<PAGE>
As filed with the Securities and Exchange Commission on May 26, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GRAHAM PACKAGING COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3085 23-2786688
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Number) Identification Number)
--------------------------
<CAPTION>
GPC CAPITAL CORP. I
(Exact name of Registrant as specified in its charter)
<S> <C> <C>
DELAWARE 3085 23-2952403
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Numer) Identification Number)
-------------------------
<CAPTION>
GRAHAM PACKAGING HOLDINGS COMPANY
(Exact name of Registrant as specified in its charter)
<S> <C> <C>
PENNSYLVANIA 3085 23-2553000
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Numer) Identification Number)
-------------------------
<CAPTION>
GPC CAPITAL CORP. II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<S> <C> <C>
DELAWARE 3085 23-2952404
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Numer) Identification Number)
-------------------------
</TABLE>
<TABLE>
<S> <C>
PHILIP R. YATES
JOHN E. HAMILTON
1110 EAST PRINCESS STREET 1110 EAST PRINCESS STREET
YORK, PENNSYLVANIA 17403 YORK, PENNSYLVANIA 17403
(717) 849-8500 (717) 849-8500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
With a copy to:
WILSON S. NEELY, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being 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
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED PRICE PER NOTE OFFERING PRICE(1)
<S> <C> <C> <C>
8 3/4% Senior Subordinated Notes Due 2008, Series B(2)........ $150,000,000 100% $150,000,000
Floating Interest Rate Subordinated Term Securities Due 2008,
Series B (FIRSTS(Service Mark)*)(3)........................... $75,000,000 100% $75,000,000
10 3/4% Senior Discount Notes Due 2009, Series B(4)........... $169,000,000 61.6% $104,104,000
Guarantees(5)................................................. (6) (6) (6)
Total......................................................... $394,000,000 -- $329,104,000
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
8 3/4% Senior Subordinated Notes Due 2008, Series B(2)........ $44,250
Floating Interest Rate Subordinated Term Securities Due 2008,
Series B (FIRSTS(Service Mark)*)(3)........................... $22,125
10 3/4% Senior Discount Notes Due 2009, Series B(4)........... $30,711
Guarantees(5)................................................. (6)
Total......................................................... $97,086
</TABLE>
(footnotes on next page)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
- ------------------
(footnotes from previous page)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2) To be issued by Graham Packaging Company and GPC Capital Corp. I
(collectively, the 'Company Issuers') in exchange for the Company Issuers'
outstanding 8 3/4% Senior Subordinated Notes Due 2008, Series A.
(3) To be issued by the Company Issuers in exchange for the Company Issuers'
outstanding Floating Interest Rate Term Securities Due 2008, Series A
(FIRSTS(Service Mark)*).
(4) To be issued by Graham Packaging Holdings Company and GPC Capital Corp. II
(collectively, the 'Holdings Issuers') in exchange for the Holdings Issuers'
outstanding 10 3/4% Senior Discount Notes Due 2009, Series A. The 'Amount to
be Registered' with respect to the 10 3/4% Senior Discount Notes Due 2009,
Series B, represents the aggregate principal amount at maturity of such
notes. The 10 3/4% Senior Discount Notes Due 2009, Series A, were sold at a
substantial discount from their principal amount at maturity. The
registration fee with respect to the 10 3/4% Senior Discount Notes Due 2009,
Series B, was calculated based on the approximate accreted value thereof as
of May 26, 1998 determined pursuant to the provisions of the Indenture
governing such notes.
(5) Guarantees by Graham Packaging Holdings Company ('Holdings') of the Company
Issuers' 8 3/4% Senior Subordinated Notes Due 2008, Series B, and the
Company Issuers' Floating Interest Rate Term Securities Due 2008, Series B,
to be issued in exchange for Holdings' outstanding guarantees of the Company
Issuers' 8 3/4% Senior Subordinated Notes Due 2008, Series A, and the
Company Issuers' Floating Interest Rate Term Securities Due 2008, Series A.
(6) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate registration fee is payable for the guarantees of Holdings, which
are guarantees of the respective issues of the Company Issuers' 8 3/4%
Senior Subordinated Notes Due 2008, Series B, and the Company Issuers'
Floating Interest Rate Term Securities Due 2008, Series B, which are being
registered concurrently.
- ------------------------
* FIRSTS is a service mark of BT Alex. Brown Incorporated.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
DATED MAY 26, 1998
PRELIMINARY PROSPECTUS
GRAHAM PACKAGING COMPANY
AND
GPC CAPITAL CORP. I
OFFER TO EXCHANGE UP TO $150,000,000 OF THEIR
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B, AND $75,000,000 OF THEIR
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2008 (FIRSTS(SERVICE
MARK)*), SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OF THEIR OUTSTANDING
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A, AND ANY AND ALL OF THEIR
OUTSTANDING FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2008
(FIRSTS(SERVICE MARK)*), SERIES A
GRAHAM PACKAGING HOLDINGS COMPANY
AND
GPC CAPITAL CORP. II
OFFER TO EXCHANGE UP TO $169,000,000 OF THEIR
10 3/4% SENIOR DISCOUNT NOTES DUE 2009, SERIES B,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OF THEIR OUTSTANDING
10 3/4% SENIOR DISCOUNT NOTES DUE 2009, SERIES A
THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________
__, 1998, UNLESS EXTENDED.
Graham Packaging Company (the 'Operating Company') and GPC Capital Corp. I
('CapCo I' and, together with the Operating Company, the 'Company Issuers'),
hereby offer, upon the terms and subject to the conditions set forth in this
Prospectus and the related Letters of Transmittal (which together constitute the
'Senior Subordinated Exchange Offers'), (i) to exchange an aggregate of up to
$150,000,000 principal amount of 8 3/4% Senior Subordinated Notes Due 2008,
Series B (the 'Fixed Rate Senior Subordinated Exchange Notes'), of the Company
Issuers for an equal principal amount of the issued and outstanding 8 3/4%
Senior Subordinated Notes Due 2008, Series A (the 'Fixed Rate Senior
Subordinated Old Notes' and, together with the Fixed Rate Senior Subordinated
Exchange Notes, the 'Fixed Rate Senior Subordinated Notes'), of the Company
Issuers from the Holders thereof and (ii) to exchange an aggregate of up to
$75,000,000 principal amount of Floating Interest Rate Subordinated Term
Securities Due 2008, Series B (the 'Floating Rate Senior Subordinated Exchange
Notes' and, together with the Fixed Rate Senior Subordinated Exchange Notes, the
'Senior Subordinated Exchange Notes'), of the Company Issuers for an equal
principal amount of the issued and outstanding Floating Interest Rate
Subordinated Term Securities Due 2008, Series A (the 'Floating Rate Senior
Subordinated Old Notes' and, together with the Fixed Rate Senior Subordinated
Old Notes, the 'Senior Subordinated Old Notes'), of the Company Issuers from the
Holders thereof. The Floating Rate Senior Subordinated Exchange Notes and the
Floating Rate Senior Subordinated Old Notes are herein sometimes collectively
called the 'Floating Rate Senior Subordinated Notes,' and the Fixed Rate Senior
Subordinated Notes and the Floating Rate Senior Subordinated Notes are herein
sometimes collectively called the 'Senior Subordinated Notes.'
Graham Packaging Holdings Company ('Holdings') and GPC Capital Corp. II
('CapCo II' and, together with Holdings, the 'Holdings Issuers', which together
with the Company Issuers are herein sometimes collectively called the
'Issuers'), hereby offer, upon the terms and subject to the conditions set forth
in this Prospectus and the related Letter of Transmittal (which together
constitute the 'Senior Discount Exchange Offer'), to exchange an aggregate of up
to $169,000,000 principal amount at maturity of 10 3/4% Senior Discount Notes
Due 2009, Series B (the 'Senior Discount Exchange Notes'), of the Holdings
Issuers for an equal principal amount of the issued and outstanding 10 3/4%
Senior Discount Notes Due 2009, Series A (the 'Senior Discount Old Notes' and,
together with the Senior Discount Exchange Notes, the 'Senior Discount Notes'),
of the Holdings Issuers from the Holders thereof. (Continued on next page.)
SEE 'RISK FACTORS,' BEGINNING ON PAGE 23, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN CONNECTION WITH THE EXCHANGE
OFFERS AND AN INVESTMENT IN THE SENIOR SUBORDINATED EXCHANGE NOTES OR THE SENIOR
DISCOUNT EXCHANGE NOTES.
------------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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.
* FIRSTS is a service mark of BT Alex. Brown Incorporated.
<PAGE>
(Continued from cover page)
The Company Issuers and the Holdings Issuers are herein sometimes
collectively called the 'Issuers'; the Senior Subordinated Exchange Offer
relating to the Fixed Rate Senior Subordinated Notes is herein sometimes called
the 'Fixed Rate Senior Subordinated Exchange Offer'; the Senior Subordinated
Exchange Offer relating to the Floating Rate Senior Subordinated Notes is herein
sometimes called the 'Floating Rate Senior Subordinated Exchange Offer'; the
Senior Subordinated Exchange Offers and the Senior Discount Exchange Offer are
herein sometimes collectively called the 'Exchange Offers'; the Senior
Subordinated Exchange Notes and the Senior Discount Exchange Notes are herein
sometimes collectively called the 'Exchange Notes'; the Senior Subordinated Old
Notes and the Senior Discount Old Notes are herein sometimes collectively called
the 'Old Notes'; and the Senior Subordinated Notes and the Senior Discount Notes
are herein sometimes collectively called the 'Notes'.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of the Fixed Rate Senior Subordinated Old Notes and $75,000,000 aggregate
principal amount of the Floating Rate Senior Subordinated Old Notes is
outstanding. The terms of the Fixed Rate Senior Subordinated Exchange Notes and
the Floating Rate Senior Subordinated Exchange Notes are identical in all
material respects to the terms of the Fixed Rate Senior Subordinated Old Notes
and the Floating Rate Senior Subordinated Old Notes, respectively, except that
the Senior Subordinated Exchange Notes have been registered under the Securities
Act of 1933, as amended (the 'Securities Act'), and therefore will not bear
legends restricting their transfer and will not contain certain provisions
providing for an increase in the interest rate on the Senior Subordinated Old
Notes under certain circumstances described in the Senior Subordinated
Registration Rights Agreement (as hereinafter defined), which provisions will
terminate as to all of the Senior Subordinated Notes upon the consummation of
the Senior Subordinated Exchange Offers. While the Operating Company and CapCo I
are jointly and severally liable for the obligations under the Senior
Subordinated Notes, CapCo I, a wholly owned subsidiary of the Operating Company,
has only nominal assets, does not conduct any operations and was formed solely
to act as a co-issuer of the Senior Subordinated Notes.
As of the date of this Prospectus, $169,000,000 aggregate principal amount
at maturity of the Senior Discount Old Notes is outstanding. The Senior Discount
Old Notes were issued at a substantial discount from their principal amount so
as to generate gross proceeds to the Holdings Issuers of $100,612,460. See
'Certain U.S. Federal Income Tax Considerations.' The terms of the Senior
Discount Exchange Notes are identical in all material respects to the terms of
the Senior Discount Old Notes, except that the Senior Discount Exchange Notes
have been registered under the Securities Act and therefore will not bear
legends restricting their transfer and will not contain certain provisions
providing for an increase in the interest rate on the Senior Discount Old Notes
under certain circumstances described in the Senior Discount Registration Rights
Agreement (as hereinafter defined), which provisions will terminate as to all of
the Senior Discount Notes upon the consummation of the Senior Discount Exchange
Offer. While Holdings and CapCo II are jointly and severally liable for the
obligations under the Senior Discount Notes, CapCo II, a wholly owned subsidiary
of Holdings, has only nominal assets, does not conduct any operations and was
formed solely to act as a co-issuer of the Senior Discount Notes.
Each of the Indentures (as hereinafter defined) under which the Notes have
been or will be issued provides that all obligations under the Indentures, the
Notes, the Holdings Guarantee and the Old Holdings Guarantee (as each is
hereinafter defined) (and all notes and guarantees issued in exchange therefor)
shall be expressly non-recourse to the partners of Holdings in their capacities
as such, and that, by purchasing the Notes, each holder of Notes waives any
liability of any partner of Holdings under the Indentures, the Notes, the
Holdings Guarantee and the Old Holdings Guarantee (and all notes and guarantees
issued in exchange therefor). See 'Risk Factors,' 'The Recapitalization,' 'The
Issuers' and 'Security Ownership' in this Prospectus.
Interest on the Senior Subordinated Exchange Notes will accrue from the
last Interest Payment Date on which interest was paid on the Senior Subordinated
Old Notes so surrendered or, if no interest has been paid on such Notes, from
February 2, 1998, and will be payable semiannually in arrears on January 15 and
July 15 of each year, commencing on the first such date to occur after the
effective date of the applicable Senior Subordinated Exchange Offer, at the rate
of 8 3/4% per annum in the case of the Fixed Rate Senior Subordinated Exchange
Notes and at a rate per annum equal to LIBOR (as defined) plus 3 5/8% in the
case of the Floating Rate
ii
<PAGE>
Senior Subordinated Exchange Notes. Interest on the Floating Rate Senior
Subordinated Exchange Notes will be reset semiannually. The Senior Subordinated
Exchange Notes will mature on January 15, 2008.
The Senior Subordinated Exchange Notes will be general unsecured
obligations of the Company Issuers and will be subordinated in right of payment
to all existing and future Senior Indebtedness (as defined) of the Company
Issuers. As of March 29, 1998, after giving effect to the Recapitalization, the
Offerings and the initial borrowings under the New Credit Facility (as defined),
the Company Issuers had $414.7 million of Senior Indebtedness outstanding. In
addition, the Senior Subordinated Exchange Notes will be effectively
subordinated to all indebtedness and other liabilities (including trade
payables) of the Operating Company's subsidiaries. As of March 29, 1998, after
giving effect to the Recapitalization, the Offerings and the initial borrowings
under the New Credit Facility, such subsidiaries had total liabilities of $38.4
million, including indebtedness of $5.1 million. The Senior Subordinated
Exchange Notes will rank pari passu with any future senior subordinated
indebtedness of the Company Issuers and will rank senior to all other
subordinated indebtedness of the Company Issuers. The Senior Subordinated
Exchange Notes will be unconditionally guaranteed by Holdings (the 'Holdings
Guarantee') on a senior subordinated basis, and Holdings hereby offers to issue
the Holdings Guarantee with respect to all Senior Subordinated Exchange Notes
issued in the Senior Subordinated Exchange Offers in exchange for Holdings'
outstanding guarantees (the 'Old Holdings Guarantee') of the Senior Subordinated
Old Notes. Because the Holdings Guarantee will be subordinated in right of
payment to all senior indebtedness of Holdings and effectively subordinated to
all indebtedness and other liabilities (including trade payables) of Holdings'
subsidiaries, investors should not rely on the Holdings Guarantee in evaluating
an investment in the Senior Subordinated Exchange Notes. See 'Use of Proceeds,'
'Unaudited Pro Forma Financial Information' and 'Description of the New Credit
Facility.'
The Fixed Rate Senior Subordinated Exchange Notes will be redeemable, in
whole or in part, at the option of the Company Issuers, on or after January 15,
2003 at the redemption prices set forth herein, plus accrued and unpaid interest
to the date of redemption. The Floating Rate Senior Subordinated Exchange Notes
will be redeemable, in whole or in part, at the option of the Company Issuers,
at any time, at the redemption prices set forth herein plus accrued and unpaid
interest to the date of redemption. The Fixed Rate Senior Subordinated Exchange
Notes are not redeemable by the Company Issuers prior to January 15, 2003,
except that, at any time on or prior to January 15, 2001, the Company Issuers,
at their option, may redeem, with the net cash proceeds of one or more Equity
Offerings (as defined), Fixed Rate Senior Subordinated Notes up to an aggregate
principal amount equal to 40% of the aggregate principal amount of the Fixed
Rate Senior Subordinated Old Notes originally issued, at a redemption price
equal to 108.750% of the principal amount thereof, plus accrued and unpaid
interest to the date of redemption; provided that Fixed Rate Senior Subordinated
Notes in an aggregate principal amount equal to at least 60% of the aggregate
principal amount of the Fixed Rate Senior Subordinated Old Notes originally
issued remains outstanding immediately following such redemption.
Upon a Change of Control (as defined), each holder of Senior Subordinated
Exchange Notes will have the right to require the Company Issuers to repurchase
such holder's Senior Subordinated Exchange Notes at a price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest to the repurchase
date. In addition, in the event of certain Asset Sales (as defined), the Company
Issuers will be obligated to offer to repurchase the Senior Subordinated
Exchange Notes at a price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest to the repurchase date. See 'Description of the
Senior Subordinated Exchange Notes.'
Cash interest on the Senior Discount Exchange Notes will not accrue until
January 15, 2003. Thereafter, interest on the Senior Discount Exchange Notes
will accrue from January 15, 2003 at the rate of 10 3/4% per annum on the
principal amount at maturity of the Senior Discount Exchange Notes, and will be
payable semiannually in arrears on January 15 and July 15 of each year,
commencing July 15, 2003. The Senior Discount Exchange Notes will mature on
January 15, 2009.
The Senior Discount Exchange Notes will be redeemable, in whole or in part,
at the option of the Holdings Issuers on or after January 15, 2003 at the
redemption prices set forth herein, plus accrued and unpaid interest to the date
of redemption. The Senior Discount Exchange Notes are not redeemable by the
Holdings Issuers prior to January 15, 2003, except that, at any time on or prior
to January 15, 2001, the Holdings Issuers, at their option, may redeem, with the
net cash proceeds of one or more Equity Offerings, Senior Discount Notes up to
an
iii
<PAGE>
aggregate principal amount at maturity equal to 40% of the aggregate principal
amount at maturity of the Senior Discount Old Notes originally issued, at a
redemption price equal to 110.750% of the Accreted Value (as defined) thereof;
provided that Senior Discount Notes in an aggregate principal amount equal to at
least 60% of the aggregate principal amount at maturity of the Senior Discount
Old Notes originally issued remains outstanding immediately following such
redemption. See 'Description of the Senior Discount Exchange Notes--
Redemption.'
Upon a Change of Control (as defined), each holder of Senior Discount
Exchange Notes will have the right to require the Holdings Issuers to repurchase
such holder's Senior Discount Exchange Notes at a price equal to 101% of the
Accreted Value thereof, plus accrued and unpaid interest, if any, to the
repurchase date. In addition, in the event of certain Asset Sales (as defined),
the Holdings Issuers will be obligated to offer to repurchase the Senior
Discount Exchange Notes, at a price equal to 100% of the Accreted Value thereof,
plus accrued and unpaid interest, if any, to the repurchase date. See
'Description of the Senior Discount Exchange Notes.'
The Senior Discount Exchange Notes will be general unsecured obligations of
the Holdings Issuers and will rank pari passu in right of payment with all
existing and future senior indebtedness of the Holdings Issuers and senior in
right of payment to all subordinated obligations of the Holdings Issuers. Since
Holdings is a holding company and conducts its business through subsidiaries,
the Senior Discount Exchange Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables) of Holdings'
subsidiaries. Investors in the Senior Discount Exchange Notes will have no claim
against Holdings' principal subsidiary, the Operating Company, or any of its
subsidiaries. As of March 29, 1998, after giving effect to the Recapitalization,
the Offerings and the initial borrowings under the New Credit Facility, such
subsidiaries had total liabilities of $757.8 million, including indebtedness of
$641.5 million. See 'Use of Proceeds,' 'Unaudited Pro Forma Financial
Information' and 'Description of the New Credit Facility.'
The Old Notes were issued and sold on February 2, 1998 in transactions (the
'Offerings') not registered under the Securities Act in reliance upon an
exemption from the registration requirements thereof. In general, the Old Notes
may not be offered or sold unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act. The Senior Subordinated Exchange Notes and the Senior Discount
Exchange Notes are being offered hereby in order to satisfy certain obligations
of the Holdings Issuers contained in the Senior Subordinated Registration Rights
Agreement and the Senior Discount Registration Rights Agreement, respectively.
Based on interpretations by the Staff of the Securities and Exchange Commission
(the 'Commission') set forth in no-action letters issued to third parties, the
Issuers believe that the Exchange Notes issued pursuant to the respective
Exchange Offers in exchange for the respective series of Old Notes may be
offered for resale, resold or otherwise transferred by any holder thereof (other
than any such holder that is an 'affiliate' of the Issuers of such Exchange
Notes within the meaning of Rule 405 promulgated under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business, such holder has no arrangement with
any person to participate in the distribution of such Exchange Notes and neither
such holder nor any such other person is engaging in or intends to engage in a
distribution of such Exchange Notes. However, the Issuers have not sought, and
do not intend to seek, their own no-action letter, and there can be no assurance
that the Staff of the Commission would make a similar determination with respect
to the Exchange Offers. Notwithstanding the foregoing, each broker-dealer that
receives Exchange Notes for its own account pursuant to an Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letters of Transmittal state that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an 'underwriter' within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with any resale of Exchange Notes received in
exchange for such Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Issuers thereof). A
broker-dealer may not participate in any of the Exchange Offers with respect to
Old Notes acquired other than as a result of market-making activities or other
trading activities. The respective Issuers have agreed that, for a period of 90
days after the date of this Prospectus, they will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See 'Plan of
Distribution.'
iv
<PAGE>
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ('PORTAL') market. There is no
established trading market for the Senior Subordinated Exchange Notes or the
Senior Discount Exchange Notes. The respective Issuers currently do not intend
to list any of the Exchange Notes on any securities exchange or to seek approval
for quotation of the Exchange Notes through any automated quotation system.
Accordingly, there can be no assurance as to the development or liquidity of any
market for any of the Exchange Notes.
The respective Exchange Offers are not conditioned upon any minimum
aggregate principal amount of any series of Old Notes being tendered for
exchange. The date of acceptance and exchange of each series of Old Notes (each
an 'Exchange Date') will be the fourth business day following the applicable
Expiration Date (as hereinafter defined). Old Notes tendered pursuant to an
Exchange Offer may be withdrawn at any time prior to the applicable Expiration
Date. The Senior Subordinated Exchange Offers will expire at 5:00 p.m., New York
City Time, on , 1998 (the date of expiration of each Senior
Subordinated Exchange Offer, as extended, being herein called a 'Senior
Subordinated Expiration Date'), and the Senior Discount Exchange Offer will
expire at 5:00 p.m., New York City Time, on , 1998 (as extended,
the 'Senior Discount Expiration Date' and, together with the Senior Subordinated
Expiration Dates, the 'Expiration Dates'). The Issuers do not currently intend
to extend any of the Expiration Dates.
The respective Issuers will not receive any proceeds from any of the
Exchange Offers. The Company Issuers and the Holdings Issuers will pay all of
the expenses incident to the Senior Subordinated Exchange Offers and the Senior
Discount Exchange Offer, respectively. The Issuers used all of the proceeds from
the Offerings to (i) redeem certain partnership interests in Holdings pursuant
to the recapitalization transaction described herein (the 'Recapitalization');
(ii) repay substantially all of the existing debt of Holdings and its
subsidiaries; (iii) pay certain bonuses and other cash payments to certain
members of Management; and (iv) pay related transaction fees and expenses. Since
the consummation of the Recapitalization, the Issuers have been controlled by
Blackstone Capital Partners III Merchant Banking Fund L.P. and its affiliates
(collectively, 'Blackstone'). See 'The Recapitalization.'
v
<PAGE>
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, exhibits, schedules and supplements thereto,
the 'Registration Statement') under the Securities Act with respect to the
Exchange Notes being offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Issuers and
the Exchange Notes, reference is made to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and, where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified in all respects by the provisions in such exhibit, to which reference
is hereby made. The Issuers are not currently subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'). Upon completion of the Exchange Offers, the Holdings Issuers will be
subject to the information requirements of the Exchange Act and, in accordance
therewith, will file periodic reports and other information with the Commission.
The Registration Statement, such reports and other information can be inspected
and copied at the Public Reference Section of the Commission located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at
regional public reference facilities maintained by the Commission 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. Copies of
such material, including copies of all or any portion of the Registration
Statement, can be obtained from the Public Reference Section of the Commission
at prescribed rates. Such material may also be accessed electronically by means
of the Commission's home page on the Internet (http://www.sec.gov). In addition,
pursuant to the Indentures covering the Notes, the Issuers have agreed that the
Holdings Issuers shall file with the Commission and provide to the Holders of
the Notes the annual reports and the information, documents and other reports
otherwise required pursuant to Section 13 of the Exchange Act. Such requirements
may be satisfied through the filing and provision of such documents and reports
which would otherwise be required pursuant to Section 13 in respect of the
Holdings Issuers.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
CAUTIONARY STATEMENT FOR PURPOSES OF THE 'SAFE HARBOR'
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A 'SAFE
HARBOR' FOR CERTAIN FORWARD-LOOKING STATEMENTS. THIS PROSPECTUS INCLUDES
'FORWARD-LOOKING STATEMENTS' WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
'EXCHANGE ACT'). ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS
INCLUDED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING
THE ISSUERS' FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED
COSTS AND PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-
LOOKING STATEMENTS. IN ADDITION, FORWARD-LOOKING STATEMENTS GENERALLY CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS 'MAY', 'WILL',
'EXPECT', 'INTEND', 'ESTIMATE', 'ANTICIPATE', 'BELIEVE', OR 'CONTINUE' OR THE
NEGATIVE THEREOF OR VARIATIONS THEREON OR SIMILAR TERMINOLOGY. ALTHOUGH THE
ISSUERS BELIEVE THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, THEY CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS
WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE ISSUERS' EXPECTATIONS ('CAUTIONARY
STATEMENTS') ARE DISCLOSED UNDER 'RISK FACTORS' AND ELSEWHERE IN THIS
PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-
LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS. ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE ISSUERS, OR PERSONS ACTING ON ANY
OF THEIR BEHALF, ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS.
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
statements appearing elsewhere in this Prospectus. Unless the context otherwise
requires, all references in this Prospectus to the 'Company,' with respect to
periods prior to the Recapitalization, refer to the business historically
conducted by Graham Packaging Holdings Company ('Holdings') (which served as the
operating entity for the business prior to the Recapitalization) and one of its
predecessors (Graham Container Corporation), together with Holdings'
subsidiaries and certain affiliates, and, with respect to periods subsequent to
the Recapitalization, refer to Holdings and its subsidiaries. All references to
the Recapitalization herein shall mean the collective reference to the
recapitalization of Holdings and related transactions as described under 'The
Recapitalization,' including the initial borrowings under the New Credit
Facility, the Offerings and the related uses of proceeds. References to
'Continuing Graham Partners' herein refer to Graham Packaging Corporation
('Graham GP Corp.'), Graham Family Growth Partnership or affiliates thereof or
other entities controlled by Donald C. Graham and his family, and references to
'Graham Partners' refer to the Continuing Graham Partners, Graham Engineering
Corporation ('Graham Engineering') and the other partners of Holdings
(consisting of Donald C. Graham and certain entities controlled by Mr. Graham
and his family). All references to 'Management' herein shall mean the management
of the Company at the time in question, unless the context indicates otherwise.
In addition, unless otherwise indicated, all sources for all industry data and
statistics contained herein are estimates contained in or derived from internal
or industry sources believed by the Company to be reliable.
THE COMPANY
Graham Packaging Company is a worldwide leader in the design and
manufacture of customized blow-molded rigid plastic bottles for many of the
world's largest branded consumer products companies for whom customized
packaging design is a critical component in their efforts to differentiate their
products to the consumer. The Company's products are made primarily from high
density polyethylene ('HDPE') and polyethylene terephthalate ('PET') resins for
customers in the (i) automotive, (ii) food and beverage and (iii) household
cleaning and personal care products businesses. With leading positions in each
of its businesses, the Company has been a major beneficiary of the trend of
conversion from glass, paper and metal containers to plastic packaging and has
grown its net sales over the past 15 years at a 24% compounded annual growth
rate ('CAGR'). In contrast to the carbonated soft drink bottle business, the
businesses in which the Company operates are characterized by more specialized
technology, a greater degree of customized packaging, shorter production runs,
higher growth rates and more attractive profit margins.
In order to position itself to further capitalize on the conversion trend,
the Company has made substantial capital expenditures since 1992, particularly
in the fast growing hot-fill PET area for shelf-stable (i.e., unrefrigerated)
beverages. In addition, the Company has distinguished itself as the leader in
locating its manufacturing plants on-site at its customers' packaging facilities
and has over one-third of its 41 facilities at on-site locations. The many
benefits of on-site plants, in addition to the Company's track record of
innovative design, superior customer service and low cost manufacturing
processes, help account for the fact that the Company has not lost a major
customer in the last three years. For the year ended December 31, 1997,
approximately 77% of the Company's net sales were generated by its top 20
customers, approximately 60% of which were under long-term contracts (i.e., with
terms of between one and ten years) and the remainder of which were customers
with whom the Company has been doing business for over 10 years on average. For
the year ended December 31, 1997, the Company generated net sales and EBITDA (as
defined) of $521.7 million and $89.8 million, respectively, and for the three
months ended March 29, 1998, the Company generated net sales and EBITDA of
$134.4 million and $25.3 million, respectively.
Automotive. The Company is the preeminent supplier of one quart HDPE motor
oil containers in the United States, producing over 1.5 billion units in 1997,
which Management believes represents 73% of the one quart motor oil containers
produced domestically. The Company is a supplier of such containers to many of
the top domestic producers of motor oil, including Amoco Corporation ('Amoco'),
Ashland Inc. ('Ashland,' producer of Valvoline motor oil), Castrol, Inc.
('Castrol'), Chevron Corporation ('Chevron'), Pennzoil Products Company
('Pennzoil'), Shell Oil Company ('Shell Oil'), Sun Company, Inc. ('Sun Company')
and
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Texaco, Inc. ('Texaco'), and is the sole supplier of one quart motor oil
containers to five of these producers. The Company also manufactures containers
for other automotive products, such as antifreeze and automatic transmission
fluid. Capitalizing on its leading position in the U.S., the Company is
expanding its operations in Latin America. In Brazil, where Management believes
that the Company is among the largest independent suppliers of plastic packaging
for motor oil, the Company currently operates four plants and recently signed an
agreement to operate one additional plant. In addition to benefitting from the
conversion to plastic packaging for motor oil in Latin America, Management
believes that the Company will benefit from the general growth in the automotive
business in this region as the number of motor vehicles per person increases. In
1994, the ratio of passenger cars to people was 1 to 13.2 in Brazil, while in
the U.S. the ratio was 1 to 1.8. For the year ended December 31, 1997 and the
three months ended March 29, 1998, the Company generated approximately 37.6% and
33.5%, respectively, of its net sales from the automotive container business.
Food & Beverage. In the food and beverage business, the Company produces
both HDPE and PET containers for customers for whom customized packaging design
is a critical component of their efforts to differentiate their products to the
consumer. From 1992 through December 31, 1997, the Company grew its food and
beverage business at a CAGR of 67%. This substantial growth has been driven by
the rapid conversion of metal, glass and paper containers to plastic bottles, as
the superior functionality, safety and improving economics of plastic became
more apparent. The Company is a leader in the production of HDPE containers for
non-carbonated, chilled juice and juice drinks and certain liquid foods that
utilize HDPE resins. From 1992 through December 31, 1997, the Company invested
over $99 million in capital expenditures to build a strategic nationwide plant
network and to develop the specialized bottle manufacturing processes necessary
to produce the PET bottles required for the hot-fill packaging of shelf-stable
juices and juice drinks. The hot-fill process, in which bottles are filled at
between 180 degrees-190 degrees Fahrenheit to kill bacteria, permits the
shipment and display of juices and juice drinks in a shelf-stable state. The
manufacturing process for hot-fill PET packaging is significantly more demanding
than that used for cold-fill carbonated soft drink containers, and typically
involves shorter production runs, greater shape complexity and close production
integration with customers. Industry sources forecast that the hot-fill PET
juice and juice drink container business, upon which the Company focuses, will
enjoy a CAGR of over 40% between 1996 and 2000. The Company's largest customers
in the food and beverage business include Groupe Danone ('Danone'), Hershey
Foods Corporation ('Hershey's'), The Minute Maid Company ('Minute Maid'), Nestle
Food Company ('Nestle's'), Ocean Spray Cranberries, Inc. ('Ocean Spray'), Seneca
Foods Corporation ('Seneca'), Tree Top, Inc. ('Tree Top'), Tropicana Products,
Inc. ('Tropicana') and Welch Foods, Inc. ('Welch's'). For the year ended
December 31, 1997 and the three months ended March 29, 1998, the Company
generated approximately 28.9% and 34.2%, respectively, of its net sales from the
food and beverage business.
Household Cleaning & Personal Care. The Company is a leading supplier of
HDPE custom bottles to the North American household cleaning and personal care
('HC/PC') products business which includes products such as shampoo, liquid
laundry detergent, tub and tile cleaner and dishwashing liquid. By focusing on
its customized product design capability, the Company provides its HC/PC
customers with a key component in their efforts to differentiate products on
store shelves. The Company's largest customers in this sector include The Clorox
Company ('Clorox'), Colgate-Palmolive Company ('Colgate-Palmolive'), The Dial
Corp. ('Dial'), Johnson & Johnson ('J&J'), L'Oreal S.A. ('L'Oreal'), The Procter
& Gamble Company ('Procter & Gamble') and Unilever NV ('Unilever'). The Company
is pursuing significant growth opportunities both domestically and
internationally associated with the continued conversion to HDPE packaging of
both household cleaners and personal care products. The Company continues to
benefit as liquid laundry detergents, which are packaged in plastic containers,
capture an increased share from powdered detergents, which are predominantly
packaged in cardboard. For the year ended December 31, 1997 and the three months
ended March 29, 1998, the Company generated approximately 33.5% and 32.3%,
respectively, of its net sales from the HC/PC business.
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COMPANY STRENGTHS
Management believes the Company has the following key competitive
strengths:
Strong Relationships and Long-Term Contracts with Diversified Blue Chip
Customer Base. The Company has enjoyed long-standing relationships averaging 16
years with its top twenty customers, who generated 77% of the Company's net
sales in 1997. These customers include many of the world's leading branded
consumer product companies and motor oil companies. Management attributes these
close relationships to the Company's creative design and engineering
capabilities, high level of customer service, high quality products, efficient
manufacturing, reliable delivery, speed to market and experienced and stable
management team and workforce. The Company supplies several of these customers
with 100% of their plastic packaging needs nationally, regionally or for a
specific brand, including Valvoline motor oil, Tropicana orange juice, Cascade
dishwashing gel and Purex laundry detergent. As another example of customer
loyalty, substantially all contracts which have come up for renewal in the last
three fiscal years have been extended.
Premier Custom Package Designer. The Company has centered its growth
strategy upon customers that require custom, as opposed to stock, plastic
containers as a critical component of their marketing efforts. The production of
custom containers involves a high degree of design, engineering and
manufacturing complexity in terms of bottle shapes, production tolerance and
performance requirements. The Company's ability to design and manufacture highly
customized packaging has enabled it to secure long-term contractual commitments
and to continue to enjoy a history of stable and steadily increasing orders from
its top customers at attractive profit margins. Management intends to apply this
core custom manufacturing capability in growth businesses, such as hot-fill PET
packaging, that require the same degree of customization and manufacturing
expertise as the Company's existing HDPE packaging business.
On-Site Facilities. More than one-third of the Company's 41 plants are
located on-site at its customers' plants, which is substantially greater than
any of its competitors. On-site plants enable the Company to work more closely
with its customers, facilitating just-in-time inventory management, generating
significant savings opportunities through process re-engineering, eliminating
costly shipping and handling charges, reducing working capital needs and
fostering the development of long-term customer relationships. The benefits of
on-site manufacturing result in increased profitability for both the Company and
its customers, and partially accounts for the fact that the Company has never
lost an on-site relationship.
Leading Positions. The Company is the preeminent domestic supplier of
motor oil containers, with what Management believes to be an approximate 73%
share of the domestic one quart motor oil container business. The Company has
become a leading manufacturer of hot-fill PET containers for juice and juice
drinks in North America after only approximately five years in the business and
is also a leading supplier in North America of custom HDPE containers for juice
and juice drinks and HDPE custom plastic bottles in the HC/PC business.
Strong Industry Fundamentals and Growth Prospects. Management believes
that the businesses in which the Company operates exhibit strong fundamental
characteristics and growth prospects including (i) the domestic and
international trend in the conversion to plastic packaging from other materials
(including the conversion of the hot-fill domestic juice and juice drinks
business which is only 14% converted to plastic), (ii) the non-cyclical nature
of end-use products for which the Company designs and manufactures packaging
(including motor oil, juices, laundry detergents and shampoos, among others),
(iii) long-term relationships which yield efficiencies in situations where
customers integrate their operations with packaging suppliers, particularly in
on-site situations and (iv) attractive margins inherent in the complex design
and engineering capabilities that are required in these businesses.
Significant Investment in Manufacturing Systems. Management believes that
the Company's investment in its manufacturing systems throughout its 28 U.S.
plants and 13 international plants provides it with a competitive advantage.
From 1992 through December 31, 1997, the Company invested approximately $64
million to maintain its asset base, approximately $200 million to improve the
efficiency of its existing operations and expand capacity and approximately $53
million to acquire several businesses in its effort to diversify globally. From
1992 through December 31, 1997, the Company made capital expenditures of over
$99 million relating to the hot-fill PET business. Management anticipates
achieving higher EBITDA margins in the next few years in the hot-fill PET
business through the leveraging of this investment, as fixed manufacturing and
selling, general and
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administrative ('SG&A') costs are absorbed by higher sales. As a result of the
Company's on-site strategy and long-term contractual relationships, capital
expenditures are typically associated directly with specific contracts with
customers, which allows Management to more effectively allocate its investment
capital.
Favorable Supplier Relationships. HDPE and PET resins are the principal
raw materials used to manufacture the Company's products. Because the Company is
among the largest purchasers of bottle-grade HDPE resins for blow molding in the
world, it is able to secure advantageous supply arrangements. In addition, the
Company has limited exposure to fluctuations in the price of these raw materials
because it can pass through price adjustments to its customers due to
contractual provisions and standard industry practice. See 'Business--Raw
Materials.'
Experienced Management Team. The Company is led by an experienced team of
senior managers with a track record of achieving profitable growth, maintaining
the Company's blue chip customer base, introducing differentiated product
designs and entering new businesses. The Company's top 20 managers average over
15 years of work experience in the packaging industry and 13 years at the
Company. Since the Recapitalization, the Company's senior managers have owned an
equity investment in Investor LP (the entity through which Blackstone holds its
interest in Holdings), that approximates a 2.6% indirect equity interest in
Holdings, and will be awarded options, subject to certain performance based and
other vesting provisions, representing an additional equity interest in
Holdings. In addition, the Continuing Graham Partners retained a 1% general
partnership interest and a 14% limited partnership interest in Holdings, which
interests were valued at $36.7 million at the consummation of the
Recapitalization. See 'The Recapitalization,' 'Management--Management Option
Plan' and 'Security Ownership'.
BUSINESS STRATEGY
The Company's objective is to capitalize on its position as a leading
custom blow molded plastic container supplier. The Company seeks to achieve this
objective by pursuing the following strategies:
Capitalize on Conversion to Plastic Containers. The Company intends to
grow both domestically and internationally by continuing to capitalize on the
industry trend toward the conversion from glass, metal and paper to plastic
containers, which Management believes is being driven by consumer demand, price
competitiveness and superior functionality. As one of the leading domestic
suppliers of hot-fill PET containers, the Company is poised to take advantage of
the rapid conversion from glass to plastic in the juice and juice drink
business, 86% of which has not yet been converted. In addition to opportunities
in the domestic hot-fill PET arena, Management believes that additional
conversions to HDPE packaging will occur in areas such as frozen juice
concentrate (currently packaged entirely in metal and cardboard containers), 64
ounce juices (a large portion of which is currently packaged in cardboard
containers) and motor oil (particularly in Latin America).
Maintain and Expand Position with Key Customers. The Company plans to
maintain and expand its position with global branded consumer products companies
that require highly customized features to differentiate their products on store
shelves. Central to this strategy are the continued (i) delivery of superior
customer service, (ii) location of facilities on-site, (iii) innovation in
packaging design, (iv) operation through long-term contracts and (v) provision
of low cost manufacturing processes.
Pursue Acquisitions and Strategic Joint Ventures. Management believes that
there are major synergistic acquisition and joint venture opportunities across
the Company's businesses, and, on an opportunistic basis, intends to pursue them
(i) to complement its existing businesses through product line expansion, (ii)
to strengthen its competitive position as a domestic leader and (iii) to
facilitate the penetration of new and developing business areas and geographic
territories. Furthermore, Management believes that it can improve the
profitability of acquired entities through economies of scale, by leveraging the
Company's existing strengths and by expanding the acquired entities' access to
international markets through the Company's existing international presence.
Capture Global Growth Opportunities with Improved Profitability. Since
1992, the Company has expanded globally both through acquisitions and by
accompanying its existing customers into new territories. Following the
Company's entrance into Western Europe, as well as its subsequent expansion into
Brazil, Canada and Poland, the Company's international operations have grown
substantially to 21.2% of net sales for the year end December 31, 1997 and to
21.7% of net sales for the three months ended March 29, 1998. Management
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believes that the global trend in the conversion to plastic packaging will
continue, particularly in the developing world as consumer economies expand and
industrialization continues. Currently, profitability levels from international
operations are lower than in the U.S., and Management intends to improve these
margins, particularly in France.
THE RECAPITALIZATION
The recapitalization (the 'Recapitalization') of Holdings was consummated
on February 2, 1998 pursuant to an Agreement and Plan of Recapitalization,
Redemption and Purchase, dated as of December 18, 1997 (the 'Recapitalization
Agreement'), by and among (i) Holdings, (ii) the Graham Partners, and (iii)
BMP/Graham Holdings Corporation, a Delaware corporation formed by Blackstone
('Investor LP'), and BCP/Graham Holdings L.L.C., a Delaware limited liability
company and a wholly owned subsidiary of Investor LP ('Investor GP' and,
together with Investor LP, the 'Equity Investors').
On February 2, 1998, as part of the Recapitalization, Graham Packaging
Company (the 'Operating Company') and GPC Capital Corp. I ('CapCo I' and,
together with the Operating Company, the 'Company Issuers') consummated an
offering (the 'Senior Subordinated Offering') pursuant to Rule 144A under the
Securities Act of their Senior Subordinated Notes Due 2008, consisting of
$150,000,000 aggregate principal amount of their 8 3/4% Senior Subordinated
Notes Due 2008, Series A (the 'Fixed Rate Senior Subordinated Old Notes') and
$75,000,000 aggregate principal amount of their Floating Interest Rate
Subordinated Term Securities Due 2008, Series A (the 'Floating Rate Senior
Subordinated Old Notes' and, together with the Fixed Rate Senior Subordinated
Old Notes, the 'Senior Subordinated Old Notes'). Pursuant to the Senior
Subordinated Exchange Offers, the Company Issuers are offering to exchange
$150,000,000 aggregate principal amount of their 8 3/4% Senior Subordinated
Notes Due 2008, Series B (the 'Fixed Rate Senior Subordinated Exchange Notes'),
and $75,000,000 aggregate principal amount of their Floating Interest Rate
Subordinated Term Securities Due 2008, Series B (the 'Floating Rate Senior
Subordinated Exchange Notes' and, together with the Fixed Rate Senior
Subordinated Old Notes, the 'Senior Subordinated Exchange Notes'), for equal
principal amounts of Fixed Rate Senior Subordinated Old Notes and Floating Rate
Senior Subordinated Old Notes, respectively.
On February 2, 1998, as part of the Recapitalization, Holdings and GPC
Capital Corp. II ('CapCo II' and, together with the Operating Company, the
'Holdings Issuers', which when referred to with the Company Issuers will
collectively be referred to as the 'Issuers') consummated an offering (the
'Senior Discount Offering' and, together with the Senior Subordinated Offering,
the 'Offerings') pursuant to Rule 144A under the Securities Act of $169,000,000
aggregate principal amount at maturity of their 10 3/4% Senior Discount Notes
Due 2009, Series A (the 'Senior Discount Old Notes' and, together with the
Senior Subordinated Old Notes, the 'Old Notes'). Pursuant to the Senior Discount
Exchange Offer, the Holdings Issuers are offering to exchange $169,000,000
aggregate principal amount at maturity of their 10 3/4% Senior Discount Notes
Due 2009, Series B (the 'Senior Discount Exchange Notes'), for an equal
principal amount at maturity of Senior Discount Old Notes.
The other principal components of the Recapitalization included the
following transactions:
o The contribution by Holdings of substantially all of its assets and
liabilities to the Operating Company;
o The contribution by certain Graham Partners to the Operating Company of
their ownership interests in certain partially owned subsidiaries and
certain real estate used but not owned by Holdings and its subsidiaries
(the 'Graham Contribution');
o The initial borrowing by the Operating Company of $395.0 million (the
'Bank Borrowings') in connection with the New Credit Facility by and
among the Operating Company, Holdings and a syndicate of lenders, as
described under 'Description of the New Credit Facility';
o The repayment by the Operating Company of substantially all of the
existing indebtedness and accrued interest of Holdings and its
subsidiaries (approximately $264.9 million);
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o The distribution by the Operating Company to Holdings of all of the
remaining net proceeds of the Bank Borrowings and the Senior Subordinated
Offering (other than amounts necessary to pay certain fees and expenses
and payments to Management) which, in aggregate, were approximately
$312.8 million;
o The repayment by the Graham Partners of $21.2 million owed to Holdings
under certain promissory notes;
o The redemption by Holdings of certain partnership interests in Holdings
held by the Graham Partners for $429.6 million;
o The purchase by the Equity Investors of certain partnership interests in
Holdings held by the Graham Partners for $208.3 million; and
o The payment of certain bonuses and other cash payments and the granting
of certain equity awards to senior and middle level management.
Upon the consummation of the Recapitalization, Investor LP owned an 81%
limited partnership interest in Holdings, Investor GP owned a 4% general
partnership interest in Holdings, and the Continuing Graham Partners retained a
1% general partnership interest and a 14% limited partnership interest in
Holdings. Upon the consummation of the Recapitalization, Holdings owned a 99%
limited partnership interest in the Operating Company, and GPC Opco GP LLC
('Opco GP'), a wholly owned subsidiary of Holdings, owned a 1% general
partnership interest in the Operating Company. See 'The Recapitalization' and
'The Issuers.' Following the consummation of the Recapitalization, certain
members of Management owned an aggregate of approximately 3% of the outstanding
common stock of Investor LP, which constitutes approximately a 2.6% interest in
Holdings. In addition, an affiliate of BT Alex. Brown Incorporated and Bankers
Trust International PLC (which acted as initial purchasers of the Old Notes in
the Offerings) acquired approximately a 4.8% equity interest in Investor LP. See
'Security Ownership.'
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SUMMARY OF CASH FLOWS ASSOCIATED WITH THE RECAPITALIZATION
The following chart sets forth a summary of the cash flows associated with
the Recapitalization.
- ------------- -------------------
| Equity | $208.3 million \ | Graham Partners |
| Investors | ----------------------------------------- | |
- ------------- Purchase of existing / / _ -------------------
partnership interests / /|
/ /
$ 21.2 million / /
Repayment of / /
promissory notes / / $429.6 million
/ / Redemption of existing
/ / partnership interests
/ /
/ /
Transaction costs |/_ /
and expenses ------------
$5.9 million | Holdings |
------------
/ /
- ------------------------------ ------------------------------------
\ /|\ \
| $100.6 million Senior Discount Notes
|
|
| $313.7 million
|
Repayment of |
existing indebtedness |
$264.9 million | $403.5 million Bank Borrowings
/ | /
- ------------------------- --------------------------------
\ \
Payment to Management --------------------- $225.0 million Senior
$15.4 million | Operating Company | Subordinated Notes
/ --------------------- /
- ------------------------- --------------------------------
\ \
Fees and expenses $1.7 million Available Cash
$36.2 million
/ /
- ------------------------- --------------------------------
\ \
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THE SENIOR SUBORDINATED EXCHANGE OFFERS
<TABLE>
<S> <C>
The Senior Subordinated Exchange
Offers............................. The Company Issuers are offering to exchange pursuant to the Senior
Subordinated Exchange Offers (i) up to $150,000,000 aggregate principal
amount of their Fixed Rate Senior Subordinated Exchange Notes for a like
aggregate principal amount of their Fixed Rate Senior Subordinated Old
Notes, and (ii) up to $75,000,000 aggregate principal amount of their
Floating Rate Senior Subordinated Exchange Notes for a like aggregate
principal amount of their Floating Rate Senior Subordinated Old Notes. The
terms of the Fixed Rate Senior Subordinated Exchange Notes and the
Floating Rate Senior Subordinated Exchange Notes are identical in all
material respects (including principal amount, interest rate and maturity)
to the terms of the Fixed Rate Senior Subordinated Old Notes and the
Floating Rate Senior Subordinated Old Notes, respectively, for which they
may be exchanged pursuant to the Senior Subordinated Exchange Offers,
except that the Senior Subordinated Exchange Notes are freely
transferrable by Holders thereof (other than as provided herein), and are
not subject to any covenant regarding registration under the Securities
Act. The Senior Subordinated Exchange Notes will be unconditionally
guaranteed by Holdings (the 'Holdings Guarantee') on a senior subordinated
basis, and Holdings hereby offers to issue the Holdings Guarantee with
respect to all Senior Subordinated Exchange Notes issued in the Senior
Subordinated Exchange Offers in exchange for Holdings' outstanding
guarantees (the ' Old Holdings Guarantee') of the Senior Subordinated Old
Notes. See 'The Senior Subordinated Exchange Offers.'
No Minimum Condition................. The Senior Subordinated Exchange Offers are not conditioned upon any
minimum aggregate principal amount of Senior Subordinated Old Notes being
tendered for exchange.
Senior Subordinated Expiration Dates;
Withdrawal of Tenders.............. The Fixed Rate Senior Subordinated Exchange Offer will expire at 5:00
p.m., New York City time, on , 1998 (the 'Fixed Rate
Senior Subordinated Expiration Date'), and the Floating Rate Senior
Subordinated Exchange Offer will expire at 5:00 p.m., New York City time,
on , 1998 (the 'Floating Rate Senior Subordinated
Expiration Date' and, together with the Fixed Rate Senior Subordinated
Expiration Date, the 'Senior Subordinated Expiration Dates'), unless the
applicable Senior Subordinated Exchange Offer is extended, in which case
the term 'Fixed Rate Senior Subordinated Expiration Date' or 'Floating
Rate Senior Subordinated Expiration Date' means the latest date and time
to which the Fixed Rate Senior Subordinated Exchange Offer or the Floating
Rate Senior Subordinated Exchange Offer, as the case may be, is extended.
The Company Issuers do not currently intend to extend either of the Senior
Subordinated Expiration Dates. Tenders may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the applicable Senior Subordinated
Expiration Date. See 'The Senior Subordinated Exchange Offers--Withdrawal
Rights.'
Senior Subordinated Exchange Date.... The date of acceptance for exchange of the Senior Subordinated Old
</TABLE>
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Notes will be the fourth business day following the applicable Senior
Subordinated Expiration Date.
Conditions to the Senior Subordinated
Exchange Offers.................... Each of the Senior Subordinated Exchange Offers is subject to certain
customary conditions, which may be waived by the Company Issuers. The
Company Issuers currently expect that each of the conditions will be
satisfied and that no waivers will be necessary. See 'The Senior
Subordinated Exchange Offers--Certain Conditions to the Senior
Subordinated Exchange Offers.' The Company Issuers reserve the right to
terminate or amend either Senior Subordinated Exchange Offer at any time
prior to the applicable Senior Subordinated Expiration Date upon the
occurrence of any such condition.
Procedures for Tendering Senior
Subordinated Old Notes............. Each Holder wishing to accept the applicable Senior Subordinated Exchange
Offer must complete, sign and date the applicable Letter of Transmittal,
or a facsimile thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the applicable Senior
Subordinated Old Notes and any other required documentation to the Senior
Subordinated Exchange Agent at the address set forth therein. See 'The
Senior Subordinated Exchange Offers--Procedures for Tendering Senior
Subordinated Old Notes' and 'Plan of Distribution.'
Use of Proceeds...................... There will be no proceeds to the Company Issuers from the exchange of
Senior Subordinated Notes pursuant to the Senior Subordinated Exchange
Offers.
Federal Income Tax
Considerations..................... The exchange of Notes pursuant to the Senior Subordinated Exchange Offers
will not be a taxable event for federal income tax purposes. See 'Certain
U.S. Federal Income Tax Considerations.'
Special Procedures for Beneficial
Owners............................. Any beneficial owner whose Senior Subordinated 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 such 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
beneficial owner's own behalf, such beneficial owner must, prior to
completing and executing the applicable Letter of Transmittal and
delivering the Senior Subordinated Old Notes, either make appropriate
arrangements to register ownership of the Senior Subordinated 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. See 'The Senior Subordinated Exchange
Offers--Procedures for Tendering Senior Subordinated Old Notes.'
Guaranteed Delivery Procedures....... Holders of Senior Subordinated Old Notes who wish to tender their Senior
Subordinated Old Notes and whose Senior Subordinated Old Notes are not
immediately available or who cannot deliver their Senior Subordinated Old
Notes, the applicable Letter of Transmittal or any other documents
required by such Letter of Transmittal to the Senior Subordinated Exchange
Agent prior to the applicable Expiration Date
</TABLE>
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must tender their Senior Subordinated Old Notes according to the
guaranteed delivery procedures set forth in 'The Senior Subordinated
Exchange Offers--Procedures for Tendering Senior Subordinated Old Notes.'
Acceptance of Senior Subordinated Old
Notes and Delivery of Senior
Subordinated Exchange Notes........ The Company Issuers will accept for exchange any and all Senior
Subordinated Old Notes which are properly tendered in the Senior
Subordinated Exchange Offers prior to 5:00 p.m., New York City time, on
the applicable Senior Subordinated Expiration Date. The Senior
Subordinated Exchange Notes issued pursuant to the Senior Subordinated
Exchange Offers will be delivered promptly following the applicable Senior
Subordinated Expiration Date. See 'The Senior Subordinated Exchange
Offers--Acceptance of Senior Subordinated Old Notes for Exchange; Delivery
of Senior Subordinated Exchange Notes.'
Effect on Holders of Senior
Subordinated Old Notes............. As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Subordinated Old Notes pursuant to the terms of
the Senior Subordinated Exchange Offers, the Company Issuers will have
fulfilled a covenant contained in the Registration Rights Agreement (the
'Senior Subordinated Registration Rights Agreement') dated as of February
2, 1998 among the Company Issuers, Holdings, as guarantor, and BT Alex.
Brown Incorporated, Bankers Trust International PLC, Lazard Freres & Co.
L.L.C. and Salomon Brothers Inc (the 'Initial Purchasers'), and,
accordingly, there will be no increase in the interest rate on the Senior
Subordinated Old Notes pursuant to the terms of the Senior Subordinated
Registration Rights Agreement, and the holders of the Senior Subordinated
Old Notes will have no further registration or other rights under the
Senior Subordinated Registration Rights Agreement. Holders of the Senior
Subordinated Old Notes who do not tender their Senior Subordinated Old
Notes in the Senior Subordinated Exchange Offers will continue to hold
such Senior Subordinated Old Notes and will be entitled to all the rights
and limitations applicable thereto under the Indenture dated as of
February 2, 1998 (the 'Senior Subordinated Indenture') between the Company
Issuers and United States Trust Company of New York, as Trustee, relating
to the Senior Subordinated Old Notes and the Senior Subordinated Exchange
Notes, except for any such rights under the Senior Subordinated
Registration Rights Agreement that by their terms terminate or cease to
have further effectiveness as a result of the making of, and the
acceptance for exchange of all validly tendered Senior Subordinated Old
Notes pursuant to, the Senior Subordinated Exchange Offers.
Consequence of Failure to Exchange... Holders of Senior Subordinated Old Notes who do not exchange their Senior
Subordinated Old Notes for Senior Subordinated Exchange Notes pursuant to
the Senior Subordinated Exchange Offers will continue to be subject to the
restrictions on transfer of such Senior Subordinated Old Notes provided
for in the Senior Subordinated Old Notes and in the Senior Subordinated
Indenture and as set forth in the legend on the Senior Subordinated Old
Notes. In general, the Senior Subordinated Old Notes may not be offered or
sold, unless registered under the Securities
</TABLE>
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Act, except pursuant to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state securities laws. The Company
Issuers do not currently anticipate that they will register the Senior
Subordinated Old Notes under the Securities Act. To the extent that Senior
Subordinated Old Notes are tendered and accepted in the Senior
Subordinated Exchange Offers, the trading market for untendered Senior
Subordinated Old Notes could be adversely affected.
Senior Subordinated Exchange Agent... United States Trust Company of New York is serving as exchange agent (the
'Senior Subordinated Exchange Agent') in connection with the Senior
Subordinated Exchange Offers. See 'The Senior Subordinated Exchange
Offers-Senior Subordinated Exchange Agent.'
</TABLE>
TERMS OF THE SENIOR SUBORDINATED EXCHANGE NOTES
<TABLE>
<S> <C>
Securities Offered................... $150,000,000 aggregate principal amount of 8 3/4% Senior Subordinated
Notes Due 2008, Series B (referred to herein as the 'Fixed Rate Senior
Subordinated Exchange Notes').
$75,000,000 aggregate principal amount of Floating Interest Rate
Subordinated Term Securities Due 2008, Series B (referred to herein as the
'Floating Rate Senior Subordinated Exchange Notes').
Issuers.............................. Graham Packaging Company and GPC Capital Corp. I.
Maturity Date........................ January 15, 2008.
Interest Payment Dates............... Interest on the Senior Subordinated Exchange Notes will accrue from the
last Interest Payment Date to which interest was paid on the related
series of Senior Subordinated Old Notes, or if no interest has been paid
on the Senior Subordinated Old Notes, from February 2, 1998. Interest will
be payable semi-annually in arrears on January 15 and July 15 of each
year, commencing on the first such date to occur after the applicable
Senior Subordinated Exchange Date. The Fixed Rate Senior Subordinated
Exchange Notes will bear interest at the rate of 8 3/4% per annum. The
Floating Rate Senior Subordinated Exchange Notes will bear interest at a
rate per annum equal to LIBOR plus 3 5/8%. Interest on the Floating Rate
Senior Subordinated Exchange Notes will be reset semi-annually.
Ranking.............................. The Senior Subordinated Exchange Notes will be general unsecured
obligations of the Company Issuers and will be subordinated in right of
payment to all existing and future Senior Indebtedness of the Company
Issuers. As of March 29, 1998, after giving effect to the
Recapitalization, the Company Issuers and the Operating Company's
subsidiaries had $414.7 million of Senior Indebtedness outstanding. In
addition, the Senior Subordinated Exchange Notes will be effectively
subordinated to all indebtedness and other liabilities (including trade
payables) of the Operating Company's subsidiaries. As of March 29, 1998,
after giving effect to the Recapitalization, such subsidiaries had total
liabilities of $38.4 million, including indebtedness of $5.1 million. In
addition, at March 29, 1998, the Operating Company had additional
borrowing availability of approximately $242.0 million under the New
Credit Facility subject to certain customary drawing conditions relating
to the Revolving Credit Facility (as defined) and certain other
conditions, including required equity contributions relating to the Growth
Capital
</TABLE>
12
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Revolving Facility (as defined). See 'Use of Proceeds,' 'Unaudited Pro
Forma Financial Information' and 'Description of the New Credit Facility.'
