [SIGNATURE APPEARS HERE]
------------------------
, Secretary
Approved as Paragraphs 1.2 and 1.3:
James River Paper Co., Inc.
By: [SIGNATURE APPEARS HERE]
------------------------
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EXHIBIT A
[Description of Premises]
-22-
<PAGE>
Exhibit 10.74
HYRESAVTAL
1
Hyresgivare Oy KWH Plast Ab, Jakobstad
2
Hyrestagare Isora Oy
3
Hyresobjektet och dess anvanding
Av bilaga 1 framgaende produktions- och kontorsutrymmen
vilka ar belagna pa lagenheten Jarnvagsgatan 22, samt
yttre omraden enligt bilaga 2, punkt 3.
------
Hyresobjektet skall anvandas for Hyrestagarens
industriella verksamhet.
4
Hyrestid Hyrestiden ar 5 ar, fran 12 april 1995 till 12 april
2000. Hyresavtalet kan uppsagas av bade hyrestagaren och
hyresgivaren fore avtalad hyrestids utgang enligt
bestammelser som ingar i bilagda allmanna villkor.
5
Hyra Hyran ar 325 000 mark per ar. Fran och med ar 1996 och
under de darpa foljande aren justeras hyran en gang per
ar sa att hyran motsvarar 325 000 mark okad med den
forandring i levnadskostnadsindex (medeltal under aret)
som skett fran och med ar 1995 till respektive hyresar.
6
Forhandsratt att forhandla om kop
Ifall tredje part onskar kopa en del eller hela
hyresobjektet pa villkor som hyresgivaren ar beredd att
acceptera, har hyrestagaren ratt att kopa de berorda
utrymmena pa samma villkor som tredje part. Hyrestagaren
skall meddela huruvida hyrestagaren onskar nyttja denna
forhandsratt inom fjorton (14) dagar fran att ha blivit
tillfragad darom av hyresgivaren.
7
Hyresavtalets allmanna villkor
I ovrigt tillampas pa detta avtal de allmanna villkor som
bilagges detta avtal och som hyrestagaren noggrannt last
och gjort sig fortrogen med.
8
<PAGE>
Ikrafttradande Detta hyresavtal trader ikraft da bada parterna
undertecknat detsamma.
Detta hyresavtal ar uppgjort i tva likalydande exemplar,
ett for vardera avtalsparten.
Jakobstad den 24.1.1995
Oy KWH Plast Ab Isora Oy
Peter Hoglund Hannu Lehtonen
Per-Ole Hjulfors
<PAGE>
ALLMANNA VILLKOR
1
Betalning av hyran Hyrestagaren bor erlagga hyran, utan sarskilt yrkande
halvarsvis i forskott senast den tredje bankdagen i varje
hyresperiod. Den forsta hyran betalas dock for perioden
13 april 1995 till 30 juni 1995 (79 dagar=70 342 mark)
och erlaggs undantagsvis i efterskott samtidigt som rat
tva for (2) ar 1995 erlaggs i forskott.
2
Forsening av hyresbetalningen
Om betalningen av hyran forsenas skall pa det obetalda
beloppet erlaggas 16% arlig ranta raknat fran
forfallodagen till betalningsdagen.
Dartill bor hyrestagaren erlagga till hyresgivaren de
kostnader, som uppkommer da hyran skall indrivas eller
eventuell pant skall realiseras.
3
Hyresobjektets skick Hyrestagaren, som ar val inforstadd med hyresobjektets
forhallanden, godkanner det i det skick det ar da
hyrestiden borjar. Hyrestagaren forbinder sig, att under
hyrestiden pa egen bekostnad halla och efter hyrestiden
aterborda hyresobjektet i gott skick med beaktande av
hyresobjektets and vandingssatt och hyrestid och det
skick hyresobjektet anvandningssatt hade vid
ikrafttradandet.
4
Anvandningen och underhall av hyresobjektet
Hyrestagaren svarar for kostnader for el och uppvarmning
samt for alla ovriga nodiga kostnader som hanfor sig till
hyresobjektets anvandning, skotsel och underhall.
Hyrestagaren alaggs att betala hyra aven for sadan tid,
da hyresobjektets anvandning forhindras pa grund av
myndigheters bestammelser eller av annan orsak, om
avbrottet fororsakats av hyrestagarens atgarder eller
forsummelse.
Hyrestagaren svarar for, att hyresobjektet ar i sadant
skick som pabjudes av myndigheter och lag samt ovriga
bestammelser.
Hyresgivaren ar befriad fran allt ansvar for skada som
hyresobjektets bruk kan asamka manniskor, djur eller
annan fast eller los egendom eller miljon, oberoende av
om skadan fororsakats av hyrestagaren eller inte.
5
Grundreparation Varje ar, inom april-maj manad, skall hyrestagaren och
hyresgivaren genomga och overenskomma om eventuella
grundreparationer. Hyresgivaren svarar for
grundreparationskostnader.
6
<PAGE>
Hyresobjektets forsakring
Hyresgivaren svarar endast for, att hyresobjektet ar
forsakrat till ateranskaffningsvarde under hyrestiden.
Hyresgivaren svarar for de kostnader denna forsakring
medfor.
7
Hyresobjektets skada eller forstorelse
Ifall hyresobjektet skadas skall hyrestagaren
ofordrojligen meddela hyresgivaren. Om skadan ar
fororsakat av hyrestagaren, ar hyrestagaren ansvarig for
att pa egen bekostnad aterstalla hyresobjektet i ett i
punk 3 namnt skick, dock att ersattning i forsta hand
skall sokas hos forsakringsbolaget. Skyldigheten ar i
kraft oberoende av om skada uppstatt av sadan orsak, som
av forsakringsbolaget inte godkannes sasom grund for
forsakringsersattning.
Hyrestagaren ar skyldig att betala hyran for
hyresobjektets reparationstid samt aven for annan sadan
tid da hyresobjektet inte anvants eller inte kan anvandas
for att det skadats eller forstorts, i det fall att
hyrestagaren har fororsakat skadan. Om hyresobjektet
forsakrats for sadan risk och om full ersattning
erhallits av forsakringsbolaget for sadan risk, befrias
hyrestagaren fran ansvar i motsvarande man. Till
forsakringen hanforande kostnader, sasom
varderingskostnader och eventuella sjalvriskandelar,
pafors hyrestagaren.
Ifall hyrestagaren har fororsakat skadan och
hyresobjektet skadas eller forstors sa att det inte kan
anvandas eller repareras eller annars forloras, och om
forsakringen inte, pa grund av skal som inte beror pa
hyresgivaren, tacker skadan, ar hyrestagaren skyldig att
ersatta hyresgivaren med vardet av den forstorda eller
forlorade egendomen.
8
Overlatelse av hyresrattigheterna
Hyrestagaren far inte overfora hyresrattigheterna pa
tredje person utan hyresgivarens skriftliga samtycke.
Hyrestagaren har inte heller ratt att hyra ut
hyresobjektet helt eller delvis i andra hand utan
hyresgivarens skriftliga samtycke.
9
Hyresgivarens granskningsratt
<PAGE>
Hyresgivaren eller hans ombud har ratt att narsomhelst
han onskar granska hyresobjektet, forusatt att det kan
ske utan att hyrestagaren fororsakats oskalig olagenhet
darav.
Uppdagas vid en sadan granskning brisfallighet i
hyresobjektets skick eller om hyrestagaren underlatit att
halla hyresobjektet i avtalsenligt skick eller underlatit
att skrida till andra nodiga atgarder for att halla
hyresobjektet i avtalsenligt skick ager hyresgivaren ratt
att i stod av ett sakkunnigutlatande och efter
vederborligt horande av hyrestagaren pa hyrestagarens
bekostnad atgarda dessa brister. Hyrestagaren har dock
alltid ratt att i forsta hand inom skalig tid sjalv pa
egen bekostnad atgarda bristerna.
10
Uppsagning av hyresavtalet
Bade hyrestagaren och hyresgivaren ager ratt att uppsaga
hyresavtalet med sex (6) manaders uppsagningstid.
11
Hyresgivarens ratt att hava avtalet
Hyresgivaren ager ratt att hava avtalet omedelbart och ta
hyresobjektet i sin besittning, samt avensa skrida till
atgarder for uthyrning av hyresobjektet savitt
a) hyresbetalningen forsenas mer an trettio (30) dagar;
b) hyrestagaren ej underhallit hyresobjektet i enlighet
med detta avtal och ej heller efter uppmaning inom
skalig utsatt tid tillrattalagger situationen;
c) hyrestagaren trader i likvidation eller forsatts i
konkurs;
d) hyrestagaren anvander hyresobjektet for olagligt
andamal eller bryter vasentligt pa annat satt mot
dessa avtalsvillkor.
12
Foljder av avtalets havning
Om hyresgivaren haver avtalet pa grund av nagot i
forenamnda punkt 11 angivet skal, ar hyrestagaren
forpliktad att erlagga till hyresgivaren forutom de redan
forfallna och obetalda hyrorna jamte eventuell
drojsmalsranta aven
. av hyresobjektet eller dess bruk foranledda kostnader
eller andra forpliktelser, for vilka hyrestagaren
enlig lag eller hyresavtal ar ansvarig och vilka
tillkommer hyresgivaren i egenskap av hyresobjektets
agare eller eljest pa grund av avtalets havning.
13
Aterstallande av hyresobjektet vid hyresperiodens utgang
<PAGE>
Efter avtalets utgang ar hyretagaren skyldig att pa egen
bekostnad aterstalla hyresobjektet for hyresgivarens bruk
i ett i punkt 3 motsvarande skick.
Ifall hyrestagaren forsummar aterstallningspliktelsen
betraffande hyresobjektet eller om hyresobjektet vid
aterstallandet inte ar i ett ovan namnt skick, har
hyresgivaren sjalv ratt att ta hyresobjektet i sin
besitting och/eller stalla det i namnt skick pa
hyrestagarens bekostnad.
14
Allmant Ifall nagot av detta avtals villkor senare konstateras
vara ogiltigt, forbinder sig parterna att vid behov andra
eller tolka detta sa, att villkor som konstaterats vara
ogiltigt ersatts med ett sadant nytt villkor, som ur
parternas synvinkel i mojligast storsta man leder till
samma ekonomiska slutresultat for parterna som detta
avtal.
15
Avgorande av tvister Tvister som harror ur detta avtal skall handlaggas av den
allmanna underratten i Jakobstad stad.
<PAGE>
KWH
PLAST PROTOKOLL
Jacobstad Groop/mc 23.4.1990
ISORA - KWH PLAST SAMARBETF
Diskussionstillfalle
Tid 20.4.1990, kl 09.00
Narvarande Groop D
Hjulfors P-O
Hoglund P-E
Lehtonen Hannu
Tirkkonen Sirkka
1 For att uppfriska de narvarandes minne presenterade PEH
hyreskontraktet mellan Isora och KWH Plast.
2 Forsaljningen av anga till Isora har en langre tid
distkuterats. Isora anser att det nuvarande priset 160 mk/ton
ar en hog kostnad och KWH Plast att det ar en dalig affar.
Orsaken till detta ar att Isora val skulle komma till ratta med
orenare anga och med lagre tryck. For KWH ar den stotiga
angforbrukning ett stort problem i synnerhet mellan kl. 06.00-
09.00 nar styroxen kor igang for dagen. Eftersom vart pannrum
skall vara obemannat staller detta till verkliga problem.
En sak som bor noteras i samband med energidebiteringen ar att
KWH koper tillbaka en del av energin i form av hyrda utrymmen.
Ifall Isoras kostnadskalkyl tillater kommer en pannanskaffning
att kunna goras 1991.
Utrymmesutnyttjandet (som namnts i protokollet 19.10.89) slogs
fast.
. Gransen mellan Isora och Jarnvagsgatan 21 ar definierad och
inritad pa kartan.
. Parkeringsutrymme norr om KWH Plasts verkstad ar ocksa
inritat pa kartan inkl. det arbetsutrymme som finns bakom
verkstaden.
Inre omraden:
. Isora avstar fran sin andel av plathallen vid Jarnvagsgatan
21.
. Isora avstar fran sin del av vindsvaningen i Jarnvagsgatan
23 samt fran "gula paviljongen".
. Isora far tillgang till den nybyggda lagerhallen i
anslutning till styroxfabriken.
Ytorna som Isora och KWH Plast betalar for forblir oforandrade.
<PAGE>
1 (2)
LEASE AGREEMENT
1
Lessor Oy KWH Plast Ab, Jakobstad
2
Lessee Isora Oy
3
Object of lease and its use
Production and office premises pursuant to appendix 1, which are
----------
situated at Jarnvagen 22, together with outside spaces according
to appendix 2, item 3.
----------
The lease object shall be used for the lessee's industrial
activities.
4
Term of lease The term of the lease is 5 years, from April 12, 1995 until
April 12, 2000. The lease agreement can be terminated by either
the lessee or the lessor prior to the expiration of the lease
term, according to the provisions set forth in the attached
general conditions.
5
Rent The rent is 325,000 marks per year. Effective as of the year
1996 and during the years following thereon, the rent shall be
adjusted once a year so that it shall correspond to the 325,000
mark increase in the change in the cost of living index (average
for the year), which occurred from the year 1995 until the
respective year.