The Senior Subordinated Exchange Notes will rank pari passu with any
future senior subordinated indebtedness of the Company Issuers and will
rank senior to all other subordinated indebtedness of the Company Issuers.
See 'Use of Proceeds,' 'Unaudited Pro Forma Financial Information' and
'Description of the New Credit Facility.'
Optional Redemption.................. The Fixed Rate Senior Subordinated Exchange Notes will be redeemable, in
whole or in part, at the option of the Company Issuers on or after January
15, 2003 at the redemption prices set forth herein, plus accrued and
unpaid interest to the date of redemption. The Fixed Rate Senior
Subordinated Exchange Notes are not redeemable by the Company Issuers
prior to January 15, 2003, except that, at any time on or prior to January
15, 2001, the Company Issuers, at their option, may redeem, with the net
cash proceeds of one or more Equity Offerings, Fixed Rate Senior
Subordinated Notes up to an aggregate principal amount equal to 40% of the
aggregate principal amount of the Fixed Rate Senior Subordinated Old Notes
originally issued, at a redemption price equal to 108.750% of the
principal amount thereof, plus accrued and unpaid interest to the date of
redemption; provided that Fixed Rate Senior Subordinated Notes in an
aggregate principal amount equal to at least 60% of the aggregate
principal amount of the Fixed Rate Senior Subordinated Old Notes
originally issued remains outstanding immediately following such
redemption. The Floating Rate Senior Subordinated Exchange Notes will be
redeemable, in whole or in part, at the option of the Company Issuers, at
any time, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. See 'Description of
the Senior Subordinated Exchange Notes--Redemption.'
Change of Control.................... Upon a Change of Control, each holder of Senior Subordinated Exchange
Notes will have the right to require the Company Issuers to repurchase
such holder's Senior Subordinated Exchange Notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest to the
repurchase date. See 'Description of the Senior Subordinated Exchange
Notes--Change of Control.'
Guarantees........................... The Senior Subordinated Exchange Notes will be unconditionally guaranteed
by Holdings on a senior subordinated basis. The Holdings Guarantee will be
subordinated in right of payment to all senior indebtedness of Holdings
($102.3 million at March 29, 1998) and effectively subordinated to all
indebtedness and other liabilities (including but not limited to trade
payables) of Holdings' subsidiaries ($757.8 million at March 29, 1998).
Investors should not rely on the Holdings Guarantee in evaluating an
investment in the Senior Subordinated Exchange Notes. See 'Risk
Factors--Subordination of Senior Subordinated Exchange Notes' and
'Holdings Guarantee.'
Certain Covenants.................... The Senior Subordinated Indenture contains certain covenants with respect
to the Operating 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,
and (e) transactions with affiliates. The Senior Subordinated Indenture
also restricts the ability of the Company Issuers to consolidate
</TABLE>
13
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or merge with or into, or to transfer all or substantially all of their
assets to, another person. In addition, under certain circumstances, the
Company Issuers will be required to offer to purchase the Senior
Subordinated Exchange Notes, in whole or in part, with the proceeds of
certain Asset Sales, at a purchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest to the repurchase date.
These restrictions and requirements are subject to a number of important
qualifications and exceptions. See 'Description of the Senior Subordinated
Exchange Notes--Certain Covenants.'
Absence of Market.................... The Senior Subordinated Exchange Notes are new securities for which there
is currently no established market. Accordingly, there can be no assurance
as to the development or liquidity of any market for the Senior
Subordinated Exchange Notes. The Company Issuers do not intend to list the
Senior Subordinated Exchange Notes on any securities exchange or to seek
approval for quotation of the Senior Subordinated Exchange Notes on any
automated quotation system.
No Recourse to Holdings Partners; No
Personal Liability of Directors,
Officers, Employees and
Stockholders....................... The Senior Subordinated Indenture under which the Senior Subordinated
Notes have been or will be issued provides that all obligations under the
Senior Subordinated Indenture, the Senior Subordinated Notes, the Holdings
Guarantee and the Old Holdings Guarantee (and all notes and guarantees
issued in exchange therefor) shall be expressly non-recourse to the
partners of Holdings in their capacities as such, and that, by purchasing
the Senior Subordinated Notes, each holder of Senior Subordinated Notes
waives any liability of any partner of Holdings under the Senior
Subordinated Indenture, the Senior Subordinated Notes, the Holdings
Guarantee and the Old Holdings Guarantee (and all notes and guarantees
issued in exchange therefor). No director, officer, employee, incorporator
or stockholder of the Company Issuers (or any Guarantor (as defined) under
any Guarantee (as defined) that has been or may be issued with respect to
the Senior Subordinated Notes) shall have any liability for any
obligations of the Company Issuers (or any such Guarantor) under the
Senior Subordinated Notes or the Indenture (or any such Guarantee) or any
claim based on, in respect of, or by reason of such obligation, or their
creation. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a
waiver is against public policy.
</TABLE>
For additional information regarding the Senior Subordinated Exchange
Notes, see 'Description of the Senior Subordinated Exchange Notes.'
14
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THE SENIOR DISCOUNT EXCHANGE OFFER
<TABLE>
<S> <C>
The Senior Discount Exchange Offer........ The Holdings Issuers are offering to exchange pursuant to the Senior
Discount Exchange Offer up to $169,000,000 aggregate principal amount
of their Senior Discount Exchange Notes for a like aggregate
principal amount of their Senior Discount Old Notes. The terms of the
Senior Discount Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms
of the Senior Discount Old Notes for which they may be exchanged
pursuant to the Senior Discount Exchange Offer, except that the
Senior Discount Exchange Notes are freely transferrable by Holders
thereof (other than as provided herein), and are not subject to any
covenant regarding registration under the Securities Act. See 'The
Senior Discount Exchange Offer.'
No Minimum Condition...................... The Senior Discount Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Senior Discount Old Notes being
tendered for exchange.
Senior Discount Expiration Date;
Withdrawal of Tenders................... The Senior Discount Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1998, unless the Senior Discount
Exchange Offer is extended, in which case the term 'Senior Discount
Expiration Date' means the latest date and time to which the Senior
Discount Exchange Offer is extended. The Holdings Issuers do not
currently intend to extend the Senior Discount Expiration Date.
Tenders may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Senior Discount Expiration Date. See 'The Senior
Discount Exchange Offer-- Withdrawal Rights.'
Exchange Date............................. The date of acceptance for exchange of the Senior Discount Old Notes
will be the fourth business day following the Senior Discount
Expiration Date.
Conditions to the Senior Discount Exchange
Offer................................... The Senior Discount Exchange Offer is subject to certain customary
conditions, which may be waived by the Holdings Issuers. The Holdings
Issuers currently expect that each of the conditions will be
satisfied and that no waivers will be necessary. See 'The Senior
Discount Exchange Offer--Certain Conditions to the Senior Discount
Exchange Offer.' The Holdings Issuers reserve the right to terminate
or amend the Senior Discount Exchange Offer at any time prior to the
Senior Discount Expiration Date upon the occurrence of any such
condition.
Procedures for Tendering Senior Discount
Old Notes............................... Each Holder wishing to accept the Senior Discount Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of Transmittal, or
such facsimile, together with the Senior Discount Old Notes and any
other required documentation to the Senior Discount Exchange Agent at
the address set forth therein. See 'The Senior Discount Exchange
Offer--Procedures for Tendering Senior Discount Old Notes' and 'Plan
of Distribution.'
</TABLE>
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Use of Proceeds........................... There will be no proceeds to the Holdings Issuers from the exchange
of Notes pursuant to the Senior Discount Exchange Offer.
Federal Income Tax Consequences........... The exchange of Notes pursuant to the Senior Discount Exchange Offer
will not be a taxable event for federal income tax purposes. See
'Certain U.S. Federal Income Tax Consequences.'
Special Procedures for Beneficial
Owners.................................. Any beneficial owner whose Senior Discount 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 such 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 beneficial owner's own behalf, such beneficial owner must,
prior to completing and executing the Letter of Transmittal and
delivering the Senior Discount Old Notes, either make appropriate
arrangements to register ownership of the Senior Discount 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. See 'The Senior Discount
Exchange Offer--Procedures for Tendering Senior Discount Old Notes.'
Guaranteed Delivery Procedures............ Holders of Senior Discount Old Notes who wish to tender their Senior
Discount Old Notes and whose Senior Discount Old Notes are not
immediately available or who cannot deliver their Senior Discount Old
Notes, the Letter of Transmittal or any other documents required by
the Letter of Transmittal to the Senior Discount Exchange Agent prior
to the Expiration Date must tender their Senior Discount Old Notes
according to the guaranteed delivery procedures set forth in 'The
Senior Discount Exchange Offer--Procedures for Tendering Senior
Discount Old Notes.'
Acceptance of Senior Discount Old Notes
and Delivery of Senior Discount Exchange
Notes................................... The Holdings Issuers will accept for exchange any and all Senior
Discount Old Notes which are properly tendered in the Senior Discount
Exchange Offer prior to 5:00 p.m., New York City time, on the Senior
Discount Expiration Date. The Senior Discount Exchange Notes issued
pursuant to the Senior Discount Exchange Offer will be delivered
promptly following the Senior Discount Expiration Date. See 'The
Senior Discount Exchange Offer-- Acceptance of Senior Discount Old
Notes for Exchange; Delivery of Senior Discount Exchange Notes.'
Effect on Holders of Senior Discount Old
Notes................................... As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Discount Old Notes pursuant to the terms of
this Senior Discount Exchange Offer, the Holdings Issuers will have
fulfilled a covenant contained in the Registration Rights Agreement
(the 'Senior Discount Registration Rights Agreement') dated as of
February 2, 1998 among the Holdings Issuers and the Initial
Purchasers, and, accordingly, there will be no increase in the
interest rate on the Senior Discount Old Notes pursuant to the terms
of the Registration Rights Agreement, and the holders of the Senior
Discount Old Notes will have no further registration or other rights
</TABLE>
16
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under the Senior Discount Registration Rights Agreement. Holders of
the Senior Discount Old Notes who do not tender their Senior Discount
Old Notes in the Senior Discount Exchange Offer will continue to hold
such Senior Discount Old Notes and will be entitled to all the rights
and limitations applicable thereto under the Indenture dated as of
February 2, 1998 (the 'Senior Discount Indenture') between the
Holdings Issuers and The Bank of New York, as Trustee, relating to
the Senior Discount Old Notes and the Senior Discount Exchange Notes,
except for any such rights under the Senior Discount Registration
Rights Agreement that by their terms terminate or cease to have
further effectiveness as a result of the making of, and the
acceptance for exchange of all validly tendered Senior Discount Old
Notes pursuant to, the Senior Discount Exchange Offer.
Consequence of Failure to Exchange........ Holders of Senior Discount Old Notes who do not exchange their Senior
Discount Old Notes for Senior Discount Exchange Notes pursuant to the
Senior Discount Exchange Offer will continue to be subject to the
restrictions on transfer of such Senior Discount Old Notes provided
for in the Senior Discount Old Notes and in the Senior Discount
Indenture and as set forth in the legend on the Senior Discount Old
Notes. In general, the Senior Discount Old Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant
to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Holdings
Issuers do not currently anticipate that they will register the
Senior Discount Old Notes under the Securities Act. To the extent
that Senior Discount Old Notes are tendered and accepted in the
Senior Discount Exchange Offer, the trading market for untendered
Senior Discount Old Notes could be adversely affected.
Senior Discount Exchange Agent............ The Bank of New York is serving as exchange agent (the 'Senior
Discount Exchange Agent') in connection with the Senior Discount
Exchange Offer. See 'The Senior Discount Exchange Offer--Senior
Discount Exchange Agent.'
</TABLE>
TERMS OF THE SENIOR DISCOUNT EXCHANGE NOTES
<TABLE>
<S> <C>
Securities Offered........................ $169,000,000 aggregate principal amount at maturity of 10 3/4% Senior
Discount Notes Due 2009, Series B, having an approximate Accreted
Value at May 26, 1998 equal to 61.6% of the principal amount at
maturity thereof.
Issuers................................... Graham Packaging Holdings Company and GPC Capital Corp. II.
Maturity Date............................. January 15, 2009.
Interest Payment Dates.................... Cash interest on the Senior Discount Exchange Notes will not accrue
until January 15, 2003. Thereafter, interest on the Senior Discount
Exchange Notes will accrue from January 15, 2003 and will be payable
semi-annually in arrears on January 15 and July 15 of each year,
commencing July 15, 2003.
Ranking................................... The Senior Discount Exchange Notes will be general unsecured
obligations of the Holdings Issuers and will rank pari passu in right
</TABLE>
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of payment with all existing and future senior indebtedness of the
Holdings Issuers and senior in right of payment to all subordinated
obligations of the Holdings Issuers. Since Holdings is a holding
company and conducts its business through subsidiaries, the Senior
Discount Exchange Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables) of
Holdings' subsidiaries. As of March 29, 1998, after giving effect to
the Recapitalization, such subsidiaries had total liabilities of
$757.8 million, including indebtedness of $641.5 million. See 'Use of
Proceeds,' 'Unaudited Pro Forma Financial Information' and
'Description of the New Credit Facility.'
Optional Redemption....................... The Senior Discount Exchange Notes will be redeemable, in whole or in
part, at the option of the Holdings Issuers on or after January 15,
2003 at the redemption prices set forth herein, plus accrued and
unpaid interest to the date of redemption. The Senior Discount
Exchange Notes are not redeemable by the Holdings Issuers prior to
January 15, 2003, except that, at any time on or prior to January 15,
2001, the Holdings Issuers, at their option, may redeem, with the net
cash proceeds of one or more Equity Offerings, Senior Discount Notes
up to an aggregate principal amount at maturity equal to 40% of the
aggregate principal amount at maturity of the Senior Discount Old
Notes originally issued, at a redemption price equal to 110.750% of
the Accreted Value (as defined) thereof; provided that Senior
Discount Notes in an aggregate principal amount equal to at least 60%
of the aggregate principal amount at maturity of the Senior Discount
Old Notes originally issued remains outstanding immediately following
such redemption. See 'Description of the Senior Discount Exchange
Notes-- Redemption.'
Change of Control......................... Upon a Change of Control, each holder of Senior Discount Exchange
Notes will have the right to require the Holdings Issuers to
repurchase such holder's Senior Discount Exchange Notes at a price
equal to 101% of the Accreted Value thereof, plus accrued and unpaid
interest, if any, to the repurchase date. See 'Description of the
Exchange Notes--Change of Control.'
Guarantees................................ None.
Certain Covenants......................... The Senior Discount Indenture contains certain covenants with respect
to Holdings 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, and (e) transactions with affiliates. The Senior Discount
Indenture also restricts the ability of the Holdings Issuers to
consolidate or merge with or into, or to transfer all or
substantially all of their assets to, another person. In addition,
under certain circumstances, the Holdings Issuers will be required to
offer to purchase the Senior Discount Exchange Notes, in whole or in
part, with the proceeds of certain Asset Sales, at a price equal to
100% of the Accreted Value thereof, plus accrued and unpaid interest,
if any, to the repurchase date. These restrictions and requirements
are subject to a number of important qualifications and
</TABLE>
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exceptions. See 'Description of the Senior Discount Exchange
Notes--Certain Covenants.'
Absence of Market......................... The Senior Discount Exchange Notes are new securities for which there
is currently no established market. Accordingly, there can be no
assurance as to the development or liquidity of any market for the
Senior Discount Exchange Notes. The Holdings Issuers do not intend to
list the Senior Discount Exchange Notes on any securities exchange or
to seek approval for quotation of the Senior Discount Exchange Notes
on any automated quotation system.
No Personal Liability of Directors,
Officers, Employees and Stockholders.... The Senior Discount Indenture under which the Senior Discount Notes
have been or will be issued provides that all obligations under the
Senior Discount Indenture and the Senior Discount Notes (and all
notes issued in exchange therefor) shall be expressly non-recourse to
the partners of Holdings in their capacities as such, and that, by
purchasing the Senior Discount Notes, each holder of Senior Discount
Notes waives any liability of any partner of Holdings under the
Senior Discount Indenture and the Senior Discount Notes (and all
notes issued in exchange therefor). No director, officer, employee,
incorporator or stockholder of the Holdings Issuers (or any Guarantor
(as defined) under any Guarantee (as defined) that may be issued with
respect to the Senior Discount Notes) shall have any liability for
any obligations of the Holdings Issuers (or any such Guarantor) under
the Senior Discount Exchange Notes or the Senior Discount Indenture
(or any such Guarantee) or any claim based on, in respect of, or by
reason of such obligation, or their creation. Such waiver may not be
effective to waive liabilities under the federal securities laws and
it is the view of the Commission that such a waiver is against public
policy.
</TABLE>
For additional information regarding the Senior Discount Exchange Notes,
see 'Description of the Senior Discount Exchange Notes.'
USE OF PROCEEDS
The gross proceeds of the Offerings were used to (i) redeem certain
partnership interests in Holdings pursuant to the Recapitalization; (ii) repay
substantially all of the existing debt of Holdings and its subsidiaries; (iii)
pay certain bonuses and other cash payments to certain members of Management;
and (iv) pay related transaction fees and expenses. See 'The Recapitalization'
and 'Use of Proceeds.'
19
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RISK FACTORS
See 'Risk Factors' for a discussion of certain factors that should be
considered in evaluating an investment in the Notes.
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth summary historical combined financial data
for the Graham Packaging Group (as described below) for and at the end of each
of the years in the three-year period ended December 31, 1997, and summary pro
forma financial data for Holdings and the Operating Company for the three month
period ended March 29, 1998. The summary historical combined financial data for
each of the three years in the period ended December 31, 1997 are derived from
the Graham Packaging Group's combined financial statements as of and for each of
the three years in the period ended December 31, 1997. The combined financial
statements as of December 31, 1995, 1996 and 1997 and for each of the three
years in the period ended December 31, 1997 have been audited by Ernst & Young
LLP, independent auditors. The combined financial statements of Graham Packaging
Group have been prepared to include Holdings and its subsidiaries and the
ownership interests and real estate constituting the Graham Contribution for all
periods that the operations were under common control. The pro forma financial
information reflects the Recapitalization in the manner described under
'Unaudited Pro Forma Financial Information.' The pro forma financial information
is not necessarily indicative of either future results of operations or the
results that might have occurred if the foregoing transactions had been
consummated on the indicated dates.
The following table should be read in conjunction with 'Unaudited Pro Forma
Financial Information,' 'Management's Discussion and Analysis of Financial
Condition and Results of Operations', the Combined Financial Statements of
Graham Packaging Group, including the related notes thereto, and the Condensed
Financial Statements, including the related notes thereto, included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------------
1995(1) 1996 1997(2)
------- ------ ------- THREE MONTHS ENDED
MARCH 29, 1998(2,12)
---------------------
PRO FORMA
---------------------
OPERATING
HOLDINGS COMPANY
-------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales(3)...................................................... $ 466.8 $459.7 $ 521.7 $134.4 $ 134.4
Gross margin(3)................................................... 66.8 77.2 84.4 24.6 24.6
Selling, general and administrative expenses...................... 35.5 35.5 34.9 8.5 8.5
Special charges and unusual items(4).............................. 5.9 7.0 24.4 1.6 1.6
Operating income.................................................. 25.4 34.7 25.1 14.5 14.5
Interest expense, net............................................. 16.2 14.5 13.4 18.1 15.0
Other expense (income), net....................................... (11.0) (1.0) 0.7 0.2 0.2
Income tax (benefit) expense(5)................................... (0.3) -- 0.6 -- --
Minority interest................................................. -- -- 0.2 -- --
Extraordinary loss(6)............................................. 1.8 -- -- -- --
------- ------ ------- -------- ---------
Net income (loss)................................................. 18.7 21.2 10.2 (3.8) (0.7)
======= ====== ======= ======== =========
OTHER DATA:
Cash flows provided by (used in):
Operating activities............................................ $ 60.5 $ 68.0 $ 66.9 $ 1.3 $ 1.3
Investing activities............................................ (68.4) (32.8) (72.3) (16.6) (16.6)
Financing activities............................................ 9.2 (34.6) 9.5 30.8 30.8
EBITDA(7)......................................................... 77.1 90.6 89.8 25.3 25.3
Capital expenditures.............................................. 68.6 31.3 53.2 13.5 13.5
Investments(8).................................................... 3.2 1.2 19.0 3.0 3.0
Depreciation and amortization(9).................................. 45.7 48.2 41.0 9.2 9.2
Ratio of earnings to fixed charges(10)............................ 2.0x 2.2x 1.6x -- --
Pro forma ratio of EBITDA to cash interest expense, net........... 1.79x 1.79x
BALANCE SHEET DATA:
Working capital(11)............................................... $ 18.0 $ 17.0 $ 2.4 $ 6.9 $ 6.9
Total assets...................................................... 360.7 338.8 385.5 423.8 423.8
Total debt........................................................ 257.4 240.5 268.5 743.8 641.5
Partners'/owners' equity (deficit)................................ 15.3 16.8 0.3 (436.3) (339.0)
</TABLE>
(Footnotes on next page)
20
<PAGE>
(Footnotes from previous page)
- ------------------
(1) In September 1993, Graham Packaging Group acquired an interest in Commercial
Packaging UK Ltd. (the 'UK Operations') for $0.6 million. In July 1995,
Graham Packaging Group acquired an additional interest in its UK Operations
for $1.1 million and subsequently sold those interests for $5.6 million,
recognizing a gain of $4.4 million in 1995. In addition, Graham Packaging
Group entered into an agreement with the purchaser of its UK Operations and
recorded $6.4 million of non-recurring technical support services income.
Both the gain and the technical support services income are included in
other expense (income), net.
(2) In April 1997, Graham Packaging Group acquired 80% of certain assets and
assumed 80% of certain liabilities of Rheem-Graham Embalagens Ltda. in
Brazil for $20.3 million (excluding direct costs of the acquisition). The
remaining 20% was purchased in February 1998. These transactions were
accounted for under the purchase method of accounting. Results of
operations are included in the historical amounts since the dates of
acquisitions.
(3) Net sales increase or decrease based on fluctuations in resin prices as
industry practice and the Company's agreements with its customers permit
price changes to be passed through to customers by means of corresponding
changes in product pricing. Therefore, the Company's dollar gross profit is
substantially unaffected by changes in resin prices.
(4) Represents certain legal, restructuring and systems conversion costs. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the Combined Financial Statements of Graham Packaging
Group, including the related notes thereto, for further discussion.
(5) As a limited partnership, Holdings is not subject to U.S. federal income
taxes or most state income taxes. Instead, such taxes are assessed to
Holdings' partners based on the income of Holdings. Holdings makes tax
distributions to its partners to reimburse them for such tax liabilities.
The Company's foreign operations are subject to tax in their local
jurisdictions. Most of these entities have historically had net operating
losses and recognized minimal tax expense.
(6) Represents the write-off of unamortized deferred financing fees in
connection with the early extinguishment of debt. The write-off of deferred
financing fees associated with the retirement of outstanding indebtedness
on February 2, 1998 totalling $0.7 million has been excluded from the pro
forma results of operations for the three months ended March 29, 1998.
(7) EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to net income as an indicator of operating performance or to
cash flow as a measure of liquidity. 'EBITDA' is defined as earnings before
minority interest, extraordinary items, interest expense, interest income,
income taxes, depreciation and amortization expense, fees paid pursuant to
the Monitoring Agreement (as defined), non-cash equity income in earnings
of joint ventures, other non-cash charges, Recapitalization expenses and
special charges and unusual items. Also in 1995, EBITDA excludes the $4.4
million gain on the sale of the UK Operations and the related $6.4 million
technical support services income as described in note (1) above. EBITDA is
included in this Prospectus as it is a basis upon which Management assesses
financial performance, and certain covenants in Holdings' and the Operating
Company's borrowing arrangements are tied to similar measures. While EBITDA
is frequently used as a measure of operations and the ability to meet debt
service requirements, it is not necessarily comparable to other similarly
titled captions of other companies due to the potential inconsistencies in
the method of calculation.
(8) Investments includes the acquisitions made by Graham Packaging Group in the
UK and Brazil described in notes (1) and (2) above. In addition, in 1995,
the Company paid $1.9 million for a 50% interest in the Masko-Graham Joint
Venture (the 'Masko-Graham Joint Venture') in Poland and committed to make
loans to the Masko-Graham Joint Venture of up to $1.9 million. In 1996, the
Company loaned $1.0 million to the Masko-Graham Joint Venture. The
Masko-Graham Joint Venture is accounted for under the equity method of
accounting, and its earnings are included in other expense (income), net.
Amounts shown under this caption represent cash paid, net of cash acquired
in acquisitions.
(9) Depreciation and amortization excludes amortization of deferred financing
fees, which is included in interest expense, net.
21
<PAGE>
(10) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, minority interest and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, amortization of deferred financing fees, and
one-third of rental expense on operating leases representing that portion
of rental expense deemed to be attributable to interest. Earnings were
insufficient to cover fixed charges on a pro forma basis for the three
months ended March 29, 1998 by $3.9 million for Holdings and $0.8 million
for the Operating Company.
(11) Working capital is defined as current assets (less cash and cash
equivalents) minus current liabilities (less current maturities of
long-term debt).
(12) In February 1998, the Recapitalization occurred.
22
<PAGE>
RISK FACTORS
Holders of Old Notes should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before deciding
to tender Old Notes in the Exchange Offers. The risk factors set forth below are
generally applicable to the Old Notes as well as the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the applicable Exchange Offer will continue to be subject to the
restrictions on transfer of such Old Notes as set forth in the legend thereon.
In general, Old Notes may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. The respective Issuers do not currently intend to
register the Old Notes under the Securities Act. Based on interpretations by the
staff of the Commission, the Issuers believe that Exchange Notes issued pursuant
to the applicable 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 Issuers thereof 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 Old
Notes were acquired in the ordinary course of such Holders' business and such
Holders have no arrangement with any person to participate in the distribution
of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its
own account in exchange for Old Notes, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See 'Plan of Distribution.' To the
extent that Old Notes are tendered and accepted in the applicable Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
will be adversely affected.
SUBSTANTIAL LEVERAGE
Upon the consummation of the Recapitalization, the Operating Company and
Holdings became highly leveraged. As of March 29, 1998, after giving effect to
the Recapitalization, as described in the Unaudited Pro Forma Financial
Information, (i) the Operating Company and its consolidated subsidiaries had an
aggregate of $641.5 million of outstanding indebtedness and a partners' deficit
of $339.0 million, and the Operating Company's earnings would have been
inadequate to cover fixed charges by approximately $0.8 million for the three
months ended March 29, 1998; and (ii) Holdings and its consolidated subsidiaries
had an aggregate of $743.8 million of outstanding indebtedness and a partners'
deficit of $436.3 million, and Holdings' earnings would have been inadequate to
cover fixed charges by approximately $3.9 million for the three months ended
March 29, 1998. The New Credit Facility includes a $155.0 million Revolving
Credit Facility (of which $13.0 million had been drawn down at March 29, 1998),
and a $100.0 million Growth Capital Revolving Facility. The Indentures (as
defined) permit the Issuers to incur additional indebtedness, subject to certain
limitations. See 'Unaudited Pro Forma Combined Financial Information,'
'Capitalization,' 'Description of the Senior Subordinated Exchange Notes,'
'Description of the Senior Discount Notes' and the Combined Financial Statements
of Graham Packaging Group, including the related notes thereto.
The Issuers' high degree of leverage could have important consequences to
the holders of the Notes, including, but not limited to, the following: (i) the
Issuers' ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired in the future; (ii) a substantial portion of the Issuers' cash flow
from operations must be dedicated to the payment of principal and interest on
their indebtedness, thereby reducing the funds available to the Issuers for
other purposes, including capital expenditures necessary for maintenance of the
Company's facilities and for the growth of its businesses; (iii) certain of the
Issuers' borrowings are and will continue to be at variable rates of interest,
which exposes the Issuers to the risk of increased interest rates; (iv) the
indebtedness outstanding under the New Credit Facility is secured and matures
prior to the maturity of the Notes; (v) the Issuers may be substantially more
leveraged than certain of their competitors, which may place the Issuers at a
competitive disadvantage; and (vi) the Issuers' substantial degree of leverage,
as well as the covenants contained in the Indentures and the New Credit
Facility, may hinder their ability to adjust rapidly to changing market
conditions and could make them more vulnerable in the event of a downturn in
general economic conditions or in their business. See 'Description
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<PAGE>
of the New Credit Facility,' 'Description of the Senior Subordinated Exchange
Notes' and 'Description of the Senior Discount Exchange Notes.'
ABILITY TO SERVICE DEBT
The Issuers' ability to make scheduled payments or to refinance their
obligations with respect to their indebtedness will depend on their financial
and operating performance, which, in turn, is subject to prevailing economic
conditions and to certain financial, business and other factors beyond their
control. If the Issuers' cash flow and capital resources are insufficient to
fund their respective debt service obligations, they may be forced to reduce or
delay planned expansion and capital expenditures, sell assets, obtain additional
equity capital or restructure their debt. There can be no assurance that the
Issuers' operating results, cash flow and capital resources will be sufficient
for payment of their indebtedness. In the absence of such operating results and
resources, the Issuers could face substantial liquidity problems and might be
required to dispose of material assets or operations to meet their respective
debt service and other obligations, and there can be no assurance as to the
timing of such sales or the proceeds which the Issuers could realize therefrom.
In addition, because the Operating Company's obligations under the New Credit
Facility will bear interest at floating rates, an increase in interest rates
could adversely affect, among other things, the Operating Company's ability to
meet its debt service obligations. The Operating Company will be required to
make scheduled principal payments under the New Credit Facility commencing in
1998. See 'Description of the New Credit Facility,' 'Unaudited Pro Forma
Financial Information,' 'Capitalization,' 'Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources' and the Combined Financial Statements of Graham Packaging Group,
including the related notes thereto.
Additionally, if the Issuers were to sustain a decline in their operating
results or available cash, they could experience difficulty in complying with
the covenants contained in the New Credit Facility, the Indentures or any other
agreements governing future indebtedness. The failure to comply with such
covenants could result in an event of default under these agreements, thereby
permitting acceleration of such indebtedness as well as indebtedness under other
instruments that contain cross-acceleration and cross-default provisions.
HOLDING COMPANY STRUCTURE; STRUCTURAL SUBORDINATION OF SENIOR DISCOUNT EXCHANGE
NOTES
Holdings is a holding company which has no significant assets other than
its direct and indirect partnership interests in the Operating Company. CapCo
II, a wholly owned subsidiary of Holdings, was formed for the purpose of serving
as a co-issuer of the Senior Discount Notes and has no operations or assets from
which it will be able to repay the Senior Discount Notes. Accordingly, the
Holdings Issuers must rely entirely upon distributions from the Operating
Company to generate the funds necessary to meet their obligations, including the
payment of Accreted Value or principal and interest on the Senior Discount
Notes. The Senior Subordinated Indenture and the New Credit Facility contain
significant restrictions on the ability of the Operating Company to distribute
funds to Holdings. There can be no assurance that the Senior Subordinated
Indenture, the New Credit Facility or any agreement governing indebtedness that
refinances such indebtedness or other indebtedness of the Operating Company will
permit the Operating Company to distribute funds to Holdings in amounts
sufficient to pay the Accreted Value or principal or interest on the Senior
Discount Notes when the same become due (whether at maturity, upon acceleration
or otherwise).
The only significant assets of Holdings are the partnership interests in
the Operating Company owned by it. All such interests are pledged by Holdings as
collateral under the New Credit Facility. Therefore, if Holdings were unable to
pay the Accreted Value or principal or interest on the Senior Discount Notes,
the ability of the holders of the Senior Discount Notes to proceed against the
partnership interests of the Operating Company to satisfy such amounts would be
subject to the prior satisfaction in full of all amounts owing under the New
Credit Facility. Any action to proceed against such partnership interests by or
on behalf of the holders of Senior Discount Notes would constitute an event of
default under the New Credit Facility entitling the lenders thereunder to
declare all amounts owing thereunder to be immediately due and payable, which
event would in turn constitute an event of default under the Senior Subordinated
Indenture, entitling the holders of the Senior Subordinated Notes to declare the
principal and accrued interest on the Senior Subordinated Notes to be
immediately due and payable. In addition, as secured creditors, the lenders
under the New Credit Facility would control the disposition and sale of the
Operating Company partnership interests after an event of default under the
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<PAGE>
New Credit Facility and would not be legally required to take into account the
interests of unsecured creditors of Holdings, such as the holders of the Senior
Discount Notes, with respect to any such disposition or sale. There can be no
assurance that the assets of Holdings after the satisfaction of claims of its
secured creditors would be sufficient to satisfy any amounts owing with respect
to the Senior Discount Notes.
The Senior Discount Notes will be effectively subordinated to all existing
and future claims of creditors of Holdings' subsidiaries, including the lenders
under the New Credit Facility, the holders of the Senior Subordinated Notes and
trade creditors. At March 29, 1998, after giving effect to the Recapitalization,
such subsidiaries had approximately $757.8 million of total liabilities,
including approximately $641.5 million of indebtedness. As described above, the
rights of the Holdings Issuers and their creditors, including the holders of the
Senior Discount Notes, to realize upon the assets of Holdings or any of its
subsidiaries upon any such subsidiary's liquidation (and the consequent rights
of the holders of the Senior Discount Notes to participate in the realization of
those assets) will be subject to the prior claims of the lenders under the New
Credit Facility and the creditors of Holdings' subsidiaries including in the
case of the Operating Company, the lenders under the New Credit Facility and the
holders of the Senior Subordinated Notes. In such event, there may not be
sufficient assets remaining to pay amounts due on any or all of the Senior
Discount Notes then outstanding.
The Senior Subordinated Notes and all amounts owing under the New Credit
Facility will mature prior to the maturity of the Senior Discount Notes. The
Senior Discount Indenture requires that any agreements governing indebtedness
that refinances the Senior Subordinated Notes or the New Credit Facility not
contain restrictions on the ability of the Operating Company to make
distributions to Holdings that are more restrictive than those contained in the
Senior Subordinated Indenture or the New Credit Facility, respectively. There
can be no assurance that if the Operating Company is required to refinance the
Senior Subordinated Notes or any amounts under the New Credit Facility, it will
be able to do so upon acceptable terms, if at all.
SUBORDINATION OF SENIOR SUBORDINATED NOTES AND HOLDINGS GUARANTEE
The Senior Subordinated Notes are unsecured obligations of the Company
Issuers that are subordinated in right of payment to all Senior Indebtedness of
the Company Issuers, including all indebtedness under the New Credit Facility.
As of March 29, 1998, after giving effect to the Recapitalization, the Company
Issuers had $414.7 million of Senior Indebtedness outstanding. In addition, the
Senior Subordinated Notes are effectively subordinated to all indebtedness and
other liabilities (including trade payables) of the Operating Company's
subsidiaries. As of March 29, 1998, after giving effect to the Recapitalization,
such subsidiaries had total liabilities of $38.4 million, including indebtedness
of $5.1 million. In addition, at March 29, 1998, the Operating Company had
additional borrowing availability of approximately $242.0 million under the New
Credit Facility. The Indentures and the New Credit Facility will permit the
Operating Company to incur additional Senior Indebtedness, provided that certain
conditions are met, and the Operating Company expects from time to time to incur
additional Senior Indebtedness. In the event of the insolvency, liquidation,
reorganization, dissolution or other winding up of the Company Issuers or upon a
default in payment with respect to, or the acceleration of, or if a judicial
proceeding is pending with respect to any default under, any Senior
Indebtedness, the lenders under the New Credit Facility and any other creditors
who are holders of Senior Indebtedness must be paid in full before a holder of
the Senior Subordinated Notes may be paid. Accordingly, there may be
insufficient assets remaining after such payments to pay principal or interest
on the Senior Subordinated Notes. In addition, under certain circumstances, no
payments may be made with respect to the principal of or interest on the Senior
Subordinated Notes if a default exists with respect to certain Senior
Indebtedness. See 'Description of the Senior Subordinated Notes--Subordination.'
CapCo I, a wholly owned subsidiary of the Operating Company, was formed solely
for the purpose of serving as a co-issuer of the Senior Subordinated Notes and
has no operations or assets from which it will be able to repay the Senior
Subordinated Notes. Accordingly, the Company Issuers must rely entirely upon the
cash flow and assets of the Operating Company to generate the funds necessary to
meet their obligations, including the payment of principal and interest on the
Senior Subordinated Notes.
The Senior Subordinated Old Notes are, and the Senior Subordinated Exchange
Notes will be, guaranteed by Holdings on a senior subordinated basis. The Old
Holdings Guarantee is, and the Holdings Guarantee will be, subordinated to all
senior indebtedness of Holdings ($102.3 million at March 29, 1998) and
effectively subordinated to all indebtedness and other liabilities (including
but not limited to trade payables) of Holdings'
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<PAGE>
subsidiaries ($757.8 million at March 29, 1998). Investors should not rely on
the Holdings Guarantee in evaluating an investment in the Senior Subordinated
Exchange Notes.
RESTRICTIVE DEBT COVENANTS
The New Credit Facility and the Indentures contain a number of significant
covenants that, among other things, restrict the ability of the Issuers to
dispose of assets, repay other indebtedness, incur additional indebtedness, pay
dividends, prepay subordinated indebtedness (including, in the case of the New
Credit Facility, the Notes), incur liens, make capital expenditures and make
certain investments or acquisitions, engage in mergers or consolidations, engage
in certain transactions with affiliates and otherwise restrict the activities of
the Issuers. In addition, under the New Credit Facility, the Operating Company
is required to satisfy specified financial ratios and tests. The ability of the
Operating Company to comply with such provisions may be affected by events
beyond the Operating Company's control, and there can be no assurance that the
Operating Company will meet those tests. To the extent that the Operating
Company does not achieve the pro forma estimates with respect to its operations,
it may not be in compliance with certain of the covenants included in the New
Credit Facility. See 'Unaudited Pro Forma Financial Information.' The breach of
any of these covenants could result in a default under the New Credit Facility.
See 'Description of the New Credit Facility.' In the event of any such default,
depending upon the actions taken by the lenders, the Issuers could be prohibited
from making any payments of principal or interest on the Notes. See 'Description
of the Senior Subordinated Exchange Notes--Subordination' and '--Holding
Company Structure; Structural Subordination of Senior Discount Exchange Notes.'
In addition, the lenders could elect to declare all amounts borrowed under the
New Credit Facility, together with accrued interest, to be due and payable and
could proceed against the collateral securing such indebtedness. If the Senior
Indebtedness were to be accelerated, there can be no assurance that the assets
of the Operating Company would be sufficient to repay in full that indebtedness
and the other indebtedness of the Operating Company. See 'Description of the New
Credit Facility,' 'Description of the Senior Subordinated Exchange Notes' and
'Description of the Senior Discount Exchange Notes.'
COMPETITION
The manufacture and sale of plastic containers are highly competitive, and
several of the Company's competitors are larger and have substantially greater
financial resources than the Company. In particular, price competition can be an
important factor and may affect the Company's results of operations. In
addition, the Company could face increased competition in its hot-fill PET
business if manufacturers of cold-fill containers were able to refit their
machines to produce hot-fill PET bottles. To date, such refitting efforts have
proved to be expensive and substantially less efficient than the Company's
equipment for producing hot-fill PET containers. No assurance can be given,
however, that new technologies will not be created to allow such refitting at
lower costs and greater efficiencies than exist today. See
'Business--Competition.'
DECLINE IN DOMESTIC MOTOR OIL BUSINESS
The domestic one quart motor oil business is forecasted to decline between
1-2% measured by unit volume per year for the next five years due to several
factors, including, but not limited to, the decreased need of motor oil changes
in new automobiles and the growth in retail automotive fast lubrication and
fluid maintenance service centers (such as Jiffy Lube Service Centers). The
Company has encountered pricing pressures on several existing contracts that
have come up for renewal. For the twelve months ended December 31, 1997, the
Company generated net sales of $177.5 million in the domestic automotive
business, which represented 34.0% of the Company's revenues for that period.
Although the Company has been able over time to partially offset these margin
declines through international expansion (e.g., in Brazil) and by reducing its
cost structure and making more efficient the manufacturing process associated
with its domestic automotive business, no assurance can be given that the
Company will be able to continue to do so in the future. Further declines in
domestic demand for and prices of plastic packaging for motor oil could have a
material adverse effect on the Company's results of operations, financial
condition and cash flow. See 'Business--Automotive' and 'Business--Industry
Overview--Automotive.'
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<PAGE>
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company has significant operations outside the United States in the
form of wholly owned subsidiaries, cooperative joint ventures and other
arrangements. The Company has 13 plants located in countries outside the United
States, including Canada (4), Brazil (4), France (2), Italy (2) and Poland (1),
with two plants pending. For the twelve months ended December 31, 1997, net
sales of the Company's products outside the United States totalled approximately
$110.7 million, representing approximately 21.2% of the Company's net sales for
such period. As a result, the Company is subject to risks associated with
operating in foreign countries, including fluctuations in currency exchange
rates, imposition of limitations on conversion of foreign currencies into
dollars or remittance of dividends and other payments by foreign subsidiaries,
imposition or increase of withholding and other taxes on remittances and other
payments by foreign subsidiaries, hyperinflation in certain foreign countries
and imposition or increase of investment and other restrictions by foreign
governments. In addition, the Company's operations in France have undergone
extensive restructuring over the past three years and have been less profitable
than its other businesses. No assurance can be given that such risks will not
have a material adverse effect on the Company in the future. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations,'
'Business--Facilities' and 'Business--Foreign Operations.'
EXPOSURE TO FLUCTUATIONS IN RESIN PRICES AND DEPENDENCE ON RESIN SUPPLIES
The Company uses large quantities of HDPE and PET resins in manufacturing
its products. While the Company historically has been able to pass through
changes in the cost of resins to its customers due to contractual provisions and
standard industry practice, the Company may not be able to do so in the future
and significant increases in the price of resin could adversely affect the
Company's operating margins and growth plans. Furthermore, a significant
increase in resin prices could slow the pace of conversions from paper, glass
and metal containers to plastic containers to the extent that such costs are
passed on to the consumer. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and 'Business--Raw Materials.'
DEPENDENCE ON SIGNIFICANT CUSTOMER
The Company's largest customer (Unilever) accounted for approximately 13.8%
of the Company's net sales for the twelve months ended December 31, 1997. The
termination by such customer of its relationship with the Company could have a
material adverse effect upon the Company's business, financial position or
results of operations. The Company's existing customers' purchase orders and
contracts typically vary from one to ten years. Prices under these arrangements
are tied to market standards and therefore vary with market conditions. The
contracts generally are requirements contracts which do not obligate the
customer to purchase any given amount of product from the Company. Accordingly,
notwithstanding the existence of certain supply contracts, the Company faces the
risk that customers will not purchase the amounts expected by the Company
pursuant to such supply contracts. See 'Business--Customers.'
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends to a large extent on a number of key
employees, and the loss of the services provided by them could have a material
adverse effect on the Company. In particular, the loss of the services provided
by G. Robinson Beeson, Scott G. Booth, Alex H. Everhart, John E. Hamilton,
Geoffrey R. Lu, Roger M. Prevot and Philip R. Yates, among others, could have a
material adverse effect on the Company.
RELATIONSHIP WITH GRAHAM AFFILIATES
The relationship of the Company with Graham Engineering and Graham Capital
Corporation ('Graham Capital'), or their successors or assigns, is material to
the business of the Company. To date, certain affiliates of the Graham Partners
have provided important equipment, technology and services to Holdings and its
subsidiaries. Upon the Recapitalization, Holdings entered into the Equipment
Sales Agreement (as defined) with Graham Engineering, pursuant to which Graham
Engineering will provide the Company with the Graham Wheel and related technical
support, and the Consulting Agreement (as defined) with Graham Capital, pursuant
to which Graham Capital will provide the Company with certain consulting
services. If any such agreements were
27
<PAGE>
terminated prior to their scheduled terms or if the relevant Graham affiliate
fails to comply with any such agreement, the business, financial condition and
results of operations of the Company could be materially and adversely affected.
See 'Certain Relationships and Related Party Transactions--Certain Business
Relationships.'
ENVIRONMENTAL MATTERS
The Company and its operations, both in the U.S. and abroad, are subject to
national, state, provincial and/or local laws and regulations that impose
limitations and prohibitions on the discharge and emission of, and establish
standards for the use, disposal, and management of, certain materials and waste,
and impose liability for the costs of investigating and cleaning up, and certain
damages resulting from, present and past spills, disposals, or other releases of
hazardous substances or materials (collectively, 'Environmental Laws').
Environmental Laws can be complex and may change often, capital and operating
expenses to comply can be significant, and violations may result in substantial
fines and penalties. In addition, Environmental Laws such as the Comprehensive
Environmental Response, Compensation and Liability Act ('CERCLA,' also known as
'Superfund'), in the United States, impose liability on several grounds for the
investigation and cleanup of contaminated soil, groundwater and buildings, and
for damages to natural resources, at a wide range of properties: for example,
contamination at properties formerly owned or operated by the Company as well as
at properties the Company currently owns or operates, and properties to which
hazardous substances were sent by the Company, may result in liability for the
Company under Environmental Laws. As a manufacturer, the Company has an inherent
risk of liability under Environmental Laws both with respect to ongoing
operations and with respect to contamination that may have occurred in the past
on its properties or as a result of its operations. There can be no assurance
that the costs of complying with Environmental Laws, any claims concerning
noncompliance, or liability with respect to contamination will not in the future
adversely affect the Company in a manner that could be material.
In addition, a number of governmental authorities both in the U.S. and
abroad have considered or are expected to consider legislation aimed at reducing
the amount of plastic wastes disposed of. Such programs have included, for
example, mandating certain rates of recycling and/or the use of recycled
materials, imposing deposits or taxes on plastic packaging material, and/or
requiring retailers or manufacturers to take back packaging used for their
products. Such legislation, as well as voluntary initiatives similarly aimed at
reducing the level of plastic wastes, could reduce the demand for certain
plastic packaging, result in greater costs for plastic packaging manufacturers,
or otherwise impact the Company's business. Some consumer products companies
(including certain customers of the Company) have responded to these
governmental initiatives and to perceived environmental concerns of consumers
by, for example, using bottles made in whole or in part of recycled plastic.
There can be no assurance that such legislation and initiatives will not in the
future adversely affect the Company in a manner that could be material. See
'Business--Environmental Matters.'
FRAUDULENT CONVEYANCE
In connection with the Recapitalization, the Operating Company made a
distribution to Holdings of $312.8 million of the net proceeds of the Senior
Subordinated Offering and the Bank Borrowings, and Holdings redeemed certain
partnership interests held by the Graham Partners for $429.6 million (without
giving effect to payment by the Graham Partners of $21.2 million owed to
Holdings under certain promissory notes). See 'Use of Proceeds.'
If a court in a lawsuit brought by an unpaid creditor of one of the Issuers
or a representative of such creditor, such as a trustee in bankruptcy, or one of
the Issuers as a debtor-in-possession, were to find under relevant federal and
state fraudulent conveyance statutes that such Issuer had (a) actual intent to
defraud or (b) did not receive fair consideration or reasonably equivalent value
for the distribution from the Operating Company to Holdings or for incurring the
debt, including the Notes, in connection with the financing of the
Recapitalization, and that, at the time of such incurrence, such Issuer (i) was
insolvent, (ii) was rendered insolvent by reason of such incurrence, (iii) was
engaged in a business or transaction for which the assets remaining with such
Issuer constituted unreasonably small capital or (iv) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
matured, such court could void such Issuer's obligations under the Notes,
subordinate the Notes to other indebtedness of such Issuer or take other action
detrimental to the holders of the Notes.
28
<PAGE>
The measure of insolvency for these purposes varies depending upon the law
of the jurisdiction being applied. Generally, however, a company would be
considered insolvent for these purposes if the sum of the company's debts
(including contingent debts) were greater than the fair saleable value of all
the company's property, or if the present fair saleable value of the company's
assets were less than the amount that would be required to pay its probable
liability on its existing debts as they become absolute and matured. Moreover,
regardless of solvency or the adequacy of consideration, a court could void an
Issuer's obligations under the Notes, subordinate the Notes to other
indebtedness of such Issuer or take other action detrimental to the holders of
the Notes if such court determined that the incurrence of debt, including the
Notes, was made with the actual intent to hinder, delay or defraud creditors.
The Issuers believe that the indebtedness represented by the Notes was
incurred for proper purposes and in good faith without any intent to hinder,
delay or defraud creditors, that the Issuers received reasonably equivalent
value or fair consideration for incurring such indebtedness, that the Issuers
were prior to the issuance of the Notes and, after giving effect to the issuance
of the Notes and the use of proceeds in connection with the Recapitalization,
continued to be, solvent under the applicable standards (notwithstanding the
negative net worth and insufficiency of earnings to cover fixed charges for
accounting purposes that will result from the Recapitalization) and that the
Issuers have and will have sufficient capital for carrying on their businesses
and are and will be able to pay their debts as they mature. There can be no
assurance, however, as to what standard a court would apply in order to evaluate
the parties' intent or to determine whether the Issuers were insolvent at the
time, or rendered insolvent upon consummation, of the Recapitalization or the
sale of the Notes or that, regardless of the method of valuation, a court would
not determine that an Issuer was insolvent at the time, or rendered insolvent
upon consummation, of the Recapitalization.
In rendering their opinions in connection with the Offerings, counsel for
the Issuers and counsel for the Initial Purchasers did not express any opinion
as to the applicability of federal or state fraudulent conveyance laws.
CONTROL BY BLACKSTONE
Since the consummation of the Recapitalization, Blackstone has indirectly
controlled approximately 80% of the general partnership interests in Holdings.
Pursuant to the Holdings Partnership Agreement (as defined), holders of a
majority of the general partnership interests generally have the sole power,
subject to certain exceptions, to take actions on behalf of Holdings, including
the appointment of management and the entering into of mergers, sales of
substantially all assets and other extraordinary transactions. There can be no
assurance that the interests of Blackstone will not conflict with the interests
of holders of the Notes. See 'The Recapitalization' and 'The Partnership
Agreements--Holdings Partnership Agreement.'
LIMITATION ON CHANGE IN CONTROL
The Indentures require the Company Issuers and the Holdings Issuers, in the
event of a Change of Control (as defined under 'Description of the Senior
Subordinated Notes' and 'Description of the Senior Discount Notes'), to offer to
repurchase the Senior Subordinated Notes or the Senior Discount Notes,
respectively, at a purchase price equal to 101% of the principal amount thereof
or the Accreted Value thereof, respectively, plus, in each case, accrued and
unpaid interest, if any, to the repurchase date. See 'Description of the Senior
Subordinated Exchange Notes--Change of Control' and 'Description of the Senior
Discount Exchange Notes--Change of Control.'
The Change of Control purchase features of the Notes may in certain
circumstances discourage or make more difficult a sale or takeover of Holdings.
In addition, the New Credit Facility will, and other indebtedness may, contain
prohibitions of certain events which would constitute a Change of Control.
Furthermore, the exercise by the holders of the Notes, or if issued, the
Exchange Notes, of their right to require the Issuers to repurchase the Old
Notes or the Exchange Notes may cause a default under the New Credit Facility or
such other indebtedness, even if the Change of Control does not. Finally, there
can be no assurance that the Issuers will have the financial resources necessary
to purchase the Notes upon a Change of Control. See 'Description of the Senior
Subordinated Notes' and 'Description of the Senior Discount Notes.'
29
<PAGE>
LACK OF PUBLIC MARKET FOR THE NOTES; RESTRICTIONS ON TRANSFERABILITY
The Exchange Notes are being offered to the holders of the Old Notes. The
Old Notes were offered and sold in February 1998 to a small number of
institutional investors in reliance upon an exemption from registration under
the Securities Act and applicable state securities laws. Therefore, although the
Old Notes are eligible for trading in the PORTAL market of the National
Association of Securities Dealers, Inc., the Old Notes may be transferred or
resold only in a transaction registered under or exempt from the Securities Act
and applicable state securities laws.
The Exchange Notes generally will be permitted to be resold or otherwise
transferred by each holder without the requirement of further registration. Each
series of Exchange Notes, however, constitutes a new issue of securities with no
established trading market. The Exchange Offers will not be conditioned upon any
minimum or maximum aggregate principal amount of Notes being tendered for
exchange. The Issuers do not intend to apply for a listing of any series of the
Exchange Notes on a securities exchange or an automated quotation system, and
there can be no assurance as to the liquidity of markets that may develop for
the Exchange Notes, the ability of the holders of the Exchange Notes to sell
their Exchange Notes or the price at which such holders would be able to sell
their Exchange Notes. If markets for the Exchange Notes were to exist, the
Exchange Notes could trade at prices that may be lower than the initial market
values thereof depending on many factors. The liquidity of, and trading market
for, the Exchange Notes may be adversely affected by movements of interest
rates, the performance of the Company and general declines in the market for
similar securities. Such a decline may adversely affect such liquidity and
trading market independent of the financial performance of, and prospects for,
the Company. The Initial Purchasers are not obligated to make a market in any of
the Notes, and any market making with respect to the Notes may be discontinued
at any time without notice. In addition, such market making activity may be
limited during the pendency of the Exchange Offers or the effectiveness of a
shelf registration statement in lieu thereof. See 'Transfer Restrictions' and
'Plan of Distribution.'
In the case of non-exchanging holders of Old Notes, no assurance can be
given as to the liquidity of any trading market for the Old Notes following the
Exchange Offers.
RISKS ASSOCIATED WITH POSSIBLE FUTURE ACQUISITIONS
The Company's future growth may be a function, in part, of acquisitions of
other consumer goods packaging businesses. To finance such acquisitions, the
Operating Company or Holdings would likely incur additional indebtedness, as
permitted under the New Credit Facility and the Indentures. To the extent that
it grows through acquisition, the Company will face the operational and
financial risks commonly encountered with such a strategy. The Company would
face certain operational risks, including but not limited to failing to
assimilate the operations and personnel of the acquired businesses, disrupting
the Company's ongoing business, dissipating the Company's limited management
resources and impairing relationships with employees and customers of the
acquired business as a result of changes in ownership and management. Customer
satisfaction or performance problems at a single acquired firm could have a
materially adverse impact on the reputation of the Company as a whole. Depending
on the size of the acquisition, it can take up to two to three years to
completely integrate an acquired business into the acquiring company's
operations and systems and realize the full benefit of the integration.
Moreover, during the early part of this integration period, the operating
results of the acquiring business may decrease from results attained prior to
the acquisition. The Company would also face certain financial risks associated
with the incurring of additional indebtedness to make the acquisition, such as
reducing its liquidity, access to capital markets and financial stability.
JCI LITIGATION
Holdings was sued in May 1995 for alleged patent infringement, trade secret
misappropriation and other related state law claims by Hoover Universal, Inc., a
subsidiary of Johnson Controls, Inc. ('JCI'), in the U.S. District Court for the
Central District of California, Case No. CV-95-3331 RAP (BQRx). JCI alleged that
the Company was misappropriating or threatened to misappropriate trade secrets
allegedly owned by JCI relating to the manufacture of hot-fill PET plastic
containers through the hiring of JCI employees, and alleged that the Company
infringed two patents owned by JCI by manufacturing hot-fill PET plastic
containers for several of its largest customers using a certain 'pinch grip'
structural design. In December 1995, JCI filed a second lawsuit
30
<PAGE>
alleging infringement of two additional patents, which relate to a ring and base
structure for hot-fill PET plastic containers. The two suits have been
consolidated for all purposes. The Company has answered the complaints, denying
infringement and misappropriation in all respects and asserting various
defenses, including invalidity and unenforceability of the patents at issue
based upon inequitable conduct on the part of JCI in prosecuting the relevant
patent applications before the U.S. Patent Office and anticompetitive patent
misuse by JCI. The Company has also asserted counterclaims against JCI alleging
violations of federal antitrust law, based upon certain agreements regarding
market division allegedly entered into by JCI with another competitor and other
alleged conduct engaged in by JCI allegedly intended to raise prices and limit
competition. In March 1997, JCI's plastic container business was acquired by
Schmalbach-Lubeca Plastic Containers USA Inc. ('Schmalbach-Lubeca').
Schmalbach-Lubeca and certain affiliates were joined as successors to JCI and as
counter-claim defendants.
On March 10, 1998, the U.S. District Court in California entered summary
judgment in favor of JCI and against the Company regarding infringement of two
patents, but did not resolve certain issues related to the patents including
certain of the Company's defenses. On March 6, 1998, the Company also filed suit
against Schmalbach-Lubeca in Federal Court in Delaware for infringement of the
Company's patent concerning pinch grip bottle design. On April 24, 1998, the
parties to the litigation reached an understanding on the terms of a settlement
of all claims in all of the litigation with JCI and Schmalbach-Lubeca, subject
to agreement upon and execution of a formal settlement agreement. Management
believes that the amounts that will ultimately be paid in settlement, as well as
estimated litigation expenses and professional fees, will not differ materially
from the amounts accrued in Special Charges and Unusual Items in respect thereof
for the year ended December 31, 1997 and the March 29, 1998 unaudited condensed
consolidated financial statements. See Notes 13 and 17 to the Combined Financial
Statements of Graham Packaging Group as of and for the three years in the period
ended December 31, 1997 and Note 9 to the Condensed Financial Statements.
Nevertheless, if, for any reason, the terms of the settlement are materially
modified or the settlement agreement is not completed and the litigation is
continued, there can be no assurance that the result would not be a modification
of the settlement terms or an award of damages and/or injunctive relief against
the Company that would have a material adverse effect on the business, financial
condition, results of operations or cash flow of the Company. See
'Business--Legal Proceedings.'
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including,
in particular, the likelihood of the Company's success in developing and
expanding its business, including, but not limited to, the Company's hot-fill
PET plastic container business. These statements are based upon a number of
assumptions and estimates which are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Company, and reflect future business decisions which are subject to change. Some
of these assumptions inevitably will not materialize, and unanticipated events
will occur which will affect the Company's results.
31
<PAGE>
THE RECAPITALIZATION
The terms and conditions of the Recapitalization are set forth in the
Recapitalization Agreement by and among Holdings, the Graham Partners and the
Equity Investors. The summary set forth below of the terms of the
Recapitalization Agreement is qualified in its entirety by reference to all the
provisions of the Recapitalization Agreement, a copy of which has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
THE OFFERINGS
On February 2, 1998, as part of the Recapitalization, the Company Issuers
consummated an offering pursuant to Rule 144A under the Securities Act of their
Senior Subordinated Notes Due 2008, consisting of $150,000,000 aggregate
principal amount of their Fixed Rate Senior Subordinated Old Notes and
$75,000,000 aggregate principal amount of their Floating Rate Senior
Subordinated Old Notes. Pursuant to the Senior Subordinated Exchange Offers, the
Company Issuers are offering to exchange up to $150,000,000 aggregate principal
amount of their Fixed Rate Senior Subordinated Exchange Notes and $75,000,000
aggregate principal amount of their Floating Rate Senior Subordinated Exchange
Notes for equal principal amounts of Fixed Rate Senior Subordinated Old Notes
and Floating Rate Senior Subordinated Old Notes, respectively.
On February 2, 1998, as part of the Recapitalization, the Holdings Issuers
consummated an offering pursuant to Rule 144A under the Securities Act of
$169,000,000 aggregate principal amount at maturity of Senior Discount Old
Notes. Pursuant to the Senior Discount Exchange Offer, the Holdings Issuers are
offering to exchange up to $169,000,000 aggregate principal amount at maturity
of their Senior Discount Exchange Notes for an equal principal amount of Senior
Discount Old Notes.
RECAPITALIZATION AGREEMENT
Upon the consummation of the Recapitalization, Investor LP acquired an 81%
limited partnership interest in Holdings, Investor GP acquired a 4% general
partnership interest in Holdings, and the Continuing Graham Partners retained a
1% general partnership interest and a 14% limited partnership interest in
Holdings. Also upon consummation of the Recapitalization, Holdings owned a 99%
limited partnership interest in the Operating Company, and Opco GP, a wholly
owned subsidiary of Holdings, acquired a 1% general partnership interest in the
Operating Company.
As provided in the Recapitalization Agreement, immediately prior to the
consummation of the Recapitalization (the 'Closing'), (i) Holdings contributed
to the Operating Company substantially all of its assets and liabilities (other
than its partnership interests in the Operating Company, the capital stock of
CapCo II and the membership interests in Opco GP) and (ii) the Graham
Contribution was made.
Upon the Closing, (i) substantially all outstanding indebtedness of
Holdings and its subsidiaries was repaid, (ii) certain limited and general
partnership interests in Holdings held by the Graham Partners were redeemed by
Holdings for $429.6 million (the 'Redemption Consideration'), (iii) certain
limited and general partnership interests in Holdings held by the Graham
Partners were purchased by the Equity Investors for $208.3 million (the
'Purchase Consideration') and (iv) the Graham Partners repaid all amounts
outstanding under certain promissory notes held by Holdings. In addition,
contemporaneously with the Recapitalization, the Operating Company paid certain
bonuses and other cash payments, and certain equity awards were granted, to
senior and middle level management ('Management Awards'). See 'Use of Proceeds'
and 'Management--Management Awards.'
Pursuant to the Recapitalization Agreement, the Graham Partners have agreed
that neither they nor their affiliates will, subject to certain exceptions, for
a period of five years from and after the Closing, engage in the manufacture,
assembly, design, distribution or marketing for sale of rigid plastic containers
for the packaging of consumer products less than ten liters in volume.
The Recapitalization Agreement contains various representations,
warranties, covenants and conditions. The representations and warranties
generally did not survive the Closing. The Graham Partners have agreed to
indemnify Holdings in respect of any claims by Management with respect to the
adequacy of the Management
32
<PAGE>
Awards and, subject to a limit of $12.5 million on payments by the Graham
Partners, 50% of certain specified environmental costs in excess of $5.0
million.
Pursuant to the Recapitalization Agreement, upon the Closing, Holdings
entered into the Equipment Sales Agreement, the Consulting Agreement and
Partners Registration Rights Agreement (each as defined) described under
'Certain Relationships and Related Party Transactions.'
SUMMARY OF OWNERSHIP STRUCTURE AFTER THE RECAPITALIZATION
The following chart sets forth a summary of the ownership structure of
Holdings, the Operating Company and certain other parties following the
consummation of the Recapitalization:
<TABLE>
<S> <C> <C>
- ------------------------- ------------------------- -----------------------------
| Blackstone(1) | | Management | | Continuing Graham |
- ------------------------- ------------------------- | Partners |
| 97% | 3% -----------------------------
------------------------ | | |
| | 100% | |
-------------------------------- | |
| BMP/Graham Holdings | | |
| Corporation ("Investor LP") | | |
-------------------------------- | |
| 81% LP | ------------------------- |
100% | | | |
--------------------------- | -------------------------------- |
| BCP/Graham Holdings | | | Graham Packaging Corporation | |
| L.L.C. ("Investor GP") | | | ("Graham GP Corp.") | |
--------------------------- | -------------------------------- |
4% GP | | | 1% GP |
| | | ----------------------- |
| | | | 14% LP
-----------------------------------------------------------------------
| Graham Packaging Holdings |
| Company ("Holdings") |
-----------------------------------------------------------------------
| | |
----------- | ---------------------
| 100% | 100% |
| 99% LP | |
---------------------------- | -------------------------------
| GPC Capital Corp. II | | | GPC Opco GP, L.L.C. |
| ("CapCo II") | | | ("Opco GP") |
---------------------------- | -------------------------------
| | 1% GP
| ----------------------
| |
---------------------------------------
| |
| Graham Packaging Company |
| (the "Operating Company") |
| |
---------------------------------------
| |
------------------- -----------------------
| 100% |
------------------------ ------------------------------
| GPC Capital Corp. I | | Other |
| ("CapCo I") | | Subsidiaries |
------------------------ ------------------------------
</TABLE>
- -----------------------
(1) An affiliate of BT Alex. Brown Incorporated and Bankers Trust International
PLC acquired approximately a 4.8% equity interest in the voting securities
of Investor LP. See 'Security Ownership.'
33
<PAGE>
THE ISSUERS
Holdings, together with its subsidiaries, is a worldwide leader in the
design, manufacture and sale of customized HDPE and PET blow molded rigid
plastic bottles, as described under 'Business.' Holdings was formed under the
name 'Sonoco Graham Company' on April 3, 1989 as a Pennsylvania limited
partnership and changed its name to 'Graham Packaging Company' on March 28,
1991. The Operating Company was formed under the name 'Graham Packaging Holdings
I, L.P.' on September 21, 1994 as a Delaware limited partnership. The
predecessor to Holdings controlled by the Continuing Graham Partners was formed
in the mid-1970's as a regional domestic custom plastic bottle supplier, using
the proprietary Graham Rotational Wheel.
Upon the Recapitalization, substantially all of the assets and liabilities
of Holdings were contributed to the Operating Company, and since the
Recapitalization, the primary business activity of Holdings has consisted of its
direct and indirect ownership of 100% of the partnership interests in the
Operating Company. Upon the Recapitalization, the Operating Company and Holdings
changed their names to 'Graham Packaging Company' and 'Graham Packaging Holdings
Company,' respectively.
CapCo I, a wholly owned subsidiary of the Operating Company, and CapCo II,
a wholly owned subsidiary of Holdings, were incorporated in Delaware in January
1998 solely for the purpose of acting as co-obligors of the Senior Subordinated
Notes and the Senior Discount Notes, respectively. CapCo I and CapCo II have
only nominal assets, do not conduct any operations and did not receive any
proceeds of the Offerings. Accordingly, investors in the Notes should look only
to the cash flow and assets of the Operating Company or the cash flow and assets
of Holdings for payment of the Notes. See 'The Recapitalization' and 'Security
Ownership.'
The principal executive offices of the Issuers are located at 1110 East
Princess Street, York, Pennsylvania 17403, Telephone: (717) 849-8500.
USE OF PROCEEDS
There will be no proceeds to the Issuers from the exchange of Notes
pursuant to the Exchange Offers. Upon the consummation of the Recapitalization,
the proceeds from the Offerings of $325.6 million were used, together with the
initial borrowings under the New Credit Facility (the 'Bank Borrowings'), as
follows: (i) approximately $264.9 million was used to repay substantially all of
the existing indebtedness, plus accrued interest, of Holdings and its
subsidiaries, (ii) approximately $408.4 million was used by Holdings to redeem
existing partnership interests in Holdings (net of repayment by the Graham
Partners of $21.2 million owed to Holdings under certain promissory notes),
(iii) approximately $15.4 million was used to make certain cash payments to
Management pursuant to the Recapitalization Agreement and (iv) approximately
$42.1 million was used to fund costs and expenses associated with the
Recapitalization. In addition, the equity investment of approximately $208.3
million by Blackstone and Management in the Equity Investors was used to
purchase existing partnership interests in Holdings.
The existing indebtedness that was repaid at the Closing included (i)
indebtedness outstanding under Holdings' existing $125.0 million term loan
facility ('Existing Term Facility') and (ii) indebtedness outstanding under
Holdings' existing $225.0 million revolving credit facility ('Existing Revolving
Facility,' and together with the Existing Term Facility, the 'Existing Credit
Facility'), all of which indebtedness was assumed by the Operating Company prior
to the Recapitalization and repaid by the Operating Company upon the Closing. If
they had not been repaid at the Closing, the term loan under the Existing Term
Facility would have matured in annual installments beginning March 1998 through
March 2000, and the Existing Revolving Facility would have matured in April
2000. The average interest rate on the Existing Credit Facility was
approximately 5.9% per annum. See 'The Recapitalization ' and 'Capitalization.'
34
<PAGE>
The following table sets forth a summary of the sources and uses of funds
associated with the Recapitalization.
<TABLE>
<CAPTION>
AMOUNT
------------
(IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Bank Borrowings...................................................................................... $ 403.5
Senior Subordinated Notes(1)......................................................................... 225.0
Senior Discount Notes................................................................................ 100.6
Equity investments and retained equity(2)............................................................ 245.0
Repayment of promissory notes........................................................................ 21.2
Available cash....................................................................................... 1.7
----------
Total.............................................................................................. $ 997.0
----------
USES OF FUNDS:
Repayment of existing indebtedness(3)................................................................ $ 264.9
Redemption by Holdings of existing partnership interests............................................. 429.6
Purchase by Equity Investors of existing partnership interests....................................... 208.3
Partnership interests retained by Continuing Graham Partners......................................... 36.7
Payments to Management............................................................................... 15.4
Transaction costs and expenses....................................................................... 42.1
----------
Total.............................................................................................. $ 997.0
==========
</TABLE>
- ------------------
(1) Included $150.0 million of Fixed Rate Senior Subordinated Old Notes and
$75.0 million of Floating Rate Senior Subordinated Old Notes.
(2) Included a $208.3 million equity investment made by Blackstone and
Management in the Equity Investors and a $36.7 million retained partnership
interest of the Continuing Graham Partners. In addition, an affiliate of BT
Alex. Brown Incorporated and Bankers Trust International PLC, two of the
Initial Purchasers, acquired approximately a 4.8% equity interest in
Investor LP. See 'Security Ownership' and 'Private Placement.'
(3) Included $264.5 million of existing indebtedness and $0.4 million of accrued
interest.
35
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and the
consolidated capitalization of Holdings and the Operating Company as of March
29, 1998. This table should be read in conjunction with 'The Recapitalization,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the consolidated financial statements of Holdings and the
related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 29, 1998
---------------------
OPERATING
HOLDINGS COMPANY
-------- ---------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents.................................................................. $ 4.2 $ 4.2
======== =========
Total debt (including current maturities):
New Credit Facility:
Revolving Credit Facilities(1)........................................................ $ 13.0 $ 13.0
Tranche A term loans.................................................................. 75.0 75.0
Tranche B term loans.................................................................. 175.0 175.0
Tranche C term loans.................................................................. 145.0 145.0
Senior Subordinated Notes(2)............................................................... 225.0 225.0
Senior Discount Notes...................................................................... 102.3 --
Other debt................................................................................. 8.5 8.5
-------- ---------
Total debt............................................................................ 743.8 641.5
Partners' equity (deficit)................................................................. (436.3) (339.0)
-------- ---------
Total capitalization.................................................................. $ 307.5 $ 302.5
======== ========
</TABLE>
- ------------------
(1) At March 29, 1998, the Operating Company had the ability, subject to
customary borrowing conditions, to borrow up to $142.0 million under the
Revolving Credit Facility and up to $100.0 million under the Growth Capital
Revolving Facility. Amounts drawn under the Growth Capital Revolving
Facility require matching equity investments from the principal equity
holders of Holdings. See 'Description of the New Credit Facility.'
(2) Includes $150.0 million of Fixed Rate Senior Subordinated Notes and $75.0
million of Floating Rate Senior Subordinated Notes.
36
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information of Holdings and
the Operating Company has been prepared by applying pro forma adjustments to the
historical combined financial statements of Graham Packaging Group ('GP Group')
(as described below) and, in the case of the three months ended March 29, 1998,
the consolidated financial statements of Holdings. The combined financial
statements of GP Group have been prepared to include Holdings and its
subsidiaries and the ownership interests and real estate constituting the Graham
Contribution (which contribution was made to the Operating Company prior to the
Closing) for all periods that the operations were under common control, and
therefore the Graham Contribution is not included in the pro forma adjustments.
See 'The Recapitalization.' The pro forma adjustments give effect to the
following aspects of the Recapitalization (the 'Transactions'):
o The contribution by Holdings of substantially all of its assets and
liabilities to the Operating Company (the 'Holdings Contribution')
o The Bank Borrowings and the Offerings
o The repayment of substantially all of the existing indebtedness of
Holdings and its subsidiaries
o The redemption of certain general and limited partnership interests in
Holdings
o The repayment of promissory notes owed to Holdings by certain Graham
Partners
o The payments to Management
o The payment of fees and expenses related to the Transactions
The accompanying unaudited pro forma statements of operations also give
effect to the acquisition of certain assets and the assumption of certain
liabilities of Rheem-Graham Embalagens Ltda. in Brazil (the 'Brazil
Acquisition').
The unaudited pro forma statements of operations for the year ended
December 31, 1997 and the three months ended March 29, 1998 give effect to the
Transactions and the Brazil Acquisition as if they had occurred on January 1,
1997. The adjustments, which are based upon available information and upon
certain assumptions that Management believes are reasonable, are described in
the accompanying notes. The pro forma financial data do not purport to represent
what the results of operations of Holdings or the Operating Company would
actually have been had the Transactions and the Brazil Acquisition in fact
occurred on the assumed dates or to project the results of operations of
Holdings or the Operating Company for any future period or date.
A pro forma balance sheet as of March 29, 1998 is not presented since the
Transactions occurred on February 2, 1998. Accordingly, the March 29, 1998
historical consolidated balance sheet of Holdings includes the events described
in the first paragraph above.
The Recapitalization has been accounted for as a recapitalization of
Holdings and as a transaction between entities under common control for the
Holdings Contribution, which will have no impact on the historical basis of the
assets and liabilities of Holdings or the Operating Company. The Brazil
Acquisition has been accounted for using the purchase method of accounting. The
total purchase cost was allocated to the assets acquired and liabilities assumed
based on their respective fair values.
This unaudited pro forma financial information should be read in
conjunction with 'The Recapitalization,' 'Use of Proceeds,' 'Management's
Discussion and Analysis of Financial Condition and Results of Operations,' the
Combined Financial Statements of the Graham Packaging Group (including the
accompanying notes thereto) and the unaudited consolidated financial statements
of Holdings (including the accompanying notes thereto) and other financial
information included elsewhere in this Prospectus.
37
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
----------------------
BRAZIL OPERATING
GP GROUP ACQUISITION ADJUSTMENTS(A) HOLDINGS COMPANY(A)
-------- ----------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net sales........................................ $521.7 $ 7.5 $ -- $529.2 $529.2
Cost of goods sold............................... 437.3 5.3 0.3(b) 442.9 442.9
-------- ------- ------- ------- --------
Gross margin..................................... 84.4 2.2 (0.3) 86.3 86.3
Selling, general and administrative expense...... 34.9 0.6 2.0(c) 37.5 37.5
Special charges and unusual items................ 24.4 -- -- 24.4 24.4
-------- ------- ------- ------- --------
Operating income (loss).......................... 25.1 1.6 (2.3) 24.4 24.4
Interest expense, net............................ 13.4 0.1 57.6(d) 71.1 59.6
Other (income) expense net....................... 0.7 -- -- 0.7 0.7
Minority interest................................ 0.2 -- (0.2)(e) -- --
-------- ------- ------- ------- --------
Income (loss) before income taxes and
extraordinary items............................ 10.8 1.5 (59.7) (47.4) (35.9)
Income tax expense (benefit)..................... 0.6 0.2 -- 0.8 0.8
-------- ------- ------- ------- --------
Income (loss) before extraordinary items......... $ 10.2 $ 1.3 $(59.7)(f) $(48.2) $(36.7)
======== ======= ======= ======= ========
OTHER DATA:
Cash flows provided by (used in):
Operating activities........................... $ 66.9 $ 1.8 $(45.0) $ 23.7 $ 23.7
Investing activities........................... (72.3) (0.2) -- (72.5) (72.5)
Financing activities........................... 9.5 (1.5) -- 8.0 8.0
EBITDA(g)........................................ 89.8 2.1 (1.0) 90.9 90.9
Capital expenditures............................. 53.2 0.2 -- 53.4 53.4
Depreciation and amortization.................... 41.0 0.5 0.3 41.8 41.8
Cash interest expense, net....................... 13.1 0.1 43.0 56.2 56.2
Pro forma ratios of earnings to fixed
charges(h)..................................... -- --
</TABLE>
See accompanying notes.
38
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 29, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
HOLDINGS ADJUSTMENTS(A)
-------- --------------
<S> <C> <C>
Net sales......................................... $134.4 $ --
Cost of goods sold................................ 109.8 --
-------- -------
Gross margin...................................... 24.6 --
Selling, general and administrative expense....... 8.4 0.1(c)
Special charges and unusual items................. 14.9 (13.3)(f)
-------- -------
Operating income (loss)........................... 1.3 13.2
Interest expense, net............................. 11.9 6.2(d)
Other (income) expense net........................ 0.2 --
Recapitalization expenses......................... 11.5 (11.5)(f)
Minority interest................................. -- --
-------- -------
Income (loss) before taxes and extraordinary
items........................................... (22.3) 18.5
Income tax expense................................ --
-------- -------
Income (loss) before extraordinary item........... $(22.3) $ 18.5
======= =======
OTHER DATA:
Cash flows provided by (used in):
Operating activities............................ $(17.1) $ 18.4
Investing activities............................ (16.6) --
Financing activities............................ 30.8 --
EBITDA(g)......................................... 25.3 --
Capital expenditures.............................. 13.5 --
Depreciation and amortization..................... 9.2 --
Cash interest expense, net........................ 9.2 4.9
Pro forma ratios of earnings to fixed
charges(h)......................................
<CAPTION>
PRO FORMA
---------------------
OPERATING
HOLDINGS COMPANY(A)
-------- ----------
<S> <C> <C>
Net sales.........................................$ 134.4 $134.4
Cost of goods sold................................ 109.8 109.8
-------- ----------
Gross margin...................................... 24.6 24.6
Selling, general and administrative expense....... 8.5 8.5
Special charges and unusual items................. 1.6 1.6
-------- ----------
Operating income (loss)........................... 14.5 14.5
Interest expense, net............................. 18.1 15.0
Other (income) expense net........................ 0.2 0.2
Recapitalization expenses......................... -- --
Minority interest................................. -- --
-------- ----------
Income (loss) before taxes and extraordinary
items........................................... (3.8) (0.7)
Income tax expense................................ -- --
-------- ----------
Income (loss) before extraordinary item...........$ (3.8) $ (0.7)
======== =========
OTHER DATA:
Cash flows provided by (used in):
Operating activities............................$ 1.3 $ 1.3
Investing activities............................ (16.6) (16.6)
Financing activities............................ 30.8 30.8
EBITDA(g)......................................... 25.3 25.3
Capital expenditures.............................. 13.5 13.5
Depreciation and amortization..................... 9.2 9.2
Cash interest expense, net........................ 14.1 14.1
Pro forma ratios of earnings to fixed
charges(h)...................................... -- --
</TABLE>
See accompanying notes.
39
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(a) The pro forma statements of operations of the Operating Company include all
of the same adjustments made for Holdings noted below except interest
expense and deferred financing fee amortization expense related to the
Senior Discount Notes described in the table under note (d).
(b) Represents incremental depreciation based on the fair values of property and
equipment acquired in the Brazil Acquisition, using an estimated useful life
of 15 years.
(c) Represents a $1.0 million annual fee expected to be paid to Graham Family
Growth Partnership under the Holdings Partnership Agreement and a $1.0
million annual monitoring fee expected to be paid to an affiliate of
Blackstone. See 'The Partnership Agreements' and 'Certain Relationships and
Related Party Transactions.'
The unaudited pro forma statements of operations do not include any
reduction of selling, general and administrative expenses as a result of the
elimination of certain historical management fees charged by other Graham
companies to Holdings (which totaled $2.8 million for the year ended
December 31, 1997 and $0.1 million for the three months ended March 29,
1998), or any incremental expense as a result of fees expected to be
incurred by Holdings under the Consulting Agreement or the Equipment Sales
Agreement. See 'Certain Relationships and Related Party Transactions.'
(d) Represents the net adjustment to interest expense as a result of the Bank
Borrowings and the Offerings, calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1997 MARCH 29, 1998
--------------------- ---------------------
OPERATING OPERATING
HOLDINGS COMPANY HOLDINGS COMPANY
-------- --------- -------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Fixed Rate Senior Subordinated Notes(1)..................... $ 13.1 $ 13.1 $ 3.3 $ 3.3
Floating Rate Senior Subordinated Notes(2).................. 6.9 6.9 1.7 1.7
Senior Credit Facilities:
Revolving Credit Facility(3).............................. 0.7 0.7 0.2 0.2
Tranche A term loans(4)................................... 5.9 5.9 1.5 1.5
Tranche B term loans(5)................................... 14.7 14.7 3.7 3.7
Tranche C term loans(6)................................... 12.5 12.5 3.1 3.1
Commitment fees(7)........................................ 1.2 1.2 0.3 0.3
Other(8).................................................... 1.2 1.2 0.3 0.3
-------- --------- -------- ---------
Cash interest expense....................................... 56.2 56.2 14.1 14.1
Senior Discount Notes(9).................................... 11.1 -- 3.0 --
Amortization of deferred financing costs(10)................ 3.8 3.4 1.0 0.9
-------- --------- -------- ---------
Pro forma interest expense.................................. 71.1 59.6 18.1 15.0
Less historical net interest expense(11).................... (13.5) (13.5) (11.9) (11.9)
-------- --------- -------- ---------
Net adjustment.............................................. $ 57.6 $ 46.1 $ 6.2 $ 3.1
======== ========= ======== =========
</TABLE>
- ------------------
(1) Represents interest on the $150.0 million Fixed Rate Senior Subordinated
Notes using an interest rate of 8.75%.
(2) Represents interest on the $75.0 million Floating Rate Senior Subordinated
Notes using an interest rate of 9.25%.
(Footnotes continued on next page)
40
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY--(CONTINUED)
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(Footnotes continued from previous page)
(3) Represents interest on the Revolving Credit Facility and the Growth Capital
Revolving Facility using an interest rate of 7.88%, based on the $8.5
million drawdown at the Closing.
(4) Represents interest on the $75.0 million Tranche A term loans using an
assumed interest rate of 7.88%.
(5) Represents interest on the $175.0 million Tranche B term loans using an
assumed interest rate of 8.38%.
(6) Represents interest on the $145.0 million Tranche C term loans using an
assumed interest rate of 8.63%.
(7) Represents a 0.5% commitment fee on the unused portions of the Revolving
Credit Facility.
(8) Represents historical interest on $8.5 million of indebtedness and capital
lease obligations which were not repaid.
(9) Represents the accretion to Accreted Value on the Senior Discount Notes
using an interest rate of 10.75% applied to the $100.6 million gross
proceeds compounded semi-annually.
(10) Represents amortization of deferred financing costs of $31.0 million (of
which $26.0 million was recorded by the Operating Company) over the term of
related debt (six years for the Revolving Credit Facilities and Tranche A
term loans, eight years for Tranche B term loans, nine years for Tranche C
term loans, 10 years for the Senior Subordinated Notes and 11 years for the
Senior Discount Notes).
(11) Represents the elimination of historical net interest expense.
A 0.125% increase or decrease in the assumed interest rate would change the
pro forma interest expense on floating rate debt as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 MARCH 29, 1998
----------------- ------------------
(IN MILLIONS)
<S> <C> <C>
Floating Rate Senior Subordinated Notes........................ $0.1 $0.0
New Credit Facility............................................ 0.5 0.1
----- -----
Total........................................................ $0.6 $0.1
----- -----
----- -----
</TABLE>
(e) Represents the elimination of 20% minority interest in the earnings of the
Company's subsidiary in Brazil, as the Company purchased such minority
interest on February 1998.
(f) The pro forma statements of operations for the year ended December 31, 1997
do not include any adjustments for the following non-recurring charges,
which Holdings and the Operating Company incurred at Closing. Such amounts
are recorded in the historical consolidated Statements of Operations for the
three months ended March 29, 1998 and are deducted as an adjustment in
determining pro forma income (loss) for the period:
<TABLE>
<CAPTION>
HOLDINGS OPERATING COMPANY
-------- -----------------
(IN MILLIONS)
<S> <C> <C>
Payments to Management(1)................................................ $11.9 $11.9
License intangible(2).................................................... 1.4 1.4
------- ------
Special charges and unusual items(3)..................................... 13.3 13.3
Recapitalization expenses(3)............................................. 11.5 10.5
------- ------
Total.................................................................. $24.8 $23.8
======= ======
</TABLE>
- ------------------
(1) Represents $12.4 million in bonuses and other cash payments paid to
Management, net of $0.5 million accrued as of Closing. Holdings and the
Operating Company also expect to pay $4.6 million of stay bonuses
(Footnotes continued on next page)
41
<PAGE>
GRAHAM PACKAGING COMPANY
GRAHAM PACKAGING HOLDINGS COMPANY--(CONTINUED)
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(Footnotes continued from previous page)
to certain employees over one to three years and to take a total non-cash
charge of $6.1 million relating to Management's equity purchase, which is
expected to be expensed over the three-year vesting period. See
'Management--Management Awards.'
(2) Represents the non-cash write-off of certain intangibles associated with a
license agreement with a Graham affiliate that terminated at Closing and was
replaced by the Equipment Sales Agreement. See 'Certain Relationships and
Related Party Transactions.'
(3) Represents fees and expenses associated with the Recapitalization and
associated financings.
(g) EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to net income as an indicator of operating performance or to
cash flow as a measure of liquidity. 'EBITDA' is defined as earnings before
minority interest, extraordinary items, interest expense, interest income,
income taxes, depreciation and amortization expense, fees paid pursuant to
the Monitoring Agreement, non-cash equity income in earnings of joint
venture, other non-cash charges, Recapitalization expenses and special
charges and unusual items. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and Combined Financial
Statements of Graham Packaging Group (including the accompanying notes
thereto).
Pro forma EBITDA is calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1997 MARCH 29, 1998
--------------------- ---------------------
OPERATING OPERATING
HOLDINGS COMPANY HOLDINGS COMPANY
-------- --------- -------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Income (loss) before extraordinary item..................... $(48.2) $(36.7) $(3.8) $(0.7)
Interest expense, net....................................... 71.1 59.6 18.1 15.0
Income tax expense (benefit)................................ 0.8 0.8 -- --
Depreciation and amortization............................... 41.8 41.8 9.2 9.2
Fees paid pursuant to the Monitoring Agreement.............. 1.0 1.0 0.3 0.3
Equity income in earnings of joint venture.................. (0.2) (0.2) (0.1) (0.1)
Non-cash compensation....................................... 0.2 0.2 -- --
Special charges and unusual items........................... 24.4 24.4 1.6 1.6
------ ------ ----- -----
Pro forma EBITDA............................................ $90.9 $ 90.9 $25.3 $25.3
====== ====== ===== =====
</TABLE>
EBITDA is included in this Prospectus as it is a basis upon which Management
assesses financial performance, and certain covenants in Holdings' and the
Operating Company's borrowing arrangements are tied to similar measures.
While EBITDA is frequently used as a measure of operations and the ability
to meet debt service requirements, it is not necessarily comparable to other
similarly titled captions of other companies due to the potential
inconsistencies in the method of calculation.
(h) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes, minority
interest and extraordinary items, plus fixed charges. Fixed charges include
interest expense on all indebtedness, amortization of deferred debt issuance
costs, and one-third of rental expense on operating leases representing that
portion of rental expense deemed to be attributable to interest. Earnings
were insufficient to cover fixed charges on a pro forma basis for Holdings
and the Operating Company, respectively, by $48.0 million and $36.5 million
for the year ended December 31, 1997 and by $3.9 million and $0.8 million
for the three months ended March 29, 1998.
42
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth certain selected historical combined
financial data for the Graham Packaging Group for and at the end of each of the
years in the five-year period ended December 31, 1997 and as of and for the
three-month period ended March 30, 1997 and certain selected historical
consolidated financial data for Holdings as of and for the three-month period
ended March 29, 1998. The selected historical combined financial data for each
of the five years in the period ended December 31, 1997 are derived from the
Graham Packaging Group's combined financial statements. The combined financial
statements as of December 31, 1995, 1996 and 1997 and for each of the four years
in the period ended December 31, 1997 have been audited by Ernst & Young LLP,
independent auditors. The combined financial statements of Graham Packaging
Group have been prepared to include Holdings and its subsidiaries and the
ownership interests and real estate constituting the Graham Contribution (as
defined) for all periods that the operations were under common control. The
selected historical combined financial data as of December 31, 1993 and 1994,
for the year ended December 31, 1993 and as of and for the three months ended
March 30, 1997 were derived from the unaudited combined financial statements of
Graham Packaging Group which, in the opinion of Management, include all
adjustments (consisting only of usual recurring adjustments) necessary for a
fair presentation of such data. The results for the three months ended March 29,
1998 are not necessarily indicative of the results for the full year 1998. The
selected historical consolidated financial data as of and for the three months
ended March 29, 1998 were derived from the unaudited consolidated financial
statements of Holdings which, in the opinion of Management, include all
adjustments (consisting only of usual recurring adjustments) necessary for a
fair presentation of such data.
The following table should be read in conjunction with 'Management's
Discussion and Analysis of Financial Condition and Results of Operations', the
combined financial statements of Graham Packaging Group, including the related
notes thereto, and the consolidated financial statements of Holdings, including
the related notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, ----------------------
------------------------------------------------------- MARCH 30, MARCH 29,
1993(2) 1994(14)(15) 1995(3) 1996 1997(4) 1997 1998(1)(4)
------- ------------ ------- ------ ------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales(5)............................ $338.7 $396.0 $466.8 $459.7 $521.7 $116.5 $134.4
Gross margin(5)......................... 58.8 69.5 66.8 77.2 84.4 17.8 24.6
Selling, general and administrative
expenses.............................. 23.3 29.7 35.5 35.5 34.9 8.3 8.4
Special charges and unusual items(6).... 8.7 -- 5.9 7.0 24.4 1.5 14.9
Operating income........................ 26.8 39.8 25.4 34.7 25.1 8.0 1.3
Interest expense, net................... 21.1 12.5 16.2 14.5 13.4 3.3 11.9
Other expense (income), net............. -- (0.2) (11.0) (1.0) 0.7 0.3 0.2
Recapitalization expenses............... -- -- -- -- -- -- 11.5
Income tax expense (benefit)(7)......... 0.1 (0.3) (0.3) -- 0.6 -- --
Minority interest....................... -- -- -- -- 0.2 -- --
Extraordinary loss(8)................... 15.1 -- 1.8 -- -- -- 0.7
------- ------- ------- ------ ------ ------ ------
Net income (loss)....................... $ (9.5) $ 27.8 $ 18.7 $ 21.2 $ 10.2 $ 4.4 $(23.0)
======= ======= ======= ======= ====== ====== ======
OTHER DATA:
Cash flows provided by (used in):
Operating activities.................. $ 49.3 $ 74.6 $ 60.5 $ 68.0 $ 66.9 $ 6.8 $(17.1)
Investing activities.................. (63.2) (53.0) (68.4) (32.8) (72.3) (8.5) (16.6)
Financing activities.................. 9.4 (26.2) 9.2 (34.6) 9.5 0.9 30.8
EBITDA(9)............................... 77.4 81.3 77.1 90.6 89.8 19.1 25.3
Capital expenditures.................... 31.5 53.8 68.6 31.3 53.2 8.5 13.5
Investments(10)......................... 28.0 -- 3.2 1.2 19.0 -- 3.0
Depreciation and amortization(11)....... 41.9 41.3 45.7 48.2 41.0 9.9 9.2
Ratio of earnings to fixed
charges(12)........................... 1.2x 2.7x 2.0x 2.2x 1.6x 2.1x --
BALANCE SHEET DATA:
Working capital(13)..................... $ 21.3 $ 16.6 $ 18.0 $ 17.0 $ 2.4 $ 22.9 $ 6.9
Total assets............................ 306.5 332.5 360.7 338.8 385.5 337.7 423.8
Total debt.............................. 252.0 233.3 257.4 240.5 268.5 237.7 743.8
Partners'/owners' equity (deficit)...... (8.3) 15.6 15.3 16.8 0.3 20.4 (436.3)
</TABLE>
(Footnotes continued on next page)
43
<PAGE>
(Footnotes continued from previous page)
- ------------------
(1) In February 1998 the Recapitalization occurred.
(2) During 1993, the following acquisitions were completed: (i) In April 1993,
Graham Packaging Group acquired all of the outstanding stock of PLAX, Inc.,
a Canadian corporation, for $2.1 million. (ii) In June 1993, Graham
Packaging Group acquired all of the outstanding stock of Seprosy, S.A., a
French company for $27.3 million. (iii) In October 1993, Graham Packaging
Group acquired an interest in Commercial Packaging UK Ltd. (the 'UK
Operations') for $0.6 million. The above transactions were accounted for
under the purchase method of accounting. Results of operations are included
since the acquisition date.
(3) In July 1995, Graham Packaging Group acquired an additional interest in its
UK Operations and subsequently sold its interests for $5.6 million,
recognizing a gain of $4.4 million. In addition, Graham Packaging Group
entered into an agreement with the purchaser of its UK Operations and
recorded $6.4 million of non-recurring technical support services income.
Both the gain and the technical support services income are included in
other expense (income), net.
(4) In April 1997, Graham Packaging Group acquired 80% of certain assets and
assumed 80% of certain liabilities of Rheem-Graham Embalagens Ltda. for
$20.3 million (excluding direct costs of the acquisition). The remaining
20% was purchased in February 1998. These transactions were accounted for
under the purchase method of accounting. Results of operations are included
since the dates of acquisitions.
(5) Net sales increase or decrease based on fluctuations in resin prices as
industry practice and the Company's agreements with its customers permit
price changes to be passed through to customers by means of corresponding
changes in product pricing. Therefore, the Company's dollar gross profit is
substantially unaffected by changes in resin prices.
(6) Represent certain legal, restructuring and systems conversion costs and,
with respect to the three months ended March 29, 1998, Recapitalization
compensation costs. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Combined Financial Statements
of Graham Packaging Group, including the related notes thereto, and the
consolidated financial statements of Holdings, including the related notes
thereto for further discussion.
(7) As a limited partnership, Holdings is not subject to U.S. federal income
taxes or most state income taxes. Instead, such taxes are assessed to
Holdings' partners based on the income of Holdings. Holdings makes tax
distributions to its partners to reimburse them for such tax liabilities.
The Company's foreign operations are subject to tax in their local
jurisdictions. Most of these entities have historically had net operating
losses and recognized minimal tax expense.
(8) Represents costs incurred (including the write-off of unamortized deferred
financing fees) in connection with the early extinguishment of debt.
(9) EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to net income as an indicator of operating performance or to
cash flow as a measure of liquidity. 'EBITDA' is defined as earnings before
minority interest, extraordinary items, interest expense, interest income,
income taxes, depreciation and amortization expense, fees paid pursuant to
the Monitoring Agreement, non-cash equity income in earnings of joint
ventures, other non-cash charges, Recapitalization expenses and special
charges and unusual items. Also in 1995, EBITDA excludes the $4.4 million
gain on the sale of the UK operations and the related $6.4 million
technical support services income as described in note (3) above. EBITDA is
included in this Prospectus as it is a basis upon which Management assesses
financial performance, and certain covenants in Holdings' and the Operating
Company's borrowing arrangements are tied to similar measures. While EBITDA
is frequently used as a measure of operations and the ability to meet debt
service requirements, it is not necessarily comparable to other similarly
titled captions of other companies due to the potential inconsistencies in
the method of calculation.
(Footnotes continued on next page)
44
<PAGE>
(Footnotes continued from previous page)
- ------------------
(10) Investments include the acquisitions made by Graham Packaging Group in
Italy, Canada, France, the UK and Brazil described in notes (1) to (4)
above. In addition, in 1995, the Company paid $1.9 million for a 50%
interest in the Masko-Graham Joint Venture in Poland and committed to make
loans to the Joint Venture of up to $1.9 million. In 1996, the Company
loaned $1.0 million to the Joint Venture. The Joint Venture is accounted
for under the equity method of accounting, and its earnings are included in
other expense (income), net. Amounts shown under this caption represent
cash paid, net of cash acquired in the acquisitions.
(11) Depreciation and amortization excludes amortization of deferred financing
fees, which is included in interest expense, net.
(12) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, minority interest and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, amortization of deferred financing fees, and
one-third of rental expense on operating leases representing that portion
of rental expense deemed to be attributable to interest. Earnings were
insufficient to cover fixed charges by $22.4 million for the three months
ended March 29, 1998.
(13) Working capital is defined as current assets (less cash and cash
equivalents) minus current liabilities (less current maturities of
long-term debt).
(14) In 1994, the Company adopted the Last In First Out (LIFO) method of
accounting for certain inventories which had the effect of reducing net
income by $1.7 million.
(15) Balance sheet data at December 31, 1994 were derived from unaudited
financial statements.
45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations of the
Company includes a discussion of periods before the consummation of the
Recapitalization. The discussion and analysis of such periods does not reflect
the significant impact that the Recapitalization has had on the Company. See
'Risk Factors,' 'Unaudited Pro Forma Combined Financial Information' and the
section below under '--Liquidity and Capital Resources' for further discussion
relating to the impact that the Recapitalization has had and may have on the
Company. The following discussion should be read in conjunction with 'Selected
Historical Financial Data,' the Combined Financial Statements of Graham
Packaging Group, including the related notes thereto, and the consolidated
financial statements of Holdings, including the related notes thereto, appearing
elsewhere in this Prospectus and 'Unaudited Pro Forma Financial Information'.
References to 'Management' should be understood in this section to refer to the
Company's management in the time periods in question.
OVERVIEW
The Company is a worldwide leader in the design, manufacture and sale of
customized blow-molded rigid plastic bottles for the automotive, food and
beverage and HC/PC products business. Management believes that critical success
factors to the Company's business are its ability to (i) serve the complex
packaging demands of its customers which include some of the world's largest
branded consumer products companies, (ii) forecast trends in the packaging
industry across product lines and geographic territories (including those
specific to the rapid conversion of packaging products from glass, metal and
paper to plastic), and (iii) make the correct investments in plant and
technology necessary to satisfy the two forces mentioned above.
In 1992, the Company established a business plan that continues in a
modified form today. Management believed that the Company needed to profitably
grow and diversify within the custom rigid plastic sector of the packaging
industry and, to accomplish this goal, believed that it could rely on two of the
Company's core strengths, its technological capability in the innovation, design
and manufacture of customized plastic packaging and its strong relationships
with a group of customers who were the leading consumer branded products
companies in the world. Management implemented a strategy of (i) making
substantial investments in research and development, technology and machinery to
capture high margin sales growth from the rapid conversion to plastic packaging
and to meet its customers growing and complex packaging demands, (ii) expanding
in selected arenas in North America, such as in the food and beverage business,
and overseas, such as in the automotive and HC/PC product businesses, and (iii)
increasing efficiencies in its manufacturing processes, labor utilization and
procurement of raw materials.
In 1992, the Company's net sales to its automotive, food and beverage and
HC/PC product businesses were split 67.9%, 4.2% and 27.9%, respectively, and
were generated predominantly in the U.S. In 1997, this allocation between the
Company's three businesses had changed to 37.6%, 28.9% and 33.5%, respectively,
with 21.2% of the Company's net sales coming from operations outside the U.S.
The primary factors that drove this diversification were increased sales of
plastic packaging to the food and beverage businesses in North America and the
growth of the Company's food and beverage business which has grown at a CAGR of
67%.
The Company's North American one quart motor oil container business is in a
mature industry. Unit volume in the one quart motor oil business has been
declining at approximately 2% per year and, as a result, the Company has
experienced competitive price pressures in this business throughout 1995, 1996
and 1997. The Company has reduced prices on contracts that have come up for
renewal to maintain its competitive position and has been able to partially
offset these price reductions by improving manufacturing efficiencies,
light-weighting of bottles, improving line speeds, reducing material spoilage
and by improving labor efficiency and inventory. Management believes that the
decline in the domestic one quart motor oil business will continue for the next
several years but believes that there are significant volume opportunities for
its automotive product business in foreign countries, particularly those in
Latin America. On April 30, 1997, the Company acquired 80% of certain assets and
80% of certain liabilities of Rheem-Graham Embalagens Ltda., a leading supplier
of bottles to the motor oil industry in Brazil, and on February 17, 1998
purchased the residual 20% ownership interest. The Company has signed agreements
to operate two additional plants in Brazil, one of which is now in production.
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Management believes that the area with the greatest opportunity for growth
continues to be in producing bottles for the North American food and beverage
business because of the continued conversion to plastic packaging, and, in
particular, the demand for hot-fill PET containers for juices, juice drinks,
sport drinks and teas. From 1992 to 1997 the Company has invested over $99
million in capital expenditures to expand its technology, machinery and plant
structure to prepare for what Management estimated would be the growth in this
area. For the year ended December 31, 1997 sales of hot-fill PET containers had
grown to $92.2 million from negligible levels in 1993. In this business, the
Company continues to benefit from more experienced plant staff, improved line
speeds, higher absorption of SG&A and fixed overhead costs and improved resin
pricing and material usage.
Following its strategy to expand in selected international areas, the
Company currently operates, either on its own or through joint ventures, in
Argentina, Brazil, Canada, France, Italy and Poland. The Company began its
international expansion in 1992, with the acquisition of Pozzoli, s.r.l. on May
30, 1992 in Italy and the acquisition of Seprosy S.A. ('Seprosy', a wholly owned
subsidiary of Danone S.A., formerly Groupe BSN, on June 1, 1993 and renamed
Graham Packaging France, S.A., ('Graham Packaging France')). The Company
considered the Seprosy acquisition to be a strategic investment to serve its
expanding customer base and to establish the Company in the global packaging
business. Management was aware, however, that Seprosy was incurring excessive
overhead and SG&A costs and operated in a highly competitive environment.
Consequently, Management created a plan to restructure Graham Packaging France
operations in two phases and in compliance with French law and regulations.
These plans resulted in restructuring charges of $2.6 million, $3.3 million and
$0.8 million in 1993, 1995 and 1996, respectively. In 1997, Graham Packaging
France was still not profitable and as a result the Company implemented a
program designed to improve manufacturing and workforce efficiencies for a total
cost of approximately $2.0 million. Management is continuing to focus on its
operations in France, which remains a competitive arena and suffers from a
lagging economy, and is seeking to improve the profitability of that business
unit.
In the year ended December 31, 1997, approximately 77% of the Company's net
sales were generated by the top twenty customers, approximately 60% of which are
under long-term contracts (i.e., with terms of between one and ten years) and
the remainder of which were generated by customers with whom the Company has
been doing business for over 10 years on average. Prices under these
arrangements are typically tied to market standards and, therefore, vary with
market conditions. In general the contracts are requirements contracts that do
not obligate the customer to purchase any given amount of product from the
Company.
Based on industry data, the following table summarizes average market price
per pound of PET and HDPE resins:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
----------------------- --------------------------------
1995 1996 1997 MARCH 30, 1997 MARCH 29, 1998
----- ----- ----- -------------- --------------
<S> <C> <C> <C> <C> <C>
PET................................................... $0.77 $0.63 $0.50 $ 0.43 $ 0.52
HDPE.................................................. 0.45 0.41 0.46 0.46 0.42
</TABLE>
In general, the Company's dollar gross profit is substantially unaffected
by fluctuations in the prices of HDPE and PET resins, the primary raw materials
for the Company's products, because industry practice and the Company's
agreements with its customers permit price changes to be passed through to
customers by means of corresponding changes in product pricing. Consequently,
Management believes that an analysis of the cost of goods sold, as well as
certain other expense items, should not be performed as a percentage of net
sales.
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RESULTS OF OPERATIONS
The following tables set forth the major components of the Company's net
sales and such net sales expressed as a percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, -------------------------------
---------------------------------------------------------------- MARCH 29,
1995 1996 1997 MARCH 30, 1997 1998
-------------------- -------------------- -------------------- -------------------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Automotive.................. $ 202.4 43.4% $ 180.9 39.4% $ 196.4 37.6% $ 43.9 37.7% $ 45.0
Food & Beverage............. 96.2 20.6 116.4 25.3 150.6 28.9 31.0 26.6 46.0
HC/PC....................... 168.2 36.0 162.4 35.3 174.7 33.5 41.6 35.7 43.4
--------- --------- --------- ------- ---------- --------- --------- --------- ---------
Total Net Sales............. $ 466.8 100.0% $ 459.7 100.0% $ 521.7 100.0% $ 116.5 100.0% $ 134.4
========= ========= ========== ======= ========== ========= ========= ======== =========
<CAPTION>
<S> <C>
Automotive.................. 33.5%
Food & Beverage............. 34.2
HC/PC....................... 32.3
---------
Total Net Sales............. 100.0%
=========
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, -------------------------------
---------------------------------------------------------------- MARCH 29,
NET SALES 1995 1996 1997 MARCH 30, 1997 1998
-------------------- -------------------- -------------------- -------------------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
North America............... $ 380.9 81.6% $ 381.9 83.1% $ 440.0 84.3% $ 99.5 85.4% $ 112.3
Europe...................... 85.9 18.4 77.8 16.9 67.4 12.9 17.0 14.6 17.2
Latin America............... -- -- -- -- 14.3 2.8 -- -- 4.9
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Net Sales............. $ 466.8 100.0% $ 459.7 100.0% $ 521.7 100.0% $ 116.5 100.0% $ 134.4
========= ========= ========= ========= ========= ========= ========= ========= =========
<CAPTION>
NET SALES
<S> <C>
North America............... 83.6%
Europe...................... 12.8
Latin America............... 3.6
---------
Total Net Sales............. 100.0%
=========
</TABLE>
THREE MONTHS ENDED MARCH 29, 1998 COMPARED TO THREE MONTHS ENDED MARCH 30, 1997
Net Sales. Net sales for the three months ended March 29, 1998 increased
$17.9 million to $134.4 million from $116.5 million for the three months ended
March 30, 1997. The increase in net sales was primarily due to a 14.1% increase
in unit volume and a 16.4% increase in resin pounds sold. Net sales also
increased as a result of changes in product mix, partially offset by a net
decrease in average resin prices. The most significant geographic increase in
net sales was in North America, where sales in three months ended March 29, 1998
were $12.8 million or 12.9% greater than in the three months ended March 30,
1997. The North American sales increase included higher unit volume of 9% and
higher pounds sold of 15%. North American sales in the U.S. food and beverage
business contributed $13.6 million to the increase, while sales in the
automotive business were $2.3 million lower. Additionally, sales for the three
months ended March 29, 1998 included a $4.9 million contribution as a result of
the Company's investment in its Latin American subsidiary. Sales for the three
months ended March 29, 1998 in Europe were up $0.2 million or 1.2% from the
three months ended March 30, 1997. Overall, European sales reflected a 23.7%
increase in units and a 2.2% increase in pounds sold.
Gross Profit. Gross profit for the three months ended March 29, 1998
increased $6.8 million to $24.6 million from $17.8 million for the three months
ended March 30, 1997. The increase in gross profit resulted primarily from the
higher sales volume as compared to the prior year period. Gross profit in North
America was up $6.6 million or 37.7%, including increases in all product
businesses, while European gross profit was down $0.4 million. In addition,
gross profit for the three months ended March 29, 1998 included $0.6 million
from the Company's Latin American subsidiary.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 29, 1998 increased $0.1
million to $8.4 million from $8.3 million for the three months ended March 30,
1997. As a percent of sales, selling, general and administrative expense
declined to 6.3% in 1998 from 7.1% in 1997. The decline is primarily due to
lower costs in Europe of $0.5 million as a result of the elimination of
duplicative costs incurred prior to the Recapitalization and to the favorable
impact of foreign currency translation due to the weakening French Franc and
Italian Lire. Additionally, selling, general and administrative expenses were
$0.2 million lower in North America as a result of the Company's continued
effort to control these costs. Offsetting the decreases in 1998 selling, general
and administrative expenses is the inclusion of $0.8 million from the Company's
Latin America subsidiary.
Special Charges and Unusual Items. Special charges and unusual items
increased $13.4 million to $14.9 million for the three months ended March 29,
1998 from $1.5 million for the three months ended March 30, 1997. Special
charges and unusual items in the three months ended March 29, 1998 included
costs related to year 2000 system conversion expenditures (see '--Information
Systems Initiative' for a further discussion),
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<PAGE>
Recapitalization compensation costs and the write-off of unamortized licensing
fees. The special charges and unusual items in the three months ended March 30,
1997 reflect non-recurring legal fees related to the JCI Schmalbach-Lubeca
litigation.
Recapitalization Expenses. Recapitalization expenses for the three months
ended March 29, 1998 included transaction fees and costs associated with the
termination of interest rate collar and swap agreements.
Interest Expense Net. Interest expense, net increased $8.6 million to $11.9
million for the three months ended March 29, 1998 from $3.3 million for the
three months ended March 30, 1997. The increase was primarily related to the
increase in debt resulting from the Recapitalization and higher average interest
rates associated with the new debt.
Other (Income) Expense. Other (income) expense decreased $0.1 million to
$0.2 million for the three months ended March 29, 1998 from $0.3 million for the
three months ended March 30, 1997. The lower expense was due primarily to a
lower foreign currency exchange loss in the three months ended March 29, 1998 as
compared to the comparable 1997 period.
Extraordinary Loss. The extraordinary loss for the three months ended March
29, 1998 reflected the write-off of unamortized debt issuance fees associated
with the early extinguishment of debt resulting from the Recapitalization.
Net Income. Primarily as a result of factors discussed above, net loss for
the three months ended March 29, 1998 was $23.0 million compared to net income
of $4.4 million for the three months ended March 30, 1997.
EBITDA. Primarily as a result of factors discussed above, EBITDA for the
three months ended March 29, 1998 increased by 32.5% to $25.3 million from $19.1
million for the three months ended March 30, 1997.
1997 COMPARED TO 1996
Net Sales. Net Sales in 1997 increased $62.0 million to $521.7 million from
$459.7 million in 1996. The increase in net sales was primarily due to the
effects of a 6.5% increase in unit volume and an 11.7% increase in resin pounds
sold. Net sales also increased as a result of the effect of net resin price
increases and changes in product mix. The most significant geographic increase
in net sales was in North America, where sales in 1997 were $58.1 million or
15.2% higher than in 1996. The North American sales increase includes higher
unit volume of 9% and higher pounds sold of 15%. North American sales in the
food and beverage business contributed $32.9 million of the increase while the
HC/PC business contributed $18.2 million. Additionally, 1997 sales included a
$14.3 million contribution as a result of the Company's investment in its Latin
American subsidiary. Sales in Europe in 1997 declined $10.4 million or 13.4%
from 1996, primarily due to $9.1 million in foreign currency translation due to
the weakening of the French Franc and Italian Lire. Overall, European sales
reflected a decline of 1.7% in unit volume and 6.9% in pounds sold, primarily in
the HC/PC product line.
Gross Profit. Gross profit in 1997 increased $7.2 million to $84.4 million
from $77.2 million in 1996. The increase in gross profit resulted from the
higher sales volume in 1997 as compared to the prior year and from the favorable
impact of lower depreciation. Gross profit in North America was up $10.6 million
or 15.0%, while European gross profit was down $5.7 million due primarily to
lower sales volumes. In addition, 1997 gross profit included $2.3 million from
the Company's Latin American subsidiary.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses in 1997 decreased $0.6 million to $34.9 million from
$35.5 million in 1996. Selling, general and administrative expenses, as a
percentage of sales, declined to 6.7% in 1997 from 7.7% in 1996. The decrease
was due to the favorable impact of foreign currency translation due to the
weakening French Franc and Italian Lire in Europe, where selling, general and
administrative expenses were $1.8 million lower in 1997 than in 1996, partially
offset by $1.0 million from the Company's Latin American subsidiary and higher
North American expenses of $0.2 million.
Special Charges and Unusual Items. Special charges and unusual items
increased $17.4 million to $24.4 million in 1997 compared to $7.0 million in
1996. Special charges and unusual items included non-recurring legal fees in
both years, and in 1997, amounts expected to be paid in settlement of the JCI
Schmalbach-Lubeca litigation, aggregating $22.6 million in 1997 and $6.3 million
in 1996. Special charges and unusual items
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<PAGE>
also included $0.7 million of restructuring charges relating to the European
operations in each year, while 1997 special charges and unusual items also
included $0.5 million related to restructuring of North American operations and
$0.5 million related to year 2000 system conversion expenditures. See
'--Information Systems Initiative' for a further discussion.
Interest Expense, Net. Interest expense, net decreased 7.6% to $13.4
million in 1997 from $14.5 million in 1996. The decrease was primarily the
result of a lower average interest rate in 1997, partially offset by higher
borrowings during the same period.
Other (Income) Expense, Net. Other (income) expense changed $1.7 million in
1997 to $0.7 million of net expense from $1.0 million of net income in 1996.
Other (income) expense included foreign currency exchange losses of $1.0 million
in 1997 compared to foreign exchange gains of $0.7 million in 1996. In addition,
other (income) expense included equity in income of Masko Graham, the Company's
joint venture in Poland.
Net Income. Primarily as a result of factors discussed above, net income in
1997 decreased $11.0 million to $10.2 million from $21.2 million in 1996.
EBITDA. Primarily as a result of factors discussed above, EBITDA in 1997
decreased 0.9% to $89.8 million from $90.6 million in 1996.
1996 COMPARED TO 1995
Net Sales. Net sales in 1996 decreased $7.1 million to $459.7 million from
$466.8 million in 1995. The decrease in net sales included a 0.3% decrease in
unit volume coupled with the effect of bottle mix and resin price changes. On a
geographic basis, the lower sales were primarily due to a decrease in revenues
in the European unit of $8.1 million or 9.4% partially offset by higher sales in
North America of $1.0 million. The lower European sales in 1996 reflect the 1995
disposition of the Company's subsidiary in England and lower sales in France and
Italy. The slightly higher North American sales were due to a combined 6% gain
in volume, attributable mainly to the food and beverage business unit and a
shift in product mix which was offset by lower pricing, itself primarily due to
lower resin prices.
Gross Profit. Gross profit in 1996 increased $10.4 million to $77.2 million
from $66.8 million in 1995. This increase was primarily the result of a change
in product mix to more profitable products, primarily in North America where the
raw material component of the cost of products sold, as a percentage of sales,
decreased to 39.1% from 43.5%, and an exceptionally strong fourth quarter
performance which included a $1.6 million favorable adjustment to the estimated
statutory retirement indemnity accrual in France. Gross profit in the fourth
quarter of 1996 represented more than 25% of total 1996 gross profit, only a
portion of which is explained by the above mentioned adjustment. This
improvement was partially offset by a decrease in 1996 gross profit in Europe,
primarily due to lower volumes in Italy and the sale of the Company's subsidiary
in England in 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses in 1996 of $35.5 million remained constant with those in
1995, which included $0.4 million related to the Company's subsidiary in
England. The generally flat selling, general and administrative expenses
reflected the Company's efforts to control these costs.
Interest Expense, Net. Interest expense, net decreased $1.7 million to
$14.5 million in 1996 from $16.2 million in 1995. This decrease was primarily
the result of lower borrowings coupled with a lower average rate of interest on
outstanding borrowings.
Special Charges and Unusual Items. Special charges and unusual items
increased $1.1 million to $7.0 million in 1996 from $5.9 million in 1995.
Special charges and unusual items in 1996 included $6.3 million in unusual legal
fees and $0.7 million of restructuring charges relating to the European
operations while 1995 special charges and unusual items included $2.6 million in
unusual legal fees and $3.3 million restructuring charges relating to the
European operations.
Other (Income) Expense, Net. Other (income) expense, net decreased to
$(1.0) million in 1996 from $(11.0) million in 1995. This decrease is due
primarily to the 1995 gain of $4.4 million recorded on the disposition of the
Company's subsidiary in England, 1995 one-time technical support services income
of $6.4 million which was
50
<PAGE>
offset by greater 1996 foreign exchange gains and equity in income of
Masko-Graham, the Company's joint venture in Poland.
Net Income. Primarily as a result of factors discussed above, net income in
1996 increased 13.4% to $21.2 million from $18.7 million in 1995.
EBITDA. Primarily as a result of factors discussed above, EBITDA in 1996
increased by 17.5% to $90.6 million from $77.1 million in 1995.
EFFECT OF CHANGES IN EXCHANGE RATES
In general, the Company's results of operations are affected by changes in
foreign exchange rates. Subject to market conditions, the Company prices its
products in its foreign operations in local currencies. As a result, a decline
in the value of the U.S. dollar relative to these other currencies can have a
favorable effect on the profitability of the Company, and an increase in the
value of the dollar relative to these other currencies can have a negative
effect on the profitability of the Company. Exchange rate fluctuations did not
have a material effect on the financial results of the Company in 1995, 1996,
1997 or the three months ended March 29, 1998, although exchange rates in France
and Italy changed 15% and 14% respectively from December 31, 1996 to December
31, 1997.
INFORMATION SYSTEMS INITIATIVE
The Company has completed an evaluation and assessment to ensure that its
information systems and related hardware will be year 2000 compliant. As a part
of this process, the Company engaged outside consultants in 1997 to assist with
the evaluation and assessment of its information systems requirements and the
selection and implementation of Enterprise Resource Planning Software. As a
result of this evaluation and assessment, the Company has decided to replace all
of its core application systems, including its financial accounting system,
manufacturing operation system and payroll and human resources system.
During 1997, the Company expensed $0.5 million associated with its
information systems evaluation and assessment and expects to incur during 1998
through the year 2000, approximately $8.0 million to purchase, test and install
new software as well as incur internal staff costs, consulting fees and other
expenses.
The Company expects to have its remediation efforts completed by the end of
1999, and does not expect any material impact on its results of operations,
liquidity or financial position due to incomplete or untimely resolution of the
year 2000 issue. The ability of third parties with whom the Company transacts
business to adequately address their year 2000 issues is outside of the
Company's control. There can be no assurance that the failure of such third
parties to adequately address their year 2000 issues would not have a material
adverse effect on the Company.