6
Prior right to negotiate a purchase
In the event that a third party wishes to buy a part of or the
entire lease object at conditions which the lessor is prepared
to accept, the lessee shall have the right to buy the premises
concerned at the same conditions as the third party. The lessee
shall inform the lessor that he wishes to exercise this prior
right within fourteen (14) days of the date on which it was
asked about this by the lessor.
<PAGE>
7
General conditions of the lease agreement
In other respects the general conditions attached to this
agreement, which the lessee has carefully read and with which he
has familiarized himself, shall apply.
8
Entry into effect
This lease agreement shall enter into effect when both parties
have signed it.
This lease agreement is drawn up in two identical copies, one
for each of the parties to the agreement.
Jakobstad, January 24, 1995
Oy KWH Plast Ab Isora Oy
[signature]
[signature]
Peter Hglund
Hannu Lehtonen
[signature]
Per-Ole Hjulfors
<PAGE>
1
(5)
GENERAL CONDITIONS
1
Payment of rent
The lessee shall pay the rent, without special demand, semi-
annually in advance, not later than the third banking day of
each lease period. The first rent shall thus be paid for the
period from April 13, 1995 to June 30, 1995 (79 days = 70,342
marks) and, in exceptional cases, it shall be paid in arrears
together with an installment for the year 1995 which shall be
paid in advance.
2
Delay of rent payment
If payment of the rent is delayed, the unpaid amount shall be
subject to interest at the rate of 16% p.a. computed as from the
due date until the date of payment.
In addition, the lessee shall reimburse the lessor for the costs
incurred when the rent has to be recovered by collection or when
a security has to be realized.
3
Condition of the rented premises
The lessee, who is in agreement with the present state of the
rented premises, approves same in the condition they are in at
the start of the lease period. The lessee shall be committed to
maintaining the premises at his own expense during the lease
period and to returning them after the end of the lease period
in good condition, duly observing the manner of use of the
premises and the lease period and the condition the premises
were in when the lease entered into effect.
4
Use and maintenance of the rented premises
The lessee shall bear the costs of electricity and heating as
well as all other necessary costs with reference to use, care
and maintenance of the rented premises.
The lessee shall also have to pay the rent for the time when use
of the rented premises is prevented by virtue of regulations of
the authorities or due to another cause, if the interruption is
caused by the lessee's actions or neglect.
The lessee shall be responsible for keeping the rented premises
in such a condition as imposed by the authorities and by law
together with the other provisions.
<PAGE>
2
The lessor shall be released of any responsibility for damage
which the use of the rented premises may cause to people,
animals or other real or personal property or to the
environment, irrespective of whether or not the damage is caused
by the lessee.
5
Basic repair Each year, during April-May, the lessee and the lessor shall
examine and agree on possible basic repairs. The lessor shall
bear the costs of basic repairs.
6
Insurance of the rented premises
The lessor shall be responsible only for the rented premises
being insured at the replacement value during the lease period.
The lessor shall bear the costs incurred for such insurance.
7
Damage to or destruction of the rented premises
In the event that the rented premises suffer damage, the lessee
must inform the lessor without delay. If the damage is caused by
the lessee, the latter is responsible for restoring the rented
premises, at his own expense, to the condition mentioned in item
3, with indemnity sought above all from the insurance company.
The liability is in force irrespective of whether the damage is
caused by such a cause which the insurance company does not
accept as grounds for compensation.
The lessee is required to pay the rent for the period during
which the rented premises are under repair, as well as a period
during which the rented premises are not used or cannot be used,
because they are damaged or destroyed, in case the lessee has
caused the damage. If the rented premises are insured for such a
risk or if full compensation is received from the insurance
company for such risk, the lessee is released from liability in
the respective month. Costs attributed to the insurance, such as
appraisement costs and any excess risk shares, are charged to
the lessee.
In the event that the lessee has caused the damage and the
rented premises are damaged or destroyed, so that they cannot be
used or repaired or are otherwise lost, and if the insurance
does not cover the loss, on grounds not depending on the lessor,
the lessee is required to compensate the lessor for the value of
the destroyed or lost property.
<PAGE>
3
8
Assignment of lease rights
The lessee may not assign the lease rights to a third party
without the written consent of the lessor. The lessee does not
have the right to rent out the rented premises in their entirety
or partially to other parties without the written consent of the
lessor.
9
Lessor's inspection rights
The lessor or his representative has the right to inspect the
rented premises whenever he may wish to do so, provided that
this can be done without thereby causing the lessee unreasonable
inconvenience.
If at such inspection defects are discovered in the condition of
the rented premises or if the lessee fails to keep the rented
premises in a condition according to the agreement, or if he
fails to take other necessary measures to maintain the premises
in a condition according to the agreement, the lessor has the
right to obtain an expert opinion and, after due hearing of the
lessee, take action on such defects at the lessee's expense.
However, the lessee always has the right to take immediate steps
to correct the defects at his own expense.
10
Cancellation of the lease agreement
Both the lessee and the lessor have the right to cancel the
lease agreement with six (6) months advance notice.
11
Lessor's right to revoke the agreement
The lessor has the right to revoke the agreement with immediate
effect and to take possession of the rented premises, as well as
to take measures to rent out the premises in the event that
a) payment of the rent is delayed by more than thirty (30)
days;
b) the lessee does not maintain the rented premises in
accordance with this agreement and does not do so after
urgent request to comply and correct the situation within a
reasonable period of time;
<PAGE>
c) the lessee enters into liquidation or declares bankruptcy;
d) the lessee uses the rented premises for unlawful purposes
or in another way substantially violates the conditions of
this agreement.
12
Consequences of the cancellation of the agreement
If the lessor annuls the agreement by virtue of the reasons set
forth in article 11 above, the lessee is required to compensate
the lessor for the already due and unpaid rents as well as any
delay interest, as well as for
- the costs arisen for the premises and their use or other
obligations for which the lessee is liable by law or
pursuant to the lease agreement and which are due the
lessor in his capacity as owner of the rented premises or
otherwise by virtue of the cancellation of the agreement.
13
Restoration of the rented premises on termination of the lease period
Upon the end of the agreement, the lessee is responsible for
restoring the rented premises at his expense for use by the
lessor in a condition as set forth in article 3.
In the event that the lessee fails to perform his restoration
obligations regarding the rented premises or if the premises are
not restored to the aforementioned condition, the lessor himself
has the right to take possession of the premises and/or restore
them to the aforesaid condition at the lessee's expense.
14
General
In the event that any of the conditions of this agreement prove
to be invalid, the parties agree to change or render it in such
a manner that conditions found to be invalid shall be replaced
by such new conditions that, from the viewpoint of the parties,
lead to the greatest extent possible to the same economic end
result for the parties as the present agreement.
15
Settlement of disputes
Disputes that arise from this agreement shall be handled by the
general courts of first instance in the city of Jakobstad.
[Initials]
<PAGE>
ISORA - KWH PLAST COOPERATION
Occasion for discussion
Date April 20, 1990, 9:00 a.m.
Present Groop D
Hjulfors P-O
Hoglund P-E
Lehtonen Hannu
Tirkkonen Sirkka
1 To refresh the memory of those present, PEH presented the lease
agreement between Isora and KWH Plast.
2 The sale of steam to Isora has been discussed at length. Isora answers
that the current price of 160 mk/ton is a high cost and this is a bad
deal for KWH Plast.
The reason for this is that Isora may be able to get along with
unclean steam and lower pressure. For KWH, the high steam consumption
is a great problem especially between 6:00 and 9.00 a.m., when the
"styrox" facility starts up for the day. Afterwards, our boiler room
will be unmanned, and which poses a real problem.
One thing that must be noted in connection with the energy output is
that KWH is buying back part of the energy in the form of rented
spaces.
In case that Isora's cost calculation should allow it, acquisition of
a boiler could take place in 1991.
Space utilization (which is mentioned in the minutes of October 19,
1989) was settled.
Outer area:
- The boundary between Isora and Jarnvagsgatan 21 has been defined and
entered on the map.
- The parking area north of the KWH Plast workshop, including the
workspace behind the workshop, has also been drawn on the map.
Inner area:
- Isora gives up its portion of the steel-sheet hall at Jarnvagsgatan
21.
- Isora gives up its portion of the attic floor at Jarnvagsgatan 23 as
well as the "yellow pavilion."
- Isora gets access to the newly built storage hall connected to the
styrox plant.
The spaces which are paid for by Isora and KWH Plast remain unchanged.
<PAGE>
Isora yttre omrade - Isora Outside Area
Overenst. omsadesgr. Agreed boundaries
verkl. motr 34.5 m actual measurement 34.5 m
Jarnvagsgatan (street name)
<PAGE>
Exhibit 10.75
Lease and Cooperation
Agreement
Sen jalkeen kun Suomen Polystyreeni Tehdas OY/Finska Polystyren Fabriken
AB on paattanyt ryhtya valmistamaan polystyreenia ja vastaavia tuotteita
tata tarkoitusta varten rakennettavassa tehtaassa
ja sen jalkeen kun Kokemaen kunta on selittanyt olevansa valmis
asettamaan kaytettavaksi tehdastontin seka rakennuttamaan
tehdasrakennuksen hankkiaksensa teollisuuta Kokemaen kuntaan seka
lisatakseen tyonsaannin mahdollisuutta kunnassa on yhtion ja kunnan
kesken solmittu seuraava
Vuokra- ja yhteistoimintasopimus
--------------------------------
1. Sopijapuolet:
------------
Suomen Polystyreeni Tehdas OY/Finska Polystyren Fabriken AB, alempana
sanottu Vuokralaiseksi
Kokemaen kunta, alempana sanottu Vuokranantajaksi.
2. Sopimuksen kohde:
----------------
Ensimmaisessa rakennusvaiheessa:
a) tehdastontti I, alaltaan n. 30 000 m2 oheisen kartan mukaan,
b) tehdasrakennus I, tilavuudeltaan n. 7 000 m3, joka rakennetaan
tontille I allaolevan kohdan 3 d) mukaisesti.
Toisessa rakennusvaiheessa:
c) tehdastontti II, alaltaan n. 30 000 m2 oheisen kartan mukaan
d) tehdasrakennus II, tilavuudeltaan n. 7 000 m3, joka rakennetaan
tontille I tai II allaolevan kohdan 3 e) mukaisesti.
Toinen vaihe alkaa Vuokralaisen maaraamana ajankohtana, kuitenkin
aikaisintaan 1.1.1973 ja viimeisuaan 3 vouoden kuluttua sen jalkeen kun
tehdasrakennus I on luovutettu Vuokralaiselle.
3. Vuokranantajan Velvoitteet:
--------------------------
Vuokranantaja sitoutuu omalla kustannuksellaan
a) hoitamaan suunnittelun, konstruktiopiirustukset ja rakenne
<PAGE>
yksityiskohdat Vuokralaisen antamien alempana 4 kohdassa mainittujen
tietojen perusteella ja Vuokralaisen ohjeiden mukaisesti,
b) hankkimaan tarvittavat luvat rakennuksia, teita, johtoja, yms.
varten,
c) hankkimaan urakkatarjouksia, joihin Vuokranantaja ja Vuokralainen
yhdessa maaraavat kantansa,
d) suorittamaan ja 7 kuukauden kuluessa siita kun rakennuslupa on saatu
saattamaan loppuun seuraavat tyot:
- 7 000 m3 suuruisen tehdasrakennuksen rakentaminen tontille I
- saostusaltaan seka perustuksien rakentaminen sellaisia siiloja ja
sailioita varten, jotka Vuokralainen aikoo sijoittaa tontille I
ja/tai II,
- tarpeellisten raskasta liikennetta kestavien teiden rakentaminen
tonteille, mitka tiet liitetaan tonttien ulkopuolella olevaan
tieverkostoon, seka muun tarpeellisen kunnallistekniikan hoitaminen,
- Vuokralaisen teollista toimintaa varten mitoitettujen viemari-ja
vesijohtojen seka sahkojohtojen rakentaminen ja kytkeminen
rakennuksiin, joilloin on vedettava syottojohto muuntajaan seka
muuntajasta rakennuksiin,
- Rakennusten varustaminen Vuokralaisen teollista toimintaa
vastaavasti mitoitetuin LVI-ja sahkoasennuksin,
e) toisessa rakennusvaiheessa ryhtymaan kaikkiin kohtien a-c mukaisiin
toimenpiteisiin seka 7 kuukauden kuluessa siita, kun rakennuslupa on
saatu, saatamaan loppuun tehdasrakennus II:n rakentamisen tonteille I
ja/tai II samoin kuin muut kohdassa d) luetellut tyot siina
laajuudessa kun tahan tehdasrakennukseen liittyva rakennussuunitelma
sen edellyttaa,
f) alempana 6 kohdassa mainitun vuokra-ajan alkaessa vuokraamaan
Vuokralaiselle ja asettamaan hanen kagtettavakseen kaikki ylempana
kohdissa d) ja e) mainitut rakennukset ja laitteet,
g) saattamaan vuokratut rakennukset mahdollisimman nopeasti
sopimuksenmukaiseen kuntoon siina tapauksessa, etta ne kokonaan tai
osaksi tuhoutuvat palon tai muun syyn johdosta, jolloin Vuokranantaja
saa kayttaa alempana kohdassa 4 mainitun palovakuutuksen perusteella
nostettavissa olevan korvauksen,
<PAGE>
h) myotavaikuttamaan siihen etta Vuokralaisen palveluksessa olevien
henkiloiden kaytettaviksi voidaan naapuristossa asettaa asuntoja kaypaa
vuokraa vastaan.
4. Vuokralaisen Velvoitteet:
------------------------
Vuokralaisen tulee mahdollisimman pian antaa Vuokranantajalle tietoja
rakennusten mitoista, lattia-, palkisto ja perustakuormituksista,
eristyksesta, aukoista, valaistuksesta ja ilmanvaihdosta niin etta
Vuokranantaja naiden perusteella pystyy hoitamaan suunnittelua,
konstruktiopiirustuksia ja rakenneyksityiskohtia.
Kun alempana 6 kohdassa mainittu vuokra-aika on alkanut, tulee
Vuokralaisen
- maksaa alempana 5 kohdassa mainittu vuokra seka omalla
kustannuksellaan
- huolehtia vuokrattujen rakennusten tavanmukaisesta hoidosta
- huolehtia siita, etta rakennukset ovat palovakuutetut summasta, joka
vastaa niiden jalleenrakennusarvoa.
5. Vuokra
------
Vuokran maaraamiseksi tulee sopijapuolten puheenalaisten rakennusten
valmistuttua yhdessa todeta niiden Vuokranantajan suorittamien
tarpeellisten rakennuskustannusten maara, jonka Vuokranantaja on
suorittanut sopimuspuolten yhteisesti hyvaksyman rakennusohjelman
puitteissa, niihin mukaanluettuna suunittelutoiden seka siilojen ja
sailioiden ym. perustoiden aiheuttamat kustannukset samoin kuin
yksinomaan Vuokralaisen tarvetta palvelevien teiden ja Vuokralaisen
kayttoa varten vedettavien johtojen rakennuskustannukset, sahko- ja
vesijohtojen pakolliset liittymismaksut seka muut tahan verrattavat,
tasta sopimuksesta aiheutuvat kustannukset.
Vuokran maara on kuusi ( 6) prosenttia vuodessa edellaolevan mukaisesti
lasketuista rakennuskustannuksista.
Vuokra juoksee 6 kohdassa mainitun vuokra-ajan alkamisesta ja maksetaan
puolivuosittain etukateen, ensimmaisen kerran sen kalenteri-puolivuoden
loppuun asti, minka aikana vuokra-aika on alkanut.
<PAGE>
6. Vuokra-aika
- ----------------
Vuokra-aika lasketaan kunkin rakennusvaiheen osalta erikseen ja alkaa
silloin kuin kaikki puheenalaiseen rakennusvaiheeseen liittyvat
rakennukset ja laitteet sopimuksen mukaisessa kunnossa luovutetaan
Vuokralaiselle. Vuokra-aika jatkuu tasta paivasta viisi vuotta.
Sopijapuolet ovat sopineet, etta tama aika automaattisesti pidennetaan
kahdeksikymmeneksi vuodeksi, kun Vuokralainen on saanut ulkomaalaisten ja
eraiden yhteisojen oikeudesta omistaa ja hallita kiinteaa omaisuutta
28.7.1939 annetun 1 S:ssa mainitun luvan.
Vuokralainen sitoutuu valittomasti Valtioneuvostolta hakemaan tallaista
lupaa.
Ellei sopimusta irtisanota viimeistaan vuosi ennen sen paattymista se
jatkuu automaattisesti viisi vuotta kerrallaan.
Vuokralainen voi saada sopimuksen puretuksi aikaisemmin
- jos Valtioneuvosto hylkaa hanen ylempana tassa kohdassa mainitun
hakemuksensa
- jos Vesihallitus hylkaa Vuokralaisen jatevetta koskevan hakemuksen
- jos Vuokralaisen toiminta kokonaan tai oleellisin osin pysyvasti
estetaan johtuen lainsaadannon tai viranomaisten maaraysten
muuttumisesta, tai siita etta viranomaisten asen noituminen
muuttuu jossakin kysymyksessa, josta Vuokralaisen toiminta on
riippuvainen tai muista ulkonaisista seikoista Vuokralaisen
vaikutusvallan ulkopuolella, ei kuitenkaan seikoista, jotka
aiheutuvat kilpailusta tai muista samankaltaisista toiminnan
kannattavuuteen liittyvista seikoista.
Naissa tapauksissa lakkaa sopimus kolme kuukautta sen jalkeen, kun
Vuokralainen on ilmoittanut asiasta Vuokranantajalle.
Vuokranantaja voi saada sopimuksen puretuksi ennen vuokra-ajan
paatttymista, jos Vuokralainen lakkaa harjoittamasta teollista toimintaa
kiinteistolla. Tallaisessa tapauksessa on Vuokranantajan kirjallisesti
huomautetttava asiasta Vuokralaiselle. Ellei Vuokralainen 12 kuukauden
kuluttua tasta lukien ole jalleeen ryhtynyt toimintaan tai saman ajan
kuluessa ole asettanut toista tilalleen harjoittamann samanlaista
toiminta kiineistolla
<PAGE>
taikka ilmoittanut olevansa valmis ostamaan kiinteiston allaolevan kohdan
9 mukaan, lakkaa sopimus ko. 12 kuukauden jakson mentya umpeen.
Vuokra-ajan paatyttya luovutetaan vuokratut rakennuksen Vuokranantajalle
siina kunnossa missa ne luovutushetkella ovat edellyttaen, etta
Vuokranantaja maksaa Vuokralaiselle sen velan, joka on saattanut syntya
taman sopimuksen 7 kohdan puitteissa.
Vuokralainen on oikeutettu kiinteistolta viemaan pois kaiken sen
omaisuuden, minka han on sinne tuonut siinakin tapauksesssa etta se on
kiinteasti asennettu maahan tai rakennukseen.
7. Lisarakennukset ja muutokset
----------------------------
Jos Vuokralainen vuokra-aikana haluaa, etta kiinteistolla tulisi
suorittaa lisarakennus-tai muutostoita, on taman ilmoitettave tasta
Vuokranantajalle ja antaa Vuokranantajalle samanlaatuisia tietoja kuin
ylempana kohdassa 4 mainitaan.
Vuokranantajan tulee viipymatta suorittaa nama tyot, mutta Vuokralaisen
on asetettava Vuokranantajan kayttoon rakennuskustannusten peittamiseksi
tarvittavat varat.
Ennen toiden aloittamista tulee sopijapuolten todeta, jos ja missa maarin
puheenalaiset rakennustyot korottavat kiinteistojen myyntiarvoa. Taten
ehka todettua arvonnousua vastaava osa Vuokralaisen suorittamista
kustannuksista on kirjattava Vuokranantajan velkana Vuokralaiselle
maksettavaksi sopimusten lakattua. Talle velalle maksetaan 6 prosentin
korko, joka kompensoidaan vastaavalla vuokran korotuksella. - Se osa
kustannuksista, joka ei voida katsoa nostavan rakennuksen myyntiarvoa
kuuluu, kuten edella on sanottu, myos Vuokralaisen maksettaviin, mutta se
ei anna Vuokralaiselle paaoma-tai korkovaatimuksia Vuokranantajan
suhteen. Tasta seuraa, ettei tama osa rakennuskustannuksista aiheuta
vuokran korotustakaan.
8. Optio-oikeus
------------
Vuokralainen on oikeutettu milloin tahansa sopimuksen voimassaoloaikana
lunastaa tontit niilla lunastushetkella olevine rakennuksineen ja muine
Vuokranantajan omistamine laitteineen.
<PAGE>
Tonttien hinta on talloin 50 pennia neliometrilta, mita hintaa jos
lunastus tapahtuu 31 joulukuuta 1972 jalkeen, on korotettava yhta monella
prosentilla kuin samanarvoisen tonttimaan kaypa hinta Kokemaella on
noussut helmikuusta 1971 lukien.
Rakennusten hintana in niiden hankintahinta, maaratty edellaolevan 5
kohdan mukaan.
Tallainen kiinteison lunastamisesta tehty sopimus on alistetttava
Valtioneuvostolle siina mielessa kuin mainitaan laissa 28.7.1939
annetussa laissa ulkomaalaisten ja eraiden yhteisojen oikeudesta omistaa
ja hallita kiinteaa omaisuutta.
Hinta maksetaan kateisella, kun Valtioneuvoston suostumus on saatu.
Vuokranmaksuvelvollisuus lakkaa samana paivana, niin myos kaikki muut
tahan sopimukseen perustuvat oikeudet ja velvoitteet.
9. Vuokraoikeuden Siirtaminen
--------------------------
Vuokralaisella on oikeus milloin tahansa vuokra-aikana antaa koko
kiinteiston tai osan siita rakennuksineen vuokralle tai asettaa tilalleen
toisen vuokralaisen, joka aikoo harjoittaa teollista toimintaa
kiinteistolla, edellyttaen, etta Vuokralainen edelleen vastaaa vuokran
maksamisesta Vuokranantajalle, ellei toisin ole sovittu. Edelleen on
Vuokralaisella oikeus toiselle luovuttaaa sopimuken 9 kohdan mukainen
optio-oikeus. Tallainen vuokralle antaminen tai oikeuden siirtaminen on
alis tettava Vuokranantajan vahvistettavaksi. Vahvistamista ei
kuitenkaan voi evata ilman asiallisesti patevaa syyta.
10. Valimieslauseke
---------------
Jokainen sopijapuolten valinen kiistakysymys, joka koskee taman
sopimuksen rakennetta, tarkoitusta tai taytantoonpanoa tai sopijapuolten
taman sopimuksen mukaisia oikeuksia tai velvoitteita tai mika muu tahansa
kiista, joka johtuu sopimuksesta tai liittyy siihen on ratkaistava
valimiesmenettelysta Suomessa Suomen lain mukaan. Valimiehia tulee olla
kolme, joista kumpikin sopijapuoli valitsee yhden valimiehen ja kolmannen
(jonka tulee toimia puheenjohtajana) valitsevat molemmat ensinmainitut
valimiehet yhdessa.
<PAGE>
Mikali toinen sopijapuoli ei kohtuullisen ajan kuluessa valitse omaa
valitysmiestaan, asettaa sellaisen Keskuskauppakamari valimiesmenettelya
vaatineen sopijapuolen kehotuksesta. Sama koskee puheenjohtajan
maaraamista, elleivat valimiehet ole voineet kohtuullisen ajan kuluessa
sopia puheenjohtajan valitsemisesta.
Vahvistamme taten edellaolevan sopimuksen sisallon ja sitoudumme taten
puolin ja toisin tayttamaan sopimuksen ehdot ja maaraykset.
Kokemaella, helmikuun 27 paivana 1971
Kokemaen kunnan puolesta:
Ilmari Rantanen
Kunnanjohtaja Toini Napi
Kunnansihteeri
SUOMEN POLYSTYREENI TEHDAS OY
[SIGNATURE]
-----------------------------
Stig Brunow
FINSKA POLYSTYREN FABRIKEN AB
[SIGNATURE]
-----------------------------
T. Kjellman
<PAGE>
Lease and Cooperation
Agreement
After Suomen Polystyreeni Tehdas Oy/Finska Polystyren Fabriken AB has decided to
start manufacturing polystyrene and other like materials in a factory to be
built for this purpose and after Kokemaki Borough has declared that it will be
ready to provide an industrial lot for use and build an industrial building in
order to bring industry to Kokemaki Borough and to promote work opportunities in
the borough, the company and the borough have concluded the following
Lease and Cooperation Agreement
-------------------------------
1. Parties:
-------
Suomen Polystryreeni Tehdas Oy/Finska Polystyren Fabriken AB,
hereafter Tenant
Borough of Kokemaki, hereafter Lessor.
2. Subject of Agreement:
--------------------
In first construction stage:
a) industrial lot I, area ca. 30,000 m/2/ per attached map,
b) industrial building I, volume ca. 7,000 m/3/, to be built on lot
I according to item 3d) below. [handwritten: 10,495]
In second construction stage:
c) industrial lot II, area ca. 30,000 m/2/ per attached map,
d) industrial building II, volume ca. 7,000 m/3/, to be built on
lot I or II according to item 3e) below.
The second stage begins when determined by Tenant, but no earlier
than 1/1/1973 and no later than 3 years after industrial building I
has been transferred to Tenant.