DERIVATIVES
The Company enters into interest rate collar and swap agreements to hedge
the exposure to increasing rates with respect to its Credit Agreement. The
differential to be paid or received as a result of these collar and swap
agreements is accrued as interest rates change and recognized as an adjustment
to interest expense related to the Credit Agreement, which was not material in
1995, 1996 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
In 1995, 1996 and 1997, the Company generated $195.4 million of cash from
operations, $52.7 million from increased indebtedness and $3.4 million of net
proceeds from the sale of the UK Operations. This $251.5 million was primarily
used to fund $153.1 million of capital expenditures, $23.4 million of
investments, make distributions of $66.8 million to the Company's partners and
for $8.2 million of other net uses. In the three months ended March 29, 1998,
the Company funded, through its various borrowing arrangements, $17.1 million of
operating activities and $16.6 million of investing activities, including $13.5
million of capital expenditures and $3.0 million of investments.
On February 2, 1998, the Company refinanced the majority of its existing
credit facilities in connection with the Recapitalization, requiring the
repayment of $264.9 million of existing indebtedness, and entered into the
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New Credit Facility. The New Credit Facility consisted of three term loans
totaling $395 million and two revolving loan facilities totaling $255 million,
of which $8.5 million was initially borrowed. The Recapitalization also included
the issuance of $225 million of Senior Subordinated Old Notes and $100.6 million
gross proceeds of Senior Old Discount Notes ($169 million aggregate principal
amount at maturity). Additionally, the Recapitalization included net
distributions to owners of $409.3 million and debt issuance costs of $30.9
million. See 'Description of the New Credit Facility.'
At March 29, 1998, the Company's outstanding indebtedness was $743.8
million. The Company's debt service obligations could have important
consequences to holders of the Notes. See 'Risk Factors--Substantial Leverage',
'Risk Factors--Ability to Service Debt' and 'Risk Factors--Holding Company
Structure; Structural Subordination of Senior Discount Exchange Notes.'
During 1998, the Company expects to incur capital expenditures of at least
$90 million, of which approximately $17.0 million will be related to maintaining
its plant and operations and $6.5 million will be related to a new MIS system in
North America. However, total capital expenditures for 1998 may be significantly
higher depending on the timing of growth related opportunities. The Company's
principal sources of cash to fund capital requirements will be net cash provided
by operating activities and borrowings under the New Credit Facility.
Under the New Credit Facility, the Operating Company is subject to
restrictions on the payment of dividends or other distributions to Holdings;
provided that, subject to certain limitations, the Operating Company may pay
dividends or other distributions to Holdings (i) in respect of overhead, tax
liabilities, legal, accounting and other professional fees and expenses, (ii) to
fund purchases and redemptions of equity interests of Holdings or Investor LP
held by then present or former officers or employees of Holdings, the Operating
Company or their Subsidiaries (as defined) or by any employee stock ownership
plan upon such person's death, disability, retirement or termination of
employment or other circumstances with certain annual dollar limitations and
(iii) to finance, starting on July 15, 2003, the payment of cash interest
payments on the Senior Discount Notes.
The Company does not pay U.S. federal income taxes under the provisions of
the Internal Revenue Code, as the applicable income or loss is included in the
tax returns of the partners. The Company makes tax distributions to its partners
to reimburse them for such tax obligations. The Company's foreign operations are
subject to tax in their local jurisdictions. Most of these entities have
historically incurred net operating losses.
NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ('Statement 131'). Statement 131 establishes
standards for the way that public business enterprises report selected
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. Statement 131
is effective for financial statements for fiscal years beginning after December
15, 1997, and therefore, the Company will adopt the new requirements in 1998,
which will require retroactive disclosure. Management has not completed its
review of Statement 131 and has not determined the impact adoption will have on
the Company's financial statement disclosures.
In March 1998, the AICPA issued SOP 98-1, Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use. The SOP is
effective for the Company on January 1, 1999. The SOP will require the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal use. The Company
currently capitalizes certain external costs and expenses all other costs as
incurred. The Company has not yet assessed what the impact of the SOP will be on
the Company's future earnings or financial position.
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions
and Other Post-Retirement Benefits. This standard revises employers' disclosures
about pensions and other post-retirement plans, but does not change the
measurement or recognition of those plans. This standard will be effective for
the Company's financial statements for the year ended December 31, 1998.
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BUSINESS
GENERAL
Graham Packaging Company is a worldwide leader in the design and
manufacture of customized blow-molded rigid plastic bottles for many of the
world's largest branded consumer products companies for whom customized
packaging design is a critical component in their efforts to differentiate their
products to the consumer. The Company's products are made primarily from HDPE
and PET resins for customers in the (i) automotive, (ii) food and beverage and
(iii) household cleaning and personal care products businesses. With leading
positions in each of its businesses, the Company has been a major beneficiary of
the trend of conversion from glass, paper and metal containers to plastic
packaging and has grown its net sales over the past 15 years at a 24% CAGR. In
contrast to the carbonated soft drink bottle business, the businesses in which
the Company operates are characterized by more specialized technology, a greater
degree of customized packaging, shorter production runs, higher growth rates and
more attractive profit margins.
In order to position itself to further capitalize on the conversion trend,
the Company has made substantial capital expenditures since 1992, particularly
in the fast growing hot-fill PET area for shelf-stable (i.e., unrefrigerated)
beverages. In addition, the Company has distinguished itself as the leader in
locating its manufacturing plants on-site at its customers' packaging facilities
and has over one-third of its 41 facilities at on-site locations. The many
benefits of on-site plants, in addition to the Company's track record of
innovative design, superior customer service and low cost manufacturing
processes, help account for the fact that the Company has not lost a major
customer in the last three years. For the year ended December 31, 1997,
approximately 77% of the Company's net sales were generated by its top 20
customers, approximately 60% of which were under long-term contracts (i.e., with
terms of between one and ten years) and the remainder of which were customers
with whom the Company has been doing business for over 10 years on average. For
the year ended December 31, 1997, the Company generated net sales and EBITDA of
$521.7 million and $89.8 million, respectively, and for the three months ended
March 29, 1998, the Company generated net sales and EBITDA of $134.4 million and
$25.3 million, respectively.
Automotive. The Company is the preeminent supplier of one quart HDPE motor
oil containers in the United States, producing over 1.5 billion units in 1997,
which Management believes represents 73% of the one quart motor oil containers
produced domestically. The Company is a supplier of such containers to many of
the top domestic producers of motor oil, including Amoco, Ashland, Castrol,
Chevron, Pennzoil, Shell Oil, Sun Company and Texaco, and is the sole supplier
of one quart motor oil containers to five of these producers. The Company also
manufactures containers for other automotive products, such as antifreeze and
automatic transmission fluid. Capitalizing on its leading position in the U.S.,
the Company is expanding its operations in Latin America. In Brazil, where
Management believes that the Company is among the largest independent suppliers
of plastic packaging for motor oil, the Company currently operates four plants
and recently signed an agreement to operate one additional plant. In addition to
benefitting from the conversion to plastic packaging for motor oil in Latin
America, Management believes that the Company will benefit from the general
growth in the automotive business in this region as the number of motor vehicles
per person increases. In 1994, the ratio of passenger cars to people was 1 to
13.2 in Brazil, while in the U.S. the ratio was 1 to 1.8. For the year ended
December 31, 1997 and the three months ended March 29, 1998, the Company
generated approximately 37.6% and 33.5%, respectively, of its net sales from the
automotive container business.
Food & Beverage. In the food and beverage business, the Company produces
both HDPE and PET containers for customers for whom customized packaging design
is a critical component of their efforts to differentiate their products to the
consumer. From 1992 through December 31, 1997, the Company grew its food and
beverage business at a CAGR of 67%. This substantial growth has been driven by
the rapid conversion of metal, glass and paper containers to plastic bottles, as
the superior functionality, safety and improving economics of plastic became
more apparent. The Company is a leader in the production of HDPE containers for
non-carbonated chilled juice and juice drinks and certain liquid foods that
utilize HDPE resins. From 1992 through December 31, 1997, the Company invested
over $99 million in capital expenditures to build a strategic nationwide plant
network and to develop the specialized bottle manufacturing processes necessary
to produce the PET bottles required for the hot-fill packaging of shelf-stable
juices and juice drinks. The hot-fill process, in which bottles are filled at
between 180 degrees -190 degrees Fahrenheit to kill bacteria, permits the
shipment and
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display of juices and juice drinks in a shelf-stable state. The manufacturing
process for hot-fill PET packaging is significantly more demanding than that
used for cold-fill carbonated soft drink containers, and typically involves
shorter production runs, greater shape complexity and close production
integration with customers. Industry sources forecast that the hot-fill PET
juice and juice drink container business, upon which the Company focuses, will
enjoy a CAGR of over 40% between 1996 and 2000. The Company's largest customers
in the food and beverage business include Danone, Hershey's, Minute Maid,
Nestle's, Ocean Spray, Seneca, Tree Top, Tropicana and Welch's. For the year
ended December 31, 1997 and the three months ended March 29, 1998, the Company
generated approximately 28.9% and 34.2%, respectively, of its net sales from the
food and beverage business.
Household Cleaning & Personal Care. The Company is a leading supplier of
HDPE custom bottles to the North American HC/PC products business which includes
products such as shampoo, liquid laundry detergent, tub and tile cleaner and
dishwashing liquid. By focusing on its customized product design capability, the
Company provides its HC/PC customers with a key component in their efforts to
differentiate products on store shelves. The Company's largest customers in this
sector include Clorox, Colgate-Palmolive, Dial, J&J, L'Oreal, Procter & Gamble
and Unilever. The Company is pursuing significant growth opportunities both
domestically and internationally associated with the continued conversion to
HDPE packaging of both household cleaners and personal care products. The
Company continues to benefit as liquid laundry detergents, which are packaged in
plastic containers, capture an increased share from powdered detergents, which
are predominantly packaged in cardboard. For the year ended December 31, 1997
and the three months ended March 29, 1998, the Company generated approximately
33.5% and 32.3%, respectively, of its net sales from the HC/PC business.
COMPANY STRENGTHS
Management believes that the Company has the following key competitive
strengths:
Strong Relationships and Long-term Contracts with Diversified Blue Chip
Customer Base. The Company has enjoyed long-standing relationships averaging 16
years with its top twenty customers, which generated 77% of the Company's net
sales in 1997. These customers include many of the world's leading branded
consumer product companies and motor oil companies. Management attributes these
close relationships to the Company's creative design and engineering
capabilities, high level of customer service, high quality products, efficient
manufacturing, reliable delivery, speed to market and experienced and stable
management team and workforce. The Company supplies several of these customers
with 100% of their plastic packaging needs nationally, regionally or for a
specific brand, including Valvoline motor oil, Tropicana orange juice, Cascade
dishwashing gel and Purex laundry detergent. As another example of customer
loyalty, substantially all contracts which have come up for renewal in the last
three fiscal years have been extended.
Premier Custom Package Designer. The Company has centered its growth
strategy upon customers that require custom, as opposed to stock, plastic
containers as a critical component of their marketing efforts. The production of
custom containers involves a high degree of design, engineering and
manufacturing complexity in terms of bottle shapes, production tolerance and
performance requirements. The Company's ability to design and manufacture highly
customized packaging has enabled it to secure long-term contractual commitments
and to continue to enjoy a history of stable and steadily increasing orders from
its top customers at attractive profit margins. Management intends to apply this
core custom manufacturing capability in growth businesses, such as hot-fill PET
packaging, that require the same degree of customization and manufacturing
expertise as the Company's existing HDPE packaging business.
On-Site Facilities. More than one-third of the Company's 41 plants are
located on-site at its customers' plants, which is substantially greater than
any of its competitors. On-site plants enable the Company to work more closely
with its customers, facilitating just-in-time inventory management, generating
significant savings opportunities through process re-engineering, eliminating
costly shipping and handling charges, reducing working capital needs, and
fostering the development of long-term customer relationships. The benefits of
on-site manufacturing result in increased profitability for both the Company and
its customers, and partially account for the fact that the Company has never
lost an on-site relationship.
Leading Positions. The Company is the preeminent domestic supplier of motor
oil containers, with what Management believes to be an approximate 73% share of
the domestic one quart motor oil container business. The Company has become a
leading manufacturer of hot-fill PET containers for juice and juice drinks in
North
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America after only approximately five years in the business and is also a
leading supplier in North America of custom HDPE containers for juice and juice
drinks and HDPE custom plastic bottles in the HC/PC business.
Strong Industry Fundamentals and Growth Prospects. Management believes that
the businesses in which the Company operates exhibit strong fundamental
characteristics and growth prospects, including the following:
o Plastic Conversion Trend. Industry analysts project the domestic
hot-fill PET container business for juice, juice drinks, teas and
isotonics will grow at a CAGR of approximately 30% over the next several
years, driven by the continuing trend of converting glass, metal and
paper packaging to plastic containers, and that the hot-fill PET
container business for juice and juice drinks, where the Company's
beverage business is primarily focused, will grow at a CAGR of over 40%
for the next several years. To date, 78% of the domestic juice, juice
drinks, teas and isotonics business has yet to convert to plastics,
while in juice and juice drinks, 86% of the business has yet to convert.
Unlike the carbonated soft drink ('CSD') business, which is currently
characterized by standardized packaging, long production runs,
overcapacity and lower profit margins, the HDPE and hot-fill PET
container businesses require a high degree of customization, shorter
production runs, are expanding rapidly and enjoy higher profit margins.
Conversions to plastics in Latin America and Eastern Europe are
continuing as plastic penetration in these countries is considerably
less advanced than it is in the United States, where the conversion of
motor oil cans to plastic containers is nearly complete. Due to its
leading position in the HDPE and hot-fill PET packaging businesses,
Management believes it is well positioned to capture the continued
conversions to plastics in its business.
o Non-Cyclical End Use Products. Management believes that demand for the
products packaged in containers produced by the Company (such as motor
oil, juices, laundry detergents and shampoos, among others) is not
significantly affected by downturns in the general economy.
o Stable Customer Relationships. Management believes that the custom
plastic packaging industry is characterized by long-term relationships
between packaging manufacturers and their customers due to (i) the need
for joint package design between manufacturer and customer, (ii) the
integrated nature of package manufacturing and customers' filling
processes and (iii) the fact that the blow molds used by packaging
manufacturers are created specifically for and are typically funded by
the customer and, in many cases, can only be utilized on the machine for
which they were designed. Because of the expense and lead time
associated with the above, Management believes that many plastic
packaging customers have an incentive to retain their primary packaging
provider.
o Attractive Margin Products. The custom plastic packaging business has
been characterized by attractive profit margins, in comparison to the
business for stock containers, as a result of the design and engineering
complexity of bottle shapes (e.g., handles, view stripes, pouring
features and customized labeling) and the performance and material
requirements (e.g., hot-fill capability, recycled material usage,
multiple layering and flavor and oxygen barriers) for such products.
Management believes that the plastic packaging industry will continue to
offer attractive margins.
Significant Investment in Manufacturing Systems. Management believes that
the Company's investment in its manufacturing systems throughout its 28 U.S.
plants and 13 international plants provides it with a competitive advantage.
Between 1992 and 1997, the Company invested approximately $64 million to
maintain its asset base, approximately $200 million to improve the efficiency of
its existing operations and expand capacity and approximately $53 million to
acquire several businesses in its effort to diversify globally. From 1992
through December 31, 1997, the Company made capital expenditures of over $99
million relating to the hot-fill PET business. Management anticipates achieving
higher EBITDA margins in the next few years in the hot-fill PET business through
the leveraging of this investment, as fixed manufacturing and SG&A costs are
absorbed by higher sales. As a result of the Company's on-site strategy and
long-term contractual relationships, capital expenditures are typically
associated directly with specific contracts with customers, which allows
Management to more effectively allocate its investment capital.
Favorable Supplier Relationships. HDPE and PET resins are the principal raw
materials used to manufacture the Company's products. Because the Company is
among the largest purchasers of bottle-grade HDPE resins for blow molding in the
world, it is able to secure advantageous supply arrangements. In addition,
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the Company has limited its exposure to fluctuations in the price of these raw
materials because it can pass through price adjustments to its customers due to
contractual provisions and standard industry practice. See '--Raw Materials'
herein.
Experienced Management Team. The Company is led by an experienced team of
senior managers with a track record of achieving profitable growth, maintaining
the Company's blue chip customer base, introducing differentiated product
designs and entering new businesses. The Company's top 20 managers average over
15 years of work experience in the packaging industry and 13 years at the
Company. Following the Recapitalization, the Company's senior managers own an
equity investment in Investor LP (the entity through which Blackstone holds its
interest in Holdings), that approximates a 2.6% indirect equity interest in
Holdings, and will be awarded options, subject to certain performance based and
other vesting provisions, representing an additional equity interest in
Holdings. In addition, the Continuing Graham Partners retained a 1% general
partnership interest and 14% limited partnership interest in Holdings, which
were valued at $36.7 million at the consummation of the Recapitalization. See
'The Recapitalization,' 'Management,' 'Security Ownership' and
'Management--Management Option Plan.'
BUSINESS STRATEGY
The Company's objective is to capitalize on its position as a leading
custom blow molded plastic container supplier. The Company seeks to achieve this
objective by pursuing the following strategies:
Capitalize on Conversion to Plastic Containers. The Company intends to grow
both domestically and internationally by continuing to capitalize on the
industry trend toward the conversion from glass, metal and paper to plastic
containers, which Management believes is being driven by consumer demand, price
competitiveness and superior functionality. As one of the leading domestic
suppliers of hot-fill PET containers, the Company is poised to take advantage of
the rapid conversion from glass to plastic in the juice and juice drink
business, 86% of which has not yet been converted. In addition to opportunities
in the domestic hot-fill PET arena, Management believes that additional
conversions to HDPE packaging will occur in areas such as frozen juice
concentrate (currently packaged entirely in metal and cardboard containers), 64
ounce juices (a large portion of which is currently packaged in cardboard
containers) and motor oil (particularly in Latin America).
Maintain and Expand Position with Key Customers. The Company plans to
maintain and expand its position with global branded consumer products companies
that require highly customized features to differentiate their products on store
shelves. Central to this strategy are the continued (i) delivery of superior
customer service, (ii) location of facilities on-site, (iii) innovation in
packaging design, (iv) operation through long-term contracts and (v) provision
of low cost manufacturing processes.
Pursue Acquisitions and Strategic Joint Ventures. Management believes that
there are major synergistic acquisition and joint venture opportunities across
the Company's businesses, and, on an opportunistic basis, intends to pursue them
(i) to complement its existing businesses through product line expansion, (ii)
to strengthen its competitive position as a domestic leader and (iii) to
facilitate the penetration of new and developing business areas and geographic
territories. Furthermore, Management believes that it can improve the
profitability of acquired entities through economies of scale, by leveraging the
Company's existing strengths and by expanding the acquired entities' access to
international markets through the Company's existing international presence.
Capture Global Growth Opportunities with Improved Profitability. Since
1992, the Company has expanded globally both through acquisitions and by
accompanying its existing customers into new territories. Following the
Company's entrance into Western Europe, as well as its subsequent expansion into
Brazil, Canada and Poland, the Company's international operations have grown
substantially to 21.2% of net sales for the year ended December 31, 1997 and
21.7% for the three months ended March 29, 1998. Management believes that the
global trend in the conversion to plastic packaging will continue, particularly
in the developing world as consumer economies expand and industrialization
continues. Currently, profitability levels from international operations are
lower than in the U.S., and Management intends to improve these margins,
particularly in France.
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INDUSTRY OVERVIEW
Based on industry estimates for 1997, the estimated $72 billion domestic
packaging industry is comprised of paper (corrugated and folding) (38%),
flexible packaging (23%), metal cans (17%), plastic bottles (10%), glass
containers (6%) and closures (6%). Within the global rigid packaging business,
the Company competes exclusively in selected niches as described below.
Automotive. Management estimates that the domestic business for motor oil
that is packaged in one quart containers approximates two billion quarts per
year. The domestic business is converted to plastic and entirely customized,
which represents a dramatic shift from the early 1980's when the domestic
business consisted exclusively of non-custom composite cans. Management expects
1-2% unit volume declines per year in the U.S. motor oil container sector over
the next five years as new automobiles require less frequent motor oil changes
and retail automotive fast lubrication and fluid maintenance service centers
(such as Jiffy-Lube service centers) continue to grow in popularity. Management
believes that the increase in the use of plastic packaging for motor oil
internationally is attributable to the continued conversion from composite and
metal cans to customized plastic containers and the increase in the purchase of
motor vehicles as these countries continue to industrialize. In 1994, the ratio
of automobiles to individuals was approximately 1 to 13.2 in Brazil, whereas
that same ratio in the U.S. was approximately 1 to 1.8. In addition, the
international business is more fragmented with a limited number of sizable
competitors and many small, local suppliers.
Food & Beverage. The domestic food and beverage packaging business is
estimated to be 200 billion units per year and largely consists of plastic,
glass, metal and rigid paper containers. The Company focuses primarily on
subsets of the juice and juice drink non-carbonated beverage container industry,
which consist of (i) shelf-stable juices and juice drinks, (ii) chilled juices,
(iii) frozen juice concentrate, (iv) teas and (v) isotonics. Based on 1996
industry data, the aggregate size of these subsets is estimated to be
approximately 20.0 billion units per year with approximately 16% plastic
penetration. This business is comparatively fragmented and service-oriented with
multiple food and beverage companies that require value-added services and
customized packaging from their container manufacturers.
Hot-fill PET packaging for non-carbonated juices and juice drinks
approximates 1.0 billion units and is expected to grow at a CAGR of over 40%
from 1996 to 2000 due primarily to the conversion to plastics. The conversion
trend in the food and beverage sector is driven by price, functionality and
greater consumer satisfaction with plastic bottles due to several factors,
including their lighter weight, lower susceptibility to breakage (in comparison
to glass containers), custom designed spouts and built-in handles, lower
manufacturing costs (except for some single-serve applications) and superior
presentation on store shelves (which many branded consumer products companies
believe afford greater product differentiation). Penetration of PET hot-fill
containers in the non-carbonated juice and juice drink business is forecasted to
continue to grow from its current level of 14% today to approximately 44% by the
year 2000, driven largely by consumer demand for the superior functionality and
safety of plastic, a declining cost differential between plastic and glass
containers and improved manufacturing technology which enables the
cost-efficient manufacture of hot-fill PET bottles in single-serve sizes.
Household Cleaning & Personal Care. The domestic HC/PC business
approximates 5.0 billion units per year, approximately 38% of which represents
personal care products and 62% represents household products. In the United
States, the HC/PC packaging business is forecasted to grow moderately. In
selected segments, such as laundry detergents, where conversion to plastic
containers is at an earlier stage, higher growth rates have been achieved
historically. As a percentage of the total laundry detergent business, liquid
laundry detergents, which utilize plastic packaging, have grown from
approximately 38% of the business in 1992 to 52% of the business in 1996,
representing a CAGR of 5.6%. In the developing world, the packaging of HC/PC
products is expected to grow due to the expansion of consumer economies, the
entrance of global branded consumer products companies (and their new product
introductions) and the continued conversion to plastic from paper or glass.
PRODUCTS
The Company currently designs, manufactures and sells customized HDPE and
PET blow-molded rigid plastic bottles, thermo-formed rigid plastic containers
and injection molded caps and spouts, primarily for the automotive, food and
beverage and HC/PC products businesses. The Company's custom packaging involves
a
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high degree of design and engineering to accommodate complex bottle shapes
(e.g., handles, view stripes, pouring features and customized labeling) and
performance and material requirements (e.g., hot-fill capability, recycled
material usage and multiple layering).
HDPE containers, which are non-transparent, are utilized to package
products such as motor oil, laundry detergents, dishwashing liquids, personal
care products, certain food products, chilled juices and juice drinks. The
Company's HDPE containers are designed with custom features, such as specially
designed shapes, handles and pouring spouts which differentiate customers'
products to consumers and which may consist of a single layer of plastic or
multiple layers for specialized uses. Customers request multi-layer containers
for a variety of reasons, including the increased differentiation of the
packaging (such as oxygen barrier layering properties), the desire to include
recycled materials in the product's packaging and the reduction of cost by
limiting the use of colorants to a single exterior layer. The Company operates
one of the largest HDPE recycling plants in North America and more than 60% of
its HDPE packaging products contain recycled HDPE bottles.
PET containers, which are transparent, are utilized for products where
glass-like clarity is valued and that require shelf stability, such as
carbonated soft drinks, juice, juice drinks, isotonics and teas. CSD producers
are the largest users of PET containers, and the cold-fill manufacturing process
used for this application is characterized by long production runs and
standardized technology due to a low degree of product differentiation through
package design. By contrast, the hot-fill manufacturing process used for the
Company's products is characterized by shorter production runs, high
customization to facilitate greater packaging differentiation and the ability to
withstand the high temperatures under which the containers are filled.
The Company's net sales for the year ended December 31, 1992, for the year
ended December 31, 1997 and for the three months ended March 29, 1998 in each of
its three largest businesses are set forth below.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1992 DECEMBER 31, 1997 MARCH 29, 1998
------------------------------ ------------------------------ ------------------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
BUSINESS NET SALES NET SALES NET SALES NET SALES NET SALES NET SALES
- ----------------------------- ------------- ------------- ------------- ------------- ------------- -------------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Automotive................... $ 185.9 67.9% $ 196.4 37.6% $ 45.0 33.5%
Food & Beverage.............. 11.6 4.2 150.6 28.9 46.0 34.2
Household Cleaning & Personal
Care....................... 76.3 27.9 174.7 33.5 43.4 32.3
--------- ------ ------- ------ ------- ------
Total...................... $ 273.8 100.0% $ 521.7 100.0% $ 134.4 100.0%
========= ====== ======= ====== ======= ======
</TABLE>
CUSTOMERS
Substantially all of the Company's sales are made to major branded consumer
products companies and oil companies located across the United States and in
foreign countries. The Company's customers demand a high degree of packaging
design and engineering to accommodate complex bottle shapes, performance
requirements, materials, speed to market and reliable delivery. As a result,
many customers opt for long-term contracts, many of which have terms of one to
ten years. Fourteen of the Company's top 20 customers are under long-term
contracts. The Company's contracts typically contain provisions allowing for
price adjustments based on the market price of resins and colorants, energy and
labor costs, among others, and contain, in certain cases, the Company's right of
first refusal to meet a competing third party bid to supply the customer.
In many cases, the Company is the sole supplier of all of its customer's
custom plastic bottle requirements nationally, regionally or for a specific
brand. For the year ended December 31, 1997 and the three months ended March 29,
1998, the Company had only one customer (Unilever) that accounted for over 10%
of the Company's total net sales (13.8% for each period). For the year ended
December 31, 1997 and the three months ended
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March 29, 1998, the Company's twenty largest customers, who accounted for
approximately 77% and 78% of net sales for these periods, respectively, were, in
alphabetical order:
<TABLE>
<CAPTION>
CUSTOMER(1) BUSINESS COMPANY CUSTOMER SINCE(1)
- --------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Ashland(2) Automotive Early 1970's
Castrol Automotive Late 1960's
Chevron Automotive Early 1970's
Clement Pappas Food & Beverage Mid 1990's
Colgate-Palmolive HC/PC Mid 1980's
Danone Food & Beverage Before 1980
Dial HC/PC Early 1990's
Hershey's Food & Beverage Mid 1980's
Ocean Spray Food & Beverage Early 1990's
Pennzoil Automotive Early 1970's
Petrobras Distribuidora S.A. Automotive Early 1990's
Procter & Gamble HC/PC Early 1980's
Quaker State Automotive Early 1970's
Shell Oil Automotive Early 1970's
Sun Company Automotive Early 1960's
Texaco Automotive Early 1970's
Tree Top Food & Beverage Early 1990's
Tropicana Food & Beverage Mid 1980's
Unilever HC/PC, Food & Beverage Early 1970's
Welch's Food & Beverage Early 1990's
</TABLE>
- ------------------
(1) These companies include their predecessors, if applicable, and the dates may
reflect customer relationships initiated by predecessors to the Company or
entities acquired by the Company.
(2) Ashland is the producer of Valvoline motor oil.
FOREIGN OPERATIONS
The Company has significant operations outside the United States in the
form of wholly owned subsidiaries, cooperative joint ventures and other
arrangements. The Company has 13 plants located in countries outside of the
United States, including Canada (4), Brazil (4), France (2), Italy (2) and
Poland (1), with two plants pending. For the year ended December 31, 1997 and
the three months ended March 29, 1998, the Company's operations outside of the
United States represented approximately 21.2% and 21.7%, respectively, of the
Company's net sales.
Brazil and Argentina. In Brazil, the Company operates three on-site
plants for motor oil packaging, including for Petrobras Distribuidora S.A.,
the national oil company of Brazil. The Company also operates an off-site
plant for its motor oil and agricultural and chemical businesses and has
entered into an agreement to operate one more plant. On April 30, 1997, the
Company acquired 80% of certain assets and assumed 80% of certain
liabilities of Rheem-Graham Embalagens Ltda. in Brazil. Graham Packaging do
Brasil Industriais e Commerciais S.A. ('Graham Packaging do Brazil') is the
current name of the Company's subsidiary in Brazil. In February 1998, the
Company acquired the residual 20% ownership interest in Graham Packaging do
Brazil. In Argentina, the Company formed a subsidiary, Lido-Plast Graham,
to enter into a joint venture and manufacturing agreement with Lido Plast
S.A. and Lido Plast San Luis S.A. (collectively, 'Lido Plast').
Western Europe. The Company operates four off-site plants in France
and Italy for the production of liquid food HDPE containers, HC/PC,
automotive and agricultural chemical products. Under its long-term contract
with Danone, the Company manufactures a substantial portion of the plastic
containers for drinkable yogurt in France. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'
Poland. Through Masko-Graham, a 50% owned joint venture in Poland, the
Company manufactures HDPE bottles for HC/PC and the liquid food products.
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COMPETITION
The Company faces substantial competition across its product lines from a
number of well-established businesses operating both regionally and
internationally. The Company's primary competitors include Owens-Brockway (a
wholly owned subsidiary of Owens-Illinois, Inc.), Ball Corporation, Crown Cork &
Seal Company, Inc., Plastic Containers, Inc. (a wholly owned subsidiary of
Continental Can, Inc., which agreed on or about January 15, 1998 to be sold to
Suiza Foods Corporation), Plastipak, Inc., Silgan Holdings Inc. (successor to
Silgan Corporation), Schmalbach-Lubeca Plastic Containers USA Inc., American
National Can, Inc. and Alpla Werke Alwin Lehner Gmbh. Several of these
competitors are larger and have greater financial and other resources than the
Company. Management believes that the Company's long-term success is largely
dependent on its ability to provide superior levels of service, its speed to
market and its ability to develop product innovations and improve its production
technology and expertise through its applied research and development
capability. Other important competitive factors include rapid delivery of
products, production quality and price.
MARKETING AND DISTRIBUTION
The Company's sales are made through its own direct sales force; agents or
brokers are not utilized to conduct sales activities with customers or potential
customers. Sales activities are conducted from the Company's corporate
headquarters in York, Pennsylvania and from field sales offices located in
Houston, Texas, Cincinnati, Ohio, Bristol, Pennsylvania, Burlington, Ontario,
Montreal, Quebec, Paris, France, Buenos Aires, Argentina, Rio de Janeiro and Sao
Paulo, Brazil, Milan, Italy and Sulejowek, Poland. The Company's products are
typically delivered by truck, on a daily basis, in order to meet its customers'
just-in-time delivery requirements, except in the case of on-site operations. In
many cases, the Company's on-site operations are integrated with their
customers' manufacturing operations so that deliveries are made, as needed, by
direct conveyance to the customers' fill lines.
RESEARCH AND DEVELOPMENT
Research and development constitutes an important part of the Company's
competitive advantage both in the design, development and enhancement of new
customized products and in the creation of manufacturing technologies to improve
production efficiency. The Company is actively involved with its customers in
the design and introduction of new packaging features, including the design of
special wheel molds. In general, wheel molds are only able to run on the
machines for which they are built, thus encouraging customers to retain the
Company as their primary packaging provider. Management believes that the
Company's development and research abilities, coupled with the support of Graham
Engineering in the design of blow molding wheels and recycling systems, has
positioned the Company as the packaging design and development leader in the
industry. Pursuant to the Equipment Sales Agreement, Graham Engineering will
continue to provide engineering, consulting and other services and sell to the
Company certain proprietary blow molding wheels. Over the past several years,
the Company has received 28 patents and has filed for 42 additional patents.
During the year ended December 31, 1997, the Company designed over 200 new
custom containers and molds. See 'The Recapitalization,' 'Certain Relationships
and Related Party Transactions--Certain Business Relationships-- Equipment Sales
Agreement' and '--Intellectual Property' herein.
MANUFACTURING
A critical component of the Company's strategy is to locate its
manufacturing plants on-site, at its largest customers' manufacturing
operations, to provide the highest possible servicing levels, to reduce
expensive shipping and handling charges and to heighten production and
distribution efficiencies. The Company is the industry leader in on-site
manufacturing arrangements, with over a third of its 41 facilities on-site at
customers' facilities, substantially more than its competitors. See
'--Facilities' herein. Within its 41 plants, the Company runs over 300
production lines. As necessary, the Company dedicates particular production
lines within a plant to better service its customers. The Company's plants
generally operate 24 hours a day, five days a week, although not every
production line is run constantly. When customer demand requires, the Company
runs its plants seven days a week.
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In the blow molding process used for HDPE applications, resin pellets are
blended with colorants or other necessary additives and fed into the extrusion
machine, which uses heat and pressure to form the resin into a round hollow tube
of molten plastic called a parison. Bottle molds mounted radially on a wheel
capture the parisons as they leave the extruder. Once inside the mold, air
pressure is used to blow the parison into the bottle shape of the mold. In the
1970's, the Company developed and introduced the Graham Wheel. The Graham Wheel
is a single parison, electro-mechanical rotary blow molding technology designed
for its speed, reliability and ability to use virgin resins, high barrier resins
and recycled resins simultaneously without difficulty. The Company has achieved
very low production costs, particularly in plants housing Graham Wheels. While
certain of the Company's competitors also use wheel technology in their
production lines, the Company has developed a number of proprietary improvements
which Management believes permit the Company's wheels to operate at higher
speeds and with greater efficiency in the manufacture of containers with one or
more special features, such as multiple layers and in-mold labeling.
In the stretch blow molding process used for hot-fill PET applications,
resin pellets are fed into a Husky injection molding machine that uses heat and
pressure to mold a test tube shaped parison or 'preform.' The preform is then
fed into the Sidel blow molder where it is re-heated to allow it to be formed
through a stretch blow molding process into a final container. During this
re-heat and blow process, special steps are taken to induce the temperature
resistance needed to withstand high temperatures on customer filling lines.
Management believes that the Husky injection molders and Sidel blow molders used
by the Company are widely recognized as the leading technologies for high speed
production of hot-fill PET containers and have replaced less competitive
technologies used initially in the manufacture of hot-fill PET containers.
Management believes that equipment for the production of cold-fill containers
can be refitted to accommodate the production of hot-fill containers. However,
such refitting has only been accomplished at a substantial cost and has proven
to be substantially less efficient than the Company's equipment for producing
hot-fill PET containers.
The Company maintains a program of quality control with respect to
suppliers, line performance and packaging integrity for its containers. The
Company's production lines are equipped with automatic inspection machines that
electronically inspect containers for dimensional conformity, flaws and various
other performance requirements. Additionally, product samples are inspected and
tested by Company employees on the production line for proper dimensions and
performance and are also inspected and audited after packaging. Containers that
do not meet quality standards are crushed and recycled as raw materials. The
Company monitors and updates its inspection programs to keep pace with modern
technologies and customer demands. Laboratories are maintained at each
manufacturing facility to test characteristics of the products and compliance
with quality standards.
The Company has highly modernized equipment in all plants, consisting
primarily of the proprietary rotational wheel systems sold to the Company by
Graham Engineering and shuttle systems, both of which are used for HDPE blow
molding systems, and Husky/Sidel heat-set stretch blow molding systems for
custom hot-fill juice bottles. The Company is also pursuing research and
development initiatives in barrier and aseptic technologies to strengthen its
position in the food and beverage business. In the past, the Company has
achieved substantial cost savings in its manufacturing process by productivity
and process enhancements, including increasing line speeds, utilizing recycled
products, reducing scrap and optimizing plastic volume requirements for each
product's specifications. Management estimates that the Company's operating
efficiencies are among the highest in the industry.
Management believes that capital investment to maintain and upgrade
property, plant and equipment is important to remain competitive. Total capital
expenditures for 1995, 1996 and 1997 were approximately $68.6 million, $31.3
million and $53.2 million, respectively. Management estimates that the annual
capital expenditure required to maintain the Company's current facilities will
be approximately $20 million per year, and additional capital expenditures
beyond this amount will be required to expand capacity.
RAW MATERIALS
HDPE and PET resins constitute the primary raw materials used to
manufacture the Company's products. These materials are available from a number
of suppliers, and the Company is not dependent upon any single supplier for any
of these materials. Based on the Company's experience, Management believes that
adequate quantities of these materials will be available to supply all of its
customers' needs, but there can be no assurance
61
<PAGE>
that they will continue to be available in adequate supply in the future. In
general, the Company's dollar gross profit is substantially unaffected by
fluctuations in resin prices because industry practice and the Company's
contractual arrangements with its customers permit changes in resin prices to be
passed through to customers by means of corresponding changes in product
pricing. In addition, the Company manages its inventory of HDPE and PET to
minimize its exposure to fluctuations in the price of these resins.
Through its wholly owned subsidiary, Graham Recycling Company ('Graham
Recycling'), the Company operates one of the largest HDPE bottle recycling
plants in North America, and more than 60% of its HDPE packaging products
contain recycled HDPE bottles. Management believes that the Company can extend
its recycling technology to take advantage of further opportunities in the HDPE
and PET businesses. The recycling plant is located at the Company's headquarters
in York, Pennsylvania.
FACILITIES
The Company currently owns or leases 41 plants located in the United
States, Canada, Brazil, France, Italy and Poland, not including the two Lido
Plast-Graham joint venture facilities which are wholly owned and operated by its
joint venture partner. At March 29, 1998, sixteen of the Company's packaging
plants were located on-site at customer plants. In addition, the Company
operates one plant in Poland pursuant to a joint venture arrangement where the
Company owns a 50% interest. The Company is currently planning to bring two new
plants into production in 1998. The Company's corporate headquarters are in
multiple facilities located in York, Pennsylvania, totalling approximately
45,000 square feet. The Company believes that its plants, which are of varying
ages and types of construction, are in good condition, are suitable for the
Company's operations and generally provide sufficient capacity to meet the
Company's requirements for the foreseeable future.
The following table sets forth the location of the Company's plants and
administrative facilities, whether on-site or off-site, whether leased or owned,
and their approximate current square footage.
<TABLE>
<CAPTION>
ON SITE SIZE
LOCATION OR OFF SITE LEASED/OWNED (SQ. FT.)
- ---------------------------------------------------------------------- ----------- --------------- ---------
<S> <C> <C> <C>
U.S. Packaging Facilities
1. York, Pennsylvania*............................................... Off Site Owned 395,554
York, Pennsylvania(a)............................................. N/A Leased 45,000
2. Maryland Heights, Missouri........................................ Off Site Owned 308,961
3. Emigsville, Pennsylvania.......................................... Off Site Leased 148,300
4. Levittown, Pennsylvania........................................... Off Site Leased 148,000
5. Rancho Cucamonga, California...................................... Off Site Leased 143,063
6. Santa Ana, California............................................. Off Site Owned 127,680
7. Muskogee, Oklahoma................................................ Off Site Leased 125,000
8. Woodridge, Illinois............................................... Off Site Leased 124,137
9. Atlanta, Georgia.................................................. Off Site Leased 112,400
10. Cincinnati, Ohio.................................................. Off Site Leased 103,119
11. Berkeley, Missouri*............................................... Off Site Owned 75,000
12. Selah, Washington................................................. On Site Owned 70,000
13. Cambridge, Ohio................................................... On Site Leased 57,000
14. Shreveport, Louisiana............................................. On Site Leased 56,400
15. Whiting, Indiana.................................................. On Site Leased 56,000
16. Richmond, California.............................................. Off Site Leased 54,985
17. Houston, Texas.................................................... Off Site Owned 52,500
18. New Kensington, Pennsylvania...................................... On Site Leased 48,000
19. Bradford, Pennsylvania............................................ Off Site Leased 44,000
20. Port Allen, Louisiana............................................. On Site Leased 44,000
21. N. Charleston, South Carolina..................................... On Site Leased 40,000
22. Jefferson, Louisiana.............................................. On Site Leased 37,000
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
ON SITE SIZE
LOCATION OR OFF SITE LEASED/OWNED (SQ. FT.)
- ---------------------------------------------------------------------- ----------- --------------- ---------
<S> <C> <C> <C>
23. Vicksburg, Mississippi............................................ On Site Leased 31,200
24. Bordentown, New Jersey............................................ On Site Leased 30,000
25. Tulsa, Oklahoma................................................... On Site Leased 28,500
26. Wapato, Washington................................................ Off Site Leased 20,300
27. Bradenton, Florida................................................ On Site Leased 12,191
Canadian Packaging Facilities
28. Burlington, Ontario, Canada*...................................... Off Site Owned 145,200
Burlington, Ontario, Canada(a)*................................... N/A Owned 4,800
29. Mississauga, Ontario, Canada*..................................... Off Site Owned 78,416
30. Anjou, Quebec, Canada*............................................ Off Site Owned 44,875
31. Toronto, Ontario, Canada.......................................... On Site N/A 5,000
European Packaging Facilities
32. Assevent, France.................................................. Off Site Owned 186,470
33. Campochiaro, Italy................................................ Off Site Owned 93,200
34. Blyes, France..................................................... Off Site Owned 89,000
35. Sulejowek, Poland(b).............................................. Off Site Owned 82,700
36. Sovico (Milan), Italy............................................. Off Site Leased 74,500
Latin American Packaging Facilities
37. Sao Paulo, Brazil................................................. Off Site Leased 23,440
38. Rio de Janeiro, Brazil............................................ On Site Owned/Leased(c ) 20,000
Rio de Janeiro, Brazil(a)......................................... N/A Leased 1,650
39. Santos, Brazil.................................................... On Site Leased 5,400
40. Rio de Janeiro, Brazil............................................ On Site N/A 10,000
Graham Recycling
41. York, Pennsylvania*............................................... Off Site Owned 44,416
Graham Affiliated Packaging Facilities (Lido Plast-Graham--Joint
Venture)(d)
42. Buenos Aires, Argentina........................................... Off Site N/A N/A
43. San Luis, Argentina............................................... Off Site N/A N/A
</TABLE>
- ------------------
(a) This indicates an administrative facility.
(b) This facility is owned by the Masko-Graham Joint Venture, in which the
Company holds a 50% interest.
(c) The building is owned; land is leased.
(d) The Lido Plast-Graham facilities are owned and operated by the Company's
joint venture partner, Lido Plast, in which the Company does not own any
interest. See '--Foreign Operations.'
* Contributed to the Operating Company as part of the Graham Contribution.
With respect to the Berkeley, Missouri facility (Location 11 in the table
above), a manufacturing plant, warehouse and parcel of land, the latter two
of which are not listed in the table above, were contributed to the
Operating Company as part of the Graham Contribution.
EMPLOYEES
At March 29, 1998, the Company had approximately 2,937 employees, 1,826 of
which were located in the United States. Approximately 75% of the Company's
employees are hourly wage employees, 39% of whom are members of various labor
unions and are covered by collective bargaining agreements that expire between
May 1998 and April 2001. During the past three years, the Company's subsidiary
in France, Graham Packaging
63
<PAGE>
France, has experienced on several occasions labor stoppages, none of which
exceeded one day in duration. Management believes that it enjoys good relations
with the Company's employees.
ENVIRONMENTAL MATTERS
The Company and its operations, both in the U.S. and abroad, are subject to
national, state, provincial and/or local laws and regulations that impose
limitations and prohibitions on the discharge and emission of, and establish
standards for the use, disposal, and management of, certain materials and waste,
and impose liability for the costs of investigating and cleaning up, and certain
damages resulting from, present and past spills, disposals, or other releases of
hazardous substances or materials (collectively, 'Environmental Laws').
Environmental Laws can be complex and may change often, capital and operating
expenses to comply can be significant, and violations may result in substantial
fines and penalties. In addition, Environmental Laws such as the Comprehensive
Environmental Response, Compensation and Liability Act ('CERCLA,' also known as
'Superfund'), in the United States, impose liability on several grounds for the
investigation and cleanup of contaminated soil, groundwater, and buildings, and
for damages to natural resources, at a wide range of properties: for example,
contamination at properties formerly owned or operated by the Company as well as
at properties the Company currently owns or operates, and properties to which
hazardous substances were sent by the Company, may result in liability for the
Company under Environmental Laws. The Company is not aware of any material
noncompliance with the Environmental Laws currently applicable to it and is not
the subject of any material claim for liability with respect to contamination at
any location. For its operations to comply with Environmental Laws, the Company
has incurred and will continue to incur costs, which were not material in fiscal
1997 and are not expected to be material in the future. See 'Risk
Factors--Environmental Matters.'
A number of governmental authorities both in the U.S. and abroad have
considered or are expected to consider legislation aimed at reducing the amount
of plastic wastes disposed of. Such programs have included, for example,
mandating certain rates of recycling and/or the use of recycled materials,
imposing deposits or taxes on plastic packaging material, and/or requiring
retailers or manufacturers to take back packaging used for their products. Such
legislation, as well as voluntary initiatives similarly aimed at reducing the
level of plastic wastes, could reduce the demand for certain plastic packaging,
result in greater costs for plastic packaging manufacturers, or otherwise impact
the Company's business. Some consumer products companies (including certain
customers of the Company) have responded to these governmental initiatives and
to perceived environmental concerns of consumers by, for example, using bottles
made in whole or in part of recycled plastic. The Company operates one of the
largest HDPE recycling plants in North America and more than 60% of its HDPE
packaging products contain recycled HDPE bottles. To date these initiatives and
developments have not materially and adversely affected the Company. See 'Risk
Factors--Environmental Matters.'
INTELLECTUAL PROPERTY
The Company owns approximately 16 unexpired U.S. patents and three
trademarks. Approximately 15 patent applications are currently pending at the
United States Patent and Trademark Office. In addition, twelve foreign patents
have been issued and 27 are pending. While a presumption of validity exists with
respect to issued U.S. patents, the Company cannot assure that any of its
patents will not be challenged, invalidated, circumvented or rendered
unenforceable. Furthermore, the Company cannot assure the issuance of any
pending patent application, or that if patents are issued, such patents will
provide meaningful protection against competitors or against competitive
technologies. While the Company holds the various patents and trademarks
summarized above, it believes that its business is not dependent upon any one of
such patents or trademarks. The Company also relies on unpatented proprietary
know-how and continuing technological innovation and other trade secrets to
develop and maintain its competitive position. There can be no assurance,
however, that others will not obtain knowledge of such proprietary know-how
through independent development or other access by legal means. In addition to
its own patents and proprietary know-how, the Company is a party to certain
licensing arrangements and other agreements authorizing the Company to use
certain other proprietary processes, know-how and related technology and/or to
operate within the scope of certain patents owned by other entities. The Company
also has licensed or sub-licensed certain intellectual property rights to third
parties.
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<PAGE>
LEGAL PROCEEDINGS
The Company is party to various litigation matters arising in the ordinary
course of business. The ultimate legal and financial liability of the Company
with respect to such litigation cannot be estimated with certainty, but
Management believes, based on its examination of such matters, experience to
date and discussions with counsel, that such ultimate liability will not be
material to the business, financial condition or results of operations of the
Company.
Holdings was sued in May 1995 for alleged patent infringement, trade secret
misappropriation and other related state law claims by Hoover Universal, Inc., a
subsidiary of Johnson Controls, Inc. ('JCI'), in the U.S. District Court for the
Central District of California, Case No. CV-95-3331 RAP (BQRx). JCI alleged that
the Company was misappropriating or threatened to misappropriate trade secrets
allegedly owned by JCI relating to the manufacture of hot-fill PET plastic
containers through the hiring of JCI employees, and alleged that the Company
infringed two patents owned by JCI by manufacturing hot-fill PET plastic
containers for several of its largest customers using a certain 'pinch grip'
structural design. In December 1995, JCI filed a second lawsuit alleging
infringement of two additional patents, which relate to a ring and base
structure for hot-fill PET plastic containers. The two suits have been
consolidated for all purposes. The Company has answered the complaints, denying
infringement and misappropriation in all respects and asserting various
defenses, including invalidity and unenforceability of the patents at issue
based upon inequitable conduct on the part of JCI in prosecuting the relevant
patent applications before the U.S. Patent Office and anticompetitive patent
misuse by JCI. The Company has also asserted counterclaims against JCI alleging
violations of federal antitrust law, based upon certain agreements regarding
market division allegedly entered into by JCI with another competitor and other
alleged conduct engaged in by JCI allegedly intended to raise prices and limit
competition. In March 1997, JCI's plastic container business was acquired by
Schmalbach-Lubeca Plastic Containers USA Inc. ('Schmalbach-Lubeca').
Schmalbach-Lubeca and certain affiliates were joined as successors to JCI and as
counter-claim defendants.
On March 10, 1998, the U.S. District Court in California entered summary
judgment in favor of JCI and against the Company regarding infringement of two
patents, but did not resolve certain issues related to the patents including
certain of the Company's defenses. On March 6, 1998, the Company also filed suit
against Schmalbach-Lubeca in Federal Court in Delaware for infringement of the
Company's patent concerning pinch grip bottle design. On April 24, 1998, the
parties to the litigation reached an understanding on the terms of a settlement
of all claims in all of the litigation with JCI and Schmalbach-Lubeca, subject
to agreement upon and execution of a formal settlement agreement. Management
believes that the amounts that will ultimately be paid in settlement, as well as
estimated litigation expenses and professional fees, will not differ materially
from the amounts accrued in Special Charges and Unusual Items in respect thereof
for the year ended December 31, 1997 and the March 29, 1998 unaudited condensed
consolidated financial statements. See Notes 13 and 17 to the Combined Financial
Statements of Graham Packaging Group as of and for the three years in the period
ended December 31, 1997 and Note 9 to the Condensed Financial Statements.
Nevertheless, if, for any reason, the terms of the settlement are materially
modified or the settlement agreement is not completed and the litigation is
continued, there can be no assurance that the result would not be a modification
of the settlement terms or an award of damages and/or injunctive relief against
the Company that would have a material adverse effect on the business, financial
condition, results of operations or cash flow of the Company.
65
<PAGE>
MANAGEMENT
ADVISORY COMMITTEE MEMBERS AND EXECUTIVE OFFICERS
The members of the Advisory Committee of Holdings and the executive
officers of the Operating Company since the Recapitalization and their
respective ages and positions are set forth in the table below. For a
description of the Advisory Committee, see 'The Partnership Agreements--Holdings
Partnership Agreement.'
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Donald C. Graham................................ 65 Chairman of the Advisory Committee of Holdings
William H. Kerlin, Jr. ......................... 47 Vice Chairman of the Advisory Committee of
Holdings
Philip R. Yates................................. 50 President and Chief Executive Officer of the
Operating Company
G. Robinson Beeson.............................. 49 Senior Vice President and General Manager,
Automotive of the Operating Company
Scott G. Booth.................................. 41 Senior Vice President and General Manager,
Household Cleaning and Personal Care of the
Operating Company
Roger M. Prevot................................. 39 Senior Vice President and General Manager, Food
and Beverage of the Operating Company
Geoffrey R. Lu.................................. 43 Vice President and General Manager, Latin
America of the Operating Company
Alex H. Everhart................................ 37 Senior Vice President and General Manager,
Europe of the Operating Company
John E. Hamilton................................ 39 Senior Vice President, Finance and
Administration of the Operating Company
Chinh E. Chu.................................... 31 Member of the Advisory Committee of Holdings
Howard A. Lipson................................ 34 Member of the Advisory Committee of Holdings
Simon P. Lonergan............................... 29 Member of the Advisory Committee of Holdings
</TABLE>
Donald C. Graham has served as Chairman of the Advisory Committee of
Holdings since the Recapitalization. From June 1993 to the Recapitalization, Mr.
Graham served as Chairman of the Board of Directors of the Company. Prior to
June 1993, Mr. Graham served as President of the Company.
William H. Kerlin, Jr. has served as Vice Chairman of the Advisory
Committee of Holdings since the Recapitalization. From October 1996 to the
Recapitalization, Mr. Kerlin served as Vice Chairman of the Board of Directors
and Chief Executive Officer of the Company. From 1994 to 1996, Mr. Kerlin served
as Vice President of the Company and Vice Chairman of the Company. Prior to
1994, Mr. Kerlin served as Secretary of the Company.
Philip R. Yates has served as President and Chief Executive Officer of the
Operating Company since the Recapitalization. Since the Recapitalization, Mr.
Yates has also served as President and Chief Executive Officer of Opco GP and of
various subsidiaries of the Operating Company or their general partner, as
President, Treasurer and Assistant Secretary of CapCo I and CapCo II, and as a
member of the Boards of Directors of CapCo I and CapCo II. From April 1995 to
the Recapitalization, Mr. Yates served as President and Chief Operating Officer
of the Company. From 1994 to 1995, Mr. Yates served as President of the Company.
Prior to 1994, Mr. Yates served in various management positions with the
Company.
G. Robinson Beeson has served as Senior Vice President or Vice President
and General Manager, Automotive of the Operating Company since the
Recapitalization. From July 1990 to the Recapitalization, Mr. Beeson served as
Vice President and General Manager, U.S. Automotive of the Company.
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<PAGE>
Scott G. Booth has served as Senior Vice President or Vice President and
General Manager, Household Cleaning and Personal Care of the Operating Company
since the Recapitalization. From July 1990 to the Recapitalization, Mr. Booth
served as Vice President and General Manager, U.S. Household Cleaning and
Personal Care of the Company.
Roger M. Prevot has served as Senior Vice President or Vice President and
General Manager, Food and Beverage of the Operating Company since the
Recapitalization. From July 1990 to the Recapitalization, Mr. Prevot served as
Vice President and General Manager, U.S. Food and Beverage of the Company. From
June 1991 to October 1994, Mr. Prevot also served as President and General
Manager of Graham Recycling.
Geoffrey R. Lu has served as Vice President and General Manager, Latin
America of the Operating Company since the Recapitalization. From May 1997 to
the Recapitalization, Mr. Lu served as Vice President and General Manager, Latin
America of the Company. From 1994 to 1997, Mr. Lu served as Director and General
Manager, Latin America of the Company. Prior to 1994, Mr. Lu served as Director,
Global Business Development of the Company.
Alex H. Everhart has served as Senior Vice President or Vice President and
General Manager, Europe of the Operating Company since the Recapitalization.
From November 1994 to the Recapitalization, Mr. Everhart served as Vice
President and General Manager, Canada of the Company. Prior to 1994, Mr.
Everhart served as Vice President, MIS of the Company.
John E. Hamilton has served as Senior Vice President, Finance and
Administration or Vice President, Finance and Administration of the Operating
Company since the Recapitalization. Since the Recapitalization, Mr. Hamilton has
also served as Vice President Finance and Administration, Treasurer and
Secretary of Opco GP and of various subsidiaries of the Operating Company or
their general partner, as Vice President, Secretary and Assistant Treasurer of
CapCo I and CapCo II, and as a member of the Boards of Directors of CapCo I and
CapCo II. From November 1992 to the Recapitalization, Mr. Hamilton served as
Vice President, Finance and Administration, North America of the Company. Prior
to 1992, Mr. Hamilton served in various management positions with the Company.
Chinh E. Chu is a Managing Director of The Blackstone Group L.P. which he
joined in 1990. Since the Recapitalization, Mr. Chu has served as Vice
President, Secretary and Assistant Treasurer of Investor LP and Investor GP, as
a Vice President of CapCo I and CapCo II and as a member of the Boards of
Directors of Investor LP, CapCo I and CapCo II. Prior to joining Blackstone, Mr.
Chu was a member of the Mergers and Acquisitions Group of Salomon Brothers Inc
from 1988 to 1990. He currently serves on the Boards of Directors of Prime
Succession Inc., Roses, Inc. and Haynes International, Inc.
Howard A. Lipson is Senior Managing Director of The Blackstone Group L.P.
which he joined in 1988. Since the Recapitalization, Mr. Lipson has served as
President, Treasurer and Assistant Secretary of Investor LP and Investor GP and
as a member of the Board of Directors of Investor LP. Prior to joining
Blackstone, Mr. Lipson was a member of the Mergers and Acquisitions Group of
Salomon Brothers Inc. He currently serves on the Boards of Directors of Allied
Waste Industries, Inc., Volume Services, Inc., AMF Group Inc., Ritvik Holdings
Inc., Prime Succession Inc. and Roses, Inc.
Simon P. Lonergan is an Associate of The Blackstone Group L.P. which he
joined in 1996. Since the Recapitalization, Mr. Lonergan has served as Vice
President, Assistant Secretary and Assistant Treasurer of Investor LP and
Investor GP, as a Vice President of CapCo I and CapCo II and as a member of the
Boards of Directors of Investor LP, CapCo I and CapCo II. Prior to joining
Blackstone, Mr. Lonergan was an Associate at Bain Capital, Inc. and a Consultant
at Bain and Co. He currently serves on the Board of Directors of CommNet
Cellular, Inc. and the Advisory Committee of InterMedia Partners VI.
The Boards of Directors of CapCo I and CapCo II are comprised of Philip R.
Yates, John E. Hamilton, Chinh E. Chu and Simon P. Lonergan. The Board of
Directors of Investor LP is comprised of Howard A. Lipson, Chinh E. Chu and
Simon P. Lonergan.
Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
such person was elected or appointed as a director or executive officer.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid to the Chief
Executive Officer and four other most highly compensated executive officers of
the Company (the 'Named Executive Officers') for the year ended December 31,
1997, and their respective titles at December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- AWARDS
OTHER ANNUAL --------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) EAUS(#)(3) COMPENSATION
- ---------------------------------------- ---- -------- -------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Kerlin, Jr.(4)
Chief Executive Officer............... 1997 $140,000 $ 70,000 $ 2,750 -- --
Philip R. Yates
President and Chief Operating
Officer, North America................ 1997 250,000 120,000 6,991 -- --
Jean F. Rubie(5)
President and Chief Operating
Officer, Europe....................... 1997 250,000 120,000 -- -- $330,000
Roger M. Prevot
Vice President and General
Manager, Food & Beverage.............. 1997 164,275 72,000 4,181 150 --
John E. Hamilton
Vice President, Finance and
Administration........................ 1997 133,300 60,000 9,514 100 --
</TABLE>
- ------------------
(1) Represents bonus accrued in 1996 and paid in 1997 under Company's annual
discretionary bonus plan.
(2) Represents contributions to the Company's 401(k) plan and amounts
attributable to both group term life insurance and personal use of company
automobiles.
(3) Represents the number (#) of equity appreciation units awarded under
Holdings' former equity appreciation plan (which was cancelled upon the
Closing). See '--EAU Grants in Last Fiscal Year' and '--Management Awards.'
(4) Mr. Kerlin, who is compensated solely by Graham Capital, provides services
to companies other than Holdings. Amounts set forth for Mr. Kerlin represent
the portion of Mr. Kerlin's compensation allocable to Holdings based on the
amount of services provided to Holdings.
(5) Mr. Rubie's compensation was paid solely by Graham Capital and another
affiliate of the Graham Partners. The amount set forth under 'All Other
Compensation' for Mr. Rubie was a special bonus related to acquisition
activity in Europe. Since the Recapitalization, Mr. Rubie has not been
employed by the Company.
EQUITY APPRECIATION UNITS
Set forth below is certain information with respect to the equity
appreciation units ('EAUs') granted in 1997 under Holdings former equity
appreciation plan (which was cancelled upon the Closing). Under this plan,
10,000 units represented the right to cash payments equal to 1% of the equity
appreciation of Holdings from the date of grant. See '--Management Awards.'
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<PAGE>
EAU GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ---------------------------------------------------------------------------------------------------- ANNUAL RATES OF
PERCENT OF APPRECIATION OVER
TOTAL EAU'S FIVE YEARS
GRANTED TO EXERCISE OF --------------------
EAU'S EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED(#) FISCAL YEAR ($/EAU) DATE ($) ($)
- ------------------------------- ---------- ------------ ----------- ---------- ------- --------------------
<S> <C> <C> <C> <C> <C> <C>
William H. Kerlin, Jr.......... -- -- -- -- -- --
Philip R. Yates................ -- -- -- -- -- --
Jean F. Rubie.................. -- -- -- -- -- --
Roger M. Prevot................ 150 11.2% $431.04 None $17,863 $ 39,473
John E. Hamilton............... 100 7.5% 431.04 None 11,909 26,315
</TABLE>
MANAGEMENT AWARDS
Pursuant to the Recapitalization Agreement, immediately prior to the
Closing, Holdings made cash payments to approximately 20 senior level managers
equal to approximately $7.0 million, which represented the aggregate value
payable under Holdings' former equity appreciation plan (which was cancelled
upon the Closing) and additional cash bonuses.
Pursuant to the Recapitalization Agreement, immediately after the Closing,
Holdings granted to approximately 100 middle level managers stay bonuses
aggregating approximately $4.6 million, which are payable over a period of up to
three years.
Pursuant to the Recapitalization Agreement, immediately after the Closing,
Holdings made additional cash payments to approximately 15 senior level managers
equal to approximately $5.0 million, which represented additional cash bonuses
and the taxes payable by such managers in respect of the awards described in
this paragraph. In addition, (a) Holdings made additional cash payments to such
managers equal to approximately $3.1 million, which was used by the recipients
to purchase shares of restricted common stock of Investor LP and (b) each such
recipient was granted the same number of additional restricted shares as the
shares purchased pursuant to clause (a). Such restricted shares vest over a
period of three years, and one-third of any forfeited shares will increase the
Graham Partners' ownership interests in Holdings.
As a result of such equity awards, Management owns an aggregate of
approximately 3.0% of the outstanding common stock of Investor LP, which
constitutes approximately a 2.6% interest in Holdings.
SEVERANCE AGREEMENTS
In connection with the Recapitalization, the Company entered into severance
agreements with Messrs. Yates, Prevot and Hamilton. Such severance agreements
provided that in the event a Termination Event (as defined therein) occurs, the
executive shall receive: (i) a severance allowance equal to one year of salary
(two years for Mr. Yates) payable in equal monthly installments over a one year
period (two years for Mr. Yates); (ii) continued group health and life insurance
coverage for one year (the executive's contribution for which would be the same
contribution as similarly situated executives and would be deducted from the
severance allowance payments); and (iii) a lump sum amount payable when the
Company pays its executives bonuses, equal to the executive's target bonus,
pro-rated to reflect the portion of the relevant year occurring prior to the
executive's termination of employment.
SUPPLEMENTAL INCOME PLAN
Mr. Yates is the sole participant in the Graham Engineering Corporation
Amended Supplemental Income Plan (the 'SIP'). Upon the Closing, the Operating
Company assumed Graham Engineering's obligations under the SIP. The SIP provides
that upon attaining age 65, Mr. Yates shall receive a fifteen year annuity
providing annual payments equal to 25% of his Final Salary (as defined therein).
The SIP also provides that the annuity payments shall be increased annually by a
4% cost of living adjustment. The SIP permits Mr. Yates to retire at or after
attaining age 55 without any reduction in the benefit (although such benefit
would not begin until Mr. Yates
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attained age 65). In the event that Mr. Yates were to retire prior to attaining
age 55 (the benefit would still commence at age 65), then the annuity payments
would be reduced. In the event that Mr. Yates' employment is terminated by the
Company, without 'just cause' (as defined in the SIP), then upon attaining age
65, he would receive the entire annuity. The SIP provides for similar benefits
in the event of a termination of employment on account of death or disability.
MANAGEMENT OPTION PLAN
Pursuant to the Recapitalization Agreement, the Company has adopted the
Graham Packaging Holdings Company Management Option Plan (the 'Option Plan').
The Option Plan provides for the grant to management employees of Holdings
and its subsidiaries of options ('Options') to purchase limited partnership
interests in Holdings equal to 0.01% of Holdings (prior to any dilution
resulting from any interests granted pursuant to the Option Plan) (each 0.01%
interest being referred to as a 'Unit'). The aggregate number of Units with
respect to which Options may be granted under the Option Plan shall not exceed
500 Units, representing a total of up to 5% of the equity of Holdings. No grants
have yet been made under the Option Plan.
The exercise price per Unit has yet to be determined. The number and type
of Units covered by outstanding Options and exercise prices may be adjusted to
reflect certain events such as recapitalizations, mergers or reorganizations of
or by Holdings. The Option Plan is intended to advance the best interests of the
Company by allowing such employees to acquire an ownership interest in the
Company, thereby motivating them to contribute to the success of the Company and
to remain in the employ of the Company.
A committee (the 'Committee') shall be appointed to administer the Option
Plan, including, without limitation, the determination of the employees to whom
grants will be made, the number of Units subject to each grant, and the various
terms of such grants. The Committee may provide that an Option cannot be
exercised after the merger or consolidation of Holdings into another company or
corporation, the exchange of all or substantially all of the assets of Holdings
for the securities of another corporation, the acquisition by a corporation of
80% or more of Holdings' partnership interest or the liquidation or dissolution
of Holdings, and if the Committee so provides, it will also provide either by
the terms of such Option or by a resolution adopted prior to the occurrence of
such merger, consolidation, exchange, acquisition, liquidation or dissolution,
that, for ten business days prior to such event, such Option shall be
exercisable as to all Units subject thereto, notwithstanding anything to the
contrary in any provisions of such Option and that, upon the occurrence of such
event, such Option shall terminate and be of no further force or effect. The
Committee may also provide that even if the Option shall remain exercisable
after any such event, from and after such event, any such Option shall be
exercisable only for the kind and amount of securities and other property
(including cash), or the cash equivalent thereof, receivable as a result of such
event by the holder of a number of partnership interests for which such Option
could have been exercised immediately prior to such event. No suspension,
termination or amendment of or to the Option Plan shall materially and adversely
affect the rights of any participant with respect to Options issued hereunder
prior to the date of such suspension, termination or amendment without the
consent of such holder.
PENSION PLANS
In the year ended December 31, 1997 and the three months ended March 29,
1998, the Company participated in a noncontributory, defined benefit pension
plan sponsored by Graham Engineering for salaried and hourly employees other
than employees covered by collectively-bargained plans. The Company also
sponsored other noncontributory defined benefit plans under collective
bargaining agreements. These plans covered substantially all of the Company's
U.S. employees. The defined benefit plan for salaried employees provides
retirement benefits based on the final five years average compensation and years
of service, while plans covering hourly employees provide benefits based on
years of service. See Note 10 to the Combined Financial Statements of Graham
Packaging Group for each of the three years in the period ended December 31,
1997.
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The following table shows estimated annual benefits upon retirement under
the defined benefit plan for salaried employees, based on the final five years
average compensation and years of service, as specified therein:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
125,000.................................................... $27,198 $36,265 $45,331 $54,397 $55,959
150,000.................................................... 33,198 44,265 55,331 66,397 68,272
175,000.................................................... 39,198 52,265 66,331 78,387 80,584
200,000.................................................... 45,198 60,265 75,331 90,397 92,897
225,000.................................................... 51,198 68,265 85,331 102,397 105,209
250,000.................................................... 57,198 76,265 95,331 114,397 117,522
300,000.................................................... 69,198 92,265 115,331 138,397 142,147
400,000.................................................... 93,198 124,265 155,331 186,397 191,397
450,000.................................................... 105,198 140,265 176,331 210,397 216,022
500,000.................................................... 117,198 156,265 195,331 234,397 240,647
</TABLE>
Note: The amounts shown are based on 1998 covered compensation of $31,129 for an
individual born in 1933. In addition, these figures do not reflect the
salary limit of $160,000 and benefit limit under the plan's normal form of
$130,000 in 1998.
The compensation covered by the defined benefit plan for salaried employees
is an amount equal to 'Total Wages' (as defined). This amount includes the
annual Salary and Bonus amounts shown in the Summary Compensation Table above
for the four Named Executive Officers who participated in the plan. Mr. Rubie
did not participate in the plan. The estimated credited years of service for the
year ended December 31, 1997 for each of the four Named Executive Officers
participating in the plan was as follows: William H. Kerlin, Jr., 20 years;
Philip R. Yates, 26 years; Roger M. Prevot, 10 years; and John E. Hamilton, 14
years. Benefits under the plan are computed on the basis of straight-life
annuity amounts. Amounts set forth in the Pension Table are not subject to
deduction for Social Security or other offset amounts.
The Recapitalization Agreement provides that assets of the Graham
Engineering defined benefit plan related to employees not covered by collective
bargaining agreements will be transferred to a new non-contributory defined
benefit plan sponsored by the Company for such employees. Such transfer is
expected to be completed in 1998.
401(K) PLAN
During 1997 and the three months ended March 29, 1998, the Company also
participated in a defined contribution plan under Internal Revenue Code Section
401(k) sponsored by Graham Engineering, which covered all U.S. employees of the
Company except those represented by a collective bargaining unit. The Company's
contributions were determined as a specified percentage of employee
contributions, subject to certain maximum limitations. The Company's costs for
this plan for 1995, 1996, and 1997 were $668,000, $722,000 and $742,000,
respectively. See Note 10 to the Combined Financial Statements of Graham
Packaging Group for each of the three years in the period ended December 31,
1997.
Pursuant to the Recapitalization Agreement, assets of this plan related to
Company employees were transferred to a new plan sponsored by the Company
following the Closing of the Recapitalization.
COMPENSATION OF DIRECTORS AND CERTAIN PARTNERS
The members of the Boards of Directors of CapCo I and CapCo II and Investor
LP are not compensated for their services except that each is reimbursed for his
reasonable expenses in performing his duties as such.
Under the Holdings Partnership Agreement, the Advisory Committee is
comprised of five individuals, three of whom shall be appointed from time to
time by Investor GP and, for so long as the Continuing Graham Partners and their
affiliates do not sell more than two-thirds of their partnership interests owned
at the Closing, two of
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whom shall be appointed from time to time by the other general partners. The
Advisory Committee serves solely in an advisory role and does not have any power
to act for or bind Holdings. The Holdings Partnership Agreement provides that,
so long as the Continuing Graham Partners and their affiliates do not sell more
than two-thirds of their partnership interests owned at the Closing, Holdings
will pay to Graham Family Growth Partnership an annual fee of $1.0 million. The
Monitoring Agreement provides that Holdings will pay to Blackstone an annual
Monitoring Fee of $1.0 million. Under the Holdings Partnership Agreement, the
general partners of Holdings are entitled to reimbursement for their expenses in
performing their obligations thereunder. See 'The Partnership Agreements' and
'Certain Relationships and Related Party Transactions.'
SECURITY OWNERSHIP
The following table sets forth the ownership of the Issuers upon the
consummation of the Recapitalization. For a more detailed discussion of certain
ownership interests, see 'The Recapitalization,' 'The Partnership Agreements'
and 'Certain Relationships and Related Party Transactions.' Unless otherwise
noted, the address of each of the entities named below is the Operating
Company's principal executive office.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE
ISSUER OF BENEFICIAL OWNER TYPE OF INTEREST INTEREST
- ----------------------------------------------- -------------------------------- -------------------- ----------
<S> <C> <C> <C>
Graham Packaging Company....................... Holdings Limited Partnership 99%
Opco GP(1) General Partnership 1%
GPC Capital Corp. I............................ Operating Company Common Stock 100%
Graham Packaging Holdings Company.............. Investor LP(2) Limited Partnership 81%
Investor GP(2) General Partnership 4%
Graham Family entities(3) Limited Partnership 14%
Graham Packaging Corporation(3) General Partnership 1%
GPC Capital Corp. II........................... Holdings Common Stock 100%
</TABLE>
- ------------------
(1) Opco GP is a wholly owned subsidiary of Holdings.
(2) Investor GP is a wholly owned subsidiary of Investor LP. Upon the
consummation of the Recapitalization, Blackstone became the beneficial owner
of 100.0% of the common stock of Investor LP, and, following the
consummation of the Recapitalization, Blackstone transferred to Management
approximately 3.0% of such common stock. See 'Management--Management
Awards.' The address of each of the Equity Investors is c/o The Blackstone
Group L.P., 345 Park Avenue, New York, New York 10154. In addition, an
affiliate of BT Alex. Brown Incorporated and Bankers Trust International
PLC, two of the Initial Purchasers of the Old Notes, acquired approximately
a 4.8% equity interest in Investor LP. After giving effect to that
transaction, Blackstone's beneficial ownership of the common stock of
Investor LP declined by a corresponding 4.8%.
(3) Each of these entities is wholly owned, directly or indirectly, by the
Graham family. The address of each of these entities is c/o Graham Capital
Company, 1420 Sixth Avenue, York, Pennsylvania 17403.
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THE PARTNERSHIP AGREEMENTS
The summaries of the Partnership Agreements set forth below do not purport
to be complete and are qualified in their entirety by reference to all
provisions of the Partnership Agreements. Copies of the Partnership Agreements
are exhibits to the Registration Statement of which this Prospectus is a part.
THE OPERATING COMPANY PARTNERSHIP AGREEMENT
The Operating Company was formed under the name 'Graham Packaging Holdings
I, L.P.' on September 21, 1994 as a limited partnership in accordance with the
provisions of the Delaware Revised Uniform Limited Partnership Act. Upon the
Closing of the Recapitalization, the name of the Operating Company was changed
to 'Graham Packaging Company.' The Operating Company will continue until its
dissolution and winding up in accordance with the terms of the Operating Company
Partnership Agreement (as defined).
Prior to the Recapitalization, Graham Recycling Corporation ('Recycling')
was the sole general partner of the Operating Company and Holdings was the sole
limited partner of the Operating Company. As provided in the Recapitalization
Agreement, immediately prior to the Closing, Recycling contributed to Opco GP
its general partnership interest in the Operating Company, and the partnership
agreement of the Operating Company was amended and restated to reflect such
substitution of sole general partner and certain other amendments (the
'Operating Company Partnership Agreement'). Following the Closing, Holdings has
remained the sole limited partner of the Operating Company.
The purpose of the Operating Company is the sale and manufacturing of rigid
plastic containers and any business necessary or incidental thereto.
Management. The Operating Company Partnership Agreement provides that the
general partner shall be entitled in its sole discretion and without the
approval of the other partners to perform or cause to be performed all
management and operational functions relating to the Operating Company and shall
have the sole power to bind the Operating Company. The limited partner shall not
participate in the management or control of the business.
Exculpation and Indemnification. The Operating Company Partnership
Agreement provides that neither the general partner nor any of its affiliates,
nor any of its partners, shareholders, officers, directors, employees or agents,
shall be liable to the Operating Company or any partner for any breach of the
duty of loyalty or any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law or the Operating Company
Partnership Agreement. The Operating Company shall indemnify the general partner
and its affiliates, and its partners, shareholders, officers, directors,
employees and agents, from and against any claim or liability of any nature
arising out of the assets or business of the Operating Company.
Affiliate Transactions. The Operating Company may enter into transactions
with any partner or any of its affiliates which is not prohibited by applicable
law; provided that, any material transaction with any partner or any of its
affiliates shall be on terms reasonably determined by the General Partner to be
comparable to the terms which can be obtained from third parties.
Transfers of Partnership Interests. The Operating Company Partnership
Agreement provides that the limited partner shall not transfer its limited
partnership interests.
Dissolution. The Operating Company Partnership Agreement provides that the
Operating Company shall be dissolved upon the earliest of (i) December 31, 2044,
(ii) the sale, exchange or other disposition of all or substantially all of the
Operating Company's assets, (iii) the withdrawal, resignation, filing of a
certificate of dissolution or revocation of the charter or bankruptcy of a
general partner, or the occurrence of any other event which causes a general
partner to cease to be a general partner unless there shall be another general
partner, (iv) the withdrawal, resignation, filing of a certificate of
dissolution or revocation of the charter or bankruptcy of a limited partner, or
the occurrence of any other event which causes a limited partner to cease to be
a limited partner unless there shall be another limited partner, (v) the
acquisition by a single person of all of the partnership interests in the
Operating Company, (vi) the issuance of a decree of dissolution by a court of
competent jurisdiction, or (vii) otherwise as required by applicable law.
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THE HOLDINGS PARTNERSHIP AGREEMENT
Holdings was formed under the name 'Sonoco Graham Company' on April 3, 1989
as a limited partnership in accordance with the provisions of the Pennsylvania
Uniform Limited Partnership Act, and on March 28, 1991, Holdings changed its
name to 'Graham Packaging Company.' Upon the Closing of the Recapitalization,
the name of Holdings was changed to 'Graham Packaging Holdings Company.'
Holdings will continue until its dissolution and winding up in accordance with
the terms of the Holdings Partnership Agreement (as defined).
As contemplated by the Recapitalization Agreement, upon the Closing, Graham
Capital and its successors or assigns, Graham Family Growth Partnership, Graham
GP Corp., Investor LP and Investor GP entered into a Fifth Amended and Restated
Agreement of Limited Partnership (the 'Holdings Partnership Agreement'). The
general partners of the Partnership are Investor GP and Graham GP Corp. The
limited partners of the Partnership are Graham Family Growth Partnership, Graham
Capital and Investor LP.
The purpose of Holdings is the sale and manufacturing of rigid plastic
containers and any business necessary or incidental thereto.
Management; Advisory Committee. The Holdings Partnership Agreement
provides that the general partner elected by the general partner(s) holding a
majority of the general partnership interests in Holdings (the 'Managing General
Partner') shall be entitled in its sole discretion and without the approval of
the other partners to perform or cause to be performed all management and
operational functions relating to Holdings and shall have the sole power to bind
Holdings, except for certain actions in which the Managing General Partner shall
need the approval of the other general partners. The limited partners shall not
participate in the management or control of the business.
The partnership and the general partners shall be advised by a committee
(the 'Advisory Committee') comprised of five individuals, three of whom shall be
appointed from time to time by Investor GP and, for so long as the Continuing
Graham Partners and their affiliates do not sell more than two-thirds of their
partnership interests owned at the Closing, two of whom shall be appointed from
time to time by the other general partners. Such committee shall serve solely in
an advisory role and shall not have any power to act for or bind Holdings.
Annual Fee. The Holdings Partnership Agreement provides that, so long as
the Continuing Graham Partners and their affiliates do not sell more than
two-thirds of their partnership interests owned at the Closing, Holdings will
pay to Graham Family Growth Partnership an annual fee of $1.0 million.
Exculpation and Indemnification. The Holdings Partnership Agreement
provides that no general partner nor any of its affiliates, nor any of its
respective partners, shareholders, officers, directors, employees or agents,
shall be liable to Holdings or any of the limited partners for any act or
omission, except resulting from its own willful misconduct or bad faith, any
breach of its duty of loyalty or willful breach of its obligations as a
fiduciary, or any breach of certain terms of the Holdings Partnership Agreement.
Holdings shall indemnify the general partners and their affiliates, and their
respective partners, shareholders, officers, directors, employees and agents,
from and against any claim or liability of any nature arising out of the assets
or business of Holdings.
Affiliate Transactions. Holdings may not enter into any transaction with
any partner or any of its affiliates unless the terms thereof are believed by
the general partners to be in the best interests of Holdings and are
intrinsically fair to Holdings and equally fair to each of the partners;
provided that, Holdings may perform and comply with the Recapitalization
Agreement, the Equipment Sales Agreement, the Consulting Agreement and the
Monitoring Agreement (as defined).
Transfers of Partnership Interests. The Holdings Partnership Agreement
provides that, subject to certain exceptions including, without limitation, in
connection with an IPO Reorganization (as defined) and the transfer rights
described below, general partners shall not withdraw from Holdings, resign as a
general partner, nor transfer their general partnership interests without the
consent of all general partners, and limited partners shall not transfer their
limited partnership interests.
If any Continuing Graham Partner wishes to sell or otherwise transfer its
partnership interests pursuant to a bona fide offer from a third party, Holdings
and the Equity Investors must be given a prior opportunity to purchase such
interests at the same purchase price set forth in such offer. If Holdings and
the Equity Investors do
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not elect to make such purchase, then such Continuing Graham Partner may sell or
transfer such partnership interests to such third party upon the terms set forth
in such offer. If the Equity Investors wish to sell or otherwise transfer their
partnership interests pursuant to a bona fide offer from a third party, the
Continuing Graham Partners shall have a right to include in such sale or
transfer a proportionate percentage of their partnership interests. If the
Equity Investors (so long as they hold 51% or more of the partnership interests)
wish to sell or otherwise transfer their partnership interests pursuant to a
bona fide offer from a third party, the Equity Investors shall have the right to
compel the Continuing Graham Partners to include in such sale or transfer a
proportionate percentage of their partnership interests.
Dissolution. The Holdings Partnership Agreement provides that Holdings
shall be dissolved upon the earliest of (i) the sale, exchange or other
disposition of all or substantially all of Holdings' assets (including pursuant
to an IPO Reorganization), (ii) the withdrawal, resignation, filing of a
certificate of dissolution or revocation of the charter or bankruptcy of a
general partner, or the occurrence of any other event which causes a general
partner to cease to be a general partner unless (a) the remaining general
partner elects to continue the business or (b) if there is no remaining general
partner, a majority-in-interest of the limited partners elect to continue the
partnership, or (iii) such date as the partners shall unanimously elect.
IPO Reorganization. 'IPO Reorganization' means the transfer of all or
substantially all of Holdings' assets and liabilities to CapCo II in
contemplation of an initial public offering of the shares of common stock of
CapCo II. The Holdings Partnership Agreement provides that, without the approval
of each general partner, the IPO Reorganization may not be effected through any
entity other than CapCo II.
Tax Distributions. The Partnership Agreement requires certain tax
distributions to be made.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The summaries of agreements set forth below do not purport to be complete
and are qualified in their entirety by reference to all the provisions of such
agreements. Copies of the Recapitalization Agreement, the Consulting Agreement,
the Equipment Sales Agreement and the Partners Registration Rights Agreement are
exhibits to the Registration Statement of which this Prospectus is a part.
TRANSACTIONS WITH GRAHAM PARTNERS AND OTHERS
Prior to the Closing of the Recapitalization, Donald C. Graham, as lessor,
and Holdings, as lessee, were parties to four lease agreements relating to two
properties in Berkeley, Missouri and two properties in York, Pennsylvania. For
the year ended December 31, 1997, the Company paid Donald C. Graham $2.0 million
in the aggregate pursuant to such lease agreements. Upon the consummation of the
Recapitalization, the real property subject to each such lease agreement was
contributed to the Operating Company as part of the Graham Contribution. See
'The Recapitalization.'
Prior to the Closing, York Transportation and Leasing, Inc. (an affiliate
of the Graham Partners), as lessor, and Graham Packaging Canada, Ltd., as
lessee, were parties to three lease agreements relating to properties located in
Missassuaga, Ontario, Burlington, Ontario and Anjou, Quebec. For the year ended
December 31, 1997, the Company paid York Transportation and Leasing $0.6 million
in the aggregate pursuant to such lease agreements. Upon the Closing, the real
property subject to each such lease agreement was contributed to the Operating
Company as part of the Graham Contribution. See 'The Recapitalization.'
Prior to the Closing, Graham GP Corp., Graham Capital and Graham Europe
Limited (affiliates of the Graham Partners) were parties to management
agreements, pursuant to which Donald C. Graham, William H. Kerlin, Jr. and
others provided management services and served as executive officers of the
Company. The Company paid $1.7 million for the year ended December 31, 1997 for
such services.
Prior to the Closing, Holdings, Graham Capital, Graham GP Corp. and York
Transportation and Leasing were all parties to an Airplane Lease
Agreement/Aircraft Sharing Agreement. The Company paid $0.3 million for the year
ended December 31, 1997 pursuant to such agreement.
For the year ended December 31, 1997, the Company also paid Viking Graham
Corporation (an affiliate of the Graham Partners) $0.6 million for certain
consulting services.
All of the agreements described above were terminated upon the Closing.
Donald C. Graham and Jean Rubie are each one-third owners of Techne
Technipack Engineering Italia S.p.A. ('Techne'). Techne supplies shuttle
blow-molders to many of the Company's non-U.S. facilities. The Company paid
Techne approximately $3.5 million for such equipment for the year ended December
31, 1997. Prior to the Recapitalization, Mr. Rubie served as General Manager,
Europe, of the Company.
Graham Engineering has supplied both services and equipment to the Company.
The Company paid Graham Engineering approximately $11.3 million for such
services and equipment for the year ended December 31, 1997.
The Company has provided certain services to Graham Engineering. Graham
Engineering paid the Company approximately $1.0 million for such services for
the year ended December 31, 1997. In addition, in the fourth quarter of 1997,
the Company sold certain bottle manufacturing equipment to Graham Engineering
for approximately $3.4 million, and Graham Engineering sold such equipment to
Banco SRL S.A., a Brazilian commercial bank ('Banco SRL'), transmitting the
manufacturer's warranty on such equipment in a transaction financed by the
Company. The equipment is currently operated by the Company at a customer's
facility in Rio de Janeiro, Brazil, such equipment having been leased by the
customer from Banco SRL.
An affiliate of BT Alex. Brown Incorporated and Bankers Trust International
PLC, two of the Initial Purchasers of the Old Notes, acquired approximately a
4.8% equity interest in Investor LP. See 'Security Ownership.' Bankers Trust
Company, an affiliate of BT Alex. Brown Incorporated and Bankers Trust
International PLC, acted as administrative agent and provided a portion of the
financing under the New Credit Facility entered into in connection with the
Recapitalization, for which it received customary commitment and other fees and
compensation. See 'Description of the New Credit Facility.'
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BT Alex. Brown Incorporated and Bankers Trust International PLC received
customary compensation for acting as Initial Purchasers of the Old Notes.
THE PARTNERSHIP AGREEMENTS
For a description of the Operating Company Partnership Agreement and the
Holdings Partnership Agreement, including certain fees payable by Holdings
thereunder, see 'The Partnership Agreements.'
PARTNERS REGISTRATION RIGHTS AGREEMENT
Pursuant to the Recapitalization Agreement, upon the Closing, Holdings,
CapCo II, the Continuing Graham Partners, the Equity Investors and Blackstone
entered into a registration rights agreement (the 'Partners Registration Rights
Agreement'). Under the Partners Registration Rights Agreement, CapCo II will
grant, with respect to the shares of its common stock to be distributed pursuant
to an IPO Reorganization, (i) to the Continuing Graham Partners and their
affiliates (and their permitted transferees of partnership interests in
Holdings) two 'demand' registrations after an initial public offering of the
shares of common stock of CapCo II has been consummated and customary
'piggyback' registration rights (except with respect to such initial public
offering, unless Blackstone and its affiliates are selling their shares in such
offering) and (ii) to the Equity Investors, Blackstone and their affiliates an
unlimited number of 'demand' registrations and customary 'piggyback'
registration rights. The Partners Registration Rights Agreement also provides
that CapCo II will pay certain expenses of the Continuing Graham Partners, the
Equity Investors, Blackstone and their respective affiliates relating to such
registrations and indemnify them against certain liabilities which may arise
under the Securities Act. See 'The Partnership Agreements--Holdings Partnership
Agreement.'
CERTAIN BUSINESS RELATIONSHIPS
Equipment Sales Agreement. Pursuant to the Recapitalization Agreement,
upon the Closing, Holdings and Graham Engineering entered into the Equipment
Sales, Service and Licensing Agreement ('Equipment Sales Agreement'), which
provides that, with certain exceptions, (i) Graham Engineering will sell to
Holdings and its affiliates certain of Graham Engineering's larger-sized
proprietary extrusion blow molding wheel systems ('Graham Wheel Systems'), at a
price to be determined on the basis of a percentage mark-up of material, labor
and overhead costs that is as favorable to Holdings as the percentage mark-up
historically offered by Graham Engineering to Holdings and is as favorable as
the mark-up on comparable equipment offered to other parties, (ii) each party
will provide consulting services to the other party at hourly rates ranging from
$60 to $200 (adjusted annually for inflation) and (iii) Graham Engineering will
grant to Holdings a nontransferable, nonexclusive, perpetual, royalty-free right
and license to use certain technology. Subject to certain exceptions set forth
in the Equipment Sales Agreement, Holdings and its affiliates will have the
exclusive right to purchase, lease or otherwise acquire the applicable Graham
Wheel Systems in North America and South America, the countries comprising the
European Economic Community as of the Closing and any other country in or to
which Holdings has produced or shipped extrusion blow molded plastic bottles
representing sales in excess of $1.0 million in the most recent calendar year.
The Equipment Sales Agreement terminates on December 31, 2007, unless mutually
extended by the parties. After December 31, 1998, either party may terminate the
other party's right to receive consulting services.
Consulting Agreement. Pursuant to the Recapitalization Agreement, upon the
Closing, Holdings and Graham Capital entered into a Consulting Agreement (the
'Consulting Agreement'), pursuant to which Graham Capital will provide Holdings
with general business, operational and financial consulting services at mutually
agreed retainer or hourly rates (ranging from $200 to $750 per hour). The
Consulting Agreement terminates on the second anniversary of the Closing, unless
mutually extended by the parties.
PROMISSORY NOTES OF GRAHAM PARTNERS
From 1994 through the Closing, there was outstanding $20.2 million
principal amount of promissory notes owed by the Graham Partners to Holdings,
which had been contributed by the Graham Partners as capital in Holdings. Such
promissory notes (including accrued interest) were repaid in full in connection
with the
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Recapitalization. For the year ended December 31, 1997, accrued interest income
on the promissory notes was approximately $1.0 million.
PAYMENT OF CERTAIN FEES AND EXPENSES
In connection with the Recapitalization, Blackstone received a fee of
approximately $9.3 million, and the Operating Company has reimbursed or will
reimburse Blackstone for all out-of-pocket expenses incurred in connection with
the Recapitalization. In addition, pursuant to a monitoring agreement (the
'Monitoring Agreement') entered into among Blackstone, Holdings and the
Operating Company, Blackstone will receive a monitoring fee equal to $1.0
million per annum, and will be reimbursed for certain out-of-pocket expenses. In
the future, an affiliate or affiliates of Blackstone may receive customary fees
for advisory and other services rendered to Holdings and its subsidiaries. If
such services are rendered in the future, the fees will be negotiated from time
to time on an arm's length basis and will be based on the services performed and
the prevailing fees then charged by third parties for comparable services.
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DESCRIPTION OF THE NEW CREDIT FACILITY
The summary of the New Credit Facility set forth below does not purport to
be complete and is qualified in its entirety by reference to all the provisions
of the definitive Credit Agreement governing the New Credit Facility. A copy of
such Credit Agreement is an exhibit to the Registration Statement of which this
Prospectus is a part.
GENERAL
As part of the Recapitalization, the Operating Company entered into a
credit facility (the 'New Credit Facility') with Bankers Trust Company ('BT'),
as administrative agent, and the several lenders parties thereto. The New Credit
Facility consists of term loan facilities (the 'Term Loan Facilities') in an
aggregate principal amount of $395.0 million, a revolving credit facility (the
'Revolving Credit Facility') in an aggregate principal amount of up to $155.0
million and a revolving credit facility in an aggregate principal amount of up
to $100.0 million (the 'Growth Capital Revolving Facility,' and, together with
the Term Loan Facilities and the Revolving Facility, the 'Facilities'). The
following is a summary description of the principal terms of the New Credit
Facility and is subject to, and qualified in its entirety by reference to, the
definitive agreement, which is filed as an exhibit to the Registration Statement
and incorporated herein by reference.
All obligations of the Operating Company under the New Credit Facility are
unconditionally and irrevocably guaranteed jointly and severally by Holdings and
each of Holdings' present and future domestic subsidiaries (other than the
Operating Company) ('Loan Guarantors'). Indebtedness under the New Credit
Facility is secured by a first priority perfected security interest in (i) all
of the capital stock, partnership interests and promissory notes owned by the
Operating Company and the Loan Guarantors of their domestic subsidiaries and up
to 65% of the equity interests of material foreign subsidiaries and (ii)
substantially all other tangible and intangible assets (including receivables,
contract rights, securities, patents, trademarks, other intellectual property,
inventory, equipment and certain fee owned real estate) owned by the Operating
Company and each Loan Guarantor.
TERM LOAN FACILITIES
The Term Loan Facilities consist of three tranches of term loans in an
aggregate principal amount of $395.0 million. The Tranche A term loans are in an
aggregate principal amount of $75.0 million, the Tranche B term loans are in an
aggregate principal amount of $175.0 million, and the Tranche C term loans are
in an aggregate principal amount of $145.0 million. The loans under the Term
Loan Facilities (the 'Term Loans') were made in a single drawing at the Closing
of the Recapitalization. The Tranche A term loans will mature on the sixth
anniversary of the Closing, the Tranche B term loans will mature on the eighth
anniversary of the Closing, and the Tranche C term loans will mature on the
ninth anniversary of the Closing. Installments of the Tranche A term loans will
be due in equal quarterly amounts totalling $10.0 million in year 3, $15.0
million in year 4, $20.0 million in year 5, and $30.0 million in year 6.
Installments of the Tranche B term loans will be due in aggregate principal
amounts per annum equal to 1% of the initial aggregate principal amount of
Tranche B term loans for the first six years after the Closing and the remaining
amount of Tranche B term loans will be due in eight quarterly amortization
payments in the seventh and eighth years after the Closing. Installments of the
Tranche C term loans will be due in aggregate principal amounts per annum equal
to 1% of the initial aggregate principal amount of Tranche C term loans for the
first eight years after the Closing and the remaining amount of Tranche C term
loans will be due in four quarterly amortization payments in the ninth year
after the Closing.
REVOLVING CREDIT FACILITY
The Revolving Credit Facility consists of a revolving credit facility in an
aggregate principal amount of $155.0 million. The Operating Company is entitled
to draw amounts under the Revolving Credit Facility for general corporate
purposes. The Revolving Credit Facility includes sub-limits for letters of
credit and swingline loans ('Swingline Loans'). The Revolving Credit Facility
will mature on the sixth anniversary of the Closing.
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GROWTH CAPITAL REVOLVING CREDIT FACILITY
The Growth Capital Revolving Facility consists of a revolving credit
facility in an aggregate principal amount of $100.0 million. The Operating
Company is entitled to draw amounts under the Growth Capital Revolving Facility
for capital expenditure requirements and to finance acquisitions and
investments, provided that loans under the Growth Capital Revolving Facility may
only be incurred to the extent that such loans are matched with equity
contributions from the principal equity holders of Investor LP (which equity
contributions shall, in turn, ultimately be contributed to the Operating
Company), on a dollar-for-dollar basis. The Growth Capital Revolving Facility
will mature on the sixth anniversary of the Closing.
AVAILABILITY
The full amount of the Term Loan Facilities was drawn in a single drawing
at the Closing, and $8.5 million was drawn under the Revolving Credit Facility
at the Closing. The loans under the Revolving Credit Facility and the Growth
Capital Revolving Facility (the 'Revolving Loans' and 'Growth Capital Loans,'
respectively, and, together with the Term Loans, the 'Loans') are subject to
various conditions precedent typical of bank facilities of this type and may be
borrowed, repaid and reborrowed after the Closing. Utilization under the Growth
Capital Revolving Facility will be matched by equity contributions, as described
above.
INTEREST RATES
The Operating Company may elect that all or a portion of the Loans, other
than the Swingline Loans, bear interest at the eurodollar rate (the 'Eurodollar
Rate') plus the applicable interest margin, or the base rate (the 'Base Rate')
plus the applicable interest margin. The Base Rate is defined as the higher of
(i) the overnight federal funds rate, plus 1/2% and (ii) the prime lending rate
of BT. The Eurodollar Rate is defined as the rate at which eurodollar deposits
for one, two, three or six months or (if and when available to all of the
relevant lenders) nine or twelve months are offered to BT in the London
interbank eurodollar market. The applicable interest margin for Tranche A term
loans, Revolving Loans and Growth Capital Loans is 1.25% for Base Rate loans and
2.25% for Eurodollar Rate loans. The applicable interest margin for Tranche B
term loans is 1.75% for Base Rate loans and 2.75% for Eurodollar Rate loans. The
applicable interest margin for Tranche C term loans is 2.00% for Base Rate loans
and 3.00% for Eurodollar Rate loans. The interest margins for the Loans are
subject to reduction, as long as no default or event of default exists under the
New Credit Facility based on the leverage ratio. Interest accrues quarterly on
Base Rate Loans.
MANDATORY AND OPTIONAL REPAYMENT
The Term Loan Facilities shall be prepaid, subject to certain conditions
and exceptions, with (i) 100% of the net proceeds of any incurrence of
indebtedness, subject to certain exceptions, by Holdings or its subsidiaries,
(ii) 75% of the net proceeds of issuances of equity, subject to certain
exceptions, after the Closing by Holdings or any of its subsidiaries, (iii) 100%
of the net proceeds of certain asset dispositions, (iv) 50% of the annual excess
cash flow (as such term is defined in the New Credit Facility) of Holdings and
its subsidiaries on a consolidated basis and (v) 100% of the net proceeds from
any condemnation and insurance recovery events, subject to certain reinvestment
rights. The foregoing mandatory prepayments will first be applied pro rata to
reduce outstanding Tranche A, Tranche B and Tranche C term loans (and to
installments of each Tranche on a pro rata basis or, in the case of prepayments
based on excess cash flow, in direct order of maturity), provided, however, that
at the Operating Company's election, (i) up to $30 million in the aggregate of
mandatory prepayments (to the extent based on annual excess cash flow) and
voluntary prepayments will be applied first to prepay outstanding Tranche A term
loans and, to the extent in excess thereof, as otherwise provided herein for
mandatory prepayments and (ii) at any time that Tranche A term loans are
outstanding, the holders of Tranche B term loans and Tranche C term loans may
decline to accept voluntary or mandatory prepayment of Tranche B term loans or
Tranche C term loans, as the case may be, and such amounts shall be applied to
the Tranche A term loans. Prepayments in excess of the amount of outstanding
term loans will be applied (i) first, to reduce the commitments under the Growth
Capital Revolving Facility (and, in the case of any reduction of commitments
pursuant to this clause (i), a like principal amount of Growth Capital Revolving
loans, to the extent then outstanding, shall also be required to be prepaid at
such time) and (ii) second, to reduce the commitments under the Revolving Credit
Facility. The New Credit Facility provides that the Operating Company may
voluntarily
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prepay loans in whole or in part without penalty, subject to minimum
prepayments. Prepayments of Eurodollar Rate Loans shall be subject to
reimbursement of the lenders' breakage and redeployment costs. Optional
prepayments of the Term Loans will be applied pro rata to reduce outstanding
Tranche A, Tranche B and Tranche C term loans (and to installments of each
Tranche in the direct order).
COVENANTS
The New Credit Facility contains certain covenants and other requirements
of Holdings and its subsidiaries. The affirmative covenants provide for, among
other things, mandatory reporting by Holdings of financial and other information
to the administrative agent and notice by Holdings to the agent upon the
occurrence of certain events. The affirmative covenants also include standard
covenants requiring Holdings and its subsidiaries to operate its business in an
orderly manner and consistent with past practice and requiring maintenance of
interest rate protection.
The New Credit Facility also contains certain negative covenants and
restrictions on actions by Holdings and its subsidiaries, including, without
limitation, restrictions on indebtedness, liens, guarantee obligations, mergers,
asset dispositions, investments, loans, advances, acquisitions, dividends and
other restricted junior payments, transactions with affiliates, changes in
business conducted and prepayments and amendments of subordinated indebtedness.
The New Credit Facility also requires Holdings and its subsidiaries to meet
certain financial covenants.
EVENTS OF DEFAULT
The New Credit Facility specifies certain customary events of default
including, without limitation, non-payment of principal, non-payment of interest
or fees (with a customary grace period), violation of covenants, inaccuracy of
representations and warranties in any material respect, cross-default to certain
other indebtedness, bankruptcy and insolvency events, material judgments,
violations of the Employee Retirement Income Security Act of 1974, as amended,
change of control transactions, failure to maintain security interests,
invalidity or asserted invalidity of credit documents, including guarantees and
failure of the New Credit Facility and guarantees thereof to be senior in right
of payment.
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THE SENIOR SUBORDINATED EXCHANGE OFFERS
GENERAL
The Company Issuers hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the applicable Letters of
Transmittal (which together constitute the Senior Subordinated Exchange Offers),
(i) to exchange an aggregate of up to $150,000,000 principal amount of their
Fixed Rate Senior Subordinated Exchange Notes for an equal principal amount of
their issued and outstanding Fixed Rate Senior Subordinated Old Notes, and (ii)
to exchange an aggregate of up to $75,000,000 principal amount of their Floating
Rate Senior Subordinated Exchange Notes for an equal principal amount of their
issued and outstanding Floating Rate Senior Subordinated Old Notes, in each case
properly tendered on or prior to the applicable Senior Subordinated Expiration
Date and not withdrawn as permitted pursuant to the procedures described below.
This Prospectus and the Letter of Transmittal related to the Fixed Rate Senior
Subordinated Notes together constitute the Fixed Rate Senior Subordinated
Exchange Offer, and this Prospectus and the Letter of Transmittal related to the
Floating Rate Senior Subordinated Notes together constitute the Floating Rate
Senior Subordinated Exchange Offer. The Senior Subordinated Exchange Notes will
be unconditionally guaranteed by Holdings (the 'Holdings Guarantee') on a senior
subordinated basis. Upon the terms and subject to the conditions set forth in
this Prospectus and in the applicable Letter of Transmittal, Holdings hereby
offers to issue the Holdings Guarantee with respect to all Senior Subordinated
Exchange Notes issued in the Senior Subordinated Exchange Offers in exchange for
Holdings' outstanding guarantees (the 'Old Holdings Guarantee') of the Senior
Subordinated Old Notes. Throughout this Prospectus, references to the Senior
Subordinated Exchange Offers include the offer of Holdings to exchange the
Holdings Guarantee for the Old Holdings Guarantee, whether so expressed or not.
Throughout this Prospectus, references to the 'Letter of Transmittal' refer to
the form of Letter of Transmittal that is applicable to the Fixed Rate Senior
Subordinated Notes, the Floating Rate Senior Subordinated Notes or the Senior
Discount Notes, as the context requires, whether so expressed or not. The Senior
Subordinated Exchange Offers are being made with respect to all of the Senior
Subordinated Old Notes.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of Fixed Rate Senior Subordinated Old Notes is outstanding and $75,000,000
aggregate principal amount of Floating Rate Senior Subordinated Old Notes is
outstanding. This Prospectus and the applicable Letters of Transmittal are first
being sent on or about , 1998, to all holders of Senior
Subordinated Old Notes known to the Company Issuers. The Company Issuers'
obligation to accept Senior Subordinated Old Notes for exchange pursuant to the
Senior Subordinated Exchange Offers is subject to certain conditions set forth
under 'Certain Conditions to the Senior Subordinated Exchange Offers' below. The
Company Issuers currently expect that each of the conditions will be satisfied
and that no waivers will be necessary.
PURPOSE OF THE SENIOR SUBORDINATED EXCHANGE OFFERS
The Senior Subordinated Old Notes were issued on February 2, 1998 in
transactions exempt from the registration requirements of the Securities Act.
Accordingly, the Senior Subordinated Old Notes may not be reoffered, resold, or
otherwise transferred unless so registered or unless an applicable exemption
from the registration and prospectus delivery requirements of the Securities Act
is available.
In connection with the issuance and sale of the Senior Subordinated Old
Notes, the Company Issuers and Holdings, as guarantor, entered into the Senior
Subordinated Registration Rights Agreement, which requires the Company Issuers
and Holdings to file with the Commission a registration statement relating to
the Senior Subordinated Exchange Offers not later than 120 days after the date
of issuance of the Senior Subordinated Old Notes and to use their best efforts
to cause the registration statement relating to the Senior Subordinated Exchange
Offers to become effective under the Securities Act not later than 180 days
after the date of issuance of the Senior Subordinated Old Notes. In addition,
the Senior Subordinated Registration Rights Agreement provides for certain
remedies if the Senior Subordinated Exchange Offers are not consummated or a
shelf registration statement with respect to Senior Subordinated Old Notes is
not made effective within the time periods specified therein. See 'Senior
Subordinated Exchange Offers; Senior Subordinated Registration Rights.' A copy
of the Senior Subordinated Registration Rights Agreement has been filed as an
exhibit to the Registration Statement.
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The Senior Subordinated Exchange Offers are being made by the Company
Issuers to satisfy their obligations with respect to the Senior Subordinated
Registration Rights Agreement. The term 'holder,' with respect to the Senior
Subordinated Exchange Offers, means any person in whose name Senior Subordinated
Old Notes are registered on the books of the Company Issuers or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose Senior Subordinated Old Notes are held of record by The
Depository Trust Company or its nominee. Other than pursuant to the Senior
Subordinated Registration Rights Agreement, the Company Issuers and Holdings are
not required to file any registration statement to register any outstanding
Senior Subordinated Old Notes. Holders of Senior Subordinated Old Notes who do
not tender their Senior Subordinated Old Notes or whose Senior Subordinated Old
Notes are tendered but not accepted would have to rely on exceptions to the
registration requirements under the securities laws, including the Securities
Act, if they wish to sell their Senior Subordinated Old Notes.
The Company Issuers are making the Senior Subordinated Exchange Offers in
reliance on the position of the Staff of the Commission as set forth in certain
interpretive letters addressed to third parties in other transactions. However,
the Company Issuers have not sought their own interpretive letter and there can
be no assurance that the Staff would make a similar determination with respect
to the Senior Subordinated Exchange Offers as it has in such interpretive
letters to third parties. Based on these interpretations by the Staff, the
Company Issuers believe that the Senior Subordinated Exchange Notes issued
pursuant to the Senior Subordinated Exchange Offers in exchange for Senior
Subordinated Old Notes may be offered for resale, resold and otherwise
transferred by a Holder (other than any Holder who is a broker-dealer or an
'affiliate' of the Company Issuers or Holdings within the meaning of Rule 405 of
the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Senior Subordinated Exchange Notes are acquired in the ordinary course of such
Holder's business and that such Holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Senior Subordinated Exchange
Notes. See '--Resale of Senior Subordinated Exchange Notes.' Each broker-dealer
that receives Senior Subordinated Exchange Notes for its own account in exchange
for Senior Subordinated Old Notes, where such Senior Subordinated Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Senior Subordinated Exchange Notes. See 'Plan
of Distribution.'
TERMS OF THE EXCHANGE
The Company Issuers hereby offer, subject to the conditions set forth
herein and in the applicable Letters of Transmittal accompanying this
Prospectus, (i) to exchange $1,000 principal amount of Fixed Rate Senior
Subordinated Exchange Notes for each $1,000 principal amount of their issued and
outstanding Fixed Rate Senior Subordinated Old Notes, and (ii) to exchange
$1,000 principal amount of Floating Rate Senior Subordinated Exchange Notes for
each $1,000 principal amount of their issued and outstanding Floating Rate
Senior Subordinated Old Notes, in each case properly tendered on or prior to the
applicable Senior Subordinated Expiration Date and not withdrawn as permitted
pursuant to the procedures described below. The terms of the Fixed Rate Senior
Subordinated Exchange Notes and the Floating Rate Senior Subordinated Exchange
Notes are identical in all material respects to the terms of the Fixed Rate
Senior Subordinated Old Notes and the Floating Rate Senior Subordinated Old
Notes, respectively, for which they may be exchanged pursuant to the applicable
Senior Subordinated Exchange Offer, except that the Senior Subordinated Exchange
Notes will generally be freely transferable by holders thereof and will not be
subject to any covenant regarding registration. The Fixed Rate Senior
Subordinated Exchange Notes and the Floating Rate Senior Subordinated Exchange
Notes will evidence the same indebtedness as the Fixed Rate Senior Subordinated
Old Notes and the Floating Rate Senior Subordinated Old Notes, respectively, and
will be entitled to the benefits of the Senior Subordinated Indenture. See
'Description of Senior Subordinated Exchange Notes.'
The Senior Subordinated Exchange Offers are not conditioned upon any
minimum aggregate principal amount of Senior Subordinated Old Notes being
tendered for exchange.
The Company Issuers have not requested, and do not intend to request, an
interpretation by the Staff of the Commission with respect to whether the Senior
Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange
Offers in exchange for the Senior Subordinated Old Notes may be offered for
sale, resold
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or otherwise transferred by any holder without compliance with the registration
and prospectus delivery provisions of the Securities Act. Instead, based on an
interpretation by the Staff of the Commission set forth in a series of no-action
letters issued to third parties, the Company Issuers believe that Senior
Subordinated Exchange Notes issued pursuant to the Senior Subordinated Exchange
Offers in exchange for Senior Subordinated Old Notes may be offered for sale,
resold and otherwise transferred by any holder of such Senior Subordinated
Exchange Notes (other than any such holder that is a broker-dealer or is an
'affiliate' of the Company Issuers or Holdings 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 Senior
Subordinated Exchange Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any person to
participate in the distribution of such Senior Subordinated Exchange Notes and
neither such holder nor any other such person is engaging in or intends to
engage in a distribution of such Senior Subordinated Exchange Notes. Since the
Commission has not considered the Senior Subordinated Exchange Offers in the
context of a no-action letter, there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Senior
Subordinated Exchange Offers. Any holder who is an affiliate of the Company
Issuers or who tenders in the Senior Subordinated Exchange Offers for the
purpose of participating in a distribution of the Senior Subordinated Exchange
Notes cannot rely on such interpretation by the Staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each holder, other
than a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of Senior Subordinated Exchange Notes. Each
broker-dealer that receives Senior Subordinated Exchange Notes for its own
account in exchange for Senior Subordinated Old Notes, where such Senior
Subordinated Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Senior
Subordinated Exchange Notes. A broker-dealer may not participate in the Senior
Subordinated Exchange Offers with respect to Senior Subordinated Old Notes
acquired other than as a result of market-making activities or other trading
activities. See 'Plan of Distribution.'
Interest on the Senior Subordinated Exchange Notes will accrue from the
last Interest Payment Date on which interest was paid on the Senior Subordinated
Old Notes so surrendered or, if no interest has been paid on such Notes, from
February 2, 1998.
Tendering holders of the Senior Subordinated Old Notes will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of the Senior
Subordinated Old Notes pursuant to the Senior Subordinated Exchange Offers.
EXPIRATION DATES; EXTENSION; TERMINATION; AMENDMENT
The Fixed Rate Senior Subordinated Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998 (the 'Fixed Rate Senior
Subordinated Expiration Date'), and the Floating Rate Senior Subordinated
Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1998 (the 'Floating Rate Senior Subordinated Expiration Date'
and, together with the Fixed Rate Senior Subordinated Expiration Date, the
'Senior Subordinated Expiration Dates'), unless the applicable Senior
Subordinated Exchange Offer is extended, in which case the term 'Fixed Rate
Senior Subordinated Expiration Date' or 'Floating Rate Senior Subordinated
Expiration Date' means the latest date and time to which the Fixed Rate Senior
Subordinated Exchange Offer or the Floating Rate Senior Subordinated Exchange
Offer, as the case may be, is extended. The Fixed Rate Senior Subordinated
Expiration Date and the Floating Rate Senior Subordinated Expiration Date will
each be at least 20 business days after the commencement of the related Senior
Subordinated Exchange Offer in accordance with Rule 14e-1(a) under the Exchange
Act. The Company Issuers expressly reserve the right, at any time or from time
to time, to extend the period of time during which either the Fixed Rate Senior
Subordinated Exchange Offer or the Floating Rate Senior Subordinated Exchange
Offer is open, and thereby delay acceptance for exchange of any Fixed Rate
Senior Subordinated Old Notes or Floating Rate Senior Subordinated Old Notes, as
the case may be, by giving oral or written notice to the Senior Subordinated
Exchange Agent and by timely public announcement no later than 9:00 a.m. New
York City time, on the next business day after the applicable Senior
Subordinated Expiration Date previously in effect. During any such extension,
all Senior Subordinated Old Notes previously tendered will remain subject to the
applicable Senior Subordinated Exchange Offer unless properly withdrawn. The
Company Issuers do not anticipate extending either Senior Subordinated
Expiration Date.
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The Company Issuers expressly reserve the right to (i) terminate or amend
either Senior Subordinated Exchange Offer and not to accept for exchange any
Senior Subordinated Old Notes not theretofore accepted for exchange upon the
occurrence of any of the events specified below under 'Certain Conditions to the
Senior Subordinated Exchange Offers' which have not been waived by the Company
Issuers and (ii) amend the terms of the Senior Subordinated Exchange Offers in
any manner which, in their good faith judgment, is advantageous to the holders
of the Senior Subordinated Old Notes, whether before or after any tender of
Senior Subordinated Old Notes. If any such termination or amendment occurs, the
Company Issuers will notify the Senior Subordinated Exchange Agent and will
either issue a press release or give oral or written notice to the holders of
the Senior Subordinated Old Notes as promptly as practicable.
For purposes of the Senior Subordinated Exchange Offers, a 'business day'
means any day other than Saturday, Sunday or a date on which banking
institutions are required or authorized by New York State law to be closed, and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time. Unless the Company Issuers terminate the applicable Senior
Subordinated Exchange Offer prior to 5:00 p.m., New York City time, on the
related Senior Subordinated Expiration Date, the Company Issuers will exchange
the applicable Senior Subordinated Exchange Notes for Senior Subordinated Old
Notes on such Senior Subordinated Exchange Date.
PROCEDURES FOR TENDERING SENIOR SUBORDINATED OLD NOTES
The tender to the Company Issuers of Senior Subordinated Old Notes by a
holder thereof as set forth below and the acceptance thereof by the Company
Issuers will constitute a binding agreement between the tendering holder and the
Company Issuers upon the terms and subject to the conditions set forth in this
Prospectus and in the applicable Letter of Transmittal.
A holder of Senior Subordinated Old Notes may tender the same by (i)
properly completing and signing the applicable Letter of Transmittal or a
facsimile thereof (all references in this Prospectus to a Letter of Transmittal
shall be deemed to include a facsimile thereof) and delivering the same,
together with the certificate or certificates representing the Senior
Subordinated Old Notes being tendered and any required signature guarantees and
any other documents required by such Letter of Transmittal, to the Senior
Subordinated Exchange Agent at its address set forth below on or prior to the
applicable Senior Subordinated Expiration Date (or complying with the procedure
for book-entry transfer described below) or (ii) complying with the guaranteed
delivery procedures described below.
THE METHOD OF DELIVERY OF SENIOR SUBORDINATED OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO SENIOR
SUBORDINATED OLD NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY
ISSUERS.
If tendered Senior Subordinated Old Notes are registered in the name of the
signer of the Letter of Transmittal and the Senior Subordinated Exchange Notes
to be issued in exchange therefor are to be issued (and any untendered Senior
Subordinated Old Notes are to be reissued) in the name of the registered holder
(which term, for the purposes described herein, shall include any participant in
The Depository Trust Company (also referred to as a 'book-entry transfer
facility') whose name appears on a security listing as the owner of Senior
Subordinated Old Notes), the signature of such signer need not be guaranteed. In
any other case, the tendered Senior Subordinated Old Notes must be endorsed or
accompanied by written instruments of transfer in form satisfactory to the
Company Issuers and duly executed by the registered holder, and the signature on
the endorsement or instrument of transfer must be guaranteed by a bank, broker,
dealer, credit union, savings association, clearing agency or other institution
(each an 'Eligible Institution') that is a member of a recognized signature
guarantee medallion program within the meaning of Rule 17Ad-15 under the
Exchange Act. In addition, if the Senior Subordinated Exchange Notes and/or
Senior Subordinated Old Notes not exchanged are to be delivered to an address
other than that of the registered holder appearing on the applicable note
register for such Senior Subordinated Old Notes, the signature on the Letter of
Transmittal must be guaranteed by an Eligible Institution.
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The Senior Subordinated Exchange Agent will make a request within two
business days after the date of receipt of this Prospectus to establish accounts
with respect to the Senior Subordinated Old Notes at the book-entry transfer
facility for the purpose of facilitating the Senior Subordinated Exchange
Offers, and subject to the establishment thereof, any financial institution that
is a participant in the book-entry transfer facility's system may make
book-entry delivery of Senior Subordinated Old Notes by causing such book-entry
transfer facility to transfer such Senior Subordinated Old Notes into the Senior
Subordinated Exchange Agent's account with respect to the Senior Subordinated
Old Notes in accordance with the book-entry transfer facility's procedures for
such transfer. Although delivery of Senior Subordinated Old Notes may be
effected through book-entry transfer into the Senior Subordinated Exchange
Agent's account at the book-entry transfer facility, an appropriate Letter of
Transmittal with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Senior Subordinated Exchange Agent at its address set forth below on or prior to
the applicable Senior Subordinated Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures.