3. Lessor's obligations:
--------------------
Lessor undertakes at its own cost
a) to take care of planning, construction drawings and details of
construction according to Tenant-supplied information, mentioned
in item 4 below, and according to Tenant's instructions,
<PAGE>
-2-
b) to obtain necessary permissions for buildings, roads, wiring,
etc.,
c) to obtain contract bids, the acceptance of which is decided
jointly by Lessor and Tenant,
d) to begin, and, within 7 months of obtaining building permit,
complete the following tasks:
- construct a 7,000 m/3/ industrial building on lot I
- construct a sedimentation pool and foundations for such silos
and tanks that Tenant plans to place on lot I and/or II,
- construct roads intended for heavy traffic on the lots, said
roads being joined with exterior road network, and to
provide other necessary municipal engineering,
- construct sewers and water mains along with electrical wiring
and connections to buildings in scale of Tenant's needs,
which means bringing a supply line to the transformer and
from the transformer to the buildings,
- equip the buildings with heating, plumbing and air
conditioning that meets Tenant's needs for industrial
operation,
e) in the second building stage, to begin all actions needed in
items a-c, and of obtaining the building permit, to complete
construction of industrial building II on lots I and/or II, as
well as other tasks mentioned in item d) commensurate to the
specifications of this industrial building,
f) at the beginning of the lease period mentioned below in item 6,
to rent to Tenant and to transfer to Tenant's use all buildings
and equipment, mentioned above in items d) and e)
g) to bring all leased buildings as quickly as possible to agreed
condition in the event that they should wholly or partly be
destroyed because of fire or for another reason, in which case
Lessor may use the fire insurance compensation, mentioned below
in item 4,
<PAGE>
-3-
h) to assist Tenant's employees to obtain housing in the
neighborhood at normal rents.
4. Tenant's obligations:
--------------------
As soon as is possible, Tenant must give Lessor information about
the building's measurements, loads on floors, joists and foundation,
insulation, openings, lighting, and ventilation so that Lessor will
be able to use the information for planning, construction
specifications and building details. When the rental period,
mentioned below in item 6, has begun, Tenant is obligated to
- pay rent mentioned below in item 5, and at Tenant's own cost
- maintain the leased buildings in usual manner
- make sure that the buildings carry fire insurance at an amount
equal to their reconstruction value.
5. Rent
----
In order to determine the rent, the parties shall, after the
buildings in this discussion have been completed, jointly ascertain
the necessary construction costs incurred and paid out by Lessor
according to the jointly approved construction program, including
the planning costs and the costs for silos and tanks and other basic
costs as well as the costs of roads and wiring solely for Tenant's
use, compulsory connection costs for wiring and plumbing and other
similar costs resulting from this agreement.
The rent is six (6) percent annually calculated from above presented
construction costs.
The rent is paid starting from the rental period mentioned in item
6, and it will be paid every half-year beforehand, first payment to
end of the calendar year during which the rental period started.
<PAGE>
-4-
6. Rental period
-------------
The rental period is calculated separately for each construction
--------------------------------
stage, and it will start when all said buildings and equipment in
-----
the construction stage under this discussion are transferred to
Tenant. The rental period continues for five years from this date.
--------------
[handwritten:] 1973
The parties have agreed that this period is automatically extended
to twenty years once Tenant has obtained the permission to own and
------------
manage real property as decreed in (S)1 of the 7/28/1939 law, which
concerns foreigners and certain corporations.
Tenant promises immediately to apply for such permission from the
Cabinet (Valtioneuvosto).
Unless a termination notice is given at least one year before the
ending date of the agreement, the agreement continues automatically
five years at a time.
Tenant may terminate the agreement earlier
- if the Cabinet rejects the above mentioned application from Tenant
- if the National Water Board rejects Tenant's application
concerning waste water
- if Tenant's operations are wholly or essentially and permanently
prevented because of legislation, or because the authorities have
assumed a different position in matters upon which the Tenant's
operation depends, or for other reasons outside of Tenant's
influence, but not in the event of conditions caused by
competition or other similar matters pertaining to profitability
of operation.
In these cases the agreement terminates three months after Tenant
has informed Lessor of the matter.
Lessor may terminate the agreement before the end of lease period,
if Tenant ceases industrial operations on the property. In such a
case Tenant must give a written notice to Lessor. If Tenant has not
resumed operations within 12 months thereafter or within the same
period has not replaced someone else to continue industrial
operations on the
<PAGE>
-5-
property, or has informed to be ready to buy the property according
to item 9 below, the agreement will be terminated after the said 12
month period has ended.
After the rental period, the rented buildings are transferred back
to Lessor in the same condition they were in when received, provided
that Lessor pays Tenant the loan that may have been incurred within
item 7 of this agreement.
Tenant has the right to remove all items brought to property by
Tenant, even if such items are fixed to the ground or to the
building.
7. Additional buildings and changes
--------------------------------
If Tenant wishes additional buildings or changes during the rental
period, Tenant should communicate this to Lessor and provide Lessor
with the same kind of information as mentioned in item 4 above.
Lessor shall perform this work immediately, but Tenant must provide
Lessor with the funds needed to cover the construction costs.
Before starting the work, the parties must ascertain if and to what
degree the said construction raises the property value. The possible
additional value is to be credited as Lessor's debt to Tenant, to be
paid back after termination of the agreement. Interest at six
percent is to be paid on this debt, which will be compensated by
equivalent raise in rent. The portion of costs not considered to
raise the selling price of the building is included, as stated
before, in payments by Tenant, but it does not entitle the Tenant to
receive any capital or interest compensation from the Lessor.
Therefore, this part of the construction costs does not result in
any raises in rent.
8. Option right
------------
At any time while the agreement is in effect, Tenant has the right
to redeem the lots including the existing buildings and other
equipment owned by Lessor at redemption date.
<PAGE>
-6-
Lots are at that time priced at 50 pennies per square meter, which,
if the redemption takes place after December 31, 1972, will be
raised by the same percentage as similar land properties have risen
at Kokemaki since February 1971.
The prices of the buildings equal their construction cost,
determined in item 3 above.
This kind of agreement on redemption of property must be subjected
to Cabinet approval as decreed in (S)1 of the 7/28/1939 law, which
concerns the rights of foreigners and certain corporations to own
and manage real property.
The price is to be paid in cash after the Cabinet approval has been
obtained.
Rent obligation ends on the same date, along with other rights and
obligations based on this agreement.
9. Transfer of lease rights
------------------------
Tenant has a right, at any time while the agreement is in effect, to
rent all or part of the property, including the buildings, or to
substitute another tenant who intends to continue industrial
operations on the property, provided that Tenant continues to be
responsible for paying rent to Lessor, unless otherwise agreed.
Further, Tenant has a right to transfer the option right as
described in item 9 of the agreement. This kind of subletting or
rights transfer must be subjected to Lessor for confirmation. The
confirmation cannot, however, be rejected without a valid reason.
10. Arbitration clause
------------------
Every dispute between the parties concerning the structure, purpose
or execution of this agreement, or the rights or obligations of the
parties according to this agreement, or any other dispute arising
from this agreement or connected with it must be solved through
arbitration in Finland, according to the laws of Finland. Three
arbiters are needed, each party selecting one, the third one (who is
to act as the chairperson) being elected by the other two arbiters
together.
<PAGE>
-7-
If the other party does not within a reasonable time select an
arbiter, the Central Chamber of Commerce will appoint one at the
behest of the party demanding arbitration. The same applies for
determining the chairperson, if the arbiters have not been able to
agree on the chairperson within a reasonable amount of time.
We hereby confirm the contents of the previous agreement and we
commit ourselves to meet the terms and conditions of this agreement.
At Kokemaki on February 27, 1971
On behalf of Kokemaki Borough:
[signature][stamp]
Ilmari Rantanen [signature]
Borough Mayor Toini Napi
Borough Secretary
SUOMEN POYSTYREENI TEHDAS OY
FINSKA POLYSTYREN FABRIKEN AB
[signature] [signature]
Stig Brunow T. Kjellman
<PAGE>
Lisasopimus
1. Sopijapuolet
- ----------------
Suomen Polystyreeni Tehdas Oy/Finska Polystyren Fabriken Ab, alempana
sanottu vuokralaiseksi seka Kokemaen kauppala, alempana sanottu
vuokranantajtaksi.
2. Sopimuksen peruste
- ---------------------
Tama lisasopimus liittyy sopijapuolten kesken 27.2.1971 allekirjoitettuun
Vuokra-ja yhteistoimintasopimukseen, erityisesti sen kohtaan 7.
Lisarakennukset ja muutokset.
3. Sopimuksen Kohde
- --------------------
Taman lisasopimuksen puitteissa on vuokranantaja rakennuttanut
vuokralaisen kayttoon lisarakennuksen edella mainitussa Vuokra- ja
yhteistoimintasopimuksessa mainitulle tontille vuokralaisen hankkkimien
piirustusten ja tyoselitysten seka rakennuslupapaatoksen mukaisesti.
Tama lisarakennus on valmistunut ja luovutettu vuokralaisen kayttoon
1.6.1976.
4. Rahoitus
- ------------
Vuokra- ja yhteistoimintasopimuksen 7 kohdassa vahvistettuja periaatteita
noudattaen on rakennusen rahoitus hoidettu seuraavasti:
Rakennuskustannukset, joiden kokonaismaaran sopijapuolet puolin ja toisin
ovat todeneet nouseen 475.000 markkkaan, on maksettu vuokralaisen
hankkimilla ja vuokranantajalle luovuttamilla lainaveroilla, jotka
kirjataan vuokranantajan velaksi vuokraajalle yhta pitkaksi aikaa kuin
vuokrasuhde alempana 7 kohdassa mainitut maaraykset huomioonottaen
kestaa.
5. Lainan korko ja takaisinmaksu
- ---------------------------------
Edella mainitusta 475.000 markan suuruisesta lainasta lasketaan 1.6.1971
alkaen vuotuista korkoa Vuokra- ja yhteistoimintasopimuksen 7 kohdan
maaraysten mukaisesti kymmenen ja yhden neljasosa (10 1/4) prosentin
mukaan eli mk 48.687,50.
Niin kauan kuin sopijapuolten valinen vuokrasuhde jatkuu, vuokralainen
suorittaa vuokranantajalle koron eraantymispaivana vuokrana askenmainitun
maaran eli mk 48.687,50 vuodessa.
Jos korkokanta sopimuksen kestaessa syysta tai toiseta muuttuu,
tarkistetaan vuokra vastaavasti.
Lainan paaoman edellytetaan eraantyvan maksettavaksi vuokralaisen
lunastattaessa taman sopimuksen kohteena olevan lisarakennuksen siten kun
alempana 7 kohdassa mainitaan, jolloin rakennuksen kauppahinta kuittautuu
<PAGE>
lainan maaraa vastaan. - Ellei lunastus toteudu, eraantyy laina
lunastusajan pattyessa.
6. Vuokranantajan takaus
- -------------------------
Sopijapuolten kesken tehdyn sopimuksen mukaisesti vuokralainen on ottanut
edella 4 kohdassa mainitut lainavarat lainana Elakevakuutusyhtio
Kalervolta. Taman vuokralaisen saaman lainan vakuudeksi on vuokranantaja
antanut takauksen, minka takauksen vuokranantaja tarpeen vaatiessa
pdentaa olemaan voimassa kunnes laina 5 kohdan mukaisesti eraantyy.
7. Tehdaskiinteiston lunastaminen
- ----------------------------------
Taman lisasopimuksen kohteena oleva rakennus in soveltuvin osin samojen
vuokra- ja lunastussaantojan alainen kuin Vuokra- ja
yhteistoimintasopimuksen 8 kohdassa ("Optio-oikeus") mainitut
rakennukset. Viimeiksimainitun sopimuksen ja taman lisasopimuksen
maaraykset on tulkittava siten, etta lunastusoikeutta harjoitettaessa in
vuokralainen velvollinen lunastamaan kaikki vuokraamansa rakennukset
yhdella kertaa Vuokra- ja yhteistoimintasopimuksen aika- ja muita
maarayksia noudattaen.
8. Muut maaraykset
- -------------------
Tahan lisasopimukseen sovelletaan soveltuvin osin Vuokra- ja
yhteistoimintasopimuksen maaraykset, niiden joukossa myos
valimieslauseke.
<PAGE>
Tata lisasopimusta on laadittu kaksi yhtapitavaa kappaletta, toinen
vuokranrantajalle ja toinen vuokralaiselle.
Kokemaella, lokakuun 13 paivana 1976
Kokemaen kauppalan puolesta
Kauppalanjohtaja Ilmari Rantanen
Hallintopaallikko Martti Jalkanen
Helsingissa, elokuun 30 paivana 1976
Suomen Polystyreeni Tehdas Oy/
Finska Polystyren Fabriken Ab
Stig Brunow Kaj-Kristian Eskelin
<PAGE>
16.X.1976
Subcontract
1. Parties
- -----------
Suomen Polystyreeni Tehdas Oy/Finska Polystyren Fabriken Ab, hereafter
Tenant, and Borough of Kokemaki, hereafter Lessor.
2. Basis for Agreement
- -----------------------
This subcontract is related to the Lease and Cooperation Agreement signed
on 2/27/1971 by the parties, especially to its item 7, Additional
buildings and changes.
3. Subject of Agreement
- ------------------------
As per this subcontract, Lessor will have built for Tenant's use an
additional building on the property mentioned in the previously mentioned
Lease and Cooperation Agreement, according to jointly approved plans and
specifications as well as building permit decisions. The additional
building is finished and released to Tenant's use on 6/1/1976.
4. Financing
- -------------
Conforming to the principles confirmed in item 7 of the Lease and
Cooperation Agreement, the building has been financed as follows: The
building costs, whose total amount the parties have mutually ascertained
as 475,000 marks, have been paid with loans procured by tenant and
released to Lessor's use, said funds being recorded as Lessor's debt to
Tenant as long as the lease agreement is in effect, according to the
stipulations in item 7 below.