If a holder desires to accept either Senior Subordinated Exchange Offer and
time will not permit the applicable Letter of Transmittal or Senior Subordinated
Old Notes to reach the Senior Subordinated Exchange Agent before the applicable
Senior Subordinated Expiration Date or the procedure for book-entry transfer
cannot be completed on a timely basis, a tender may be effected if the Senior
Subordinated Exchange Agent has received at its address set forth below on or
prior to the applicable Senior Subordinated Expiration Date, a letter, telegram
or facsimile transmission (receipt confirmed by telephone and an original
delivered by guaranteed overnight courier) from an Eligible Institution setting
forth the name and address of the tendering holder, the names in which the
Senior Subordinated Old Notes are registered and, if possible, the certificate
numbers of the Senior Subordinated Old Notes to be tendered, and stating that
the tender is being made thereby and guaranteeing that within three business
days after the applicable Senior Subordinated Expiration Date, the Senior
Subordinated Old Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Senior Subordinated Old Notes into the Senior
Subordinated Exchange Agent's account at the book-entry transfer facility), will
be delivered by such Eligible Institution together with a properly completed and
duly executed Letter of Transmittal (and any other required documents). Unless
Senior Subordinated Old Notes being tendered by the above-described method are
deposited with the Senior Subordinated 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 Issuers may, at their
option, reject the tender. Copies of the forms of notice of guaranteed delivery
('Notice of Guaranteed Delivery') relating to the Fixed Rate Senior Subordinated
Notes and the Floating Rate Senior Subordinated Notes, respectively, which may
be used by Eligible Institutions for the purposes described in this paragraph
are available from the Senior Subordinated Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Senior Subordinated Old Notes (or a confirmation of
book-entry transfer of such Senior Subordinated Old Notes into the Senior
Subordinated Exchange Agent's account at the book-entry transfer facility) is
received by the Senior Subordinated Exchange Agent, or (ii) the applicable
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) from an Eligible Institution is received by
the Senior Subordinated Exchange Agent. Issuances of Senior Subordinated
Exchange Notes in exchange for Senior Subordinated Old Notes tendered pursuant
to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission
to similar effect (as provided above) by an Eligible Institution will be made
only against deposit of the applicable Letter of Transmittal (and any other
required documents) and the tendered Senior Subordinated Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Senior Subordinated Old Notes tendered for exchange
will be determined by the Company Issuers in their sole discretion, which
determination shall be final and binding. The Company Issuers reserve the
absolute right to reject any and all tenders of any particular Senior
Subordinated Old Notes not properly tendered or not to accept any particular
Senior Subordinated Old Notes which acceptance might, in the judgment of the
Company Issuers or their counsel, be unlawful. The Company Issuers also reserve
the absolute right to waive any defects or irregularities or conditions of the
Senior Subordinated Exchange Offers as to any particular Senior Subordinated Old
Notes either before or after the applicable Senior Subordinated Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Senior Subordinated Old Notes in the Senior Subordinated
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Exchange Offers). The interpretation of the terms and conditions of the Senior
Subordinated Exchange Offers (including the applicable Letter of Transmittal and
the instructions thereto) by the Company Issuers shall be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Senior Subordinated Old Notes for exchange must be cured within such
reasonable period of time as the Company Issuers shall determine. Neither the
Company Issuers, the Senior Subordinated Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Senior Subordinated Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification.
If a Letter of Transmittal is signed by a person or persons other than the
registered holder or holders of Senior Subordinated Old Notes, such Senior
Subordinated Old Notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders appear on the Senior Subordinated Old Notes.
If a Letter of Transmittal or any Senior Subordinated 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 persons should so indicate when signing, and,
unless waived by the Company Issuers, proper evidence satisfactory to the
Company Issuers of their authority to so act must be submitted.
By tendering, each holder will represent to the Company Issuers that, among
other things, the Senior Subordinated Exchange Notes acquired pursuant to the
Senior Subordinated Exchange Offers are being acquired in the ordinary course of
business of the person receiving such Senior Subordinated Exchange Notes,
whether or not such person is the holder, that neither the holder nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such Senior Subordinated Exchange Notes and that neither
the holder nor any such other person is an 'affiliate,' as defined under Rule
405 of the Securities Act, of the Company Issuers or Holdings, or if it is an
affiliate it will comply with the registration and prospectus requirements of
the Securities Act to the extent applicable.
Each broker-dealer that receives Senior Subordinated Exchange Notes for its
own account in exchange for Senior Subordinated Old Notes where such Senior
Subordinated Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities must acknowledge that it
will deliver a prospectus in connection with any resale of such Senior
Subordinated Exchange Notes. See 'Plan of Distribution.'
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
Each Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the related Senior Subordinated Exchange
Offer.
The party tendering Notes for exchange (the 'Transferor') exchanges,
assigns and transfers the Senior Subordinated Old Notes to the Company Issuers
and irrevocably constitutes and appoints the Senior Subordinated Exchange Agent
as the Transferor's agent and attorney-in-fact to cause the Senior Subordinated
Old Notes to be assigned, transferred and exchanged. The Transferor represents
and warrants that it has full power and authority to tender, exchange, assign
and transfer the Senior Subordinated Old Notes and to acquire Senior
Subordinated Exchange Notes issuable upon the exchange of such tendered Notes,
and that, when the same are accepted for exchange, the Company Issuers will
acquire good and unencumbered title to the tendered Senior Subordinated Old
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the Senior
Subordinated Exchange Agent or the Company Issuers to be necessary or desirable
to complete the exchange, assignment and transfer of tendered Senior
Subordinated Old Notes or transfer ownership of such Senior Subordinated Old
Notes on the account books maintained by a book-entry transfer facility. The
Transferor further agrees that acceptance of any tendered Senior Subordinated
Old Notes by the Company Issuers and the issuance of Senior Subordinated
Exchange Notes in exchange therefor shall constitute performance in full by the
Company Issuers of certain of their obligations under the Senior Subordinated
Registration Rights Agreement. All authority conferred by the Transferor will
survive the death or incapacity of the Transferor and every obligation of the
Transferor shall be binding upon the heirs, legal representatives, successors,
assigns, executors and administrators of such Transferor.
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The Transferor certifies that it is not an 'affiliate' of the Company
Issuers or Holdings within the meaning of Rule 405 under the Securities Act and
that it is acquiring the Senior Subordinated Exchange Notes offered hereby in
the ordinary course of such Transferor's business and that such Transferor has
no arrangement with any person to participate in the distribution of such Senior
Subordinated Exchange Notes. Each holder, other than a broker-dealer, must
acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of Senior Subordinated Exchange Notes. Each Transferor which is a
broker-dealer receiving Senior Subordinated Exchange Notes for its own account
must acknowledge that it will deliver a prospectus in connection with any resale
of such Senior Subordinated Exchange 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 Senior Subordinated Exchange Notes
received in exchange for Senior Subordinated Old Notes where such Senior
Subordinated Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company Issuers will,
for a period of 90 days after the applicable Senior Subordinated Expiration
Date, make copies of this Prospectus available to any broker-dealer for use in
connection with any such resale.
WITHDRAWAL RIGHTS
Tenders of Senior Subordinated Old Notes may be withdrawn at any time prior
to the applicable Senior Subordinated Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Senior Subordinated Exchange Agent at the address set forth
herein prior to the applicable Senior Subordinated Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having tendered the
Senior Subordinated Old Notes to be withdrawn (the 'Depositor'), (ii) identify
the Senior Subordinated Old Notes to be withdrawn (including the certificate
number or numbers and principal amount of such Senior Subordinated Old Notes),
(iii) specify the principal amount of Senior Subordinated Old Notes to be
withdrawn, (iv) include a statement that such holder is withdrawing his election
to have such Senior Subordinated Old Notes exchanged, (v) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Senior Subordinated Old Notes were tendered or as otherwise
described above (including any required signature guarantees) or be accompanied
by documents of transfer sufficient to have the Senior Subordinated Trustee
under the Senior Subordinated Indenture register the transfer of such Senior
Subordinated Old Notes into the name of the person withdrawing the tender and
(vi) specify the name in which any such Senior Subordinated Old Notes are to be
registered, if different from that of the Depositor. The Senior Subordinated
Exchange Agent will return the properly withdrawn Senior Subordinated Old Notes
promptly following receipt of notice of withdrawal.
If Senior Subordinated Old Notes have been tendered pursuant to the
procedure for book-entry transfer, 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 Senior Subordinated Old Notes or otherwise comply
with the book-entry transfer facility procedure. All questions as to the
validity of notices of withdrawals, including time of receipt, will be
determined by the Company Issuers and such determination will be final and
binding on all parties.
Any Senior Subordinated Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the applicable Senior
Subordinated Exchange Offer. Any Senior Subordinated Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Senior Subordinated Old Notes tendered by book-entry transfer into the Senior
Subordinated Exchange Agent's account at the book-entry transfer facility
pursuant to the book-entry transfer procedures described above, such Senior
Subordinated Old Notes will be credited to an account with such book-entry
transfer facility specified by the holder) as soon as practicable after
withdrawal, rejection of tender or termination of the applicable Senior
Subordinated Exchange Offer. Properly withdrawn Senior Subordinated Old Notes
may be retendered by following one of the procedures described under
'--Procedures for Tendering Senior Subordinated Old Notes' above at any time on
or prior to the applicable Senior Subordinated Expiration Date.
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ACCEPTANCE OF SENIOR SUBORDINATED OLD NOTES FOR EXCHANGE; DELIVERY OF SENIOR
SUBORDINATED EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Senior
Subordinated Exchange Offers, the Company Issuers will accept, promptly on the
Senior Subordinated Exchange Date, all Senior Subordinated Old Notes properly
tendered and will issue the Senior Subordinated Exchange Notes promptly after
such acceptance. See '--Certain Conditions to the Senior Subordinated Exchange
Offers' below. For purposes of the Senior Subordinated Exchange Offers, the
Company Issuers shall be deemed to have accepted properly tendered Senior
Subordinated Old Notes for exchange when, as and if the Company Issuers have
given oral or written notice thereof to the Senior Subordinated Exchange Agent.
For each Senior Subordinated Old Note accepted for exchange, the holder of
such Senior Subordinated Old Note will receive a Senior Subordinated Exchange
Note having a principal amount equal to that of the surrendered Senior
Subordinated Old Note.
In all cases, issuance of Senior Subordinated Exchange Notes for Senior
Subordinated Old Notes that are accepted for exchange pursuant to either of the
Senior Subordinated Exchange Offers will be made only after timely receipt by
the Senior Subordinated Exchange Agent of certificates for such Senior
Subordinated Old Notes or a timely book-entry confirmation of such Senior
Subordinated Old Notes into the Senior Subordinated 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 Senior
Subordinated Old Notes are not accepted for any reason set forth in the terms
and conditions of the applicable Senior Subordinated Exchange Offer or if Senior
Subordinated Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Senior Subordinated
Old Notes will be returned without expense to the tendering holder thereof (or,
in the case of Senior Subordinated Old Notes tendered by book-entry transfer
into the Senior Subordinated Exchange Agent's account at the book-entry transfer
facility pursuant to the book-entry transfer procedures described above, such
non-exchanged Senior Subordinated Old Notes will be credited to an account
maintained with such book-entry transfer facility specified by the holder) as
promptly as practicable after the expiration of the applicable Senior
Subordinated Exchange Offer.
CERTAIN CONDITIONS TO THE SENIOR SUBORDINATED EXCHANGE OFFERS
Notwithstanding any other provision of the Senior Subordinated Exchange
Offers, or any extension of the Senior Subordinated Exchange Offers, the Company
Issuers shall not be required to accept for exchange, or to issue Senior
Subordinated Exchange Notes in exchange for, any Senior Subordinated Old Notes
and may terminate or amend either Senior Subordinated Exchange Offer (by oral or
written notice to the Senior Subordinated Exchange Agent or by a timely press
release) if at any time before the acceptance of such Senior Subordinated Old
Notes for exchange or the exchange of the Senior Subordinated Exchange Notes for
such Senior Subordinated Old Notes, any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency or regulatory authority or any
injunction, order or decree is issued with respect to such Senior
Subordinated Exchange Offer which, in the sole judgment of the Company
Issuers, might materially impair the ability of the Company Issuers to
proceed with the Senior Subordinated Exchange Offer or have a material
adverse effect on the contemplated benefits of such Senior Subordinated
Exchange Offer to the Company Issuers; or
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company Issuers that, in the sole judgment of the Company
Issuers, is or may be adverse to the Company Issuers, or the Company
Issuers shall have become aware of facts that have or may have adverse
significance with respect to the value of the Senior Subordinated Old Notes
or the Senior Subordinated Exchange Notes or that may, in the sole judgment
of the Company Issuers, materially impair the contemplated benefits of such
Senior Subordinated Exchange Offer to the Company Issuers; or
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(c) any law, rule or regulation or applicable interpretations of the
Staff of the Commission is issued or promulgated which, in the good faith
determination of the Company Issuers, does not permit the Company Issuers
to effect such Senior Subordinated Exchange Offer; or
(d) any governmental approval has not been obtained, which approval
the Company Issuers, in their sole discretion, deem necessary for the
consummation of such Senior Subordinated Exchange Offer; or
(e) there shall have been proposed, adopted or enacted any law,
statute, rule or regulation (or an amendment to any existing law, statute,
rule or regulation) which, in the sole judgment of the Company Issuers,
might materially impair the ability of the Company Issuers to proceed with
such Senior Subordinated Exchange Offer or have a material adverse effect
on the contemplated benefits of such Senior Subordinated Exchange Offer to
the Company Issuers; or
(f) there shall occur a change in the current interpretation by the
Staff of the Commission which permits the Senior Subordinated Exchange
Notes issued pursuant to such Senior Subordinated Exchange Offer in
exchange for Senior Subordinated Old Notes to be offered for resale, resold
and otherwise transferred by holders thereof (other than any such holder
that is an 'affiliate' of the Company Issuers or Holdings 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 Senior Subordinated Exchange Notes are acquired in the
ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such
Senior Subordinated Exchange Notes; or
(g) there shall have occurred (i) any general suspension of,
shortening of hours for, or limitation on prices for, trading in securities
on any national securities exchange or in the over-the-counter market
(whether or not mandatory), (ii) any limitation by any governmental agency
or authority which may adversely affect the ability of the Company Issuers
to complete the transactions contemplated by such Senior Subordinated
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks by Federal or state authorities
in the United States (whether or not mandatory), (iv) a commencement of a
war, armed hostilities or other international or national crisis directly
or indirectly involving the United States, (v) any limitation (whether or
not mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or
other lending institutions in the United States, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Senior
Subordinated Exchange Offers, a material acceleration or worsening thereof.
The Company Issuers expressly reserve the right to terminate either Senior
Subordinated Exchange Offer and not accept for exchange any of the related
Senior Subordinated Old Notes upon the occurrence of any of the foregoing
conditions (which represent all of the material conditions to the acceptance by
the Company Issuers of such Senior Subordinated Old Notes which are properly
tendered). In addition, the Company Issuers may amend either Senior Subordinated
Exchange Offer at any time prior to the applicable Senior Subordinated
Expiration Date if any of the conditions set forth above occurs. Moreover,
regardless of whether any of such conditions has occurred, the Company Issuers
may amend either Senior Subordinated Exchange Offer in any manner which, in
their good faith judgment, is advantageous to holders of the related Senior
Subordinated Old Notes.
The foregoing conditions are for the sole benefit of the Company Issuers
and may be asserted by the Company Issuers regardless of the circumstances
giving rise to any such condition or may be waived by the Company Issuers in
whole or in part at any time and from time to time in their sole discretion. The
failure by the Company Issuers at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. If the Company Issuers waive or amend the foregoing conditions, they will,
if required by law, extend the applicable Subordinated Exchange Offer for a
minimum of five business days from the date that the Company Issuers first give
notice, by public announcement or otherwise, of such waiver or amendment, if
such Senior Subordinated Exchange Offer would otherwise expire within such five
business-day period. Any determination by the Company Issuers concerning the
events described above will be final and binding upon all parties.
In addition, the Company Issuers will not accept for exchange any Senior
Subordinated Old Notes tendered, and no Senior Subordinated Exchange Notes will
be issued in exchange for any such Senior Subordinated Old Notes, if at such
time any stop order shall be threatened or in effect with respect to the
Registration Statement of
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which this Prospectus constitutes a part or the qualification of the Senior
Subordinated Indenture under the Trust Indenture Act of 1939, as amended. In any
such event, the Company Issuers are required to use every reasonable effort to
obtain the withdrawal of any stop order at the earliest possible time.
The Senior Subordinated Exchange Offers are not conditioned upon any
minimum principal amount of Senior Subordinated Old Notes being tendered for
exchange.
SENIOR SUBORDINATED EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Senior
Subordinated Exchange Agent for the Senior Subordinated Exchange Offers. All
executed Letters of Transmittal related to either Senior Subordinated Exchange
Offer should be directed to the Senior Subordinated Exchange Agent at one of the
addresses set forth below:
<TABLE>
<S> <C>
By Overnight Courier: By Registered or Certified Mail:
United States Trust Company of New York United States Trust Company of New York
770 Broadway P.O. Box 844
13th Floor Attn: Corporate Trust Services
New York, New York 10003 Cooper Station
Attn: Corporate Trust Services New York, New York 10276-0844
By Hand: By Facsimile (Eligible Institutions Only):
United States Trust Company of New York (212) 420-6152
111 Broadway Confirm by Telephone
Lower Level (800) 548-6565
Attn: Corporate Trust Services
New York, New York 10006
</TABLE>
Questions and requests for assistance, requests for additional copies of
this Prospectus or of either Letter of Transmittal related to the Senior
Subordinated Notes and requests for Notices of Guaranteed Delivery related to
the Senior Subordinated Notes should be directed to the Senior Subordinated
Exchange Agent at the address and telephone number set forth in the applicable
Letter of Transmittal.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE APPLICABLE LETTER OF
TRANSMITTAL, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE SET FORTH ON SUCH LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID
DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The Company Issuers have not retained any dealer-manager in connection with
the Senior Subordinated Exchange Offers and will not make any payments to
brokers, dealers or others soliciting acceptances of the Senior Subordinated
Exchange Offers. The Company Issuers, however, will pay the Senior Subordinated
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith. The
Company Issuers will also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this and other related documents to the beneficial owners
of the Senior Subordinated Old Notes and in handling or forwarding tenders for
their customers.
The estimated cash expenses to be incurred in connection with the Senior
Subordinated Exchange Offers will be paid by the Company Issuers and are
estimated in the aggregate to be approximately $ , including fees
and expenses of the Senior Subordinated Exchange Agent or the Senior
Subordinated Trustee, registration fees, and accounting, legal, printing and
related fees and expenses.
No person has been authorized to give any information or to make any
representations in connection with the Senior Subordinated Exchange Offers other
than those contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company Issuers. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create
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any implication that there has been no change in the affairs of the Company
Issuers since the respective dates as of which information is given herein. The
Senior Subordinated Exchange Offers are not being made to (nor will tenders be
accepted from or on behalf of) holders of Senior Subordinated Old Notes in any
jurisdiction in which the making of the applicable Senior Subordinated Exchange
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Company Issuers may, at their discretion, take such
action as they may deem necessary to make the Senior Subordinated Exchange
Offers in any such jurisdiction and extend the Senior Subordinated Exchange
Offers to holders of Senior Subordinated Old Notes in such jurisdiction. In any
jurisdiction in which the securities or 'blue sky' laws require the Senior
Subordinated Exchange Offers to be made by a licensed broker or dealer, the
Senior Subordinated Exchange Offers are being made on behalf of the Company
Issuers by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
TRANSFER TAXES
The Company Issuers will pay all transfer taxes, if any, applicable to the
exchange of Senior Subordinated Old Notes pursuant to the applicable Senior
Subordinated Exchange Offer. If, however, certificates representing Senior
Subordinated Exchange Notes or Senior Subordinated Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name of, any person other than the registered holder of the
Senior Subordinated Old Notes tendered, or if tendered Senior Subordinated Old
Notes are registered in the name of any person other than the person signing the
applicable Letter of Transmittal, or if a transfer tax is imposed for any reason
other than the exchange of Senior Subordinated Old Notes pursuant to the
applicable Senior Subordinated Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the applicable Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
ACCOUNTING TREATMENT
The Senior Subordinated Exchange Notes will be recorded at the carrying
value of the Senior Subordinated Old Notes as reflected in the Company Issuers'
accounting records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by the Company Issuers upon the exchange
of Senior Subordinated Exchange Notes for Senior Subordinated Old Notes.
Expenses incurred in connection with the issuance of the Senior Subordinated
Exchange Notes will be amortized over the term of the Senior Subordinated
Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Senior Subordinated Old Notes who do not exchange their Senior
Subordinated Old Notes for Senior Subordinated Exchange Notes pursuant to the
Senior Subordinated Exchange Offers will continue to be subject to the
restrictions on transfer of such Senior Subordinated Old Notes as set forth in
the legend thereon. Senior Subordinated Old Notes not exchanged pursuant to the
Senior Subordinated Exchange Offers will continue to remain outstanding in
accordance with their terms. In general, the Senior Subordinated Old Notes may
not be offered or sold unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company Issuers do not
currently anticipate that they will register the Senior Subordinated Old Notes
under the Securities Act.
Participation in the Senior Subordinated Exchange Offers is voluntary, and
holders of Senior Subordinated Old Notes should carefully consider whether to
participate. Holders of Senior Subordinated Old Notes are urged to consult their
financial and tax advisors in making their own decision on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Subordinated Old Notes pursuant to the terms of, the
Senior Subordinated Exchange Offers, the Company Issuers will have fulfilled a
covenant contained in the Senior Subordinated Registration Rights Agreement.
Holders of Senior Subordinated Old Notes who do not tender their Senior
Subordinated Old Notes in the applicable Senior Subordinated Exchange Offer will
continue to hold such Senior Subordinated Old Notes and will be entitled to all
the rights and limitations applicable thereto under the Senior Subordinated
Indenture, except for any such rights
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under the Senior Subordinated Registration Rights Agreement that by their terms
terminate or cease to have further effectiveness as a result of the making of
the Senior Subordinated Exchange Offers. All untendered Senior Subordinated Old
Notes will continue to be subject to the restrictions on transfer set forth in
the Senior Subordinated Indenture. To the extent that Senior Subordinated Old
Notes are tendered and accepted in the Senior Subordinated Exchange Offers, the
trading market for untendered Senior Subordinated Old Notes could be adversely
affected.
The Company Issuers may in the future seek to acquire, subject to the terms
of the Senior Subordinated Indenture, untendered Senior Subordinated Old Notes
in open-market or privately-negotiated transactions, through subsequent exchange
offers or otherwise. The Company Issuers have no present plan to acquire any
Senior Subordinated Old Notes which are not tendered in the Senior Subordinated
Exchange Offers.
RESALE OF SENIOR SUBORDINATED EXCHANGE NOTES
The Company Issuers are making the Senior Subordinated Exchange Offers in
reliance on the position of the Staff of the Commission as set forth in certain
interpretive letters addressed to third parties in other transactions. However,
the Company Issuers have not sought their own interpretive letter and there can
be no assurance that the Staff would make a similar determination with respect
to the Senior Subordinated Exchange Offers as it has in such interpretive
letters to third parties. Based on these interpretations by the Staff, the
Company Issuers believe that the Senior Subordinated Exchange Notes issued
pursuant to the Senior Subordinated Exchange Offers in exchange for Senior
Subordinated Old Notes may be offered for resale, resold and otherwise
transferred by a Holder (other than any Holder who is a broker-dealer or an
'affiliate' of the Company Issuers or Holdings within the meaning of Rule 405 of
the Securities Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Senior Subordinated Exchange Notes are acquired in the ordinary course of such
Holder's business and that such Holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Senior Subordinated Exchange
Notes. However, any holder who is an 'affiliate' of the Company Issuers or
Holdings who has an arrangement or understanding with respect to the
distribution of the Senior Subordinated Exchange Notes to be acquired pursuant
to the Senior Subordinated Exchange Offers, or any broker-dealer who purchased
Senior Subordinated Old Notes from the Company Issuers to resell pursuant to
Rule 144A or any other available exemption under the Securities Act (i) could
not rely on the applicable interpretations of the Staff and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act. A broker-dealer who holds Senior Subordinated Old Notes that were acquired
for its own account as a result of market-making or other trading activities may
be deemed to be an 'underwriter' within the meaning of the Securities Act and
must, therefore, deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of Senior Subordinated Exchange Notes. Each
such broker-dealer that receives Senior Subordinated Exchange Notes for its own
account in exchange for Senior Subordinated Old Notes, where such Senior
Subordinated Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge in the
applicable Letter of Transmittal that it will deliver a prospectus in connection
with any resale of such Senior Subordinated Exchange Notes. See 'Plan of
Distribution.'
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Senior Subordinated Exchange Notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
an exemption from registration or qualification is available and is complied
with. The Company Issuers have agreed, pursuant to the Senior Subordinated
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the Senior Subordinated Exchange Notes for offer
or sale under the securities or blue sky laws of such jurisdictions as any
holder of the Senior Subordinated Exchange Notes reasonably requests. Such
registration or qualification may require the imposition of restrictions or
conditions (including suitability requirements for offerees or purchasers) in
connection with the offer or sale of any Senior Subordinated Exchange Notes.
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THE SENIOR DISCOUNT EXCHANGE OFFER
GENERAL
The Holdings Issuers hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the applicable Letter of
Transmittal (which together constitute the Senior Discount Exchange Offer), to
exchange up to $169,000,000 aggregate principal amount at maturity of their
Senior Discount Exchange Notes for a like aggregate principal amount at maturity
of their Senior Discount Old Notes properly tendered on or prior to the Senior
Discount Expiration Date and not withdrawn as permitted pursuant to the
procedures described below. Throughout this Prospectus, references to the
'Letter of Transmittal' refer to the form of Letter of Transmittal that is
applicable to the Senior Discount Notes, the Fixed Rate Senior Subordinated
Notes or the Floating Rate Senior Subordinated Notes, as the context requires,
whether so expressed or not. The Senior Discount Exchange Offer is being made
with respect to all of the Senior Discount Old Notes.
As of the date of this Prospectus, $169,000,000 aggregate principal amount
at maturity of Senior Discount Old Notes is outstanding. This Prospectus and the
applicable Letter of Transmittal are first being sent on or about
, 1998, to all holders of Senior Discount Old Notes known to the
Holdings Issuers. The Holdings Issuers' obligation to accept Senior Discount Old
Notes for exchange pursuant to the Senior Discount Exchange Offer is subject to
certain conditions set forth under 'Certain Conditions to the Senior Discount
Exchange Offer' below. The Holdings Issuers currently expect that each of the
conditions will be satisfied and that no waivers will be necessary.
PURPOSE OF THE SENIOR DISCOUNT EXCHANGE OFFER
The Senior Discount Old Notes were issued on February 2, 1998 in a
transaction exempt from the registration requirements of the Securities Act.
Accordingly, the Senior Discount Old Notes may not be reoffered, resold, or
otherwise transferred unless so registered or unless an applicable exemption
from the registration and prospectus delivery requirements of the Securities Act
is available.
In connection with the issuance and sale of the Senior Discount Old Notes,
the Holdings Issuers entered into the Senior Discount Registration Rights
Agreement, which requires the Holdings Issuers to file with the Commission a
registration statement relating to the Senior Discount Exchange Offer not later
than 120 days after the date of issuance of the Senior Discount Old Notes, and
to use its best efforts to cause the registration statement relating to the
Senior Discount Exchange Offer to become effective under the Securities Act not
later than 180 days after the date of issuance of the Senior Discount Old Notes.
In addition, the Senior Discount Registration Rights Agreement provides for
certain remedies if the Senior Discount Exchange Offer is not consummated or a
shelf registration statement with respect to Senior Discount Old Notes is not
made effective within the time periods specified therein. See 'Senior Discount
Exchange Offer; Senior Discount Registration Rights.' A copy of the Senior
Discount Registration Rights Agreement has been filed as an exhibit to the
Registration Statement.
The Senior Discount Exchange Offer is being made by the Holdings Issuers to
satisfy their obligations with respect to the Senior Discount Registration
Rights Agreement. The term 'holder,' with respect to the Senior Discount
Exchange Offer, means any person in whose name Senior Discount Old Notes are
registered on the books of the Holdings Issuers or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Senior Discount Old Notes are held of record by The Depository
Trust Company or its nominee. Other than pursuant to the Senior Discount
Registration Rights Agreement, the Holdings Issuers are not required to file any
registration statement to register any outstanding Senior Discount Old Notes.
Holders of Senior Discount Old Notes who do not tender their Senior Discount Old
Notes or whose Senior Discount Old Notes are tendered but not accepted would
have to rely on exceptions to the registration requirements under the securities
laws, including the Securities Act, if they wish to sell their Senior Discount
Old Notes.
The Holdings Issuers are making the Senior Discount Exchange Offer in
reliance on the position of the Staff of the Commission as set forth in certain
interpretive letters addressed to third parties in other transactions. However,
the Holdings Issuers have not sought their own interpretive letter and there can
be no assurance that the Staff would make a similar determination with respect
to the Senior Discount Exchange Offer as it has in such
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interpretive letters to third parties. Based on these interpretations by the
Staff, the Holdings Issuers believe that the Senior Discount Exchange Notes
issued pursuant to the Senior Discount Exchange Offer in exchange for Senior
Discount Old Notes may be offered for resale, resold and otherwise transferred
by a Holder (other than any Holder who is a broker-dealer or an 'affiliate' of
the Holdings Issuers within the meaning of Rule 405 of the Securities Act)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Senior Discount Exchange
Notes are acquired in the ordinary course of such Holder's business and that
such Holder is not participating, and has no arrangement or understanding with
any person to participate, in a distribution (within the meaning of the
Securities Act) of such Senior Discount Exchange Notes. See '--Resale of Senior
Discount Exchange Notes.' Each broker-dealer that receives Senior Discount
Exchange Notes for its own account in exchange for Senior Discount Old Notes,
where such Senior Discount Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Senior
Discount Exchange Notes. See 'Plan of Distribution.'
TERMS OF THE EXCHANGE
The Holdings Issuers hereby offer to exchange, subject to the conditions
set forth herein and in the applicable Letter of Transmittal accompanying this
Prospectus, $1,000 in principal amount at maturity of Senior Discount Exchange
Notes for each $1,000 principal amount at maturity of the Senior Discount Old
Notes, properly tendered on or prior to the Senior Discount Expiration Date and
not withdrawn as permitted pursuant to the procedures described below. The terms
of the Senior Discount Exchange Notes are identical in all material respects to
the terms of the Senior Discount Old Notes for which they may be exchanged
pursuant to the Senior Discount Exchange Offer, except that the Senior Discount
Exchange Notes will generally be freely transferable by holders thereof and will
not be subject to any covenant regarding registration. The Senior Discount
Exchange Notes will evidence the same indebtedness as the Senior Discount Old
Notes and will be entitled to the benefits of the Senior Discount Indenture. See
'Description of Senior Discount Exchange Notes.'
The Senior Discount Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Senior Discount Old Notes being tendered for
exchange.
The Holdings Issuers have not requested, and do not intend to request, an
interpretation by the Staff of the Commission with respect to whether the Senior
Discount Exchange Notes issued pursuant to the Senior Discount Exchange Offer in
exchange for the Senior Discount Old Notes may be offered for sale, resold or
otherwise transferred by any holder without compliance with the registration and
prospectus delivery provisions of the Securities Act. Instead, based on an
interpretation by the Staff of the Commission set forth in a series of no-action
letters issued to third parties, the Holdings Issuers believe that Senior
Discount Exchange Notes issued pursuant to the Senior Discount Exchange Offer in
exchange for Senior Discount Old Notes may be offered for sale, resold and
otherwise transferred by any holder of such Senior Discount Exchange Notes
(other than any such holder that is a broker-dealer or is an 'affiliate' of the
Holdings Issuers 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 Senior Discount Exchange Notes are
acquired in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such Senior Discount Exchange Notes and neither such holder nor any other
such person is engaging in or intends to engage in a distribution of such Senior
Discount Exchange Notes. Since the Commission has not considered the Senior
Discount Exchange Offer in the context of a no-action letter, there can be no
assurance that the Staff of the Commission would make a similar determination
with respect to the Senior Discount Exchange Offer. Any holder who is an
affiliate of the Holdings Issuers or who tenders in the Senior Discount Exchange
Offer for the purpose of participating in a distribution of the Senior Discount
Exchange Notes cannot rely on such interpretation by the Staff of the Commission
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each holder, other
than a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of Senior Discount Exchange Notes. Each
broker-dealer that receives Senior Discount Exchange Notes for its own account
in exchange for Senior Discount Old Notes, where such Senior Discount Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Senior Discount Exchange Notes. A
broker-dealer may
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not participate in the Senior Discount Exchange Offer with respect to Senior
Discount Old Notes acquired other than as a result of market-making activities
or other trading activities. See 'Plan of Distribution.'
Cash interest on the Senior Discount Exchange Notes will not accrue until
January 15, 2003. Thereafter, interest on the Senior Discount Exchange Notes
will accrue from January 15, 2003 at the rate of 10 3/4% per annum on the
principal amount at maturity of the Senior Discount Exchange Notes, and will be
payable semiannually in arrears on January 15 and July 15 of each year,
commencing July 15, 2003.
Tendering holders of the Senior Discount Old Notes will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
applicable Letter of Transmittal, transfer taxes with respect to the exchange of
the Senior Discount Old Notes pursuant to the Senior Discount Exchange Offer.
SENIOR DISCOUNT EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Senior Discount Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1998, unless the Holdings Issuers, in their sole
discretion, have extended the period of time for which the Senior Discount
Exchange Offer is open (such date, as it may be extended, is referred to herein
as the 'Senior Discount Expiration Date' and, together with the Senior
Subordinated Expiration Dates, the 'Expiration Dates.') . The Senior Discount
Expiration Date will be at least 20 business days after the commencement of the
Senior Discount Exchange Offer in accordance with Rule 14e-1(a) under the
Exchange Act. The Holdings Issuers expressly reserve the right, at any time or
from time to time, to extend the period of time during which the Senior Discount
Exchange Offer is open, and thereby delay acceptance for exchange of any Senior
Discount Old Notes, by giving oral or written notice to the Senior Discount
Exchange Agent and by timely public announcement no later than 9:00 a.m. New
York City time, on the next business day after the previously scheduled Senior
Discount Expiration Date. During any such extension, all Senior Discount Old
Notes previously tendered will remain subject to the Senior Discount Exchange
Offer unless properly withdrawn. The Holdings Issuers do not anticipate
extending the Senior Discount Expiration Date.
The Holdings Issuers expressly reserve the right to (i) terminate or amend
the Senior Discount Exchange Offer and not to accept for exchange any Senior
Discount Old Notes not theretofore accepted for exchange upon the occurrence of
any of the events specified below under 'Certain Conditions to the Senior
Discount Exchange Offer' which have not been waived by the Holdings Issuers and
(ii) amend the terms of the Senior Discount Exchange Offer in any manner which,
in their good faith judgment, is advantageous to the holders of the Senior
Discount Old Notes, whether before or after any tender of the Senior Discount
Old Notes. If any such termination or amendment occurs, the Holdings Issuers
will notify the Senior Discount Exchange Agent and will either issue a press
release or give oral or written notice to the holders of the Senior Discount Old
Notes as promptly as practicable.
For purposes of the Senior Discount Exchange Offer, a 'business day' means
any day other than Saturday, Sunday or a date on which banking institutions are
required or authorized by New York State law to be closed, and consists of the
time period from 12:01 a.m. through 12:00 midnight, New York City time. Unless
the Holdings Issuers terminate the Senior Discount Exchange Offer prior to 5:00
p.m., New York City time, on the Senior Discount Expiration Date, the Holdings
Issuers will exchange the Senior Discount Exchange Notes for the Senior Discount
Old Notes on the Senior Discount Exchange Date.
PROCEDURES FOR TENDERING SENIOR DISCOUNT OLD NOTES
The tender to the Holdings Issuers of Senior Discount Old Notes by a holder
thereof as set forth below and the acceptance thereof by the Holdings Issuers
will constitute a binding agreement between the tendering holder and the
Holdings Issuers upon the terms and subject to the conditions set forth in this
Prospectus and in the applicable Letter of Transmittal.
A holder of Senior Discount Old Notes may tender the same by (i) properly
completing and signing the applicable Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) and delivering the same, together with
the certificate or certificates representing the Senior Discount Old Notes being
tendered and any required signature guarantees and any other documents required
by the applicable Letter of Transmittal, to the Senior Discount Exchange
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Agent at its address set forth below on or prior to the Senior Discount
Expiration Date (or complying with the procedure for book-entry transfer
described below) or (ii) complying with the guaranteed delivery procedures
described below.
THE METHOD OF DELIVERY OF SENIOR DISCOUNT OLD NOTES, LETTERS OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY. NO SENIOR DISCOUNT OLD NOTES OR
LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE HOLDINGS ISSUERS.
If tendered Senior Discount Old Notes are registered in the name of the
signer of the Letter of Transmittal and the Senior Discount Exchange Notes to be
issued in exchange therefor are to be issued (and any untendered Senior Discount
Old Notes are to be reissued) in the name of the registered holder (which term,
for the purposes described herein, shall include any participant in The
Depository Trust Company (also referred to as a 'book-entry transfer facility')
whose name appears on a security listing as the owner of Senior Discount Old
Notes), the signature of such signer need not be guaranteed. In any other case,
the tendered Senior Discount Old Notes must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Holdings Issuers and
duly executed by the registered holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a bank, broker, dealer, credit
union, savings association, clearing agency or other institution (each an
'Eligible Institution') that is a member of a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. In
addition, if the Senior Discount Exchange Notes and/or Senior Discount 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 Senior Discount Old
Notes, the signature on the Letter of Transmittal must be guaranteed by an
Eligible Institution.
The Senior Discount Exchange Agent will make a request within two business
days after the date of receipt of this Prospectus to establish accounts with
respect to the Senior Discount Old Notes at the book-entry transfer facility for
the purpose of facilitating the Senior Discount Exchange Offer, and subject to
the establishment thereof, any financial institution that is a participant in
the book-entry transfer facility's system may make book-entry delivery of Senior
Discount Old Notes by causing such book-entry transfer facility to transfer such
Senior Discount Old Notes into the Senior Discount Exchange Agent's account with
respect to the Senior Discount Old Notes in accordance with the book-entry
transfer facility's procedures for such transfer. Although delivery of Senior
Discount Old Notes may be effected through book-entry transfer into the Senior
Discount Exchange Agent's account at the book-entry transfer facility, an
appropriate Letter of Transmittal with any required signature guarantee and all
other required documents must in each case be transmitted to and received or
confirmed by the Senior Discount Exchange Agent at its address set forth below
on or prior to the Senior Discount Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures.
If a holder desires to accept the Senior Discount Exchange Offer and time
will not permit a Letter of Transmittal or Senior Discount Old Notes to reach
the Senior Discount Exchange Agent before the Senior Discount Expiration Date or
the procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if the Senior Discount Exchange Agent has received at its
address set forth below on or prior to the Senior Discount Expiration Date, a
letter, telegram or facsimile transmission (receipt confirmed by telephone and
an original delivered by guaranteed overnight courier) from an Eligible
Institution setting forth the name and address of the tendering holder, the
names in which the Senior Discount Old Notes are registered and, if possible,
the certificate numbers of the Senior Discount Old Notes to be tendered, and
stating that the tender is being made thereby and guaranteeing that within three
business days after the Senior Discount Expiration Date, the Senior Discount Old
Notes in proper form for transfer (or a confirmation of book-entry transfer of
such Senior Discount Old Notes into the Senior Discount Exchange Agent's account
at the book-entry transfer facility), will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Senior Discount Old Notes
being tendered by the above-described method are deposited with the Senior
Discount 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 Holdings Issuers may, at their option, reject the tender. Copies
of the notice of guaranteed delivery ('Notice of
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Guaranteed Delivery') which may be used by Eligible Institutions for the
purposes described in this paragraph are available from the Senior Discount
Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Senior Discount Old Notes (or a confirmation of book-entry
transfer of such Senior Discount Old Notes into the Senior Discount Exchange
Agent's account at the book-entry transfer facility) is received by the Senior
Discount Exchange Agent, or (ii) a Notice of Guaranteed Delivery or letter,
telegram or facsimile transmission to similar effect (as provided above) from an
Eligible Institution is received by the Senior Discount Exchange Agent.
Issuances of Senior Discount Exchange Notes in exchange for Senior Discount Old
Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram
or facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the applicable Letter of
Transmittal (and any other required documents) and the tendered Senior Discount
Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Senior Discount Old Notes tendered for exchange will
be determined by the Holdings Issuers in their sole discretion, which
determination shall be final and binding. The Holdings Issuers reserve the
absolute right to reject any and all tenders of any particular Senior Discount
Old Notes not properly tendered or not to accept any particular Senior Discount
Old Notes which acceptance might, in the judgment of the Holdings Issuers or
their counsel, be unlawful. The Holdings Issuers also reserve the absolute right
to waive any defects or irregularities or conditions of the Senior Discount
Exchange Offer as to any particular Senior Discount Old Notes either before or
after the Senior Discount Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Senior Discount Old Notes in the
Senior Discount Exchange Offer). The interpretation of the terms and conditions
of the Senior Discount Exchange Offer (including the applicable Letter of
Transmittal and the instructions thereto) by the Holdings Issuers shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Senior Discount Old Notes for exchange must be cured
within such reasonable period of time as the Holdings Issuers shall determine.
Neither the Holdings Issuers, the Senior Discount Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Senior Discount Old Notes for
exchange, nor shall any of them incur any liability for failure to give such
notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Senior Discount Old Notes, such Senior
Discount Old Notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders appear on the Senior Discount Old Notes.
If the Letter of Transmittal or any Senior Discount 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 persons should so indicate when signing, and,
unless waived by the Holdings Issuers, proper evidence satisfactory to the
Holdings Issuers of their authority to so act must be submitted.
By tendering, each holder will represent to the Holdings Issuers that,
among other things, the Senior Discount Exchange Notes acquired pursuant to the
Senior Discount Exchange Offer are being acquired in the ordinary course of
business of the person receiving such Senior Discount Exchange Notes, whether or
not such person is the holder, that neither the holder nor any such other person
has an arrangement or understanding with any person to participate in the
distribution of such Senior Discount Exchange Notes and that neither the holder
nor any such other person is an 'affiliate,' as defined under Rule 405 of the
Securities Act, of the Holdings Issuers, or if it is an affiliate it will comply
with the registration and prospectus requirements of the Securities Act to the
extent applicable.
Each broker-dealer that receives Senior Discount Exchange Notes for its own
account in exchange for Senior Discount Old Notes where such Senior Discount Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities must acknowledge that it will deliver a
prospectus in connection with any resale of such Senior Discount Exchange Notes.
See 'Plan of Distribution.'
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TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Senior Discount Exchange Offer.
The party tendering Notes for exchange (the 'Transferor') exchanges,
assigns and transfers the Senior Discount Old Notes to the Holdings Issuers and
irrevocably constitutes and appoints the Senior Discount Exchange Agent as the
Transferor's agent and attorney-in-fact to cause the Senior Discount Old Notes
to be assigned, transferred and exchanged. The Transferor represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Senior Discount Old Notes and to acquire Senior Discount Exchange
Notes issuable upon the exchange of such tendered Notes, and that, when the same
are accepted for exchange, the Holdings Issuers will acquire good and
unencumbered title to the tendered Senior Discount Old Notes, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The Transferor also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Senior Discount Exchange Agent or
the Holdings Issuers to be necessary or desirable to complete the exchange,
assignment and transfer of tendered Senior Discount Old Notes or transfer
ownership of such Senior Discount Old Notes on the account books maintained by a
book-entry transfer facility. The Transferor further agrees that acceptance of
any tendered Senior Discount Old Notes by the Holdings Issuers and the issuance
of Senior Discount Exchange Notes in exchange therefor shall constitute
performance in full by the Holdings Issuers of certain of their obligations
under the Senior Discount Registration Rights Agreement. All authority conferred
by the Transferor will survive the death or incapacity of the Transferor and
every obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
The Transferor certifies that it is not an 'affiliate' of the Holdings
Issuers within the meaning of Rule 405 under the Securities Act and that it is
acquiring the Senior Discount Exchange Notes offered hereby in the ordinary
course of such Transferor's business and that such Transferor has no arrangement
with any person to participate in the distribution of such Senior Discount
Exchange Notes. Each holder, other than a broker-dealer, must acknowledge that
it is not engaged in, and does not intend to engage in, a distribution of Senior
Discount Exchange Notes. Each Transferor which is a broker-dealer receiving
Senior Discount Exchange Notes for its own account must acknowledge that it will
deliver a prospectus in connection with any resale of such Senior Discount
Exchange 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 Senior Discount Exchange Notes received in exchange for Senior
Discount Old Notes where such Senior Discount Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Holdings Issuers will, for a period of 90 days after the Senior
Discount Expiration Date, make copies of this Prospectus available to any
broker-dealer for use in connection with any such resale.
WITHDRAWAL RIGHTS
Tenders of Senior Discount Old Notes may be withdrawn at any time prior to
the Senior Discount Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Senior Discount Exchange Agent at the address set forth
herein prior to the Senior Discount Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having tendered the Senior
Discount Old Notes to be withdrawn (the 'Depositor'), (ii) identify the Senior
Discount Old Notes to be withdrawn (including the certificate number or numbers
and principal amount of such Senior Discount Old Notes), (iii) specify the
principal amount of Senior Discount Old Notes to be withdrawn, (iv) include a
statement that such holder is withdrawing his election to have such Senior
Discount Old Notes exchanged, (v) be signed by the holder in the same manner as
the original signature on the Letter of Transmittal by which such Senior
Discount Old Notes were tendered or as otherwise described above (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee under the Senior Discount Indenture register the
transfer of such Senior Discount Old Notes into the name of the person
withdrawing the tender and (vi) specify the name in which any such Senior
Discount Old
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Notes are to be registered, if different from that of the Depositor. The Senior
Discount Exchange Agent will return the properly withdrawn Senior Discount Old
Notes promptly following receipt of notice of withdrawal.
If Senior Discount Old Notes have been tendered pursuant to the procedure
for book-entry transfer, 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 Senior Discount Old Notes or otherwise comply with the book-entry
transfer facility procedure. All questions as to the validity of notices of
withdrawals, including time of receipt, will be determined by the Holdings
Issuers and such determination will be final and binding on all parties.
Any Senior Discount Old Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Senior Discount Exchange
Offer. Any Senior Discount Old Notes which have been tendered for exchange but
which are not exchanged for any reason will be returned to the holder thereof
without cost to such holder (or, in the case of Senior Discount Old Notes
tendered by book-entry transfer into the Senior Discount Exchange Agent's
account at the book-entry transfer facility pursuant to the book-entry transfer
procedures described above, such Senior Discount Old Notes will be credited to
an account with such book-entry transfer facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of the
Senior Discount Exchange Offer. Properly withdrawn Senior Discount Old Notes may
be retendered by following one of the procedures described under '--Procedures
for Tendering Senior Discount Old Notes' above at any time on or prior to the
Senior Discount Expiration Date.
ACCEPTANCE OF SENIOR DISCOUNT OLD NOTES FOR EXCHANGE; DELIVERY OF SENIOR
DISCOUNT EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Senior Discount
Exchange Offer, the Holdings Issuers will accept, promptly on the Senior
Discount Exchange Date, all Senior Discount Old Notes properly tendered and will
issue the Senior Discount Exchange Notes promptly after such acceptance. See
'--Certain Conditions to the Senior Discount Exchange Offer' below. For purposes
of the Senior Discount Exchange Offer, the Holdings Issuers shall be deemed to
have accepted properly tendered Senior Discount Old Notes for exchange when, as
and if the Holdings Issuers have given oral or written notice thereof to the
Senior Discount Exchange Agent.
For each Senior Discount Old Note accepted for exchange, the holder of such
Senior Discount Old Note will receive a Senior Discount Exchange Note having a
principal amount equal to that of the surrendered Senior Discount Old Note.
In all cases, issuance of Senior Discount Exchange Notes for Senior
Discount Old Notes that are accepted for exchange pursuant to the Senior
Discount Exchange Offer will be made only after timely receipt by the Senior
Discount Exchange Agent of certificates for such Senior Discount Old Notes or a
timely book-entry confirmation of such Senior Discount Old Notes into the Senior
Discount 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 Senior Discount Old Notes are not accepted
for any reason set forth in the terms and conditions of the Senior Discount
Exchange Offer or if Senior Discount Old Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Senior Discount Old Notes will be returned without expense to the
tendering holder thereof (or, in the case of Senior Discount Old Notes tendered
by book-entry transfer into the Senior Discount Exchange Agent's account at the
book-entry transfer facility pursuant to the book-entry transfer procedures
described above, such non-exchanged Senior Discount Old Notes will be credited
to an account maintained with such book-entry transfer facility specified by the
holder) as promptly as practicable after the expiration of the Senior Discount
Exchange Offer.
CERTAIN CONDITIONS TO THE SENIOR DISCOUNT EXCHANGE OFFER
Notwithstanding any other provision of the Senior Discount Exchange Offer,
or any extension of the Senior Discount Exchange Offer, the Holdings Issuers
shall not be required to accept for exchange, or to issue Senior Discount
Exchange Notes in exchange for, any Senior Discount Old Notes and may terminate
or amend the Senior Discount Exchange Offer (by oral or written notice to the
Senior Discount Exchange Agent or by a timely press release) if at any time
before the acceptance of such Senior Discount Old Notes for exchange or the
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exchange of the Senior Discount Exchange Notes for such Senior Discount Old
Notes, any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency or regulatory authority or any
injunction, order or decree is issued with respect to the Senior Discount
Exchange Offer which, in the sole judgment of the Holdings Issuers, might
materially impair the ability of the Holdings Issuers to proceed with the
Senior Discount Exchange Offer or have a material adverse effect on the
contemplated benefits of the Senior Discount Exchange Offer to the Holdings
Issuers; or
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Holdings Issuers that, in the sole judgment of the
Holdings Issuers, is or may be adverse to the Holdings Issuers, or the
Holdings Issuers shall have become aware of facts that have or may have
adverse significance with respect to the value of the Senior Discount Old
Notes or the Senior Discount Exchange Notes or that may, in the sole
judgment of the Holdings Issuers, materially impair the contemplated
benefits of the Senior Discount Exchange Offer to the Holdings Issuers; or
(c) any law, rule or regulation or applicable interpretations of the
Staff of the Commission is issued or promulgated which, in the good faith
determination of the Holdings Issuers, does not permit the Holdings Issuers
to effect the Senior Discount Exchange Offer; or
(d) any governmental approval has not been obtained, which approval
the Holdings Issuers, in their sole discretion, deem necessary for the
consummation of the Senior Discount Exchange Offer; or
(e) there shall have been proposed, adopted or enacted any law,
statute, rule or regulation (or an amendment to any existing law, statute,
rule or regulation) which, in the sole judgment of the Holdings Issuers,
might materially impair the ability of the Holdings Issuers to proceed with
the Senior Discount Exchange Offer or have a material adverse effect on the
contemplated benefits of the Senior Discount Exchange Offer to the Holdings
Issuers; or
(f) there shall occur a change in the current interpretation by the
Staff of the Commission which permits the Senior Discount Exchange Notes
issued pursuant to the Senior Discount Exchange Offer in exchange for
Senior Discount Old Notes to be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
'affiliate' of the Holdings Issuers 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 Senior
Discount Exchange Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such Senior Discount Exchange Notes; or
(g) there shall have occurred (i) any general suspension of,
shortening of hours for, or limitation on prices for, trading in securities
on any national securities exchange or in the over-the-counter market
(whether or not mandatory), (ii) any limitation by any governmental agency
or authority which may adversely affect the ability of the Holdings Issuers
to complete the transactions contemplated by the Senior Discount Exchange
Offer, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks by Federal or state authorities in the United
States (whether or not mandatory), (iv) a commencement of a war, armed
hostilities or other international or national crisis directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or
other lending institutions in the United States, or (vi) in the case of any
of the foregoing existing at the time of the
commencement of the Senior Discount Exchange Offer, a material acceleration
or worsening thereof.
The Holdings Issuers expressly reserve the right to terminate the Senior
Discount Exchange Offer and not accept for exchange any Senior Discount Old
Notes upon the occurrence of any of the foregoing conditions (which represent
all of the material conditions to the acceptance by the Holdings Issuers of
properly tendered Senior Discount Old Notes). In addition, the Holdings Issuers
may amend the Senior Discount Exchange Offer at any time prior to the Senior
Discount Expiration Date if any of the conditions set forth above occurs.
Moreover, regardless of whether any of such conditions has occurred, the
Holdings Issuers may amend the Senior Discount
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Exchange Offer in any manner which, in their good faith judgment, is
advantageous to holders of the Senior Discount Old Notes.
The foregoing conditions are for the sole benefit of the Holdings Issuers
and may be asserted by the Holdings Issuers regardless of the circumstances
giving rise to any such condition or may be waived by the Holdings Issuers in
whole or in part at any time and from time to time in their sole discretion. The
failure by the Holdings Issuers at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. If the Holdings Issuers waive or amend the foregoing conditions, they
will, if required by law, extend the Senior Discount Exchange Offer for a
minimum of five business days from the date that the Holdings Issuers first give
notice, by public announcement or otherwise, of such waiver or amendment, if the
Senior Discount Exchange Offer would otherwise expire within such five
business-day period. Any determination by the Holdings Issuers concerning the
events described above will be final and binding upon all parties.
In addition, the Holdings Issuers will not accept for exchange any Senior
Discount Old Notes tendered, and no Senior Discount Exchange Notes will be
issued in exchange for any such Senior Discount Old Notes, if at such time any
stop order shall be threatened or in effect with respect to the Registration
Statement of which this Prospectus constitutes a part or the qualification of
the Senior Discount Indenture under the Trust Indenture Act of 1939, as amended.
In any such event, the Holdings Issuers are required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
The Senior Discount Exchange Offer is not conditioned upon any minimum
principal amount of Senior Discount Old Notes being tendered for exchange.
SENIOR DISCOUNT EXCHANGE AGENT
The Bank of New York has been appointed as the Senior Discount Exchange
Agent for the Senior Discount Exchange Offer. All executed Letters of
Transmittal should be directed to the Senior Discount Exchange Agent at one of
the addresses set forth below:
<TABLE>
<S> <C>
By Hand or Overnight Delivery: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attn: Enrique Lopez, Reorganization Section
New York, New York 10286
Attn: Enrique Lopez, Reorganization Section
<CAPTION>
<C>
By Facsimile (Eligible Institutions Only):
(212) 815-6339
Attn: Enrique Lopez, Reorganization Section
Telephone: (212) 816-2742
</TABLE>
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 Senior Discount Exchange Agent at
the address and telephone number set forth in the Letter of Transmittal.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE LETTER OF TRANSMITTAL, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE SET FORTH
ON THE LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID DELIVERY.
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SOLICITATION OF TENDERS; FEES AND EXPENSES
The Holdings Issuers have not retained any dealer-manager in connection
with the Senior Discount Exchange Offer and will not make any payments to
brokers, dealers or others soliciting acceptances of the Senior Discount
Exchange Offer. The Holdings Issuers, however, will pay the Senior Discount
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith. The
Holdings Issuers will also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this and other related documents to the beneficial owners
of the Senior Discount Old Notes and in handling or forwarding tenders for their
customers.
The estimated cash expenses to be incurred in connection with the Senior
Discount Exchange Offer will be paid by the Holdings Issuers and are estimated
in the aggregate to be approximately $ , including fees and
expenses of the Senior Discount Exchange Agent and the Senior Discount Trustee,
registration fees, and accounting, legal, printing and related fees and
expenses.
No person has been authorized to give any information or to make any
representations in connection with the Senior Discount Exchange Offer other than
those contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Holdings Issuers. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Holdings Issuers since the respective dates
as of which information is given herein. The Senior Discount Exchange Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Senior Discount Old Notes in any jurisdiction in which the making of the Senior
Discount Exchange Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, the Holdings Issuers may, at their
discretion, take such action as they may deem necessary to make the Senior
Discount Exchange Offer in any such jurisdiction and extend the Senior Discount
Exchange Offer to holders of Senior Discount Old Notes in such jurisdiction. In
any jurisdiction in which the securities or 'blue sky' laws require the Senior
Discount Exchange Offer to be made by a licensed broker or dealer, the Senior
Discount Exchange Offer is being made on behalf of the Holdings Issuers by one
or more registered brokers or dealers which are licensed under the laws of such
jurisdiction.
TRANSFER TAXES
The Holdings Issuers will pay all transfer taxes, if any, applicable to the
exchange of Senior Discount Old Notes pursuant to the Senior Discount Exchange
Offer. If, however, certificates representing Senior Discount Exchange Notes or
Senior Discount Old Notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the registered holder of the Senior Discount Old Notes tendered, or
if tendered Senior Discount Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Senior Discount Old Notes
pursuant to the Senior Discount Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the applicable Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
ACCOUNTING TREATMENT
The Senior Discount Exchange Notes will be recorded at the carrying value
of the Senior Discount Old Notes as reflected in the Holdings Issuers'
accounting records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by the Holdings Issuers upon the exchange
of Senior Discount Exchange Notes for Senior Discount Old Notes. Expenses
incurred in connection with the issuance of the Senior Discount Exchange Notes
will be amortized over the term of the Senior Discount Exchange Notes.
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CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Senior Discount Old Notes who do not exchange their Senior
Discount Old Notes for Senior Discount Exchange Notes pursuant to the Senior
Discount Exchange Offer will continue to be subject to the restrictions on
transfer of such Senior Discount Old Notes as set forth in the legend thereon.
Senior Discount Old Notes not exchanged pursuant to the Senior Discount Exchange
Offer will continue to remain outstanding in accordance with their terms. In
general, the Senior Discount Old Notes may not be offered or sold unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Holdings Issuers do not currently anticipate that they will register
the Senior Discount Old Notes under the Securities Act.
Participation in the Senior Discount Exchange Offer is voluntary, and
holders of Senior Discount Old Notes should carefully consider whether to
participate. Holders of Senior Discount Old Notes are urged to consult their
financial and tax advisors in making their own decision on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Discount Old Notes pursuant to the terms of, the Senior
Discount Exchange Offer, the Holdings Issuers will have fulfilled a covenant
contained in the Senior Discount Registration Rights Agreement. Holders of
Senior Discount Old Notes who do not tender their Senior Discount Old Notes in
the Senior Discount Exchange Offer will continue to hold such Senior Discount
Old Notes and will be entitled to all the rights and limitations applicable
thereto under the Senior Discount Indenture, except for any such rights under
the Senior Discount Registration Rights Agreement that by their terms terminate
or cease to have further effectiveness as a result of the making of this Senior
Discount Exchange Offer. All untendered Senior Discount Old Notes will continue
to be subject to the restrictions on transfer set forth in the Senior Discount
Indenture. To the extent that Senior Discount Old Notes are tendered and
accepted in the Senior Discount Exchange Offer, the trading market for
untendered Senior Discount Old Notes could be adversely affected.
The Holdings Issuers may in the future seek to acquire, subject to the
terms of the Senior Discount Indenture, untendered Senior Discount Old Notes in
open-market or privately-negotiated transactions, through subsequent exchange
offers or otherwise. The Holdings Issuers have no present plan to acquire any
Senior Discount Old Notes which are not tendered in the Senior Discount Exchange
Offer.
RESALE OF SENIOR DISCOUNT EXCHANGE NOTES
The Holdings Issuers are making the Senior Discount Exchange Offer in
reliance on the position of the Staff of the Commission as set forth in certain
interpretive letters addressed to third parties in other transactions. However,
the Holdings Issuers have not sought their own interpretive letter and there can
be no assurance that the Staff would make a similar determination with respect
to the Senior Discount Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the Staff, the Holdings Issuers
believe that the Senior Discount Exchange Notes issued pursuant to the Senior
Discount Exchange Offer in exchange for Senior Discount Old Notes may be offered
for resale, resold and otherwise transferred by a Holder (other than any Holder
who is a broker-dealer or an 'affiliate' of the Holdings Issuers within the
meaning of Rule 405 of the Securities Act) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such Senior Discount Exchange Notes are acquired in the ordinary
course of such Holder's business and that such Holder is not participating, and
has no arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of such Senior Discount
Exchange Notes. However, any holder who is an 'affiliate' of the Holdings
Issuers or who has an arrangement or understanding with respect to the
distribution of the Senior Discount Exchange Notes to be acquired pursuant to
the Senior Discount Exchange Offer, or any broker-dealer who purchased Senior
Discount Old Notes from the Holdings Issuers to resell pursuant to Rule 144A or
any other available exemption under the Securities Act (i) could not rely on the
applicable interpretations of the Staff and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act. A
broker-dealer who holds Senior Discount Old Notes that were acquired for its own
account as a result of market-making or other trading activities may be deemed
to be an 'underwriter' within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of Senior Discount Exchange Notes. Each such
broker-dealer that receives Senior Discount Exchange Notes for its own account
in exchange for Senior
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Discount Old Notes, where such Senior Discount Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge in the applicable Letter of Transmittal that it
will deliver a prospectus in connection with any resale of such Senior Discount
Exchange Notes. See 'Plan of Distribution.'