<PAGE>
5. Interest on loan and installments
- -------------------------------------
Annual interest on the previously mentioned loan of 475,000 marks will be
collected as of 6/1/1976, according to item 7 in the Lease and
Cooperation Agreement and at ten and one quarter (10 1/4) percent, which
comes to 48,687.50.
While the lease agreement between the parties remains in effect, Tenant
will pay Lessor the previously mentioned amount, 48,687.50, as rent on
the interest due date.
If for some reason the interest rates change while the agreement is in
effect, rent will be adjusted accordingly.
The principal of the loan is expected to fall due when Tenant redeems the
additional building referred to in this contract, as mentioned in item 7
below, at which time the sale price of the building is set off against
the amount of the loan. If redemption does not take place, the loan falls
due at redemption due date.
6. Security by Lessor
- ----------------------
According to the agreement between the parties, Tenant has obtained the
loan funds, mentioned in item 4 above, from Elakevakuutusyhtio Kalervolta
(life insurance company). As protection against this loan received by
Tenant, Lessor has given a security, which Lessor continues in effect as
needed until the loan is due, according to item 5.
7. Redemption of the factory property
- --------------------------------------
Where applicable, the building which is subject to this subcontract is
under the same lease and redemption rules as the buildings mentioned in
item 8 ("Option Rights") of the Lease and Cooperation Agreement. The
rules in the previously mentioned agreement along with those in this
subcontract are to be interpreted so that Tenant, when using the Option,
is obligated to redeem all of the buildings rented by Tenant
simultaneously, according to the stipulations that concern time and other
matters in the Lease and Cooperation Agreement.
8. Other stipulations
- ----------------------
As applicable, this subcontract is subject to the rules in the Lease and
Cooperation Agreement, including the arbitration clause.
<PAGE>
This subcontract has been made in two identical copies, one to Lessor
and one to Tenant.
Kokemaki on October 13, 1976
On behalf of Kokemaki Borough:
[signature] [stamp]
Borough Mayor Ilmari Rantanen
[signature]
Administrative Manager Martti Jalkanen
Helsinki, on August 30, 1976
Suomen Polystyreeni Tehdas Oy/
Finska Polystyren Fabriken Ab
[signature] [signature]
Stig Brunow Kaj-Kristian Eskelin
<PAGE>
LISASOPIMUS II
1. Sopijapuolet Kokemaen kaupungissa kotipaikan omaava Suomen
- ---------------- Polystyreeni Tehdas Oy/Finska Polystyren Fabriken Ab,
Alempana sanottu vuokralaiseksi, seka Kokemaen kaupunki,
alempana sanottu vuokranantajaksi.
2. Sopimuksen peruste
- ----------------------
Tama lisasopimus II liittyy sopijapuolten kesken
27.2.1971 allekirjoitettuun Vuokra-ja
yhteistoimintasopimukseen, erityisesti sen kohtaan 7.
Lisarakennukset ja muutokset.
3. Sopimuksen kohde
- --------------------
Taman lisasopimuksen puitteissa vuokranantaja rakennuttaa
vuokralaisen kayttoon toimistorakennuksen laajennuksen
yhteisesti hyvaksyttyjen piirustusten ja tyoselitysten
seka rakennuslupapaatoksen mukaisesti. Rakennustyot
aloitetaan huhtikuussa 1981 ja laajennustyo tulee olla
valmis 31.10.1981 mennessa.
4. Kustannukset Rakennuskustannusten, jotka on arvioitu
- ---------------- kolmeksisadaksiviideksikymmeneksi tuhanneksi (350 000)
markaksi, lopullinen maara todetaan yhteisesti
rakennusten valmistuttua viimestaan kolmen (3) kuukauden
kuluessa lopputarkastuksesta.
Vuokra-ja yhteistoimintasopimuksen 7 kohdan 3 momentissa
tarkoitettujen kustannusten, jotka eivat korota
kiinteisojen myyntiarvoa, osuudeksi on todettu
kolmekymmenta (30) prosenttia rakennustyon
kokonaiskustannuksista.
5. Rahoitus ja vuokra
- ----------------------
Rakennustyo rahoitetaan Keskinainen yhtio
Teollisuusvakuutuksen vuokranantajalle myontamalla
lainalla, jonka korko on talla hetkella 10.25%.
Edella 4. kohdassa tarkoitettujen kiinteiston arvoa
korottatattomien kustannusten
(30% kokonaiskustannuksista) rahoittamiseen kaytetyn
lainan osalta maksaa vuokralainen koron ja lyhennykset
vuokranantajalle edella tarkoitetun lainan lyhennysten ja
koron eraantymispaivana.
<PAGE>
Vuokranantajalla on oikeus peria edella tarkoitetusta
lainasta maksamaansa luottovarausprovisio, leimavero ja
toimitusmaksut vuokralaiselta.
Vuokranantaja perii laajennusosasta vuosittain vuokran,
jonka maara saadaan kertomalla kiinteiston arvoa
korottavat rakennuskustannukset rahoitukseen kaytetyn
lainan korkoprosetilla.
Sen jalkeen, kun laina on tullut kokonaan maksetuksi,
kaytetaan vuokran laskemisesta sita korkoprosenttia, joka
oli voimassa viimeista lainalyhennysta suoritettaessa.
Niin kauan kun sopijapuolten valinen vuokrasuhde jatkuu,
vuokralainen suorittaa vuokrananajalle vuokran edella
tarkoitetun lainan koron eraantymispaivana ja lainan
tultua maksetuksi aina vuoden kuluttua edellisesta
vuokran eraaantymispaivasta.
Siina tapauksessa, etta vuokralainen kayttaa Vuokra-ja
yhteistoimintasopimuksen 8. kohdassa tarkoitettua optio-
oikeutta, eraantyy viela maksamatta oleva osa taman
kohdan toisen momentin tarkoittamasta vuokralaisen
maksettavasta lainaosuudesta valittomasti.
6. Tehdaskiinteiston lunastaminen
- ----------------------------------
Taman lisasopimuksen kohteena oleva rakennus on
soveltuvin osin samojen vuokra-ja lunastussaantojen
alainen kuin Vuokra-ja yhteistoimintasopimuksen 8.
kohdassa (Optio-oikeus) mainitut rakennukset.
Viimeiksimainitun sopimuksen ja taman lisasopimuksen
maaraykset on tulkittava siten, etta lunastusoikeutta
harjoitettaessa in vuokralainen velvollinen lunastamaan
kaikki vuokraamansa rakennukset yhdella kertaa Vuokra-ja
yhteistoimintasopimuksen aika-ja muita maarayksia
noudattaen.
7. Muut maaraykset
- -------------------
Tahan lisasopimukseen sovelletaan soveltuvin osin Vuokra-
ja yhteistoimintasopimuksen maaraykset, niiden joukossa
myos valimieslauseke.
Tata lisasopimusta on laadittu kaksi yhtapitavaa
kappaletta, toinen vuokranantajalle ja toinen
vuokralaiselle.
Kokemaella, 26 paivana helmikuuta 1981
KOKEMAEN KAUPUNGINHALLITUS
Kaupunginjohtaja Ilmari Rantanen/Hallintopaallikko Martti
Jalkanen
SUOMEN POLYSTYREENI TEHDAS OY/
FINSKA POLYSTYREN FABRIKEN AB
[SIGNATURE]
Tommy Kjellman
<PAGE>
SUOMEN POLYSTYREENI TEHDAS OY
Finska Polystyren Fabriken AB
Puh. 939/60 911 Tel.
Telex 26425 "Styre Sf"
32800 KOKEMAKI
1982-02-16 Kokemaen kaupunki
32800 Kokemaki
Viitteenne Er ref.
Viiteemme Var ref.
Lisarakennuksen rakennuskustannukset
Viitaten kirjeeseenne 15.21.1982 ilmoitamme hyvaksyvamme lisasopimuksen II
kohdan 4 lopullisiksi kustannuksiksi 287.608 markkaa.
<PAGE>
KOKEMAEN KAUPUNKI
KAUPUNGINHALLITUS 15.2.1982
SUOMEN POLYSTYREENI TEHDAS OY
LISARAKENNUKSEN RAKENNUSKUSTANNUSTEN HYVAKSYMINEN
Suomen Polystyreeni Tehdas Oy:n ja Kokemaen kaupungin valilla 26.2.1981
allekirjoitetun lisasopimus II kohtaan 4. Kustannukset viitaten ilmoitamme, etta
kirjanpitomme mukaan rakennuskustannusten lopullinen maara on
kaksisataakahdeksankymmentaseitsemantuhattta kuusisataakahdeksan (287 608)
markkaa.
Esitamme, etta Te puolestanne hyvaksyisitte em. kustannukset ja ilmoittasitte
siita kaupungille kirjallisesti.
KOKEMAEN KAUPUNGINHALLITUS
Kaupunginjohtaja Ilmari Rantanen
Hallitopaallikko Martti Jalkanen
<PAGE>
SUBCONTRACT II
1. Parties In City of Kokemaki situated Suomen Polystyreeni Tehdas Oy/Finska
- ----------- Polystyren Fabriken Ab, hereafter Tenant, and City of Kokemaki,
hereafter Lessor.
2. Basis for Agreement
- -----------------------
This subcontract II is related to the Lease and Cooperation
Agreement signed on 2/27/1971, especially to its item 7, Additional
buildings and changes.
3. Subject of Agreement
- ------------------------
As per this subcontract, Lessor will build for Tenant's use an
extension of office building, as per jointly approved plans and
specifications as well as building permit decisions. Construction
will be started in April 1981, and the expansion shall be ready by
October 31, 1981.
4. Costs The final construction cost, estimated as three hundred fifty
- --------- thousand marks (FIM 350,000), will be ascertained jointly after the
buildings are ready, at the latest three (3) months after the final
inspection. The proportional costs referred to in item 7 part 3 of
the Lease and cooperation agreement, which do not raise the selling
price of the property, are noted to be thirty (30) percent of total
construction costs.
5. Financing and rental fee
- ----------------------------
The construction will be financed through a loan, given to Lessor
by Keskinainen yhtio Teollisuusvakuutuksen, which at present has a
rate of 10.25%.
On the loan used to finance the costs mentioned in item 4 above,
which do not raise the value of the property (30% of total costs),
the Tenant will pay to Lessor the interest and installments on the
due date of said loan.
<PAGE>
Lessor has the right to collect from Tenant a credit loss reserve
commission, stamp tax and a service charge, connected to the
aforesaid loan.
Lessor will collect annual rent for the expansion part, the rent
being calculated by multiplying the construction costs which raise
the property value by the interest rate of the loan used for
financing.
After the loan is fully paid, rent is calculated using the interest
rate in effect at the last installment. As long as the lease
agreement is in effect between the parties, Tenant will pay the
rent to Lessor on the due date of the loan interest, and after the
load is paid, one year after the last due day of the rent.
If Tenant uses the option mentioned in item 8 of the Lease and
Cooperation Agreement, the unpaid portion of the loan payable by
Tenant, referred to in the second section of this item, will become
due immediately.
6. Redemption of the factory property
- --------------------------------------
Where applicable, the building which is subject to this subcontract
is under the same lease and redemption rules as the buildings
mentioned in item 8 (Option rights) of the Lease and Cooperation
Agreement. The rules in this agreement along with those in this
subcontract are to be interpreted so that Tenant, when using the
Option, is obligated to redeem all the buildings rented by Tenant
simultaneously, according to the stipulations that concern time and
other matters in the Lease and Cooperation Agreement.
7. Other stipulations
- ----------------------
As applicable, this subcontract is subject to the rules in the
Lease and Cooperation Agreement, including the arbitration clause.
This subcontract has been made in two identical copies, one to
Lessor and the other to Tenant.
Kokemaki on February 26, 1981
KOKEMAKI CITY COUNCIL
Mayor Ilmari Rantanen [signature] [stamp]
Administrative Manager Martti Jalkanen [signature]
SUOMEN POYSTYREENI TEHDAS OY/
FINSKA POLYSTYREN FABRIKEN AB
[signature]
Tommy Kjellman
<PAGE>
SUOMEN POLYSTYREENI TEHDAS OY
Finska Polystyren Fabriken AB
Tel. 939/60 911
Telex 26425 "Styre Sf"
32800 KOKEMAKI
1982-02-16 City of Kokemaki
Your reference 32800 Kokemaki
Our reference
Construction costs of additional building
Referring to your letter of 2/15/1982, we inform you that we agree to FIM
287,608 as the final costs in Subcontract II, item 4.
[illegible stamp]
<PAGE>
349/82
CITY OF KOKEMAKI
CITY COUNCIL 2/15/1982
- --------------------------------------------------------------------------------
Suomen Polystyreeni Tehdas Oy
APPROVAL OF CONSTRUCTION COSTS OF ADDITIONAL BUILDING
Referring to Subcontract II, item 4, signed between Suomen
Polystyreeni Tehdas Oy and City of Kokemaki on 2/26/1981, we inform
you that according to our records the final sum of construction costs
is two hundred eighty-seven thousand six hundred eight marks (FIM
287,608).
We present that You, on your behalf, accept these costs and inform the
City accordingly in writing.
KOKEMAKI CITY COUNCIL
Mayor Ilmari Rantanen [signature]
Administrative Manager Martti Jalkanen [signature]
<PAGE>
LISASOPIMUS III
1. Sopijapuolet Kokemaen kaupungissa kotipaikan omaava Suomen Polystyreeni
------------
Tehdas Oy/Finska Polystyren Fabriken Ab, alempana sanottu
vuokralaiseksi, seka Kokemaen kaupunki, alempana sanottu
vuokranantajaksi.
2. Sopimuksen peruste
------------------
Tama lisasopimus III liittyy sopijapuolten kesken 27.2.1971
allekirjoitettuun Vuokra- ja yhteistoimintasopimukseen,
erityisesti sen kohtaan 7. Lisarakennukset ja muutokset.
3. Sopimuksen kohde
----------------
Taman lisasopimuksen puitteissa vuokranantaja rakennuttaa
vuokralaisen kayttoon lisarakennukset (trukkitalli ja
peroksidivarasto) edella mainitussa vuokra ja-
yhteistoimitasopimuksessa mainitulle tontille vuokralaisen
hankkimien piirustusten, jotka on oheistettu liiteeksi, ja
tyoselitysten seka rakennuslupapaatoksen mukaisesti.
Lisarakennusten tulee valmistua ja olla luovutettu
vuokralaisen kayttoon 1.1.1986.
4. Kustannukset Rakennuskustannusten, jotka on arvioitu
------------
sadaksiseitsemaksikymmeneksituhanneksi (170 000) markaksi,
lopullinen maara todetaan yhteisesti rakennusten valmistuttua
viimestaan kolmen (3) kuukauden kuluttua lopputarkastuksesta.
5. Rahoitus ja vuokra
------------------
Vuokra- ja yhteistoimintasopimuksen 7. kohdassa vahvistettuja
periaateita noudattaen hoidetaan rahoitus seuravasti:
Rakennuskustannukset, joiden kokonaismaaran sopijapuolet
puolin ja toisin toteavat 4. kohdassa sanotulla tavalla,
maksetaan vuokralaisen hankkimilla ja vuokranantajalle
luovuttamilla varoilla, jotka kirjataan vuokranantajan velaksi
vuokraaajlle yhta pitkaksi aikaa kuin vuokrasuhde alempana
<PAGE>
7. Kohdassa mainitut maaraykset huomioonottaen kestaa.
Talle velalle lasketaan kuuden (6) prosentin korko 1.1.1986
alkaen. Vuokranantaja perii puheena olevasta laajennuksesta
vuosittain vuokraa, joka on kuusi (6) prosenttia
rakennuskustannuksista. Niin kauan, kun sopijapuolten valinen
vuokrasuhde jatkuu, vuokralainen suorittaa vuokranantajalle
koron eraantymispaivana vuokrana edella mainitun maaran.
Lainan paaoman edellytetaan eraantyvan maksettavaksi
vuokralaisen lunastaessa taman sopimuksen kohteena olevan
lisarakennuksen siten kun alempana 7. kohdassa mainitaan,
jolloin rakennuksen kauppahinta kuittautuu lainan maaraa
vastaan. Ellei lunastus toteudu, eraytyy laina lunsastusajan
paattyessa.
6. Tehdaskiinteiston lunastaminen
- ----------------------------------
Taman lisasopimuksen kohteena olevat rakennukset ovat
soveltuvin osin samojen vuokra- ja lunastussaantojen alainen
kuin Vuokra- ja yhteistoimintasopimuksen 8. kohdassa (Optio-
oikeus) mainitut rakennukset. Viimeiksimainitun sopimuksen ja
taman lisasopimuksen maaraykset on tulkittava siten, etta
lunastusoikeutta harjoitettaessa on vuokralainen velvollinen
lunastamaan kaikki vuokraamansa rakennukset yhdella kertaa
Vuokra- ja yhteistoimintasopimuksen aika- ja muita maarayksia
noudattaen.
7. Muut maaraykset
- -------------------
Tahan lisasopimukseen sovelletaan soveltuvin osin Vuokra- ja
yhteistoimintasopimuksen maaraykset, niiden joukossa myos
valimieslauseke.
Tata lisasopimusta on laadittu kaksi yhtapitavaa kappaletta,
toinen vuokranantajalle ja toinen vuokralaiselle.
Kokemaella, 13 paivana elokuuta 1985
KOKEMAEN KAUPUNGINHALLITUS
Kaupunginjohtaja Ilmari Rantanen
Kansliasihteeri Tauno Makinen
<PAGE>
SUOMEN POLYSTYREENI TEHDAS OY
Johataja Heimo Kivetela
Konttoripaallikko Olli Seikkinen
Todistavat:
<PAGE>
Trukkitallin ja peroksidivaraston rakennuskustannukset
------------------------------------------------------
Todettiin Lisasopimus III, 4. pykalan mukaisesti trukkitallin ja
peroksidivaraston rakennuskustannuksiksi yhteensa 227.629,16.
Kokmaella tammikuun 29 paivana 1986
Kokemaen kaupunki Suomen Polystyreeni Tehdas OY
<PAGE>
SUBCONTRACT III
1. Parties In City of Kokemaki situated Suomen Polystyreeni Tehdas Oy/
- ----------- Finska Polystyren Fabriken Ab, hereafter Tenant, and City of
Kokemaki, hereafter Lessor.
2. Basis for Agreement
- -----------------------
This subcontract III is related to the Lease and Cooperation
Agreement signed on 2/27/1971, especially to its item 7,
Additional buildings and changes.
3. Subject of Agreement
- ------------------------
As per this subcontract, Lessor will build for Tenant's use
additional buildings (forklift garage and peroxide warehouse) on
the property mentioned in the previous Lease and Cooperation
Agreement, as per Tenant's plans, which are attached, and
specifications as well as building permit decisions. The
additional buildings must be ready and released to Tenant's use
by 1/1/1986.
4. Costs The final construction cost, estimated as one hundred seventy
- --------- thousand marks (FIM 170,000), will be ascertained jointly after
the buildings are ready, at the latest three (3) months after
the final inspection.
5. Financing and rental fee
- ----------------------------
Conforming to the principles confirmed in item 7 of the Lease
and Cooperation Agreement, the buildings will be financed as
follows:
The building costs, whose total amount the parties to
this agreement will mutually ascertain as stated in item 4, are
paid with funds that the Tenant will procure and transfer to
Lessor's use, said funds being recorded as Lessor's debt to
Tenant as long as the lease agreement is in effect, according
to the stipulations in item 7 below.
<PAGE>
The interest on this debt is calculated at six (6) percent
starting on 1/1/1986. Lessor will collect annual rent on said
expansion, the lease amount being six (6) percent of the
construction costs. While the lease agreement between the
parties remains in effect, Tenant will pay Lessor the
previously mentioned amount as rent on the interest due date.
The principal of the loan is expected to fall due when Tenant
redeems the additional building referred to in this contract,
as mentioned in item 7 below, at which time the sale price of
the building is set off against the amount of the loan. If
redemption does not take place, the loan falls due at
redemption due date.
6. Redemption of the factory property
- --------------------------------------
Where applicable, the building which is subject to this
subcontract is under the same lease and redemption rules as the
buildings mentioned in item 8 (Option rights) of the Lease and
Cooperation Agreement. The rules in this agreement along with
those in this subcontract are to be interpreted so that Tenant,
when using the Option, is obligated to redeem all the buildings
rented by Tenant simultaneously, according to the stipulations
that concern time and other matters in the Lease and
Cooperation Agreement.
7. Other stipulations
- ----------------------
As applicable, this subcontract is subject to the rules in the
Lease and Cooperation Agreement, including the arbitration
clause.
This subcontract has been made in two identical copies, one to
Lessor and the other Tenant.
Kokemaki on August 13, 1985
KOKEMAKI CITY COUNCIL
Mayor Martti Jalkanen [signature]
Council Secretary Tauno Makinen [signature]
[stamp]
<PAGE>
SUOMEN POLYSTYREENI TEHDAS OY
Director Heimo Kivetela [signature]
Office Manager Oili Seikkinen [signature]
Witnessed by:
[signatures]
<PAGE>
Construction costs of forklift garage and peroxide warehouse
------------------------------------------------------------
According to Subcontract III, item 4, construction costs of forklift
garage and peroxide warehouse were ascertained as 227,629.16.
Kokemaki on January 29, 1986
City of Kokemaki Suomen Polystyreeni Tehdas OY
[signatures] [signatures]
<PAGE>
NESTE
Lakiasiainosasto
Toni Huopalainen 29.12.1987
Kokemaen kaupungille
Vuokrasopimuksen siirto
Pyynnosta ilmoitamme etta Suomen Polystyreeni Tehdas Oy:n
Kokemaen kaupungin kanssa on 27.2.1971 solmimamme Vuokra- ja
yhteistoimintasopimus, jota on taydennety ja muutettu
Lisasopimuksella I (13.10.1976), Lisasopimuksella II (26.2.1981)
ja lisasopimuksella III (13.8.1985), on yhtion selvitysmiesten
toimesta sirretty Neste Oy:lle 28.12.1987 kaikkine oikeuksineen
ja velvoitteineen. Neste Oy jatkaa 1.1.1988 lahtien kemian
teollisuuden harhoittamista kiinteistolla.
Espoossa, 29.12.1987
Toni Huopalainen
Yhtion lakimies
<PAGE>
NESTE
Legal department [signatures]
Toni Huopalainen 12/29/1987
To City of Kokemaki [stamp:] Kokemaki City Council
Arrival date [handwritten:] 12/30/87
Handling [illegible]
Ref/Archival 78938
TRANSFER OF LEASE AGREEMENT
As requested, we inform that the Lease and Cooperation Agreement of
2/27/1971 between Suomen Polystyreeni Tehdas Oy and City of Kokemaki,
which has been added to and amended with Subcontract I (10/13/1976),
Subcontract II (2/26/1981) and Subcontract III (8/13/1985), has been
transferred by the company's executors to Neste Oy on 12/28/1987 with
all its rights and obligations. Starting on 1/1/1988, Neste Oy will
carry on chemical industry operations on this property.
In Espoo on December 29, 1987
[signature]
Toni Huopalainen
Company lawyer
<PAGE>
VUOKRASOPIMUS
Talla vuokrasopimuksella vuokraa Kokemaen kaupunki, jaljempana
kaupunki, omistamansa varastorakennuksen, kylmaa varastotilaa
970m2, Neste Oy:lle. Varasto sijaitsee Peipohjan kaupunginosan
103 korttelissa 43 tontilla 1.
Vuokraehdot ovat seuraavat:
1. Vuokra-aika alkaa 15.4.1994 jatkuen toistaiseksi 3 kuukauden
molemminpuolisella irtisanomusajalla.
2. Vuokran suuruus in 5000 mk kuukaudessa, joka maksetaan
kaupungin tilille PSP 800014-401049 kunkin kalenterikuukauden
25. paivaan mennessa ilman eri laskua. Vuokraan sisaltyy
valaistussahko.
3. Kaupunki huolehtii rakennuksen palovakuutuksesta. Neste Oy
vakuutta varastoitavat tuotteet.
4. Kaupunki huolehtii piha-alueen aurauksesta.
Tata vuokrasopimusta on tehty kaksi samanlaista kappaletta, yksi
kaupungille ja yksi Neste Oy:lle.
Kokemaki 15.4.1994
KOKEMAEN KAUPUNKI NESTE OY
Martti Jalkanen
Kaupunginjohtaja
Terttu Maattanen
Kaupunginsihteeri
<PAGE>
TONTTI I
TONTTI II
<PAGE>
LEASE AGREEMENT
With this lease agreement, City of Kokemaki, hereafter City, rents a warehouse
building, 970 m/2/ of cold warehouse space, owned by City, to Neste Oy. The
warehouse is situated in Peipohja city section 103, block 43, lot 1.
Lease terms are as follows:
1. Lease period begins 4/15/1994 and continues until further notice, with 3
months mutual term of giving notice.
2. The rent is FIM 5,000 per month, payable to City's account PSP 800014-
401049 by the 25th day of each calendar month, without separate invoice.
The rent includes electricity for lighting.
3. City will be responsible for fire insurance. Neste Oy will insure warehoused
products.
4. City will be responsible for snow plowing of the yard area.
This Lease Agreement has been made in two identical copies, one to City and
the other to Neste Oy.
Kokemaki 4/15/1994
CITY OF KOKEMAKI NESTE OY
[signature] [signatures]
Martti Jalkanen
Mayor
[signature]
Terttu Maattanen
City Secretary
<PAGE>
LOT I
LOT II
<PAGE>
[MAP]
Kayttooikeuden rajoitus Limitation of right to use
Oy W. Rosenlew Ab:n voimansiirtolaitteita for Oy W. Rosenlew Ab transmission
varten equipment
NYKYINEN CURRENT
NEW BUILDING
TEKNISEN TSTON VARASTO TECHNICAL OFFICE WAREHOUSE
UUSI LIIKENNEALUE NEW TRAFFIC AREA
SORA GRAVEL
NURMI LAWN
MAARAK URAKKAR CONTRACT FOR GROUNDWORK
PREPARATION.