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Senior Discount Exchange Notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
an exemption from registration or qualification is available and is complied
with. The Holdings Issuers have agreed, pursuant to the Senior Discount
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the Senior Discount Exchange Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Senior Discount Exchange Notes reasonably requests. Such registration or
qualification may require the imposition of restrictions or conditions
(including suitability requirements for offerees or purchasers) in connection
with the offer or sale of any Senior Discount Exchange Notes.
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DESCRIPTION OF THE SENIOR SUBORDINATED EXCHANGE NOTES
The Senior Subordinated Old Notes were issued and the Senior Subordinated
Exchange Notes offered hereby will be issued under an Indenture dated as of
February 2, 1998 (the 'Senior Subordinated Indenture') by and between the
Company Issuers, Holdings, as guarantor, and United States Trust Company of New
York, as trustee (the 'Senior Subordinated Trustee'). The Fixed Rate Senior
Subordinated Exchange Notes and the Floating Rate Senior Subordinated Exchange
Notes will be treated as a single class of securities and will be issued under
the Senior Subordinated Indenture. Any Senior Subordinated Old Notes that remain
outstanding after the completion of the Senior Subordinated Exchange Offers,
together with the Senior Subordinated Exchange Notes issued in connection with
the Senior Subordinated Exchange Offers, will also be treated as a single class
of securities under the Senior Subordinated Indenture. All references to the
'Senior Subordinated Notes' in the following summary and elsewhere herein shall
mean the collective reference to the Fixed Rate Senior Subordinated Exchange
Notes, the Floating Rate Senior Subordinated Exchange Notes, the Fixed Rate
Senior Subordinated Old Notes and the Floating Rate Senior Subordinated Old
Notes. The following summary of certain provisions of the Senior Subordinated
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Trust Indenture Act of 1939, as amended (the
'TIA'), and to all of the provisions of the Senior Subordinated Indenture,
including the definitions of certain terms therein and those terms made a part
of the Senior Subordinated Indenture by reference to the TIA as in effect on the
date of the Senior Subordinated Indenture. The definitions of certain
capitalized terms used in the following summary that relate solely to the
Floating Rate Senior Subordinated Notes are set forth below under '--Floating
Rate Senior Subordinated Notes,' and the definitions of certain other
capitalized terms used in the following summary that relate to all Senior
Subordinated Notes are set forth below under '--Certain Definitions.' For
purposes of this section, references to the 'Company' mean the Operating
Company, and the terms 'Company' and 'Company Issuers' do not include their
respective Subsidiaries. The Senior Subordinated Indenture is an exhibit to the
Registration Statement of which this Prospectus is a part.
GENERAL
On February 2, 1998 (the 'Issue Date'), the Company Issuers issued
$150,000,000 aggregate principal amount of Fixed Rate Senior Subordinated Old
Notes, and $75,000,000 aggregate principal amount of Floating Rate Senior
Subordinated Old Notes under the Senior Subordinated Indenture. The terms of the
Fixed Rate Senior Subordinated Exchange Notes and the Floating Rate Senior
Subordinated Exchange Notes are identical in all material respects to the terms
of the Fixed Rate Senior Subordinated Old Notes and the Floating Rate Senior
Subordinated Old Notes, respectively, for which they may be exchanged, except
for certain transfer restrictions and registration and other rights relating to
the exchange of the Senior Subordinated Old Notes for Senior Subordinated
Exchange Notes. The Senior Subordinated Trustee will authenticate and deliver
Fixed Rate Senior Subordinated Exchange Notes and Floating Rate Senior
Subordinated Exchange Notes for original issue only in exchange for a like
principal amount of Fixed Rate Senior Subordinated Old Notes and Floating Rate
Senior Subordinated Old Notes, respectively. The Fixed Rate Senior Subordinated
Exchange Notes and the Floating Rate Senior Subordinated Exchange Notes will be
treated as a single class of securities under the Senior Subordinated Indenture.
Any Senior Subordinated Old Notes that remain outstanding after the completion
of the Senior Subordinated Exchange Offers, together with the Senior
Subordinated Exchange Notes issued in connection with the Senior Subordinated
Exchange Offers, will also be treated as a single class of securities under the
Senior Subordinated Indenture. Accordingly, all references herein to specified
percentages in aggregate principal amount of the outstanding Senior Subordinated
Exchange Notes shall be deemed to mean, at any time after the Senior
Subordinated Exchange Offers are consummated, such percentage in aggregate
principal amount of the Senior Subordinated Old Notes and Senior Subordinated
Exchange Notes then outstanding.
The Senior Subordinated Exchange Notes will be unsecured obligations of the
Company Issuers, ranking subordinate in right of payment to all Senior
Indebtedness of the Company Issuers.
The Senior Subordinated Exchange Notes will be issued in fully registered
form only, without coupons, in denominations of $1,000 and integral multiples
thereof. Initially, the Senior Subordinated Trustee will act as Paying Agent and
Registrar for the Senior Subordinated Exchange Notes. The Senior Subordinated
Exchange Notes may be presented for registration of transfer and exchange at the
offices of the Registrar, which initially will be the Senior Subordinated
Trustee's corporate trust office. The Company Issuers may change any Paying
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Agent and Registrar without notice to holders of the Senior Subordinated
Exchange Notes (the 'Holders'). The Company Issuers will pay principal (and
premium, if any) on the Senior Subordinated Exchange Notes at the Senior
Subordinated Trustee's corporate office in New York, New York. At the Company
Issuers' option, interest may be paid at the Senior Subordinated Trustee's
corporate trust office or by check mailed to the registered addresses of
Holders.
PRINCIPAL, MATURITY AND INTEREST
The Senior Subordinated Notes are limited to $325,000,000 aggregate
principal amount at any time outstanding. Pursuant to the Senior Subordinated
Exchange Offers, an aggregate of up to $225,000,000 aggregate principal amount
of Senior Subordinated Exchange Notes may be issued, consisting of $150,000,000
principal amount of Fixed Rate Senior Subordinated Exchange Notes and
$75,000,000 principal amount of Floating Rate Senior Subordinated Exchange
Notes. Such Senior Subordinated Exchange Notes may be issued solely in exchange
for the $150,000,000 aggregate principal amount of Fixed Rate Senior
Subordinated Old Notes and $75,000,000 aggregate principal amount of Floating
Rate Senior Subordinated Old Notes which were issued on February 2, 1998.
The Senior Subordinated Exchange Notes will mature on January 15, 2008.
Interest on the Senior Subordinated Exchange Notes will be payable semiannually
in cash on each January 15 and July 15, commencing on the first such date to
occur after the effective date of the applicable Senior Subordinated Exchange
Offer. Interest will be payable to the persons who are registered Holders at the
close of business on the January 1 or July 1 immediately preceding the
applicable interest payment date. Interest on each Senior Subordinated Exchange
Note will accrue (A) from the later of (i) the last interest payment date on
which interest was paid on the Senior Subordinated Old Note surrendered in
exchange therefor or (ii) if the Senior Subordinated Old Note is 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 such Senior Subordinated Old Note, from the Issue
Date.
The Senior Subordinated Exchange Notes will not be entitled to the benefit
of any mandatory sinking fund.
FIXED RATE SENIOR SUBORDINATED EXCHANGE NOTES
Interest on the Fixed Rate Senior Subordinated Exchange Notes will accrue
at the rate of 8 3/4% per annum.
FLOATING RATE SENIOR SUBORDINATED EXCHANGE NOTES
The Floating Rate Senior Subordinated Exchange Notes will bear interest at
a rate per annum, reset semi-annually, equal to LIBOR (as defined) plus 3 5/8%,
as determined by the Calculation Agent (the 'Calculation Agent'), which shall
initially be the Senior Subordinated Trustee.
'LIBOR,' with respect to an Interest Period, will be the rate (expressed
as a percentage per annum) for deposits in United States dollars for a six-month
period beginning on the second London Banking Day (as defined) after the
Determination Date (as defined) that appears on Telerate Page 3750 (as defined)
as of 11:00 a.m., London time, on the Determination Date. If Telerate Page 3750
does not include such a rate or is unavailable on a Determination Date, LIBOR
for the Interest Period shall be the arithmetic mean of the rates (expressed as
a percentage per annum) for deposits in a Representative Amount (as defined) in
United States dollars for a six-month period beginning on the second London
Banking Day after the Determination Date that appears on Reuters Screen LIBO
Page (as defined) as of 11:00 a.m., London time, on the Determination Date. If
Reuters Screen LIBO Page does not include two or more rates or is unavailable on
a Determination Date, the Calculation Agent will request the principal London
office of each of four major banks in the London interbank market, as selected
by the Calculation Agent, to provide such bank's offered quotation (expressed as
a percentage per annum), as of approximately 11:00 a.m., London time, on such
Determination Date, to prime banks in the London interbank market for deposits
in a Representative Amount in United States dollars for a six-month period
beginning on the second London Banking Day after the Determination Date. If at
least two such offered quotations are so provided, LIBOR for the Interest Period
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, the Calculation Agent will request each of three
major banks in New York City, as selected by the Calculation Agent, to provide
such bank's rate (expressed as a percentage per
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annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a six-month period beginning on the second
London Banking Day after the Determination Date. If at least two such rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
rates. If fewer than two such rates are so provided, then LIBOR for the Interest
Period will be LIBOR in effect with respect to the immediately preceding
Interest Period.
'Interest Period' means the period commencing on and including an interest
payment date and ending on and including the day immediately preceding the next
succeeding interest payment date, with the exception that the first Interest
Period shall commence on and include February 2, 1998 and end on and include
July 14, 1998.
'Determination Date,' with respect to an Interest Period, will be the
second London Banking Day preceding the first day of the Interest Period.
'London Banking Day' is any day in which dealings in United States dollars
are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
'Representative Amount' means a principal amount of not less than U.S.
$1,000,000 for a single transaction in the relevant market at the relevant time.
'Telerate Page 3750' means the display designated as 'Page 3750' on the
Dow Jones Telerate Service (or such other page as may replace Page 3750 on that
service).
'Reuters Screen LIBO Page' means the display designated as page 'LIBO' on
The Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service).
Subject to the provisions relating to the date from which interest will
accrue on the Senior Subordinated Exchange Notes as described under
'--Principal, Maturity and Interest' above, the amount of interest for each day
that the Floating Rate Senior Subordinated Exchange Notes are outstanding (the
'Daily Interest Amount') will be calculated by dividing the interest rate in
effect for such day by 360 and multiplying the result by the principal amount of
the Floating Rate Senior Subordinated Exchange Notes. Subject to such provisions
described under '--Principal, Maturity and Interest' above, the amount of
interest to be paid on the Floating Rate Senior Subordinated Exchange Notes for
each Interest Period will be calculated by adding the Daily Interest Amounts for
each day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point being rounded upwards
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all
dollar amounts used in or resulting from such calculations will be rounded to
the nearest cent (with one-half cent being rounded upwards).
The interest rate on the Floating Rate Senior Subordinated Exchange Notes
will in no event be higher than the maximum rate permitted by New York law as
the same may be modified by United States law of general application. Under
current New York law, the maximum rate of interest is 25% per annum on a simple
interest basis. This limit may not apply to Floating Rate Senior Subordinated
Exchange Notes in which $2,500,000 or more has been invested.
The Calculation Agent will, upon the request of the holder of any Floating
Rate Senior Subordinated Exchange Note, provide the interest rate then in effect
with respect to the Floating Rate Senior Subordinated Exchange Notes. All
calculations made by the Calculation Agent in the absence of manifest error will
be conclusive for all purposes and binding on the Company Issuers, Holdings, as
guarantor, and the Holders of the Floating Rate Senior Subordinated Exchange
Notes.
REDEMPTION
Optional Redemption. The Fixed Rate Senior Subordinated Exchange Notes
will be redeemable, at the Company Issuers' option, in whole at any time or in
part from time to time, on and after January 15, 2003, upon not less than 30 nor
more than 60 days' notice, at the following redemption prices (expressed as
percentages of
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the principal amount thereof) if redeemed during the twelve-month period
commencing on January 15 of the year set forth below, plus, in each case,
accrued and unpaid interest thereon to the date of redemption:
YEAR PERCENTAGE
- ---- ----------
2003.......................................................... 104.375%
2004.......................................................... 102.917%
2005.......................................................... 101.458%
2006 and thereafter........................................... 100.000%
The Floating Rate Senior Subordinated Exchange Notes will be redeemable, at
the Company Issuers' option, in whole or in part from time to time, upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on January 15 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, to the date of
redemption:
YEAR PERCENTAGE
- ---- ----------
1998.......................................................... 105.000%
1999.......................................................... 104.000%
2000.......................................................... 103.000%
2001.......................................................... 102.000%
2002.......................................................... 101.000%
2003 and thereafter........................................... 100.000%
Optional Redemption of Fixed Rate Senior Subordinated Exchange Notes upon
Equity Offerings. At any time, or from time to time, on or prior to January 15,
2001, the Company Issuers may, at their option, use the net cash proceeds of one
or more Equity Offerings by the Company (or by Holdings to the extent such
proceeds are contributed to the Company) to redeem Fixed Rate Senior
Subordinated Notes up to an aggregate principal amount equal to 40% of the
aggregate principal amount of the Fixed Rate Senior Subordinated Old Notes
originally issued, at a redemption price equal to 108.750% of the principal
amount thereof, plus accrued and unpaid interest to the date of redemption;
provided that Fixed Rate Senior Subordinated Notes in an aggregate principal
amount equal to at least 60% of the aggregate principal amount of the Fixed Rate
Senior Subordinated Old Notes originally issued remains outstanding immediately
following such redemption. In order to effect the foregoing redemption with the
proceeds of any Equity Offering, the Company Issuers shall make such redemption
not more than 120 days after the consummation of any such Equity Offering.
SELECTION AND NOTICE OF REDEMPTION
If less than all of the Senior Subordinated Exchange Notes are to be
redeemed at any time or if more Senior Subordinated Exchange Notes are tendered
pursuant to an Asset Sale Offer or a Change of Control Offer than the Company
Issuers are required to purchase, then the selection of such Senior Subordinated
Exchange Notes for redemption or purchase, as the case may be, will be made by
the Senior Subordinated Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which such Senior
Subordinated Exchange Notes are listed, or, if such Senior Subordinated Exchange
Notes are not so listed, on a pro rata basis, by lot or by such other method as
the Senior Subordinated Trustee shall deem fair and appropriate (and in such
manner as complies with applicable legal requirements); provided that no Senior
Subordinated Exchange Notes of $1,000 or less shall be purchased or redeemed in
part.
Notices of purchase or redemption shall be mailed by first class mail,
postage prepaid, at least 30 but not more than 60 days before the purchase or
redemption date to each Holder of Senior Subordinated Exchange Notes to be
purchased or redeemed at such Holder's registered address. If any Senior
Subordinated Exchange Note is to be purchased or redeemed in part only, any
notice of purchase or redemption that relates to such Senior Subordinated
Exchange Note shall state the portion of the principal amount thereof that has
been or is to be purchased or redeemed.
A new Senior Subordinated Exchange Note in principal amount equal to the
unpurchased or unredeemed portion of any Senior Subordinated Exchange Note
purchased or redeemed in part will be issued in the name of the Holder thereof
upon cancellation of the original Senior Subordinated Exchange Note. On and
after the purchase or redemption date unless the Company Issuers default in
payment of the purchase or redemption price,
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interest shall cease to accrue on Senior Subordinated Exchange Notes or portions
thereof purchased or called for redemption.
SUBORDINATION
The payment of all Obligations on the Senior Subordinated Notes is
subordinated in right of payment to the prior payment in full in cash or Cash
Equivalents of all Obligations on Senior Indebtedness. Upon any payment or
distribution of assets of either of the Company Issuers of any kind or
character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors or marshaling of assets of either of the Company Issuers or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to either of the Company Issuers or their respective property, whether
voluntary or involuntary, all Obligations due or to become due upon all Senior
Indebtedness shall first be paid in full in cash or Cash Equivalents, or such
payment duly provided for to the satisfaction of the holders of Senior
Indebtedness, before any payment or distribution of any kind or character is
made on account of any Obligations on the Senior Subordinated Notes, or for the
acquisition of any of the Senior Subordinated Notes for cash or property or
otherwise (except that holders of the Senior Subordinated Notes may receive
Permitted Junior Securities and payments from a trust described under 'Legal
Defeasance and Covenant Defeasance' below so long as, on the date or dates the
respective amounts were paid into the trust, such payments were made with
respect to the Senior Subordinated Notes without violating the subordination
provisions described herein). If any default occurs and is continuing in the
payment when due, whether at maturity, upon any redemption, by acceleration or
otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to, any
Senior Indebtedness, no payment of any kind or character shall be made by or on
behalf of either of the Company Issuers or any other Person on either of their
behalf with respect to any Obligations on the Senior Subordinated Notes or to
acquire any of the Senior Subordinated Notes for cash or property or otherwise
(except that holders of the Senior Subordinated Notes may receive payments from
a trust described under '--Legal Defeasance and Covenant Defeasance' below so
long as, on the date or dates the respective amounts were paid into the trust,
such payments were made with respect to the Senior Subordinated Notes without
violating the subordination provisions described herein).
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness, permitting the holders of such Designated Senior Indebtedness then
outstanding to accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives written notice of the
event of default to the Senior Subordinated Trustee (a 'Default Notice'), then,
unless and until all events of default have been cured or waived or have ceased
to exist or the Senior Subordinated Trustee receives notice from the
Representative for the respective issue of Designated Senior Indebtedness
terminating the Blockage Period (as defined), during the 180 days after the
delivery of such Default Notice (the 'Blockage Period'), neither of the Company
Issuers nor any other Person on either of their behalf shall (x) make any
payment of any kind or character with respect to any Obligations on the Senior
Subordinated Notes or (y) acquire any of the Senior Subordinated Notes for cash
or property or otherwise (except that holders of the Senior Subordinated Notes
may receive payments from a trust described under '--Legal Defeasance and
Covenant Defeasance' below so long as, on the date or dates the respective
amounts were paid into the trust, such payments were made with respect to the
Senior Subordinated Notes without violating the subordination provisions
described herein). Notwithstanding anything herein to the contrary, in no event
will a Blockage Period extend beyond 180 days from the date the Default Notice
is delivered and only one such Blockage Period may be commenced within any 360
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Indebtedness shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Indebtedness
whether or not within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to an
event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
By reason of such subordination, in the event of the insolvency of either
of the Company Issuers, creditors of the Company Issuers who are not holders of
Senior Indebtedness, including the Holders of the Senior Subordinated Notes, may
recover less, ratably, than holders of Senior Indebtedness.
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COMPANY ISSUERS' STRUCTURE
The Company is a wholly owned operating subsidiary of Holdings, and CapCo I
is a subsidiary corporation of the Company with no material operations of its
own and only limited assets.
NO RECOURSE TO HOLDINGS PARTNERS; NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS
The Senior Subordinated Indenture under which the Senior Subordinated Notes
have been or will be issued provides that all obligations under the Senior
Subordinated Indenture, the Senior Subordinated Notes, the Holdings Guarantee
and the Old Holdings Guarantee (and all notes and guarantees issued in exchange
therefor) shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and that, by purchasing the Senior Subordinated Notes, each
holder of Senior Subordinated Notes waives any liability of any partner of
Holdings under the Senior Subordinated Indenture, the Senior Subordinated Notes,
the Holdings Guarantee and the Old Holdings Guarantee (and all notes and
guarantees issued in exchange therefor). No director, officer, employee,
incorporator or stockholder of the Company Issuers or any Guarantor shall have
any liability for any obligations of the Company Issuers or the Guarantors under
the Senior Subordinated Exchange Notes, the Guarantees or the Senior
Subordinated Indenture or any claim based on, in respect of, or by reason of
such obligation, or their creation. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
HOLDINGS GUARANTEE
The obligations of the Company Issuers under the Senior Subordinated
Exchange Notes and the Senior Subordinated Indenture will be guaranteed (the
'Holdings Guarantee') on a senior subordinated basis by Holdings. The Holdings
Guarantee will be subordinated in right of payment to all Senior Indebtedness of
Holdings to the same extent that the Senior Subordinated Notes are subordinated
to Senior Indebtedness of the Company Issuers. Since Holdings is a holding
company with no significant operations, the Holdings Guarantee provides little,
if any, additional credit support for the Senior Subordinated Exchange Notes,
and investors should not rely on the Holdings Guarantee in evaluating an
investment in the Senior Subordinated Exchange Notes.
CHANGE OF CONTROL
The Senior Subordinated Indenture provides that upon the occurrence of a
Change of Control, each Holder will have the right to require that the Company
Issuers purchase all or a portion of such Holder's Senior Subordinated Exchange
Notes pursuant to the offer described below (the 'Change of Control Offer'), at
a purchase price equal to 101% of the principal amount thereof plus accrued
interest to the date of purchase.
The Senior Subordinated Indenture provides that, prior to the mailing of
the notice referred to below, but in any event within 30 days following any
Change of Control, the Company Issuers covenant to (i) repay in full and
terminate all commitments under Indebtedness under the New Credit Facility and
all other Senior Indebtedness the terms of which require repayment upon a Change
of Control or offer to repay in full and terminate all commitments under all
Indebtedness under the New Credit Facility and all other such Senior
Indebtedness and to repay the Indebtedness owed to each lender which has
accepted such offer or (ii) obtain the requisite consents under the New Credit
Facility and all other Senior Indebtedness to permit the repurchase of the
Senior Subordinated Exchange Notes as provided below. The Company Issuers shall
first comply with the covenant in the immediately preceding sentence before they
shall be required to repurchase Senior Subordinated Notes pursuant to the
provisions described below. The Company Issuers' failure to comply with the
covenant described in the second preceding sentence or the immediately
succeeding paragraph shall constitute an Event of Default described in clause
(iii) (and not in clause (ii)) under 'Events of Default' below.
Within 30 days following the date upon which the Change of Control
occurred, the Company Issuers must send, by first class mail, a notice to each
Holder, with a copy to the Senior Subordinated Trustee, which notice shall
govern the terms of the Change of Control Offer. Such notice shall state, among
other things, the purchase date, which must be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be required
by law (the 'Change of Control Payment Date'). Holders electing to have a Senior
Subordinated Note purchased pursuant to a Change of Control Offer will be
required to surrender the Senior
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Subordinated Note, with the form entitled 'Option of Holder to Elect Purchase'
on the reverse of the Senior Subordinated Note completed, to the paying agent
('Paying Agent') at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company Issuers will have available funds sufficient to pay the Change of
Control purchase price for all the Senior Subordinated Exchange Notes that might
be delivered by Holders seeking to accept the Change of Control Offer. In the
event that the Company Issuers are required to purchase outstanding Senior
Subordinated Exchange Notes pursuant to a Change of Control Offer, the Company
Issuers expect that they would seek third party financing to the extent they do
not have available funds to meet their purchase obligations. However, there can
be no assurance that the Company Issuers would be able to obtain such financing.
Neither the Board of Directors of either Company Issuer nor the Senior
Subordinated Trustee may waive the covenant relating to a Holder's right to
repurchase upon a Change of Control. Restrictions in the Senior Subordinated
Indenture described herein on the ability of the Company Issuers to incur
additional Indebtedness, to grant Liens on their property, to make Restricted
Payments and to make Asset Sales may also make more difficult or discourage a
takeover of Holdings or the Company Issuers, whether favored or opposed by the
management of Holdings or the Company Issuers. Consummation of any such
transaction in certain circumstances may require redemption or repurchase of the
Senior Subordinated Exchange Notes, and there can be no assurance that the
Company Issuers or the acquiring party will have sufficient financial resources
to effect such redemption or repurchase. Such restrictions and the restrictions
on transactions with Affiliates may, in certain circumstances, make more
difficult or discourage any leveraged buyout of Holdings, either of the Company
Issuers or any of their respective Subsidiaries by the management of Holdings or
the respective Company Issuers. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Senior Subordinated Indenture may not afford the Holders of
Senior Subordinated Exchange Notes protection in all circumstances from the
adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
The Company Issuers will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Senior Subordinated Exchange Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the 'Change of Control' provisions of the Senior Subordinated
Indenture, the Company Issuers shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached their obligations under
the 'Change of Control' provisions of the Senior Subordinated Indenture by
virtue thereof.
CERTAIN COVENANTS
The Senior Subordinated Indenture contains, among others, the following
covenants:
Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock. (i) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, 'incur' and
collectively, an 'incurrence') any Indebtedness (including Acquired
Indebtedness), (ii) the Company and any Guarantor will not issue any shares of
Disqualified Stock and (iii) the Company will not permit any of its Restricted
Subsidiaries that are not Guarantors (other than CapCo I) to issue any shares of
preferred stock; provided, however, that the Company and any Guarantor may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company's and the Restricted
Subsidiaries' most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 1.75 to 1.00 (determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, and the application of proceeds therefrom had occurred at the
beginning of such four-quarter period).
The foregoing limitations do not apply to: (a) the incurrence by the
Company or its Restricted Subsidiaries of Indebtedness under the New Credit
Facility and the issuance and creation of letters of credit and banker's
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acceptances thereunder (with letters of credit and banker's acceptances being
deemed to have a principal amount equal to the face amount thereof) up to an
aggregate principal amount of $650.0 million outstanding at any one time; (b)
the incurrence by the Company Issuers of Indebtedness represented by the Senior
Subordinated Notes in an aggregate principal amount not to exceed $225,000,000;
(c) Indebtedness existing on the Issue Date (other than Indebtedness described
in clauses (a) and (b)); (d) Indebtedness (including Capitalized Lease
Obligations) incurred by the Company or any of its Restricted Subsidiaries, to
finance the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness then outstanding
and incurred pursuant to this clause (d) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (d), does not exceed 15% of Total Assets at the
time of the respective incurrence; (e) Indebtedness incurred by the Company or
any of its Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation claims; (f)
Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
(g) Indebtedness of the Company to a Restricted Subsidiary; provided that any
such Indebtedness shall be subordinated in right of payment to the Senior
Subordinated Notes; provided further that any subsequent issuance or transfer of
any Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Company or another Restricted
Subsidiary) shall be deemed, in each case to be an incurrence of such
Indebtedness; (h) shares of preferred stock of a Restricted Subsidiary issued to
the Company or another Restricted Subsidiary; provided that any subsequent
issuance or transfer of any Capital Stock or any other event which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
other subsequent transfer of any such shares of preferred stock (except to the
Company or another Restricted Subsidiary) shall be deemed, in each case to be an
issuance of such shares of preferred stock; (i) Indebtedness of a Restricted
Subsidiary to the Company or another Restricted Subsidiary; provided that if a
Guarantor incurs such indebtedness from a Restricted Subsidiary that is not a
Guarantor, such Indebtedness shall be subordinated in right of payment to the
Guarantee of such Guarantor; and provided, further, that any subsequent transfer
of any such Indebtedness (except to the Company or another Restricted
Subsidiary) shall be deemed, in each case to be an incurrence of such
Indebtedness; (j) Hedging Obligations that are incurred in the ordinary course
of business (1) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of the Senior
Subordinated Indenture to be outstanding; (2) for the purpose of fixing or
hedging currency exchange rate risk with respect to any currency exchanges; or
(3) for the purpose of fixing or hedging commodity price risk with respect to
any commodity purchases; (k) obligations in respect of performance and surety
bonds and completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business; (l) Indebtedness of any Guarantor
in respect of such Guarantor's Guarantee; (m) Indebtedness or Disqualified Stock
of the Company and any of its Restricted Subsidiaries not otherwise permitted
hereunder in an aggregate principal amount or liquidation preference, which when
aggregated with the principal amount and liquidation preference of all other
Indebtedness and Disqualified Stock then outstanding and incurred pursuant to
this clause (m), does not exceed $50.0 million at any one time outstanding; (n)
(i) any guarantee by the Company or by any Restricted Subsidiary that is a
Guarantor of Indebtedness or other obligations of the Company or any of the
Company's Restricted Subsidiaries so long as the incurrence of such Indebtedness
incurred by such Restricted Subsidiary or the Company, as the case may be, is
permitted under the terms of the Senior Subordinated Indenture and (ii) any
Excluded Guarantee of a Restricted Subsidiary; (o) the incurrence by the Company
or any of its Restricted Subsidiaries of Indebtedness which serves to refund,
refinance or restructure any Indebtedness incurred as permitted under the first
paragraph of this covenant, this clause (o) and clauses (b) and (c) above and
(q) below, or any Indebtedness issued to so refund, refinance or restructure
such Indebtedness including additional Indebtedness incurred to pay premiums and
fees in connection therewith (the 'Refinancing Indebtedness') prior to its
respective maturity; provided, however, that such Refinancing Indebtedness (i)
has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining
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Weighted Average Life to Maturity of the Indebtedness being refunded or
refinanced, (ii) to the extent such Refinancing Indebtedness refinances
Indebtedness subordinated or pari passu to the Senior Subordinated Notes, such
Refinancing Indebtedness is subordinated or pari passu to the Senior
Subordinated Notes at least to the same extent as the Indebtedness being
refinanced or refunded and (iii) shall not include (x) Indebtedness of a
Restricted Subsidiary that is not a Guarantor that refinances Indebtedness of
the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary; and provided further that
subclauses (i) and (ii) of this clause (o) will not apply to any refunding or
refinancing of any Senior Indebtedness; (p) other Indebtedness in an amount not
greater than twice the amount of Permanent Qualified Equity Contributions after
the Issue Date at any one time outstanding; and (q) Indebtedness or Disqualified
Stock of Persons that are acquired by the Company or any of its Restricted
Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms
of the Senior Subordinated Indenture; provided that such Indebtedness or
Disqualified Stock is not incurred in contemplation of such acquisition or
merger; and provided further that after giving effect to such acquisition,
either (i) the Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first sentence of this covenant or (ii) the Fixed Charge Coverage Ratio is
greater than immediately prior to such acquisition.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (a) through (q) above
or is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (other than (A)
dividends or distributions by the Company payable in Equity Interests (other
than Disqualified Stock) of the Company or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or distribution
payable on or in respect of any class or series of securities issued by a
Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the
Company or a Restricted Subsidiary receives at least its pro rata share of such
dividend or distribution in accordance with its Equity Interests in such class
or series of securities); (ii) purchase or otherwise acquire or retire for value
any Equity Interests of the Company; (iii) make any principal payment on, or
redeem, repurchase, defease or otherwise acquire or retire for value in each
case, prior to any scheduled repayment, or maturity, any Subordinated
Indebtedness (other than (A) the payment, redemption, repurchase, defeasance,
acquisition or retirement of Subordinated Indebtedness in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in any case due within one year of the date of such payment, redemption,
repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted
under clauses (g) and (i) of the covenant described under 'Limitations on
Incurrence of Indebtedness and Issuance of Disqualified Stock'); or (iv) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as 'Restricted
Payments'), unless, at the time of such Restricted Payment: (a) no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; (b) immediately after giving effect to such transaction on
a pro forma basis, the Company could incur $1.00 of additional Indebtedness
under the provisions of the first paragraph of 'Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock'; and (c) such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
made by the Company and its Restricted Subsidiaries after the Issue Date
(including Restricted Payments permitted by clauses (i), (ii) (with respect to
the repurchase, retirement or other acquisition of Retired Capital Stock
pursuant to clause (a) thereof and the payment of dividends on Retired Capital
Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x) of the next
succeeding paragraph, but excluding all other Restricted Payments permitted by
the next succeeding paragraph), is less than the sum of (i) 50% of the
cumulative Consolidated Net Income of the Company for the period (taken as one
accounting period) from the first day after the Issue Date to the date of such
Restricted Payment (or, in the case such Consolidated Net Income for such period
is a deficit, minus 100% of such deficit), plus (ii) 100% of the aggregate net
proceeds, including cash and the fair market value of property other than cash
(as determined in good faith by the Company), received by the Company since the
Issue Date from the issue or
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sale of Equity Interests of the Company (including Refunding Capital Stock (as
defined) but excluding Disqualified Stock), including such Equity Interests
issued upon conversion of Indebtedness or upon exercise of warrants or options,
plus (iii) 100% of the aggregate amount of contributions to the capital of the
Company since the Issue Date (other than Excluded Contributions), plus (iv) 100%
of the aggregate amount received in cash and the fair market value of property
other than cash (as determined in good faith by the Company) received from (A)
the sale or other disposition (other than to the Company or a Restricted
Subsidiary) of Restricted Investments made by the Company and its Restricted
Subsidiaries or (B) the sale (other than to the Company or a Restricted
Subsidiary) of the Capital Stock of an Unrestricted Subsidiary, plus (v) in case
any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary or has
been merged, consolidated or amalgamated with or into, transfers or conveys
assets to, or is liquidated into, the Company or a Restricted Subsidiary, the
fair market value (as determined in good faith by the Company) of such
Investment in such Unrestricted Subsidiary at the time of such redesignation,
combination or transfer (or of the assets transferred or conveyed, as
applicable), after deducting any Indebtedness associated with the Unrestricted
Subsidiary so designated or combined or with the assets so transferred or
conveyed.
The foregoing provisions will not prohibit: (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of the
Senior Subordinated Indenture; (ii) (a) the repurchase, retirement or other
acquisition of any Equity Interests (the 'Retired Capital Stock') or
Subordinated Indebtedness of the Company in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of the Company (other than any Disqualified Stock) or
contributions to the common equity capital of the Company (the 'Refunding
Capital Stock'), and (b) the declaration and payment of dividends on the Retired
Capital Stock out of the proceeds of the substantially concurrent sale (other
than to a Restricted Subsidiary) of Refunding Capital Stock; (iii) the
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, new Indebtedness of the Company so long as (A)
the principal amount of such new Indebtedness does not exceed the principal
amount of and accrued and unpaid interest on the Subordinated Indebtedness being
so redeemed, repurchased, acquired or retired for value (plus the amount of any
premium required to be paid under the terms of the instrument governing the
Subordinated Indebtedness being so redeemed, repurchased, acquired or retired),
(B) such Indebtedness is subordinated to the Senior Subordinated Notes at least
to the same extent as such Subordinated Indebtedness so purchased, exchanged,
redeemed, repurchased, acquired or retired for value, (C) such Indebtedness has
a final scheduled maturity date equal to or later than the final scheduled
maturity date of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired and (D) such Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average Life to
Maturity of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired; (iv) the repurchase, retirement or other acquisition for
value (or a dividend or distribution to fund any such repurchase, retirement or
other acquisition) of Equity Interests of the Company, Holdings or Investor LP
held by any future, present or former employee, director or consultant of the
Company or any Subsidiary pursuant to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement; provided,
however, that the aggregate amounts paid under this clause (iv) does not exceed
in any calendar year $5.0 million (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum (without
giving effect to the following proviso) of $10.0 million in any calendar year);
provided further, that such amount in any calendar year may be increased by an
amount not to exceed (i) the cash proceeds from the sale of Equity Interests of
the Company (or of Holdings or Investor LP which are contributed to the Company)
to members of management, directors or consultants of the Company and its
Subsidiaries that occurs after the Issue Date (provided that such proceeds have
not been included with respect to determining whether a previous Restricted
Payment was permitted pursuant to the first paragraph of this covenant) plus
(ii) the cash proceeds of key man life insurance policies received by the
Company and its Restricted Subsidiaries after the Issue Date; (v) the
declaration and payment of dividends or distributions to holders of any class or
series of Disqualified Stock of the Company or any of its Restricted
Subsidiaries issued or incurred in accordance with the covenant entitled
'Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock';
(vi) the declaration and payment of dividends or distributions to holders of any
class or series of Designated Preferred Stock; provided, however, that for the
most recently ended four full fiscal quarters for which internal financial
statements are available preceding the date of declaration of any such dividend
or distribution, after giving effect
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to such dividend or distribution as a Fixed Charge on a pro forma basis, the
Company and its Restricted Subsidiaries would have had a Fixed Charge Coverage
Ratio of at least 1.75 to 1.00; (vii) Investments in Unrestricted Subsidiaries
having an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (vii) that are at that time outstanding, not to
exceed $15.0 million at the time of such Investment (with the fair market value
of each Investment being measured at the time made and without giving effect to
subsequent changes in value); (viii) repurchases of (or a dividend or
distribution to fund the repurchases of) Equity Interests of the Company,
Holdings or Investor LP deemed to occur upon exercise of stock options if such
Equity Interests represent a portion of the exercise price of such options; (ix)
the payment of dividends on the Company's Common Stock (or the payment to
Holdings to fund the payment by Holdings of dividends on Holding's Common Stock)
following the first public offering of Common Stock of the Company or Holdings,
as the case may be, after the Issue Date, of up to 6% per annum of the net
proceeds received by the Company or contributed to the Company by Holdings, as
the case may be, in such public offering; (x) the repurchase, retirement or
other acquisition for value after the first anniversary of the Issue Date (or
dividend or distribution to fund the repurchase, retirement or other acquisition
of) of Equity Interests of Holdings, the Company or Investor LP in existence on
the Issue Date and which are not held by Blackstone or any of their Affiliates
or the Management Group on the Issue Date (including any Equity Interests issued
in respect of such Equity Interests as a result of a stock split,
recapitalization, merger, combination, consolidation or otherwise, but excluding
any management equity plan or stock option plan or similar agreement), provided
that (A) the aggregate amounts paid under this clause (x) shall not exceed (I)
$15.0 million on or prior to the second anniversary of the Issue Date or (II)
$30.0 million at any time after the second anniversary of the Issue Date and (B)
after giving effect thereto, the Company would be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first sentence of the covenant described under
'Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock';
(xi) Investments that are made with Excluded Contributions; (xii) other
Restricted Payments in an aggregate amount not to exceed $15.0 million; (xiii)
the payment of any dividend or distribution on Equity Interests of the Company
to the extent necessary to permit direct or indirect beneficial owners of such
Equity Interests to receive tax distributions in an amount equal to the taxable
income of the Company allocated to a partner multiplied by the highest combined
federal and state income tax rate (including, to the extent applicable,
alternative minimum tax) solely as a result of the Company (and any intermediate
entity through which such holder owns such Equity Interests) being a partnership
or similar pass-through entity for federal income tax purposes ('Permitted Tax
Distributions'); (xiv) the payment of dividends or distributions to Holdings to
fund cash interest payments on the Senior Discount Notes commencing July 15,
2003 in accordance with the terms of the Senior Discount Notes; (xv) Restricted
Payments made on the Issue Date contemplated by the Recapitalization Agreement;
and (xvi) any dividend or distribution to Holdings in respect of overhead
expenses, legal, accounting, Commission reporting and other professional fees
and expenses of Holdings that are directly attributable to the operations of the
Company and its Restricted Subsidiaries; provided, however,that at the time of,
and after giving effect to, any Restricted Payment permitted under clauses
(vii), (ix), (x), (xii) and (xiv) (other than with respect to Defaults and
Events of Default set forth in clause (iii) or (vi) under 'Events of Default'),
no Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof; and provided further that for purposes of
determining the aggregate amount expended for Restricted Payments in accordance
with clause (c) of the immediately preceding paragraph, only the amounts
expended under clauses (i), (ii) (with respect to the repurchase, retirement or
other acquisition of Retired Capital Stock pursuant to clause (a) thereof and
the payment of dividends on Retired Capital Stock pursuant to clause (b)
thereof), (v), (vi), (ix) and (x) shall be included.
As of the Issue Date, all of the Company's Subsidiaries were Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the second to last sentence of the
definition of 'Unrestricted Subsidiary.' For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated will be deemed to be Restricted Payments in an
amount determined as set forth in the last sentence of the definition of
'Investments.' Such designation is only permitted if a Restricted Payment in
such amount would be permitted at such time (whether pursuant to the first
paragraph of this covenant or under clause (vii), (xi) or (xii)) and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Senior Subordinated Indenture.
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Limitation on Asset Sales. The Company will not, and will not cause or
permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an
Asset Sale, unless (x) the Company or its Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
fair market value (as determined in good faith by the Company) of the assets
sold or otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents; provided that the amount of (a) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Senior Subordinated Notes) that are assumed by the transferee of any such assets
without recourse to the Company or any of the Restricted Subsidiaries, (b) any
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) within 180 days
following the closing of such Asset Sale, (c) any Designated Noncash
Consideration received by the Company or any of its Restricted Subsidiaries in
such Asset Sale having an aggregate fair market value, taken together with all
other Designated Noncash Consideration received pursuant to this clause (c) that
is at that time outstanding, not to exceed 15% of Total Assets at the time of
the receipt of such Designated Noncash Consideration (with the fair market value
of each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value) and (d) any
assets received in exchange for assets related to a Similar Business of
comparable market value in the good faith determination of, the Board of
Directors of the Company, shall be deemed to be cash for purposes of this
provision.
Within 365 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option, (i) to
permanently reduce Obligations under the New Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Senior Subordinated Notes if the Senior
Subordinated Notes are then redeemable or, if the Senior Subordinated Notes may
not be then redeemed, the Company shall make an offer (in accordance with the
procedures set forth below for an Asset Sale Offer) to all Holders to purchase
at 100% of the principal amount thereof the amount of Senior Subordinated Notes
that would otherwise be redeemed) or Indebtedness of a Restricted Subsidiary,
(ii) to an investment in any one or more businesses, capital expenditures or
acquisitions of other assets in each case, used or useful in a Similar Business
and/or (iii) to make an investment in properties or assets that replace the
properties and assets that are the subject of such Asset Sale. Pending the final
application of any such Net Proceeds, the Company or such Restricted Subsidiary
may temporarily reduce Indebtedness under a revolving credit facility, if any,
or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade
Securities. The Senior Subordinated Indenture provides that any Net Proceeds
from the Asset Sale that are not invested as provided and within the time period
set forth in the first sentence of this paragraph (it being understood that any
portion of such Net Proceeds used to make an offer to purchase Senior
Subordinated Notes, as described in clause (i) above, shall be deemed to have
been invested whether or not such offer is accepted) will be deemed to
constitute 'Excess Proceeds.' When the aggregate amount of Excess Proceeds
exceeds $15.0 million, the Company Issuers shall make an offer to all Holders of
Senior Subordinated Notes (an 'Asset Sale Offer') to purchase the maximum
principal amount of Senior Subordinated Notes, that is an integral multiple of
$1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Senior Subordinated Indenture.
The Company Issuers will commence an Asset Sale Offer with respect to Excess
Proceeds within ten Business Days after the date that Excess Proceeds exceeds
$15.0 million by mailing the notice required pursuant to the terms of the Senior
Subordinated Indenture, with a copy to the Senior Subordinated Trustee. To the
extent that the aggregate amount of Senior Subordinated Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate or partnership purposes. If the
aggregate principal amount of Senior Subordinated Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Senior Subordinated Trustee
shall select the Senior Subordinated Notes to be purchased in the manner
described under the caption 'Selection and Notice of Redemption' above. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
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The Company Issuers will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Senior Subordinated Notes pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of the Senior Subordinated Indenture, the Company Issuers will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in the Senior Subordinated Indenture by
virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to: (a)(i) pay dividends
or make any other distributions to the Company or any of its Restricted
Subsidiaries (1) on their Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries; (b) make
loans or advances to the Company or any of its Restricted Subsidiaries; or (c)
sell, lease or transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries; except (in each case) for such encumbrances or
restrictions existing under or by reason of: (1) contractual encumbrances or
restrictions in effect on the Issue Date, including pursuant to the New Credit
Facility and its related documentation and the Senior Discount Indenture; (2)
the Senior Subordinated Indenture and the Senior Subordinated Notes; (3)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature discussed in clause (c) above on
the property so acquired; (4) applicable law or any applicable rule, regulation
or order; (5) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired; (6) contracts for the sale of assets, including, without limitation,
customary restrictions with respect to a Subsidiary pursuant to an agreement
that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness
otherwise permitted to be incurred pursuant to the covenants described under
'Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock'
and 'Limitation on Liens' that limit the right of the debtor to dispose of the
assets securing such Indebtedness; (8) restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business; (9) other Indebtedness of Foreign Subsidiaries permitted to
be incurred subsequent to the Issue Date pursuant to the provisions of the
covenant described under 'Limitations on Incurrence of Indebtedness and Issuance
of Disqualified Stock'; (10) customary provisions in joint venture agreements
and other similar agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements entered into
in the ordinary course of business; (12) any encumbrances or restrictions of the
type referred to in clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board of
Directors (or the general partners with regard to a partnership) of such Company
Issuer engaged in such transaction, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the dividend or
other payment restrictions prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing; (13) any
encumbrances or restrictions that are no more restrictive than those contained
in the New Credit Facility as in effect on the Issue Date; or (14) which will
not in the aggregate cause the Company Issuers not to have the funds necessary
to pay the principal of, premium, if any, or interest on, the Senior
Subordinated Notes.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly create, incur, assume
or suffer to exist any Lien (other than a Permitted Lien) that secures any Pari
Passu Indebtedness or Subordinated Indebtedness on any asset or property of the
Company or such Restricted Subsidiary, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Senior
Subordinated Notes are equally and ratably secured with the obligations so
secured or until such time as such obligations are no longer secured by a Lien.
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The Senior Subordinated Indenture provides that no Guarantor will directly
or indirectly create, incur, assume or suffer to exist any Lien (other than a
Permitted Lien) that secures any Pari Passu Indebtedness or Subordinated
Indebtedness of such Guarantor on any asset or property of such Guarantor or any
income or profits therefrom, or assign or convey any right to receive income
therefrom, unless the Guarantee of such Guarantor is equally and ratably secured
with the obligations so secured or until such time as such obligations are no
longer secured by a Lien.
Limitation on Other Senior Subordinated Indebtedness. The Company will not,
and will not permit any Restricted Subsidiary that is a Guarantor to, directly
or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is
subordinate in right of payment to any Indebtedness of the Company or any
Indebtedness of any Restricted Subsidiary that is a Guarantor, as the case may
be, unless such Indebtedness is either (a) pari passu in right of payment with
the Senior Subordinated Notes or such Guarantor's Guarantee, as the case may be
or (b) subordinate in right of payment to the Senior Subordinated Notes, or such
Guarantor's Guarantee, as the case may be, in the same manner and at least to
the same extent as the Senior Subordinated Notes are subordinate to Senior
Indebtedness or such Guarantor's Guarantee is subordinate to such Guarantor's
Senior Indebtedness, as the case may be.
Merger, Consolidation and Sale of Assets. The Company may not consolidate
or merge with or into or wind up into (whether or not the Company is the
surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its properties or assets in one or more related
transactions, to any Person unless (i) the Company is the surviving entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is a corporation, partnership or
limited liability company organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(the Company or such Person, as the case may be, being herein called the
'Successor Company'); (ii) the Successor Company (if other than the Company or
CapCo I) expressly assumes all the obligations of the Company under the Senior
Subordinated Indenture and the Senior Subordinated Notes pursuant to a
supplemental indenture or other documents or instruments in form reasonably
satisfactory to the Senior Subordinated Trustee; (iii) immediately after such
transaction no Default or Event of Default shall have occurred and be
continuing; (iv) immediately after giving pro forma effect to such transaction,
as if such transaction had occurred at the beginning of the applicable
four-quarter period, either (A) the Successor Company (if other than CapCo I)
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first sentence of the
covenant described under 'Limitations on Incurrence of Indebtedness and Issuance
of Disqualified Stock' or (B) the Fixed Charge Coverage Ratio for the Successor
Company (if other than CapCo I) and its Restricted Subsidiaries would be greater
than such ratio for the Company and its Restricted Subsidiaries immediately
prior to such transaction; and (v) the Company shall have delivered to the
Senior Subordinated Trustee an Officers' Certificate and an opinion of counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Senior Subordinated Indenture. The Successor
Company will succeed to, and be substituted for, the Company under the Senior
Subordinated Indenture and the Senior Subordinated Notes. Notwithstanding the
foregoing clauses (iii) and (iv), (a) any Restricted Subsidiary may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company or to another Restricted Subsidiary and (b) the Company may merge with
or transfer all of its properties and assets to an Affiliate incorporated or
formed solely for the purpose of either reincorporating or reforming the Company
in another State of the United States or changing the legal structure of the
Company to a corporation so long as the amount of Indebtedness of the Company
and its Restricted Subsidiaries is not increased thereby (it being understood
that after the transfer of such property and assets for the purpose of changing
its legal structure to a corporation, the Company may dissolve).
Each Guarantor, if any, shall not, and the Company will not permit a
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation, partnership or limited liability company organized
or existing under the laws of the United States, any state thereof, the District
of
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Columbia, or any territory thereof (such Guarantor or such Person, as the case
may be, being herein called the 'Successor Guarantor'); (ii) the Successor
Guarantor (if other than such Guarantor) expressly assumes all the obligations
of such Guarantor under the Senior Subordinated Indenture and such Guarantor's
Guarantee pursuant to a supplemental indenture or other documents or instruments
in form reasonably satisfactory to the Senior Subordinated Trustee; (iii)
immediately after such transaction no Default or Event of Default shall have
occurred and be continuing; and (iv) the Guarantor shall have delivered or
caused to be delivered to the Senior Subordinated Trustee an Officers'
Certificate and an opinion of counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Senior Subordinated Indenture. The Successor Guarantor will succeed to, and be
substituted for, such Guarantor under the Senior Subordinated Indenture and such
Guarantor's Guarantee.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not cause or permit any of its Restricted Subsidiaries to, make any payment
to, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
'Affiliate Transaction') involving aggregate consideration in excess of $5.0
million, unless (a) such Affiliate Transaction is on terms that are not
materially less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (b) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, the Company
delivers to the Senior Subordinated Trustee a resolution adopted by the majority
of the Board of Directors of the Company, approving such Affiliate Transaction
and set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (a) above.
The foregoing provisions do not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by the provisions of the Senior Subordinated
Indenture described above under the covenant 'Limitation on Restricted
Payments'; (iii) the payment of annual management, consulting, monitoring and
advisory fees and related expenses to Blackstone, Graham Packaging Corporation
and their respective Affiliates; (iv) the payment of reasonable and customary
fees paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Restricted Subsidiary; (v)
payments by the Company or any of its Restricted Subsidiaries to Blackstone and
its Affiliates made for any financial advisory, financing, underwriting or
placement services or in respect of other investment banking activities,
including, without limitation, in connection with acquisitions or divestitures
which payments are approved by, the majority of the Board of Directors of the
Company, in good faith; (vi) transactions in which the Company or any of its
Restricted Subsidiaries, as the case may be, delivers to the Senior Subordinated
Trustee a letter from an Independent Financial Advisor stating that such
transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view or meets the requirements of clause (a) of the preceding
paragraph; (vii) payments or loans to employees or consultants which are
approved by a majority of the Board of Directors of the Company in good faith;
(viii) any agreement as in effect as of the Issue Date or any amendment thereto
(so long as any such amendment is not disadvantageous to the holders of the
Senior Subordinated Notes in any material respect) or any transaction
contemplated thereby; (ix) the existence of, or the performance by the Company
or any Restricted Subsidiary of its obligations under the terms of, the
Recapitalization Agreement, or any agreement contemplated thereunder (including
any registration rights agreement or purchase agreement related thereto) to
which it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the
performance by the Company or any Restricted Subsidiary of obligations under any
future amendment to any such existing agreement or under any similar agreement
entered into after the Issue Date shall only be permitted by this clause (ix) to
the extent that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders of the Senior Subordinated Notes in any
material respect; (x) the payment of all fees, expenses, bonuses and awards
related to the transactions contemplated by the Recapitalization Agreement,
including fees to Blackstone; and (xi) transactions with customers, clients,
suppliers, or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of the
Senior Subordinated Indenture which are fair to the Company and its Restricted
Subsidiaries, in the reasonable determination of the majority of the Board of
Directors of the Company, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party.
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Limitations on Guarantees of Indebtedness by Restricted Subsidiaries. (a)
The Company will not permit any Restricted Subsidiary to guarantee the payment
of any Indebtedness of the Company or any Indebtedness of any other Restricted
Subsidiary unless such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the Senior Subordinated Indenture providing
for a guarantee of payment of the Senior Subordinated Notes by such Restricted
Subsidiary, except that (A) if the Senior Subordinated Notes are subordinated in
right of payment to such Indebtedness, the Guarantee under the supplemental
indenture shall be subordinated to such Restricted Subsidiary's guarantee with
respect to such Indebtedness substantially to the same extent as the Senior
Subordinated Notes are subordinated to such Indebtedness under the Senior
Subordinated Indenture and (B) if such Indebtedness is by its express terms
subordinated in right of payment to the Senior Subordinated Notes, any such
guarantee of such Restricted Subsidiary with respect to such Indebtedness shall
be subordinated in right of payment to such Restricted Subsidiary's Guarantee
with respect to the Senior Subordinated Notes substantially to the same extent
as such Indebtedness is subordinated to the Senior Subordinated Notes; provided
that this paragraph (a) shall not be applicable to any guarantee by any
Restricted Subsidiary (x) that (A) existed at the time such Person became a
Restricted Subsidiary of the Company and (B) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (y) that guarantees the payment of Obligations of the Company or
any Restricted Subsidiary under the New Credit Facility or any other bank
facility which is designated as Senior Indebtedness and any refunding,
refinancing or replacement thereof, in whole or in part, provided that such
refunding, refinancing or replacement thereof constitutes Senior Indebtedness
and is not incurred pursuant to a registered offering of securities under the
Securities Act or a private placement of securities (including under Rule 144A)
pursuant to an exemption from the registration requirements of the Securities
Act (other than securities issued pursuant to any bank or similar credit
facility (including the New Credit Facility), which private placement provides
for registration rights under the Securities Act (any guarantee excluded by
operations of this clause (y) being an 'Excluded Guarantee').
(b) Notwithstanding the foregoing and the other provisions of the Senior
Subordinated Indenture, any Guarantee by a Restricted Subsidiary of the Senior
Subordinated Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's Capital
Stock in, or all or substantially all of the assets of, such Restricted
Subsidiary (which sale, exchange or transfer is not prohibited by the Senior
Subordinated Indenture) or (ii) the release or discharge of the guarantee which
resulted in the creation of such Guarantee, except a discharge or release by or
as a result of payment under such guarantee.
Reports to Holders. The Company Issuers will deliver to the Senior
Subordinated Trustee within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which the Company Issuers are required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
The Senior Subordinated Indenture further provides that, notwithstanding
that the Company Issuers may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the Securities and Exchange
Commission (the 'Commission'), the Senior Subordinated Indenture will require
the Company Issuers to file with the Commission (and provide the Senior
Subordinated Trustee and Holders with copies thereof, without cost to each
Holder, within 15 days after it files them with the Commission), (a) within 90
days after the end of each fiscal year, annual reports on Form 10-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in such successor or comparable form); (b) within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q (or any successor or comparable form); (c) promptly
from time to time after the occurrence of an event required to be therein
reported, such other reports on Form 8-K (or any successor or comparable form);
and (d) any other information, documents and other reports which the Company
Issuers would be required to file with the Commission if they were subject to
Section 13 or 15(d) of the Exchange Act; provided, however, that the Company
Issuers shall not be so obligated to file such reports with the Commission if
the Commission does not permit such filing, in which event the Company Issuers
will make available such information to prospective purchasers of Senior
Subordinated Notes, in addition to providing such information to the Senior
Subordinated Trustee and the Holders, in each case within 15 days after the time
the Company Issuers
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would be required to file such information with the Commission, if they were
subject to Sections 13 or 15(d) of the Exchange Act. The above reporting
requirements with respect to the Company Issuers may be satisfied through the
filing and provision of such reports, information and documents by the Holdings
Issuers in lieu of the Company Issuers. Notwithstanding the foregoing, such
requirements shall be deemed satisfied (x) prior to April 30, 1998, if the
Holdings Issuers deliver to the Senior Subordinated Trustee and the holders of
the Senior Subordinated Notes on or prior to such date copies of the audited
financial statements of the Holdings Issuers and (y) prior to May 31, 1998, by
filing with the Commission and delivering to the Senior Subordinated Trustee and
the holders of the Senior Subordinated Notes on or prior to such date a
registration statement under the Securities Act that contains the information
that would be required in a Form 10-K for the Holdings Issuers for the year
ended December 31, 1997 and a Form 10-Q for the Holdings Issuers for the quarter
ended March 31, 1998. The Company Issuers will also comply with the other
provisions of TIA Section 314(a).
EVENTS OF DEFAULT
The following events are defined in the Senior Subordinated Indenture as 'Events
of Default':
(i) the failure to pay interest on any Senior Subordinated Notes when
the same becomes due and payable and the default continues for a period of
30 days (whether or not such payment shall be prohibited by the
subordination provisions of the Senior Subordinated Indenture);
(ii) the failure to pay the principal on any Senior Subordinated
Notes, when such principal becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment to
purchase Senior Subordinated Notes tendered pursuant to a Change of Control
Offer or an Asset Sale Offer which has actually been made) (whether or not
such payment shall be prohibited by the subordination provisions of the
Senior Subordinated Indenture);
(iii) a default in the observance or performance of any other covenant
or agreement contained in the Senior Subordinated Indenture which default
continues for a period of 60 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Senior Subordinated Trustee or the Holders of at least 25% of the
outstanding principal amount of the Senior Subordinated Notes (except in
the case of a default with respect to the 'Merger, Consolidation and Sale
of Assets' covenant, which will constitute an Event of Default with such
notice requirement but without such passage of time requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Significant Restricted
Subsidiary, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $20.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $20.0
million shall have been rendered against the Company or any Significant
Restricted Subsidiary and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor
upon such judgment or decree which is not promptly stayed;
(vi) any Guarantee by a Significant Restricted Subsidiary shall become
null or void or unenforceable (other than in accordance with the terms of
the Senior Subordinated Indenture) or any such Guarantor shall deny its
obligations under its Guarantee; or
(vii) certain events of bankruptcy affecting the Company or any of its
Significant Restricted Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause
(vii) with respect to the Company) shall occur and be continuing, the Senior
Subordinated Trustee or the Holders of at least 25% in principal amount of
outstanding Senior Subordinated Notes may declare the principal of and
accrued interest on all the Senior Subordinated Notes to be due and payable
by notice in writing to the Company and the Senior
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Subordinated Trustee specifying the respective Event of Default and that it
is a 'notice of acceleration' (the 'Acceleration Notice'), and the same (i)
shall become immediately due and payable or (ii) if there are any amounts
outstanding under the New Credit Facility, shall become immediately due and
payable upon the first to occur of an acceleration under the New Credit
Facility or 5 Business Days after receipt by the Company and the
Representative under the New Credit Facility of such Acceleration Notice,
but only if such Event of Default is then continuing. If an Event of Default
specified in clause (vii) with respect to the Company occurs, then the
principal of and any accrued interest on the Senior Subordinated Notes shall
ipso facto become immediately due and payable without any further action by
the Senior Subordinated Trustee or the Holders.