PUHDISTAMONTIE (name of street)
<PAGE>
[MAP]
Monikulmiopisteet Polygon points
1040 571420,22
1046 571614,66
1469 570826,99
1479 570908,82
Jateveden puhdistamo Waste water treatment
MITTAKAAVA SCALE 1:500
<PAGE>
VUOKRASOPIMUS II LEASE AGREEMENT
Sopijapuolet Kokemaen kaupunki, alempana sanottu vuokranantajaksi, ja
Espoon kaupungissa kotipaikan omaava Neste Oy -niminen
osakeyhtio, alempana sanottu vuokralaiseksi.
Vuokralaiselle on 28.12.1987 sirretty kaikki oikeudet je
velvollisuudet, jotka olivat Kokemaella kotipaikan omaavalla
Suomen Polystyreeni Tehdas Oy:lla vuokranantajan kanssa
tehtyihin seuraaviin sopimuksiin perustuen:
Vuokra- ja yhteistoimintasopimus 27.2.1971
taydennetty ja muutettu
Lisasopimuksella I (13.10.1976)
Lisasopimuksella II (26.2.1981) ja
Lisasopimuksella III (13.8.1985)
Sopimuksen peruste
Tama vuokrasopimus II liitty sopijapuolten kesken 27.2.1971
allekirjoitettuun vuokra- ja yhteistoimintasopimukseen,
erityisesti sen kohtaan 7 (lisarakennukset ja muutokset).
Sopimuksen kohde Taman vuokrasopimuksen puitteissa rakennuttaa vuokranantaja
omistamalleen tontille nro 1 Peipohjan 103 kaupunginosan
korttelissa 43 varastorakennuksen, jonka vuokralainen
vuokraa kayttoonsa. Kylman varastorakennuksen, jonka koko on
ulkoseinien ulkopintojen mukaan laskettuna 42,0 m x 24,3 m
eli 1020 m2 ja vapaa korkeus vahitaan 5m. Varastorakennuksen
sijainti ilmenee tarkemmin liitteena olevasta
asemapiirroksesta.
Rakennuksen, jonka piirustukset hyvaksytaan yhteiseti ennen
rakennusluvan hakemista, runko tehdaan teraksesta ja seinat
puusta. Asemapiirrokseen on pistekatkoviivalla rajattu
tontista alue, jonka vuokralainen saa hallintaansa
rakennuksen kayttoa varten.
Rakennus luovutetaan vuokralaisen hallintaan 31.12.1996.
Kustannukset Vuokranantaja rakennutta rakennuksen omalla kustannuksellaan
ja huolehtii sen vakuutamisesta.
Vuokra-aika Vuokralainen vuokraa rakennuksen kymmeneksi (10) vuodeksi.
Vuokra-aika alkaa 1.1.1997 ja paattyy 31.12.2006. Vuokra-
aika jatkuu vuoden kerrallaan taman jalkeen ellei
irtisanomista toimiteta kolme (3) kuukautta ennen vuokra-
ajan paattymista.
<PAGE>
Vuokran suuruus ja maksu
Vuokran suuruus in seitseman markkaa viisikymmenta pennia
(7,50)neliometrilta eli yhteensa seitsemantuhatta
kuusisataaviisikymmenta (7.650) markkaa kuukaudessa
lisattyna kulloinin voimassa olevalla arvonlisaverolla.
Vuokra sidotaan rakennuskustannusindeksiin siten, etta
vertailuindeksina kaytetaan vuoden 1996 heinakuun
indeksilukua ja vuokran tarkistus tapahtuu kerran vuodessa
tammikuussa vertaaamalla edellisen heinakuun indeksilukua ja
muutamtalla vuokraa naiden suhteessa. Ensimmainen tarkistus
tapahtuu vuoden 1998 tammikuussa.
Vuokra maksetaan kuukausittain vuokranantajan tilille 15
paivaan mennessa. Eraantyneelle, maksamattomalle vuokralle
lasketaan viivastyskorko, jonka suuruus in Suomen Pankin
vuosittain tarkoitusta varten vahvistama viitekorko
lisattyna seitsemalla (7) prosenttiyksikolla.
Muut maaraykset Tahan vuokrasopimukseen sovelletaan soveltuvin osin vuokra-
ja yhteistoimintasopimuksen maarayksia, ei kuitenkaa
valimieslauseketta. Sopimusta koskevat erimielisyydet
ratkaistaan Kokemaen karajaoikeudessa.
Tata vuokrasopimusta II on laadittu kaksi yhtapitavaa kappaletta, toinen
vuokranantajalle ja toinen vuokralaiselle.
Paivaykset ja allekirjoitukset
Kokemaki 26.9.1996
KOKEMAEN KAUPUNGINHALLITUS
Kaupunginjohtaja Martti Jalkanen
Kaupunginsihteeri Terttu Maattanen
Todistavat:
<PAGE>
Lease Agreement
LEASE AGREEMENT II
Parties to agreement City of Kokemaki, hereafter Lessor, and in City of Espoo
situated Neste Oy company, hereafter Tenant.
On 12/28/1987 Tenant has assumed all rights and duties
that previously belonged to in Kokemaki situated Suomen
Polystyreeni Tehdas Oy, based on following agreements
made with Lessor:
Lease and Cooperation Agreement 2/27/1971,
added to and amended
with Subcontract I (10/13/1976),
with Subcontract II (2/26/1981) and
with Subcontract III (8/13/1985)
Basis for Agreement
This subcontract II is related to the Lease and
Cooperation Agreement signed on 2/27/1971, especially to
its item 7 (Additional buildings and changes).
Subject of Agreement As per this subcontract, Lessor will build on Lessor's
property, lot #1 in Peipohja city section's block 43, a
-----------------------------------
warehouse building, which Tenant will lease for Tenant's
------------------
own use. The cold warehouse building measures from
outside walls 42.0 m x 24.3 m, making 1020 m/2/, with
free height at least 5 m. A more detailed location of
the warehouse building is shown in attached layout
drawing. The frame of the building, whose specifications
are to be agreed on jointly before applying for building
permits, will be constructed of steel, and the walls
will be constructed of wood. The layout drawing is
marked with dotted lines to denote the property area
which Tenant will occupy for use of the building.
The building will be transferred to Tenant on
12/31/1996.
Costs Lessor will have the building built at Lessor's cost and
will be responsible for insuring the building.
Lease period Tenant will lease the building for a period of ten (10)
years. The lease period begins on 1/1/1997 and ends on
12/31/2006. The lease period will continue one year at a
time thereafter, unless the lease is terminated three
(3) months before end of lease period.
<PAGE>
Rental amount and payment
The rental amount is seven marks fifty pennies (FIM
7.50) per square meter, which makes seven thousand six
hundred fifty marks (FIM 7,650) per month, plus current
value added tax.
The rent will be tied to the construction cost index
with comparison index based on 1996 July index, and the
verification of rent is made once a year in January by
comparing the previous July index with the comparison
amount and changing the rent in proportion. The first
verification will be made in January 1998.
The rent will be paid monthly on Lessor's account by the
15th of the month. Unpaid rent due will be assessed a
late fee, which is based on the reference rate confirmed
annually by Finland's Bank added by seven (7) percent
units.
Other stipulations As applicable, this lease agreement is subject to the
rules in the Lease and Cooperation Agreement, but not
including the arbitration clause. Differences concerning
the agreement will be handled in Kokemaki jurisdictional
assizes.
This Lease Agreement II has been made in two identical
copies, one to Lessor and one to the other Tenant.
Dates and signatures
[signatures]
Kokemaki 9/26/1996
KOKEMAKI CITY COUNCIL
Mayor Martti Jalkanen [signature]
City Secretary Terttu Maattanen [signature]
Witnessed by:
[signatures]
<PAGE>
Exhibit 10.76
AVENA Lease Agreement
SIILOT
32830 Riste
puh. 02-5462 186
Vuokrasopimus
Talla sopimuksella Avena Siilot Oy vuokraa Kokemaen varastolta osoiteessa 32830
Riste Neste Oy Polystyreeni, 32800 Kokemaki, kayttoon 500 neliometria hallitilaa
varastotilaksi seuraavin ehdoin:
1. Vuokra-aika 14.3.97 - 14.5.97. Taman jalkeen sopimus jatkuu toistaiseksi
kuukauden molemminpuolisella irtisanomisajalla.
2. Varastotilan vuokra on 4,50mk/neliometri/kk+ALV22%. Vuokra maksetaan
kuukausittain jalkikateen laskua vastaan Avena Siilot Oy:n tilille.
3. Aluella on piirivartiointi, jonka kustannukset maksaa Avena Siilot Oy.
4. Arvonlisaveroa peritaan kulloinkin voimassaolevan arvonlisaveroprosentin
verran. Talla hetkella arvonlisaveroprosentti on 22%.
5. Vuokralainen vastaa tuotteen vakuuttamisesta.
6. Tuotetta lahetettaessa Avena Siilot Oy veloittaa tekemastaan tyosta
mies+trukki 280 mk/h, ja tarvittaessa lisatyosta mies 160 mk/h. Laskutus
tehdaan varastotilan vuokran maksun yhteydessa.
Tata sopimusta in tehty kaksi samanlaista kappaletta, yksi kummallekin
sopijapuolelle ja sopimus astuu voimaan 14.03.1997
Avena Siilot Oy
LY-tunnus 0992653 Neste Oy Polystyreeni
Inkeri Takku, varastoesimies Thomas stendahl, paikallispaall.
<PAGE>
AVENA
SIILOT
32830 Riste
Telephone: 02-5462 186 Lease Agreement
Lease Agreement
With this agreement, Avena Siilot Oy rents at Kokemaki warehousing, address
32830 Riste Neste Oy Polystyreeni, 32800 Kokemaki, 500 m/2/ of hall space for
use as warehousing at the following terms:
1. Lease period is 3/14/97 to 5/14/97. After this, the agreement will
continue until further notice with one month notice of termination by
both parties.
2. Warehouse rental is FIM 4.50/square meter/month + VAT 22%. The rent
will be paid afterwards monthly against invoice on Avena Siilot Oy
account.
3. The area has guard service, which is paid by Avena Siilot Oy.
4. The value added tax will be charged according to current tax rate. At
the moment, the value added tax rate is 22%.
5. The renter is responsible for insuring the product.
6. For shipping the product, Avena Siilot Oy will charge for labor
man+forklift FIM 280/hr, and for additional work per man FIM 160/hr.
Invoicing is done together with rental invoicing.
This agreement is made in two identical copies, one for each party, and the
agreement will take effect on March 14, 1997.
Kokemaki on March 13, 1997
Avena Siilot Oy Neste Oy Polystyreeni
LY-identification 0992653-9
[signature] [signature]
Inkeri Takku, warehouse manager Thomas Stendahl, local manager
<PAGE>
Exhibit 12.1
Computation of Ratios
(Dollars in Thousands)
<TABLE>
<CAPTION>
Predecessor Radnor
--------------------- ----------------------------------------------------------------
Year Ended
-------------------------------------------
December 29, 1991 - February 29, 1992 December 31, December 30, December 29,
February 28, 1992 January 1, 1993 1993 1994 1995
--------------------- ------------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Earnings:
Earnings from continuing
operations before income
taxes and extraordinary gains (4,258) (3,836) (4,718) (312) (7,877)
Fixed Charges N/A N/A N/A N/A N/A
-------------- ------------- ------------- ---------- -----------
Earnings (1) N/A N/A N/A N/A N/A
============== ============= ============= ========== ===========
Fixed charges
Intereste expense N/A N/A N/A N/A N/A
Amortization of financing costs
and bond premium N/A N/A N/A N/A N/A
Imputed interest on operating
lease obligations N/A N/A N/A N/A N/A
-------------- ------------- ------------- ---------- -----------
Fixed charges 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
============== ============= ============= ========== ===========
Deficiency of earnings available to
cover fixed charges (4,258) (3,836) (4,718) (312) (7,877)
============== ============= ============= ========== ===========
<CAPTION>
---------------------------------------------------------------------------------------
Year ended December 27, Nine Months Nine Months ended September 26,
----------------------------- ended -----------------------------------
Pro Forma September 27, Pro Forma
1996 1996 1996 1997 1997
--------- --------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Earnings:
Earnings from continuing
operations before income
taxes and extraordinary gains 2,858 4,252 1,277 3,812 6,565
Fixed Charges 5,865 17,846 4,256 10,136 14,233
----------- --------------- ---------------- ------------- -----------------
Earnings (1) 8,723 22,098 5,533 13,948 20,798
=========== =============== ================ ============= =================
Fixed charges
Interest expense 4,264 15,423 3,152 8,317 12,260
Amortization of financing costs
and bond premium 232 817 194 464 498
Imputed interest on operating
lease obligations 1,369 1,606 910 1,355 1,475
----------- --------------- ---------------- ------------- -----------------
Fixed charges 5,865 17,846 4,256 10,136 14,233
=========== =============== ================ ============= =================
Ratio of earnings to fixed charges (1)/(2) 1.49 x 1.24 x 1.30 x 1.38 x 1.46 x
=========== =============== ================ ============= =================
Deficiency of earnings available to
cover fixed charges N/A N/A N/A N/A N/A
=========== =============== ================ ============= =================
</TABLE>
<PAGE>
Exhibit 21.1
------------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
<TABLE>
<CAPTION>
State or
Jurisidiction of
Incorporation Names Under Which
Name of Subsidiary or Organization Subsidiary Does Business
- ------------------ --------------- ------------------------
<S> <C> <C>
WinCup Holdings, Inc.(1) Delaware WinCup Holdings, Inc.
WinCup Holdings of Texas, Inc.
Radnor Chemical Delaware Radnor Chemical Corporation
Corporation (1)
StyroChem U.S., Inc.(2) Texas StyroChem U.S., Inc.
StyroChem Canada, Ltd.(2) Quebec StyroChem Canada, Ltd.
Radnor Management, Inc.(1) Delaware Radnor Management, Inc.
StyroChem Europe (The The Netherlands StyroChem Europe (The Netherlands)
Netherlands) B.V.(2) B.V.
StyroChem Finland Oy(3) Finland StyroChem Finland Oy
ThermiSol Denmark ApS(3) Denmark ThermiSol Denmark ApS
ThermiSol Finland Oy(3) Finland ThermiSol Finland Oy
ThermiSol Sweden AB(3) Sweden ThermiSol Sweden AB
</TABLE>
- ------------------
(1) Owned 100% by Radnor Holdings Corporation.
(2) Owned 100% by Radnor Chemical Corporation.
(3) Owned 100% by StyroChem Europe (The Netherlands) B.V.
<PAGE>
Exhibit 23.1
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
December 12, 1997
<PAGE>
Exhibit 23.2
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 OY
Helsinki, Finland
December 12, 1997
<PAGE>
Exhibit 23.3
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 AB
Stockholm, Sweden
December 12, 1997
<PAGE>
Exhibit 23.4
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
Arhus, Denmark
December 12, 1997
<PAGE>
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Radnor Holdings
Corporation on Form S-4 of our report dated October 18, 1996 (October 30, 1996
as to Note 16), on our audits of the consolidated financial statements of SP
Acquisition Co. and subsidiaries as of April 1, 1995 and March 30, 1996 and the
fiscal years then ended appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in the Prospectus.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Fort Worth, Texas
December 11, 1997
<PAGE>
Exhibit 23.6
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
for 1994 and 1995 for Neste Cellplast ABs financial statements and to all
references to our Firm included in or made a part of Form S-4 registration
statement.
Gothenburg 12 December 1997
OHRLINGS COOPERS & LYBRAND AB
/s/ Lennert Wiberg
- ------------------
Lennert Wiberg
<PAGE>
Exhibit 25.1
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
(Name of Trustee)
22-1147033
(I.R.S. Employer Identification No.)
102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA
(Address of Principal Executive Offices)
19311
(Zip Code)
RADNOR HOLDINGS CORPORATION
(Exact name of registrants as specified in their charters)
DELAWARE
(State of Incorporation)
23-2674715
(I.R.S. Employer Identification No.)
THREE RADNOR CORPORATE CENTER
SUITE 300
100 MATSONFORD ROAD
RADNOR, PA 19087
(Address of Principal Executive Offices)
10% SERIES B SENIOR NOTES DUE 2003
(Title of Indenture Securities)
<PAGE>
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.
2
<PAGE>
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.
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
3
<PAGE>
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.
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.
4
<PAGE>
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 dated
- --- January 11, 1994, evidencing the authority of the trustee to transact
business.*
3. Copy of the authorization of the trustee to exercise fiduciary
- --- powers.*
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.
- ---
X 7. Copy of report of condition of the trustee at the close of business on
- --- September 30, 1997, 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.
5
<PAGE>
* Previously filed with the Securities and Exchange Commission on February 11,
1994 as an exhibit to Form T-1 in connection with Registration Statement No. 22-
73340 and ** previously filed with the Securities and Exchange Commission on May
5, 1997 as an exhibit to Form T-1 in connection with Registration Statement No.
333-23791 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 to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Philadelphia and Commonwealth of
Pennsylvania, on the 10th day of December, 1997.
FIRST UNION NATIONAL BANK
By: /s/ Alan G. Finn
Alan G. Finn
Assistant Vice President
6
<PAGE>
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, and in connection with the proposed issue of
Radnor Holdings Corporation we hereby consent 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, PA
December 10, 1997
<PAGE>
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, Avondale, Pennsylvania, at the close of business on September 30, 1997,
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
<TABLE>
<CAPTION>
ASSETS
Thousand of Dollars
-------------------
<S> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin........ 1,342,937
Interest-bearing balances................................. 284,300
Securities.................................................. /////////
Hold-to-maturity securities............................... 356,998
Available-for-sale securities............................. 3,605,206
Federal funds sold and securities purchased under agreements //////////
to resell ................................................ 1,741,187
Loans and lease financing receivables:
Loan and leases, net of unearned income......18,839,020
LESS: Allowance for loan and lease losses.......217,076
LESS: Allocated transfer risk reserve.................0
Loans and leases, net of unearned income, allowance, and
reserve..................................................... 19,621,944
Assets held in trading accounts............................. 0
Premises and fixed assets (including capitalized leases).... 421,529
Other real estate owned..................................... 30,927
Investment in unconsolidated subsidiaries and associated.... //////////
companies................................................... 33,802
Customer's liability to this bank on acceptances outstanding. 84,875
Intangible assets........................................... 392,926
Other assets................................................ 770,806
Total assets................................................ 27,687,437
LIABILITIES
Deposits:
In domestic offices.................................... 20,725,451
Noninterest-bearing......................3,229,608
interest-bearing........................17,495,843
In foreign offices, Edge and Agreement subsidiaries,
and IBFs............................................... 683,105
Noninterest-bearing............................190
Interest-bearing...........................682,915
Federal funds purchased and securities sold under
agreements to repurchase.................................... 2,500,263
Demand notes issued to the U.S. Treasury.................... 75,145
Trading liabilities......................................... 0
Other borrowed money:....................................... /////////
With original maturity of one year or less.............. ... 2,156
With original maturity of more than one year through
three years............................................ 7,520
With original maturity of more than three years........ 5,866
Bank's liability on acceptances executed and outstanding.... 85,165
Subordinated notes and debentures........................... 447,960
Other liabilities........................................... 863,272
Total liabilities........................................... 25,395,903
EQUITY CAPITAL
Perpetual preferred stock and related surplus................ 160,540
Common Stock................................................. 452,156
Surplus...................................................... 1,300,080
Undivided profits and capital reserves....................... 356,154
Net unrealized holding gains (losses) on available-for-sale
securities.................................................. 22,604
Cumulative foreign currency translation adjustments.......... 0
Total equity capital......................................... 2,291,534
Total liabilities, limited-life preferred stock and equity... /////////
capital....................................................27,687,437
</TABLE>
<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-27-1996 DEC-26-1997
<PERIOD-START> DEC-30-1995 DEC-28-1996
<PERIOD-END> DEC-27-1996 SEP-26-1997
<CASH> 855 1,303
<SECURITIES> 0 0
<RECEIVABLES> 25,400 21,018
<ALLOWANCES> 713 824
<INVENTORY> 19,078 25,386
<CURRENT-ASSETS> 50,971 54,699
<PP&E> 115,763 126,269
<DEPRECIATION> 4,372 9,380
<TOTAL-ASSETS> 172,369 181,908
<CURRENT-LIABILITIES> 42,287 39,752
<BONDS> 104,362 115,632
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 14,328 14,787
<TOTAL-LIABILITY-AND-EQUITY> 172,369 181,908
<SALES> 177,395 170,545
<TOTAL-REVENUES> 177,395 170,545
<CGS> 135,982 127,730
<TOTAL-COSTS> 135,982 127,730
<OTHER-EXPENSES> 33,685 30,316
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,496 8,781
<INCOME-PRETAX> 2,858 3,812
<INCOME-TAX> 121 323
<INCOME-CONTINUING> 1,389 3,489
<DISCONTINUED> 0 0
<EXTRAORDINARY> 710 0
<CHANGES> 0 0
<NET-INCOME> 2,099 3,489
<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> RADNOR CHEMICAL CORPORATION
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-05-1996
<PERIOD-START> MAR-31-1996
<PERIOD-END> DEC-05-1996
<CASH> 2,413,575
<SECURITIES> 0
<RECEIVABLES> 12,150,146
<ALLOWANCES> 83,502
<INVENTORY> 7,411,516
<CURRENT-ASSETS> 23,717,891
<PP&E> 8,647,357
<DEPRECIATION> 1,821,289
<TOTAL-ASSETS> 31,669,080
<CURRENT-LIABILITIES> 22,243,975
<BONDS> 2,859,264
0
223
<COMMON> 652
<OTHER-SE> 6,564,966
<TOTAL-LIABILITY-AND-EQUITY> 31,669,080
<SALES> 52,375,480
<TOTAL-REVENUES> 52,375,480
<CGS> 44,534,090
<TOTAL-COSTS> 44,534,090
<OTHER-EXPENSES> 5,423,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 684,129
<INCOME-PRETAX> 1,558,607
<INCOME-TAX> 623,500
<INCOME-CONTINUING> 935,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 935,107
<EPS-PRIMARY> 0
<EPS-DILUTED> 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 FR0M NESTE OY
POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 6,499 8,659
<ALLOWANCES> 0 0
<INVENTORY> 5,149 5,718
<CURRENT-ASSETS> 12,383 14,930
<PP&E> 48,982 43,805
<DEPRECIATION> 22,963 21,240
<TOTAL-ASSETS> 38,746 37,818
<CURRENT-LIABILITIES> 5,010 4,868
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 33,736 32,950
<TOTAL-LIABILITY-AND-EQUITY> 38,746 37,818
<SALES> 60,805 46,380
<TOTAL-REVENUES> 60,805 46,380
<CGS> 40,752 32,455
<TOTAL-COSTS> 40,752 32,455
<OTHER-EXPENSES> 15,770 11,413
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 4,283 2,512
<INCOME-TAX> 1,199 703
<INCOME-CONTINUING> 3,084 1,809
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,084 1,809
<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 ISORA OY AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 4,863 4,241
<SECURITIES> 0 0
<RECEIVABLES> 1,311 2,462
<ALLOWANCES> 0 0
<INVENTORY> 1,383 1,311
<CURRENT-ASSETS> 9,804 9,308
<PP&E> 8,133 7,213
<DEPRECIATION> 3,887 3,758
<TOTAL-ASSETS> 14,286 12,958
<CURRENT-LIABILITIES> 3,575 3,564
<BONDS> 0 0
0 0
0 0
<COMMON> 3,858 3,858
<OTHER-SE> 5,035 4,546
<TOTAL-LIABILITY-AND-EQUITY> 14,286 12,958
<SALES> 19,298 13,759
<TOTAL-REVENUES> 19,298 13,759
<CGS> 14,960 9,842
<TOTAL-COSTS> 14,960 9,842
<OTHER-EXPENSES> 4,274 3,356
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 176 631
<INCOME-TAX> (152) 0
<INCOME-CONTINUING> 328 631
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 328 631
<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 NESTE
CELLPLAST AB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 2,631 1,636
<SECURITIES> 0 0
<RECEIVABLES> 727 1,372
<ALLOWANCES> 0 0
<INVENTORY> 439 505
<CURRENT-ASSETS> 3,919 3,712
<PP&E> 5,503 5,068
<DEPRECIATION> 4,869 4,557
<TOTAL-ASSETS> 4,553 4,223
<CURRENT-LIABILITIES> 2,297 2,095
<BONDS> 0 0
0 0
0 0
<COMMON> 804 804
<OTHER-SE> 1,401 1,288
<TOTAL-LIABILITY-AND-EQUITY> 4,553 4,223
<SALES> 10,319 7,275
<TOTAL-REVENUES> 10,319 7,275
<CGS> 6,904 4,685
<TOTAL-COSTS> 6,904 4,685
<OTHER-EXPENSES> 2,595 1,909
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 900 718
<INCOME-TAX> (4) (18)
<INCOME-CONTINUING> 904 736
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 904 736
<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 NESTE
THERMISOL A/S AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 872 720
<SECURITIES> 0 0
<RECEIVABLES> 327 575
<ALLOWANCES> 0 0
<INVENTORY> 242 332
<CURRENT-ASSETS> 1,473 1,698
<PP&E> 5,036 4,369
<DEPRECIATION> 1,936 1,800
<TOTAL-ASSETS> 4,573 4,267
<CURRENT-LIABILITIES> 1,719 1,376
<BONDS> 0 0
0 0
0 0
<COMMON> 2,237 1,973
<OTHER-SE> (1,093) (392)
<TOTAL-LIABILITY-AND-EQUITY> 4,573 4,267
<SALES> 5,470 5,083
<TOTAL-REVENUES> 5,470 5,083
<CGS> 3,405 2,816
<TOTAL-COSTS> 3,405 2,816
<OTHER-EXPENSES> 2,010 1,581
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 142 76
<INCOME-PRETAX> (87) 610
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (87) 610
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (87) 610
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