The Senior Subordinated Indenture provides that, at any time after a
declaration of acceleration with respect to the Senior Subordinated Notes as
described in the preceding paragraph, the Holders of a majority in principal
amount of the Senior Subordinated Notes may rescind and cancel such declaration
and its consequences (i) if the rescission would not conflict with any judgment
or decree, (ii) if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
the acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid and
(iv) if the Company has paid the Senior Subordinated Trustee its reasonable
compensation and reimbursed the Senior Subordinated Trustee for its expenses,
disbursements and advances. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
The Holders of a majority in principal amount of the Senior Subordinated
Notes may waive any existing Default or Event of Default under the Senior
Subordinated Indenture, and its consequences, except a default in the payment of
the principal of or interest on any Senior Subordinated Notes.
Holders of the Senior Subordinated Notes may not enforce the Senior
Subordinated Indenture or the Senior Subordinated Notes except as provided in
the Senior Subordinated Indenture and under the TIA. Subject to the provisions
of the Senior Subordinated Indenture relating to the duties of the Senior
Subordinated Trustee, the Senior Subordinated Trustee is under no obligation to
exercise any of its rights or powers under the Senior Subordinated Indenture at
the request, order or direction of any of the Holders, unless such Holders have
offered to the Senior Subordinated Trustee reasonable indemnity. Subject to all
provisions of the Senior Subordinated Indenture and applicable law, the Holders
of a majority in aggregate principal amount of the then outstanding Senior
Subordinated Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Senior Subordinated
Trustee or exercising any trust or power conferred on the Senior Subordinated
Trustee.
Under the Senior Subordinated Indenture, the Company is required to provide
an Officers' Certificate to the Senior Subordinated Trustee promptly upon it
obtaining knowledge of any Default or Event of Default (provided that such
certification shall be provided at least annually whether or not the Company
knows of any Default or Event of Default) that has occurred and, if applicable,
describe such Default or Event of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company Issuers may, at their option and at any time, elect to have
their obligations discharged with respect to the outstanding Senior Subordinated
Notes ('Legal Defeasance'). Such Legal Defeasance means that the Company Issuers
shall be deemed to have paid and discharged the entire indebtedness represented
by the outstanding Senior Subordinated Notes, except for (i) the rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on the Senior Subordinated Notes when such payments are due, (ii) the
Company Issuers' obligations with respect to the Senior Subordinated Notes
concerning issuing temporary Senior Subordinated Notes, registration of Senior
Subordinated Notes, mutilated, destroyed, lost or stolen Senior Subordinated
Notes and the maintenance of an office or agency for payments, (iii) the rights,
powers, trust, duties and immunities of the Senior Subordinated Trustee and the
Company Issuers' obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Senior Subordinated Indenture. In addition, the
Company Issuers may, at their option and at any time, elect to have the
obligations of the Company Issuers released with respect to certain covenants
that are described in the Senior Subordinated Indenture ('Covenant Defeasance')
and
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thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Senior Subordinated Notes. In
the event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events) described under
'Events of Default' will no longer constitute an Event of Default with respect
to the Senior Subordinated Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Senior Subordinated Trustee, in
trust, for the benefit of the Holders 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
Senior Subordinated Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be; (ii) in the case of Legal
Defeasance, the Company shall have delivered to the Senior Subordinated Trustee
an opinion of counsel in the United States reasonably acceptable to the Senior
Subordinated Trustee confirming that (A) the Company Issuers have received from,
or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of the Senior Subordinated Indenture, there has been a change in
the applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders 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 shall have delivered to the Senior Subordinated Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders 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 shall have occurred and be 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 123rd
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Senior Subordinated Indenture (and shall not conflict with the subordination
provisions contained herein at the time the respective payments are made into
the respective defeasance trust) or any other material agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries are bound; (vi) the Company shall have
delivered to the Senior Subordinated Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
(vii) the Company shall have delivered to the Senior Subordinated Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with; (viii) the Company shall have
delivered to the Senior Subordinated Trustee an opinion of counsel (which may be
subject to customary assumptions and exclusions) to the effect that after the
123rd 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; and (ix) certain other customary
conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Senior Subordinated Indenture will be discharged and will cease to be
of further effect (except as to surviving rights or registration of transfer or
exchange of the Senior Subordinated Notes, as expressly provided for in the
Senior Subordinated Indenture) as to all outstanding Senior Subordinated Notes
when (i) either (a) all the Senior Subordinated Notes theretofore authenticated
and delivered (except lost, stolen or destroyed Senior Subordinated Notes which
have been replaced or paid and Senior Subordinated Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by the
Company Issuers and thereafter repaid to the Company Issuers or discharged from
such trust) have been delivered to the Senior Subordinated Trustee for
cancellation or (b) all Senior Subordinated Notes not theretofore delivered to
the Senior Subordinated Trustee for cancellation have become due and payable and
the Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Senior Subordinated Notes not theretofore delivered to the Senior
Subordinated Trustee for cancellation, for principal of, premium, if any, and
interest on the Senior Subordinated Notes to the date of deposit together with
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irrevocable instructions from the Company directing the Senior Subordinated
Trustee to apply such funds to the payment thereof at maturity or redemption, as
the case may be; (ii) the Company has paid all other sums payable under the
Senior Subordinated Indenture by the Company; and (iii) the Company has
delivered to the Senior Subordinated Trustee an Officers' Certificate and an
opinion of counsel stating that all conditions precedent under the Senior
Subordinated Indenture relating to the satisfaction and discharge of the Senior
Subordinated Indenture have been complied with.
MODIFICATION OF THE SENIOR SUBORDINATED INDENTURE
From time to time, the Company Issuers and the Senior Subordinated Trustee,
without the consent of the Holders, may amend the Senior Subordinated Indenture
for certain specified purposes, including curing ambiguities, defects or
inconsistencies, so long as such change does not, in the opinion of the Senior
Subordinated Trustee, adversely affect the rights of any of the Holders in any
material respect. In formulating its opinion on such matters, the Senior
Subordinated Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an opinion of counsel.
Other modifications and amendments of the Senior Subordinated Indenture may be
made with the consent of the Holders of a majority in principal amount of the
then outstanding Senior Subordinated Notes issued under the Senior Subordinated
Indenture, except that, without the consent of each Holder affected thereby, no
amendment may: (i) reduce the amount of Senior Subordinated Notes whose Holders
must consent to an amendment; (ii) reduce the rate of or change or have the
effect of changing the time for payment of interest, including defaulted
interest, on any Senior Subordinated Notes; (iii) reduce the principal of or
change or have the effect of changing the fixed maturity of any Senior
Subordinated Notes, or change the date on which any Senior Subordinated Notes
may be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor; (iv) make any Senior Subordinated Notes payable in
money other than that stated in the Senior Subordinated Notes; (v) make any
change in provisions of the Senior Subordinated Indenture protecting the right
of each Holder to receive payment of principal of and interest on such Senior
Subordinated Note on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of Senior
Subordinated Notes to waive Defaults or Events of Default; (vi) amend, change or
modify in any material respect the obligation of the Company Issuers to make and
consummate a Change of Control Offer in the event of a Change of Control or make
and consummate an Asset Sale Offer with respect to any Asset Sale that has been
consummated or modify any of the provisions or definitions with respect thereto;
or (vii) modify or change any provision of the Senior Subordinated Indenture or
the related definitions affecting the subordination or ranking of the Senior
Subordinated Notes in a manner which adversely affects the Holders.
GOVERNING LAW
The Senior Subordinated Indenture provides that it and the Senior
Subordinated Notes will be governed by, and construed in accordance with, the
laws of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the law of another
jurisdiction would be required thereby.
THE SENIOR SUBORDINATED TRUSTEE
The Senior Subordinated Indenture provides that, except during the
continuance of an Event of Default, the Senior Subordinated Trustee will perform
only such duties as are specifically set forth in the Senior Subordinated
Indenture. During the existence of an Event of Default, the Senior Subordinated
Trustee will exercise such rights and powers vested in it by the Senior
Subordinated Indenture, and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The Senior Subordinated Indenture and the provisions of the TIA contain
certain limitations on the rights of the Senior Subordinated Trustee, should it
become a creditor of either of the Company Issuers, to obtain payments of claims
in certain cases or to realize on certain property received in respect of any
such claim as security or otherwise. Subject to the TIA, the Senior Subordinated
Trustee will be permitted to engage in other transactions; provided that if the
Senior Subordinated Trustee acquires any conflicting interest as described in
the TIA, it must eliminate such conflict or resign.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Senior Subordinated Indenture. Reference is made to the Senior Subordinated
Indenture for the full definition of all such terms, as well as any other terms
used herein for which no definition is provided.
'Acquired Indebtedness' means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. 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, shall mean
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.
'Asset Sale' means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary thereof (each referred to in this definition as a
'disposition') or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than: (a) a disposition of Cash Equivalents
or Investment Grade Securities or obsolete or worn out equipment in the ordinary
course of business; (b) the disposition of all or substantially all of the
assets of the Company in a manner permitted pursuant to the provisions described
above under 'Certain Covenants--Merger, Consolidation and Sale of Assets' or any
disposition that constitutes a Change of Control pursuant to the Senior
Subordinated Indenture; (c) any Restricted Payment that is permitted to be made,
and is made, under the covenant described above under 'Limitation on Restricted
Payments;' (d) any disposition of assets with an aggregate fair market value of
less than $2.0 million; (e) any disposition of property or assets by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; (f) any exchange of like property
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for
use in a Similar Business; (g) any financing transaction with respect to
property built or acquired by the Company or any of its Restricted Subsidiaries
after the Issue Date including, without limitation, sale-leasebacks and asset
securitizations; (h) foreclosures on assets; and (i) any sale of Equity
Interests in, or Indebtedness or other securities of, an Unrestricted
Subsidiary.
'Blackstone' means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its Affiliates.
'Board of Directors' means, as to any Person, the board of directors of
such Person (or, if such Person is a partnership, the board of directors or
other governing body of the general partner of such Person) or any duly
authorized committee thereof.
'Board Resolution' means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
(or, if such Person is a partnership, its general partner) to have been duly
adopted by the Board of Directors of such Person and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
'Business Day' means a day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open.
'Capitalized Lease Obligation' means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet in accordance with GAAP.
'Capital Stock' means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests
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(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
'Cash Equivalents' means (i) U.S. dollars (and foreign currency exchanged
into U.S. dollars within 180 days), (ii) securities issued or directly and fully
guaranteed or insured by the U.S. Government or any agency or instrumentality
thereof, (iii) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having capital and surplus in
excess of $500.0 million, (iv) repurchase obligations for underlying securities
of the types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in
each case maturing within one year after the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(v) above, (vii) readily marketable direct obligations
issued by any state of the United States of America or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with
a rating of 'A' or higher from S&P or 'A2' or higher from Moody's.
'Change of Control' means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to a Person other than the Permitted Holders and their Related
Parties; or (ii) the Company becomes aware (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) of the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of acquiring,
holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), other than the Permitted Holders and their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the Voting
Stock of the Company.
'Common Stock' of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common equity, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common equity.
'Consolidated Depreciation and Amortization Expense' means with respect to
any Person for any period, the total amount of depreciation and amortization
expense of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.
'Consolidated EBITDA' means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based on income or profits of such Person, or Permitted Tax Distributions
made by such Person, for such period deducted in computing Consolidated Net
Income, plus (b) Consolidated Interest Expense of such Person for such period to
the extent the same was deducted in calculating such Consolidated Net Income,
plus (c) Consolidated Depreciation and Amortization Expense of such Person for
such period to the extent such depreciation and amortization expense was
deducted in computing Consolidated Net Income, plus (d) any fees, expenses or
charges related to any Equity Offering, Permitted Investment, acquisition or
recapitalization or Indebtedness permitted to be incurred by the Senior
Subordinated Indenture (whether or not successful) and fees, expenses or charges
related to the transactions contemplated by the Recapitalization Agreement
(including fees to Blackstone), plus (e) the amount of any non-recurring charges
(including any one-time costs incurred in connection with acquisitions after the
Issue Date) deducted in such period in computing Consolidated Net Income, plus
(f) without duplication, any other non-cash charges reducing Consolidated Net
Income for such period (excluding any such charge which requires an accrual of a
cash reserve for anticipated cash charges for any future period), plus (g) the
amount of any minority interest expense deducted in calculating Consolidated Net
Income, plus (h) special charges and unusual items during any period ending on
or prior to the second anniversary of the Issue Date not to exceed $15.0 million
in the aggregate, plus (i) the amount of management, consulting monitoring and
advisory fees paid to Blackstone and its Affiliates during such period not to
exceed $1.0 million during any four quarter period, less, without duplication
(j) non-cash items
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increasing Consolidated Net Income of such Person for such period (excluding any
items which represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges in any prior period).
'Consolidated Interest Expense' means, with respect to any Person for any
period, the sum, without duplication, of: (a) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest component of Capitalized
Lease Obligations and net payments and receipts (if any) pursuant to Hedging
Obligations to the extent included in Consolidated Interest Expense and
excluding amortization of deferred financing fees), (b) consolidated capitalized
interest of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued and (c) on and after January 15, 2004, the interest expense of
Holdings with respect to the Senior Discount Notes.
'Consolidated Net Income' means, with respect to any Person for any period,
the aggregate of the Net Income, of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis; provided, however, that (i) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto) shall be excluded, (ii) any increase in the cost of sales or other
incremental expenses resulting from purchase accounting in relation to any
acquisition, net of taxes, shall be excluded, (iii) the Net Income for such
period shall not include the cumulative effect of a change in accounting
principles during such period, (iv) any net after-tax income (loss) from
discontinued operations and any net after-tax gains or losses on disposal of
discontinued operations shall be excluded, (v) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to asset dispositions
other than in the ordinary course of business (as determined in good faith by
the Company) shall be excluded, (vi) the Net Income for such period of any
Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period, (vii) the Net Income of
any Person acquired in a pooling of interests transaction shall not be included
for any period prior to the date of such acquisition, (viii) the Net Income for
such period of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule, or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, unless
such restriction with respect to the payment of dividends or in similar
distributions has been legally waived and (ix) the Net Income for such period of
the Company and its Restricted Subsidiaries shall be decreased by the amount of
Permitted Tax Distributions during such period.
'Contingent Obligations' means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ('primary obligations') of any other Person (the
'primary obligor') in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
'Default' means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
'Designated Noncash Consideration' means the fair market value of noncash
consideration received by the Company or any of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of cash or Cash Equivalents received in
connection with a subsequent sale of such Designated Noncash Consideration.
'Designated Preferred Stock' means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in clause (c) of the covenant
described under 'Limitation on Restricted Payments.'
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'Designated Senior Indebtedness' means (i) Indebtedness under or in respect
of the New Credit Facility (except that any Indebtedness which represents a
partial refinancing of Indebtedness theretofore outstanding pursuant to the New
Credit Facility, rather than a complete refinancing thereof, shall only
constitute Designated Senior Indebtedness if such partial refinancing meets the
requirements of succeeding clause (ii)) and (ii) any other Indebtedness
constituting Senior Indebtedness which, at the time of determination, has an
aggregate principal amount or accreted value of at least $25.0 million and is
specifically designated in the instrument evidencing such Senior Indebtedness as
'Designated Senior Indebtedness' by the Company Issuers.
'Disqualified Stock' means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the maturity date of the
Senior Subordinated Notes; provided, however, that if such Capital Stock is
issued to any employee or to any plan for the benefit of employees of the
Company or any of its Subsidiaries or by any such plan to such employees, such
Capital Stock shall not constitute Disqualified Stock solely because it may be
required to be repurchased by the Company or such Subsidiary in order to satisfy
applicable statutory or regulatory obligations or as a result of such employee's
death or disability.
'Equity Interests' means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
'Equity Offering' means any public or private sale of common stock or
preferred stock of the Company or Holdings (other than Disqualified Stock),
other than (i) public offerings with respect to the Common Stock registered on
Form S-8 and (ii) any such public or private sale the proceeds of which have
been designated by the Company as an Excluded Contribution or Permanent
Qualified Equity Contributions.
'Exchange Act' means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
'Excluded Contributions' means the net cash proceeds received by the
Company after the Issue Date from (a) contributions to its common equity capital
and (b) the sale (other than to a Subsidiary or to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement
of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Excluded
Contributions pursuant to an Officers' Certificate, the cash proceeds of which
are excluded from the calculation set forth in paragraph (c) of the 'Limitation
on Restricted Payments' covenant.
'fair market value' means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
'Fixed Charge Coverage Ratio' means, with respect to any Person for any
period, the ratio of Consolidated EBITDA of such Person for such period to the
Fixed Charges of such Person for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average daily balance of
such Indebtedness during the applicable period) or issues or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the 'Calculation Date'),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. With respect to any Calculation
Date that occurs on or after January 15, 2003 and prior to January 15, 2004, the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to the
interest expense of Holdings with respect to the Holdings Senior Discount Notes
as if such interest expense was Consolidated Interest Expense of the Company.
For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP) that have been made by the Company or
any of its Restricted Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or simultaneously with
the Calculation Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, discontinued operations, mergers
and consolidations (and the reduction of any associated fixed charge obligations
and the change in Consolidated EBITDA resulting therefrom) had occurred on the
first day of the four-quarter reference period. If since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any
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Investment, acquisition, disposition, discontinued operation, merger or
consolidation that would have required adjustment pursuant to this definition,
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition,
discontinued operation, merger or consolidation had occurred at the beginning of
the applicable four-quarter period. For purposes of this definition, whenever
pro forma effect is to be given to a transaction, the pro forma calculations
shall be made as determined in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rate, shall be deemed to have been
based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate. Any such pro forma calculation may
include adjustments in the reasonable determination of the Company as set forth
in an Officers' Certificate, to (i) reflect operating expense reductions
reasonably expected to result from any acquisition or merger or (ii) eliminate
the effect of any extraordinary accounting event with respect to any acquired
Person on Consolidated Net Income.
'Fixed Charges' means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period and (b) the
product of (x) all cash dividend payments (excluding items eliminated in
consolidation) on any series of Disqualified Stock of such Person or its
Restricted Subsidiaries and (y) (A) if such Person is not a taxable entity for
U.S. federal income tax purposes, one, or (B) if such Person is an entity
taxable for U.S. federal income tax purposes, a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
'Foreign Subsidiary' means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia, or any territory thereof.
'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 have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of the
Senior Subordinated Indenture, the term 'consolidated' with respect to any
Person shall mean such Person consolidated with its Restricted Subsidiaries, and
shall not include any Unrestricted Subsidiary.
'Government Securities' means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
'guarantee' means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
'Guarantee' means any guarantee of the obligations of the Company Issuers
under the Senior Subordinated Indenture and the Senior Subordinated Notes by any
Restricted Subsidiary in accordance with the provisions of the Senior
Subordinated Indenture. When used as a verb, 'Guarantee' shall have a
corresponding meaning.
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'Guarantor' means any Restricted Subsidiary that incurs a Guarantee;
provided that upon the release and discharge of such Restricted Subsidiary from
its Guarantee in accordance with the Senior Subordinated Indenture, such
Restricted Subsidiary shall cease to be a Guarantor.
'Hedging Obligations' means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates or commodity prices.
'Indebtedness' means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) and (c) to the
extent not otherwise included, Indebtedness of another Person secured by a Lien
on any asset owned by such Person (whether or not such Indebtedness is assumed
by such Person); provided, however, that Contingent Obligations incurred in the
ordinary course of business shall be deemed not to constitute Indebtedness.
'Independent Financial Advisor' means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith determination of the
Company, qualified to perform the task for which it has been engaged.
'Investment Grade Securities' means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances between and among the
respective Company Issuers and their respective Subsidiaries, and (iii)
investments in any fund that invests exclusively in investments of the type
described in clauses (i) and (ii) which fund may also hold immaterial amounts of
cash pending investment and/or distribution.
'Investments' means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes thereto) of such
Person in the same manner as the other investments included in this definition
to the extent such transactions involve the transfer of cash or other property.
For purposes of the definition of 'Unrestricted Subsidiary' and the covenant
described under 'Certain Covenants--Limitation on Restricted Payments,' (i)
'Investments' shall include the portion (proportionate to the Company's equity
interest in its such Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent 'Investment' in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's 'Investment' in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Company.
'Issue Date' means the closing date for the sale and original issuance of
the Senior Subordinated Notes under the Senior Subordinated Indenture.
'Lien' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under
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applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction); provided that in no event shall an operating lease be
deemed to constitute a Lien.
'Management Group' means the group consisting of the executive officers of
the Company.
'Moody's' means Moody's Investors Service, Inc.
'Net Income' means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
'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, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration (including, without limitation, legal, accounting and
investment banking fees, and brokerage and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of 'Certain Covenants--Limitation on Asset Sales') to be paid as a result of
such transaction and any deduction of appropriate amounts to be provided by the
Company as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by the Company after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.
'New Credit Facility' means that certain credit facility among Bankers
Trust Company, the Company and certain of its Subsidiaries and affiliates and
the lenders from time to time party thereto, together with any related
documents, instruments and agreements executed in connection therewith
(including, without limitation, any guaranty agreements and security documents),
in each case as such credit facility and related documents, instruments and
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
additional obligors or guarantors thereunder) all or any portion of the
Indebtedness under such credit facility or any successor or replacement credit
facility and whether by the same or any other agent, lender or group of lenders.
'Obligations' means all obligations for principal, interest, penalties,
fees, indemnifications, reimbursements (including, without limitation,
reimbursement obligations with respect to letters of credit and banker's
acceptances), damages and other liabilities payable under the documentation
governing any Indebtedness; provided that Obligations with respect to the Senior
Subordinated Notes shall not include fees or indemnifications in favor of the
Senior Subordinated Trustee and other third parties other than the holders of
the Senior Subordinated Notes.
'Officer' of any Person means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer
or the Secretary of such Person.
'Officers' Certificate' of any Person means a certificate signed on behalf
of such Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of such Person that meets the requirements set
forth in the Senior Subordinated Indenture.
'Pari Passu Indebtedness' means with respect to the Senior Subordinated
Notes or a Guarantee, Indebtedness which ranks pari passu in right of payment to
the Senior Subordinated Notes or such Guarantee, as the case may be.
'Permanent Qualified Equity Contributions' means net cash proceeds to the
Company in the form of contributions to the common equity capital of the Company
or from the sale (other than to a Subsidiary of the Company or to any management
equity plan or stock option plan or any other management or employee benefit
plan of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Permanent
Qualified Equity Contributions pursuant to an Officers' Certificate, the cash
proceeds of which are excluded from the calculation set forth in paragraph (c)
of the 'Limitation on Restricted Payments' covenant.
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'Permitted Holders' means Blackstone and any of its Affiliates.
'Permitted Investments' means (a) any Investment in the Company or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary in a Person that is a Similar Business if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d)
any Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to the
provisions of 'Certain Covenants--Limitation on Asset Sales' or any other
disposition of assets not constituting an Asset Sale; (e) any Investment
existing on the Issue Date; (f) advances to employees not in excess of $10.0
million outstanding at any one time, in the aggregate; (g) any Investment
acquired by the Company or any of its Restricted Subsidiaries (i) in exchange
for any other Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (ii) as a result of a foreclosure by the
Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default; (h) Hedging Obligations permitted under clause (j) of the 'Limitation
of Incurrence of Indebtedness and Issuance of Disqualified Stock' covenant; (i)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (j) any Investment in a Similar
Business (other than an Investment in an Unrestricted Subsidiary) having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (j) that are at that time outstanding, not to exceed 10%
of Total Assets at the time of such Investment (with the fair market value of
each Investment being measured at the time made and without giving effect to
subsequent changes in value); (k) Investments the payment for which consists of
Equity Interests of the Company (other than Disqualified Stock); provided,
however, that such Equity Interests will not increase the amount available for
Restricted Payments under clause (c) of the 'Limitation on Restricted Payments'
covenant; (l) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (l) that
are at that time outstanding, not to exceed $10.0 million (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); (m) any transaction to the extent it
constitutes an Investment that is permitted by and made in accordance with the
provisions of clauses (iii) and (xi) of the second paragraph of the covenant
described under 'Certain Covenants--Transactions with Affiliates'; (n) any
Investment by Restricted Subsidiaries in other Restricted Subsidiaries; (o)
Investments consisting of the licensing or contribution of intellectual property
pursuant to joint marketing arrangements with other Persons; and (p) Investments
consisting of purchases and acquisitions of inventory, supplies, materials and
equipment or licenses or leases of intellectual property, in any case, in the
ordinary course of business.
'Permitted Junior Securities' shall mean debt or equity securities of a
Company Issuer or any successor corporation issued pursuant to a plan of
reorganization or readjustment of a Company Issuer that are subordinated to the
payment of all then outstanding Senior Indebtedness at least to the same extent
that the Senior Subordinated Notes are subordinated to the payment of all Senior
Indebtedness on the Issue Date, so long as (i) the effect of the use of this
defined term in the subordination provisions described under the caption
'Subordination' is not to cause the Senior Subordinated Notes to be treated as
part of (a) the same class of claims as the Senior Indebtedness or (b) any class
of claims pari passu with, or senior to, the Senior Indebtedness for any payment
or distribution in any case or proceeding or similar event relating to the
liquidation, insolvency, bankruptcy, dissolution, winding up or reorganization
of a Company Issuer and (ii) to the extent that any Senior Indebtedness
outstanding on the date of consummation of any such plan or reorganization or
readjustment are not paid in full in cash on such date, either (a) the holders
of any such Senior Indebtedness not so paid in full in cash have consented to
the terms of such plan or reorganization or readjustment of (b) such holders
receive securities which constitute Senior Indebtedness and which have been
determined by the relevant court to constitute satisfaction in full in money or
money's worth of any Senior Indebtedness not paid in full in cash.
'Permitted Liens' means the following types of Liens:
(i) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
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(ii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(iii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Restricted
Subsidiary other than the property and assets so acquired and (B) the Lien
securing such Indebtedness shall be created within 180 days of such
acquisition;
(iv) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(v) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(vi) Liens securing Indebtedness under Hedging Obligations;
(vii) Liens securing Acquired Indebtedness incurred in accordance with
the 'Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock' covenant; provided that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary thereof and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary thereof and
(B) such Liens do not extend to or cover any property or assets of the
Company or any of the Restricted Subsidiaries other than the property or
assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or such Restricted
Subsidiary and are no more favorable to the lienholders than those securing
the Acquired Indebtedness prior to the incurrence of such Acquired
Indebtedness by the Company or such Restricted Subsidiary;
(viii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(ix) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of Social Security, including any Lien securing letters of
credit issued in the ordinary course of business, consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
and
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements, including
rights of offset and set off.
'Person' means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
'Recapitalization Agreement' means the Agreement and Plan of
Recapitalization, Redemption and Purchase, dated as of December 18, 1997 by and
among the Company, BMP/Graham Holdings Corporation and the other parties
thereto.
'Related Parties' means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or its Affiliates is the
general partner.
'Representative' means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such Designated Senior Indebtedness in respect of any Designated
Senior Indebtedness.
'Restricted Investment' means an Investment other than a Permitted
Investment.
'Restricted Subsidiary' means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of an Unrestricted Subsidiary
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ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in
the definition of 'Restricted Subsidiary.'
'S&P' means Standard and Poor's Ratings Group.
'Securities Act' means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
'Senior Indebtedness' means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of Holdings, the Company Issuers or such Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Holdings Guarantee, the Senior Subordinated Notes or the Guarantee of such
Guarantor. Without limiting the generality of the foregoing, 'Senior
Indebtedness' shall also include the principal of, premium, if any, interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
to the extent such interest is an allowed claim under applicable law) on, and
all other amounts owing in respect of, (x) all monetary obligations (including
guarantees thereof) of every nature of Holdings, the Company Issuers or a
Guarantor under the New Credit Facility, including, without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses, indemnities and Hedging Obligations related
thereto, in each case whether outstanding on the Issue Date or thereafter
incurred and (y) all monetary obligations (including guarantees thereof) of
every nature of the Company Issuers, Holdings and any Guarantor with respect to
Hedging Obligations, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, 'Senior Indebtedness' shall
not include (i) any Indebtedness of Holdings, the Company or a Guarantor to a
Subsidiary thereof, (ii) Indebtedness to, or guaranteed on behalf of, any
director, officer or employee of Holdings, the Company or a Guarantor or any
Subsidiary thereof (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services (other than amounts
incurred under the New Credit Facility), (iv) Indebtedness represented by
Disqualified Stock, (v) any liability for federal, state, local or other taxes
owed or owing, (vi) that portion of any Indebtedness incurred in violation of
the Senior Subordinated Indenture provisions set forth under 'Limitations on
Incurrence of Indebtedness and Issuance of Disqualified Stock' (but, as to any
such obligation, no such violation shall be deemed to exist for purposes of this
clause (vi) if the holder(s) of such obligation or their representative shall
have received an Officers' Certificate of the Company to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving credit
Indebtedness, that the incurrence of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would not) violate such
provisions of the Senior Subordinated Indenture), (vii) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to Holdings, the Company or a Guarantor,
as the case may be and (viii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of Holdings, the
Company or a Guarantor, as the case may be.
'Significant Restricted Subsidiary' means any Restricted Subsidiary that
would be a 'significant subsidiary' of the Company as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
'Similar Business' means a business, the majority of whose revenues are
derived from the manufacture, marketing or sale of containers or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
'Subordinated Indebtedness' means with respect to the Senior Subordinated
Notes or a Guarantee, any Indebtedness of the Company or a Guarantor, as the
case may be, which is by its terms subordinated in right of payment to the
Senior Subordinated Notes or the Guarantee of such Guarantor, as the case may
be.
'Subsidiary' means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled,
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directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof whether in the form of membership,
general, special or limited partnership or otherwise and (y) such Person or any
Wholly Owned Restricted Subsidiary of such Person is a controlling general
partner or otherwise controls such entity.
'Total Assets' means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
'Unrestricted Subsidiary' means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or
owns, or holds any Lien on, any property of, the Company or any Subsidiary
thereof (other than any Subsidiary of the Subsidiary to be so designated),
provided that each Subsidiary to be so designated and its Subsidiaries have not
at the time of designation, and do not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, (i) the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test described under 'Certain Covenants--Limitations
on Incurrence of Indebtedness and Issuance of Disqualified Stock' or (ii) the
Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries
would be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such designation, in each case on a pro forma basis taking
into account such designation. Any such designation by the Board of Directors of
the Company shall be notified by the Company to the Senior Subordinated Trustee
by promptly filing with the Senior Subordinated Trustee a copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
'Voting Stock' of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
'Weighted Average Life to Maturity' means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
'Wholly Owned Restricted Subsidiary' is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
'Wholly Owned Subsidiary' of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
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DESCRIPTION OF THE SENIOR DISCOUNT EXCHANGE NOTES
The Senior Discount Old Notes were issued and the Senior Discount Exchange
Notes offered hereby will be issued under an indenture dated as of February 2,
1998 (the 'Senior Discount Indenture' and, together with the Senior Subordinated
Indenture, the 'Indentures') by and between the Holdings Issuers and The Bank of
New York, as trustee (the 'Senior Discount Trustee'). Any Senior Discount Old
Notes that remain outstanding after the completion of the Senior Discount
Exchange Offer, together with the Senior Discount Exchange Notes issued in
connection with the Senior Discount Exchange Offer, will be treated as a single
class of securities under the Senior Discount Indenture. The following summary
of certain provisions of the Senior Discount Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Indenture Act of 1939, as amended (the 'TIA'), and to all of the
provisions of the Senior Discount Indenture, including the definitions of
certain terms therein and those terms made a part of the Senior Discount
Indenture by reference to the TIA as in effect on the date of the Senior
Discount Indenture. The definitions of certain capitalized terms used in the
following summary are set forth below under '--Certain Definitions.' For
purposes of this section, references to 'Holdings' and the 'Holdings Issuers' do
not include their respective Subsidiaries. The Senior Discount Indenture is an
exhibit to the Registration Statement of which this Prospectus is a part.
GENERAL
On February 2, 1998, the Holdings Issuers issued $169,000,000 aggregate
principal amount at maturity of Senior Discount Old Notes under the Indenture.
The terms of the Senior Discount Exchange Notes are identical in all material
respects to the Senior Discount Old Notes, except for certain transfer
restrictions and registration and other rights relating to the exchange of the
Senior Discount Old Notes for Senior Discount Exchange Notes. The Trustee will
authenticate and deliver Senior Discount Exchange Notes for original issue only
in exchange for a like principal amount of Senior Discount Old Notes. Any Senior
Discount Old Notes that remain outstanding after the completion of the Senior
Discount Exchange Offer, together with the Senior Discount Exchange Notes issued
in connection with the Senior Discount Exchange Offer, will be treated as a
single class of securities under the Senior Discount Indenture. Accordingly, all
references herein to specified percentages in aggregate principal amount of the
outstanding Senior Discount Exchange Notes shall be deemed to mean, at any time
after the Senior Discount Exchange Offer is consummated, such percentage in
aggregate principal amount of the Senior Discount Old Notes and Senior Discount
Exchange Notes then outstanding.
The Senior Discount Exchange Notes will be unsecured obligations of the
Holdings Issuers, ranking pari passu in right of payment to all unsubordinated
obligations of the Holdings Issuers.
The Senior Discount Exchange Notes will be issued in fully registered form
only, without coupons, in denominations of $1,000 principal amount at maturity
and integral multiples thereof. Initially, the Senior Discount Trustee will act
as Paying Agent and Registrar for the Senior Discount Exchange Notes. The Senior
Discount Exchange Notes may be presented for registration of transfer and
exchange at the offices of the Registrar, which initially will be the Senior
Discount Trustee's principal corporate trust office. The Holdings Issuers may
change any Paying Agent and Registrar without notice to holders of the Senior
Discount Exchange Notes (the 'Holders'). The Holdings Issuers will pay principal
(and premium, if any) on the Senior Discount Exchange Notes at the Senior
Discount Trustee's principal corporate office in New York, New York. At the
Holdings Issuers' option, interest may be paid at the Senior Discount Trustee's
principal corporate trust office or by check mailed to the registered addresses
of Holders.
PRINCIPAL, MATURITY AND INTEREST
The Senior Discount Notes are limited in aggregate principal amount at
maturity to $169,000,000 at any time outstanding. Pursuant to the Senior
Discount Exchange Offer, an aggregate of up to $169,000,000 aggregate principal
amount at maturity of Senior Subordinated Exchange Notes may be issued. Such
Senior Discount Exchange Notes may be issued solely in exchange for the
$169,000,000 aggregate principal amount at maturity of Senior Discount Old Notes
which were issued on February 2, 1998.
The Senior Discount Exchange Notes will mature on January 15, 2009. Cash
interest on the Senior Discount Exchange Notes will not accrue prior to January
15, 2003. Thereafter, interest on the Senior Discount Exchange Notes will accrue
from January 15, 2003 at the rate of 10 3/4% per annum and will be payable
semiannually in
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cash on each January 15 and July 15, commencing on July 15, 2003, to the persons
who are registered Holders at the close of business on the January 1 and July 1
immediately preceding the applicable interest payment date.
The Senior Discount Exchange Notes will not be entitled to the benefit of
any mandatory sinking fund.
REDEMPTION
Optional Redemption. The Senior Discount Exchange Notes will be
redeemable, at the Holdings Issuers' option, in whole at any time or in part
from time to time, on and after January 15, 2003, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount at maturity thereof) if redeemed during the
twelve-month period commencing on January 15 of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
YEAR PERCENTAGE
- -------------------------------------------------------------- ----------
2003.......................................................... 105.375%
2004.......................................................... 103.583
2005.......................................................... 101.792
2006 and thereafter........................................... 100.000
Optional Redemption upon Equity Offerings. At any time, or from time to
time, on or prior to January 15, 2001, the Holdings Issuers may, at their
option, use the net cash proceeds of one or more Equity Offerings by Holdings to
redeem Senior Discount Notes up to an aggregate principal amount at maturity
equal to 40% of the aggregate principal amount at maturity of the Senior
Discount Old Notes originally issued, at a redemption price equal to 110.750% of
the Accreted Value thereof; provided that Senior Discount Notes in an aggregate
principal amount equal to at least 60% of the aggregate principal amount at
maturity of the Senior Discount Old Notes originally issued remains outstanding
immediately following such redemption. In order to effect the foregoing
redemption with the proceeds of any Equity Offering, the Holdings Issuers shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
SELECTION AND NOTICE OF REDEMPTION
If less than all of the Senior Discount Exchange Notes are to be redeemed
at any time or if more Senior Discount Exchange Notes are tendered pursuant to
an Asset Sale Offer or a Change of Control Offer than the Holdings Issuers are
required to purchase, then the selection of such Senior Discount Exchange Notes
for redemption or purchase, as the case may be, will be made by the Senior
Discount Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which such Senior Discount Exchange Notes are
listed, or, if such Senior Discount Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Senior Discount Trustee shall deem
fair and appropriate (and in such manner as complies with applicable legal
requirements); provided that no Senior Discount Notes of $1,000 principal amount
at maturity or less shall be purchased or redeemed in part.
Notices of purchase or redemption shall be mailed by first class mail,
postage prepaid, at least 30 but not more than 60 days before the purchase or
redemption date to each Holder of Senior Discount Notes to be purchased or
redeemed at such Holder's registered address. If any Senior Discount Exchange
Note is to be purchased or redeemed in part only, any notice of purchase or
redemption that relates to such Senior Exchange Discount Note shall state the
portion of the principal amount thereof that has been or is to be purchased or
redeemed.
A new Senior Exchange Discount Note in principal amount at maturity equal
to the unpurchased or unredeemed portion of any Senior Discount Note purchased
or redeemed in part will be issued in the name of the Holder thereof upon
cancellation of the original Senior Discount Exchange Note. On and after the
purchase or redemption date unless the Holdings Issuers default in payment of
the purchase or redemption price, Accreted Value shall cease to accrete or
interest shall cease to accrue on Senior Discount Exchange Notes or portions
thereof purchased or called for redemption.
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HOLDINGS ISSUERS' STRUCTURE
Holdings is a holding company with no material operations of its own.
Accordingly, Holdings is dependent upon the distribution of the earnings of its
Subsidiaries, whether in the form of dividends, advances or payments on account
of intercompany obligations, to service its debt obligations. In addition, the
claims of the Holders of Senior Discount Exchange Notes are subject to the prior
payment of all liabilities (whether or not for borrowed money) and to any
preferred stock interest of such Subsidiaries. There can be no assurance that,
after providing for all prior claims, there would be sufficient assets available
from its Subsidiaries to satisfy the claims of the Holders of Senior Discount
Exchange Notes. CapCo II is a subsidiary corporation of Holdings with no
material operations of its own.
NO RECOURSE TO HOLDINGS PARTNERS; NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS
The Senior Discount Indenture under which the Senior Discount Notes have
been or will be issued provides that all obligations under the Senior Discount
Indenture and the Senior Discount Notes (and all notes issued in exchange
therefor) shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and that, by purchasing the Senior Discount Notes, each
holder of Senior Discount Notes waives any liability of any partner of Holdings
under the Senior Discount Indenture and the Senior Discount Notes (and all notes
issued in exchange therefor). No director, officer, employee, incorporator or
stockholder of the Holdings Issuers or any Guarantor shall have any liability
for any obligations of the Holdings Issuers or the Guarantors under the Senior
Discount Exchange Notes, the Guarantees or the Senior Discount Indenture or any
claim based on, in respect of, or by reason of such obligation, or their
creation. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
CHANGE OF CONTROL
The Senior Discount Indenture provides that upon the occurrence of a Change
of Control, each Holder will have the right to require that the Holdings Issuers
purchase all or a portion of such Holder's Senior Discount Exchange Notes
pursuant to the offer described below (the 'Change of Control Offer'), at a
purchase price equal to 101% of the Accreted Value thereof, plus accrued
interest, if any, to, the date of purchase.
The Senior Discount Indenture provides that, prior to the mailing of the
notice referred to below, but in any event within 30 days following any Change
of Control, the Holdings Issuers covenant to (i) repay in full and terminate all
commitments under Indebtedness under the New Credit Facility and all other
Indebtedness of Holdings' Restricted Subsidiaries the terms of which require
repayment upon a Change of Control or offer to repay in full and terminate all
commitments under all Indebtedness under the New Credit Facility and all other
such Indebtedness of Holdings' Restricted Subsidiaries and to repay the
Indebtedness owed to each lender which has accepted such offer or (ii) obtain
the requisite consents under the New Credit Facility and all other Indebtedness
of Holdings' Restricted Subsidiaries to permit the repurchase of the Senior
Discount Exchange Notes as provided below. The Holdings Issuers shall first
comply with the covenant in the immediately preceding sentence before they shall
be required to repurchase Senior Discount Notes pursuant to the provisions
described below. The Holdings Issuers' failure to comply with the covenant
described in the second preceding sentence or the immediately succeeding
paragraph shall constitute an Event of Default described in clause (iii) (and
not in clause (ii)) under 'Events of Default' below.
Within 30 days following the date upon which the Change of Control
occurred, the Holdings Issuers must send, by first class mail, a notice to each
Holder, with a copy to the Senior Discount Trustee, which notice shall govern
the terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
60 days from the date such notice is mailed, other than as may be required by
law (the 'Change of Control Payment Date'). Holders electing to have a Senior
Discount Note purchased pursuant to a Change of Control Offer will be required
to surrender the Senior Discount Note, with the form entitled 'Option of Holder
to Elect Purchase' on the reverse of the Note completed, to the paying agent
('Paying Agent') at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control Payment Date.
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If a Change of Control Offer is made, there can be no assurance that the
Holdings Issuers will have available funds sufficient to pay the Change of
Control purchase price for all the Senior Discount Exchange Notes that might be
delivered by Holders seeking to accept the Change of Control Offer. In the event
that the Holdings Issuers are required to purchase outstanding Senior Discount
Exchange Notes pursuant to a Change of Control Offer, the Holdings Issuers
expect that they would seek third party financing to the extent they do not have
available funds to meet their purchase obligations. However, there can be no
assurance that the Holdings Issuers would be able to obtain such financing.
Neither the Board of Directors of either Holdings Issuer nor the Senior
Discount Trustee may waive the covenant relating to a Holder's right to
repurchase upon a Change of Control. Restrictions in the Senior Discount
Indenture described herein on the ability of the Holdings Issuers to incur
additional Indebtedness, to grant Liens on their property, to make Restricted
Payments and to make Asset Sales may also make more difficult or discourage a
takeover of Holdings, whether favored or opposed by the management of Holdings.
Consummation of any such transaction in certain circumstances may require
redemption or repurchase of the Senior Discount Exchange Notes, and there can be
no assurance that the Holdings Issuers or the acquiring party will have
sufficient financial resources to effect such redemption or repurchase. Such
restrictions and the restrictions on transactions with Affiliates may, in
certain circumstances, make more difficult or discourage any leveraged buyout of
Holdings or any of its Subsidiaries by the management of Holdings. While such
restrictions cover a wide variety of arrangements which have traditionally been
used to effect highly leveraged transactions, the Senior Discount Indenture may
not afford the Holders of Senior Discount Exchange Notes protection in all
circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Holdings Issuers will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Senior Discount Exchange Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the 'Change of Control' provisions of the Senior Discount
Indenture, the Holdings Issuers shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached their obligations under
the 'Change of Control' provisions of the Senior Discount Indenture by virtue
thereof.
CERTAIN COVENANTS
The Senior Discount Indenture contains, among others, the following
covenants:
Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock. Holdings will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, 'incur' and collectively, an 'incurrence') any
Indebtedness (including Acquired Indebtedness) or issue any shares of
Disqualified Stock; provided, however, that Holdings and any Restricted
Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for Holdings'
and the Restricted Subsidiaries' most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 1.75 to 1.00 (determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period).
The foregoing limitations do not apply to: (a) the incurrence by Holdings
or its Restricted Subsidiaries of Indebtedness under the New Credit Facility and
the issuance and creation of letters of credit and banker's acceptances
thereunder (with letters of credit and banker's acceptances being deemed to have
a principal amount equal to the face amount thereof) up to an aggregate
principal amount of $650.0 million outstanding at any one time; (b) the
incurrence by the Holdings Issuers of Indebtedness represented by the Senior
Discount Notes; (c) Indebtedness of Holdings and its Restricted Subsidiaries
existing on the Issue Date (other than Indebtedness described in clauses (a) and
(b)) including the Senior Subordinated Notes and Holdings' guarantee thereof
(and any future guarantees thereof); (d) Indebtedness (including Capitalized
Lease Obligations) incurred by Holdings
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or any of its Restricted Subsidiaries, to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through the
direct purchase of assets or the Capital Stock of any Person owning such assets)
in an aggregate principal amount which, when aggregated with the principal
amount of all other Indebtedness then outstanding and incurred pursuant to this
clause (d) and including all Refinancing Indebtedness (as defined below)
incurred to refund, refinance or replace any other Indebtedness incurred
pursuant to this clause (d), does not exceed 15% of Total Assets at the time of
the respective incurrence; (e) Indebtedness incurred by Holdings or any of its
Restricted Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; (f) Indebtedness arising
from agreements of Holdings or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Subsidiary, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; (g) Indebtedness of Holdings to a
Restricted Subsidiary; provided that any such Indebtedness shall be subordinated
in right of payment to the Senior Discount Notes; provided further that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of any such Indebtedness (except to Holdings or
another Restricted Subsidiary) shall be deemed, in each case to be an incurrence
of such Indebtedness; (h) shares of preferred stock of a Restricted Subsidiary
issued to Holdings or another Restricted Subsidiary; provided that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of any such shares of preferred stock (except
to Holdings or another Restricted Subsidiary) shall be deemed, in each case to
be an issuance of such shares of preferred stock; (i) Indebtedness of a
Restricted Subsidiary to Holdings or another Restricted Subsidiary; provided
that any subsequent transfer of any such Indebtedness (except to Holdings or
another Restricted Subsidiary) shall be deemed, in each case to be an incurrence
of such Indebtedness; (j) Hedging Obligations that are incurred in the ordinary
course of business (1) for the purpose of fixing or hedging interest rate risk
with respect to any Indebtedness that is permitted by the terms of the Senior
Discount Indenture to be outstanding; (2) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges; or (3) for
the purpose of fixing or hedging commodity price risk with respect to any
commodity purchases; (k) obligations in respect of performance and surety bonds
and completion guarantees provided by Holdings or any Restricted Subsidiary in
the ordinary course of business; (l) Indebtedness of any Guarantor in respect of
such Guarantor's Guarantee; (m) Indebtedness or Disqualified Stock of Holdings
and any of its Restricted Subsidiaries not otherwise permitted hereunder in an
aggregate principal amount or liquidation preference, which when aggregated with
the principal amount and liquidation preference of all other Indebtedness and
Disqualified Stock then outstanding and incurred pursuant to this clause (m),
does not exceed $75.0 million at any one time outstanding; (n) (i) any guarantee
by Holdings or any of its Restricted Subsidiaries of Indebtedness or other
obligations of any of Holdings' Restricted Subsidiaries and any guarantee by a
Restricted Subsidiary that is a Guarantor of Indebtedness of Holdings so long as
the incurrence of such Indebtedness incurred by such Restricted Subsidiary or
Holdings, as the case may be, is permitted under the terms of the Senior
Discount Indenture and (ii) any Excluded Guarantee of a Restricted Subsidiary;
(o) the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness which serves to refund, refinance or restructure any Indebtedness
incurred as permitted under the first paragraph of this covenant, this clause
(o) and clauses (b) and (c) above and (q) below, or any Indebtedness issued to
so refund, refinance or restructure such Indebtedness including additional
Indebtedness incurred to pay premiums and fees in connection therewith (the
'Refinancing Indebtedness') prior to its respective maturity; provided, however,
that such Refinancing Indebtedness (i) has a Weighted Average Life to Maturity
at the time such Refinancing Indebtedness is incurred which is not less than the
remaining Weighted Average Life to Maturity of the Indebtedness being refunded
or refinanced, (ii) to the extent such Refinancing Indebtedness refinances
Indebtedness subordinated or pari passu to the Senior Discount Notes, such
Refinancing Indebtedness is subordinated or pari passu to the Senior Discount
Notes at least to the same extent as the Indebtedness being refinanced or
refunded and (iii) shall not include (x) Indebtedness of a Restricted Subsidiary
that is not a Guarantor that refinances Indebtedness of Holdings or (y)
Indebtedness of Holdings or a Restricted Subsidiary that refinances Indebtedness
of an Unrestricted Subsidiary; and provided further that subclauses (i) and (ii)
of this clause (o) will not apply to any refunding or refinancing of any
Indebtedness of a Restricted Subsidiary; (p) other Indebtedness in an amount not
greater than
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twice the amount of Permanent Qualified Equity Contributions after the Issue
Date at any one time outstanding; and (q) Indebtedness or Disqualified Stock of
Persons that are acquired by Holdings or any of its Restricted Subsidiaries or
merged into a Restricted Subsidiary in accordance with the terms of the Senior
Discount Indenture; provided that such Indebtedness or Disqualified Stock is not
incurred in contemplation of such acquisition or merger; and provided further
that after giving effect to such acquisition, either (i) Holdings would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first sentence of this
covenant or (ii) the Fixed Charge Coverage Ratio is greater than immediately
prior to such acquisition.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (a) through (q) above
or is entitled to be incurred pursuant to the first paragraph of this covenant,
Holdings shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant.
Limitation on Restricted Payments. Holdings will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution on account of Holdings' or
any of its Restricted Subsidiaries' Equity Interests (other than (A) dividends
or distributions by Holdings payable in Equity Interests (other than
Disqualified Stock) of Holdings or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or distribution
payable on or in respect of any class or series of securities issued by a
Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, Holdings
or a Restricted Subsidiary receives at least its pro rata share of such dividend
or distribution in accordance with its Equity Interests in such class or series
of securities); (ii) purchase or otherwise acquire or retire for value any
Equity Interests of Holdings; (iii) make any principal payment on, or redeem,
repurchase, defease or otherwise acquire or retire for value in each case, prior
to any scheduled repayment, or maturity, any Subordinated Indebtedness (other
than (A) the payment, redemption, repurchase, defeasance, acquisition or
retirement of Subordinated Indebtedness in anticipation of satisfying a sinking
fund obligation, principal installment or final maturity, in any case due within
one year of the date of such payment, redemption, repurchase, defeasance,
acquisition or retirement and (B) Indebtedness permitted under clauses (g) and
(i) of the covenant described under 'Limitations on Incurrence of Indebtedness
and Issuance of Disqualified Stock'); or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as 'Restricted Payments'), unless, at the time of
such Restricted Payment: (a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (b) immediately after
giving effect to such transaction on a pro forma basis, Holdings could incur
$1.00 of additional Indebtedness under the provisions of the first paragraph of
'Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock';
and (c) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by Holdings and its Restricted Subsidiaries after the
Issue Date (including Restricted Payments permitted by clauses (i), (ii) (with
respect to the repurchase, retirement or other acquisition of Retired Capital
Stock pursuant to clause (a) thereof and the payment of dividends on Retired
Capital Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x) of the
next succeeding paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of (i) 50% of the
cumulative Consolidated Net Income of Holdings for the period (taken as one
accounting period) from the first day after the Issue Date to the date of such
Restricted Payment (or, in the case such Consolidated Net Income for such period
is a deficit, minus 100% of such deficit), plus (ii) 100% of the aggregate net
proceeds, including cash and the fair market value of property other than cash
(as determined in good faith by the Holdings Issuers), received by Holdings
since the Issue Date from the issue or sale of Equity Interests of Holdings
(including Refunding Capital Stock (as defined) but excluding Disqualified
Stock), including such Equity Interests issued upon conversion of Indebtedness
or upon exercise of warrants or options, plus (iii) 100% of the aggregate amount
of contributions to the capital of Holdings since the Issue Date (other than
Excluded Contributions), plus (iv) 100% of the aggregate amount received in cash
and the fair market value of property other than cash (as determined in good
faith by Holdings) received from (A) the sale or other disposition (other than
to Holdings or a Restricted Subsidiary) of Restricted Investments made by
Holdings and its Restricted Subsidiaries or (B) the sale (other than to Holdings
or a Restricted Subsidiary) of the Capital Stock of an
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Unrestricted Subsidiary, plus (v) in case any Unrestricted Subsidiary has been
redesignated a Restricted Subsidiary or has been merged, consolidated or
amalgamated with or into, transfers or conveys assets to, or is liquidated into,
Holdings or a Restricted Subsidiary, the fair market value (as determined in
good faith by Holdings) of such Investment in such Unrestricted Subsidiary at
the time of such redesignation, combination or transfer (or of the assets
transferred or conveyed, as applicable), after deducting any Indebtedness
associated with the Unrestricted Subsidiary so designated or combined or with
the assets so transferred or conveyed.
The foregoing provisions will not prohibit: (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of the
Senior Discount Indenture; (ii) (a) the repurchase, retirement or other
acquisition of any Equity Interests (the 'Retired Capital Stock') or
Subordinated Indebtedness of Holdings in exchange for, or out of the proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of Holdings (other than any Disqualified Stock) or
contributions to the common equity capital of Holdings (the 'Refunding Capital
Stock'), and (b) the declaration and payment of dividends on the Retired Capital
Stock out of the proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary) of Refunding Capital Stock; (iii) the redemption,
repurchase or other acquisition or retirement of Subordinated Indebtedness of
Holdings made by exchange for, or out of the proceeds of the substantially
concurrent sale of, new Indebtedness of Holdings so long as (A) the principal
amount of such new Indebtedness does not exceed the principal amount of and
accrued and unpaid interest on the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired for value (plus the amount of any premium
required to be paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired), (B) such
Indebtedness is subordinated to the Senior Discount Notes at least to the same
extent as such Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value, (C) such Indebtedness has a final
scheduled maturity date equal to or later than the final scheduled maturity date
of the Subordinated Indebtedness being so redeemed, repurchased, acquired or
retired and (D) such Indebtedness has a Weighted Average Life to Maturity equal
to or greater than the remaining Weighted Average Life to Maturity of the
Subordinated Indebtedness being so redeemed, repurchased, acquired or retired;
(iv) the repurchase, retirement or other acquisition for value (or a dividend or
distribution to fund any such repurchase, retirement or other acquisition) of
Equity Interests of Holdings or Investor LP held by any future, present or
former employee, director or consultant of Holdings or any Subsidiary of
Holdings pursuant to any management equity plan or stock option plan or any
other management or employee benefit plan or agreement; provided, however, that
the aggregate amounts paid under this clause (iv) does not exceed in any
calendar year $5.0 million (with unused amounts in any calendar year being
carried over to succeeding calendar years subject to a maximum (without giving
effect to the following proviso) of $10.0 million in any calendar year);
provided further, that such amount in any calendar year may be increased by an
amount not to exceed (i) the cash proceeds from the sale of Equity Interests of
Holdings (or of Investor LP which are contributed to Holdings) to members of
management, directors or consultants of Holdings and its Subsidiaries that
occurs after the Issue Date (provided that such proceeds have not been included
with respect to determining whether a previous Restricted Payment was permitted
pursuant to the first paragraph of this covenant) plus (ii) the cash proceeds of
key man life insurance policies received by Holdings and its Restricted
Subsidiaries after the Issue Date; (v) the declaration and payment of dividends
or distributions to holders of any class or series of Disqualified Stock of
Holdings or any of its Restricted Subsidiaries issued or incurred in accordance
with the covenant entitled 'Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock'; (vi) the declaration and payment of dividends
to holders of any class or series of Designated Preferred Stock; provided,
however, that for the most recently ended four full fiscal quarters for which
internal financial statements are available preceding the date of declaration of
any such dividend or distribution, after giving effect to such dividend or
distribution as a Fixed Charge on a pro forma basis, Holdings and its Restricted
Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75 to
1.00; (vii) Investments in Unrestricted Subsidiaries having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (vii) that are at that time outstanding, not to exceed $15.0 million at
the time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value); (viii) repurchases of (or a dividend or distribution to fund repurchases
of) Equity Interests of Holdings or Investor LP deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise price
of such options; (ix) the payment of dividends on Holding's Common Stock
following the first public offering of Common Stock of Holdings after the Issue
Date
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of up to 6% per annum of the net proceeds received by Holdings in such public
offering; (x) the repurchase, retirement or other acquisition for value after
the first anniversary of the Issue Date (or a dividend or distribution to fund
the repurchase, retirement or other acquisition of) of Equity Interests of
Holdings or Investor LP in existence on the Issue Date and which are not held by
Blackstone or any of their Affiliates or the Management Group on the Issue Date
(including any Equity Interests issued in respect of such Equity Interests as a
result of a stock split, recapitalization, merger, combination, consolidation or
otherwise, but excluding any management equity plan or stock option plan or
similar agreement), provided that (A) the aggregate amounts paid under this
clause (x) shall not exceed (I) $15.0 million on or prior to the second
anniversary of the Issue Date or (II) $30.0 million at any time after the second
anniversary of the Issue Date and (B) after giving effect thereto, Holdings
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first sentence of the
covenant described under 'Limitations on Incurrence of Indebtedness and Issuance
of Disqualified Stock'; (xi) Investments that are made with Excluded
Contributions; (xii) other Restricted Payments in an aggregate amount not to
exceed $15.0 million; (xiii) the payment of any dividend or distribution on
Equity Interests of Holdings to the extent necessary to permit direct or
indirect beneficial owners of such Equity Interests to receive tax distributions
in an amount equal to the taxable income of Holdings allocated to a partner
multiplied by the highest combined federal and state income tax rate (including,
to the extent applicable, alternative minimum tax) solely as a result of
Holdings (and any intermediate entity through which such holder owns such Equity
Interests) being a partnership or similar pass-through entity for federal income
tax purposes ('Permitted Tax Distributions'); and (xiv) Restricted Payments made
on the Issue Date contemplated by the Recapitalization Agreement; provided,
however, that at the time of, and after giving effect to, any Restricted Payment
permitted under clauses (vii), (ix), (x) and (xii), no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof; and provided further that for purposes of determining the aggregate
amount expended for Restricted Payments in accordance with clause (c) of the
immediately preceding paragraph, only the amounts expended under clauses (i),
(ii) (with respect to the repurchase, retirement or other acquisition of Retired
Capital Stock pursuant to clause (a) thereof and the payment of dividends on
Retired Capital Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x),
shall be included.
As of the Issue Date, all of Holdings' Subsidiaries were Restricted
Subsidiaries. Holdings will not permit any Unrestricted Subsidiary to become a
Restricted Subsidiary except pursuant to the second to last sentence of the
definition of 'Unrestricted Subsidiary.' For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by Holdings and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated will be deemed to be Restricted Payments in an amount
determined as set forth in the last sentence of the definition of 'Investments.'
Such designation is only permitted if a Restricted Payment in such amount would
be permitted at such time (whether pursuant to the first paragraph of this
covenant or under clause (vii), (xi) or (xii)) and if such Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries
will not be subject to any of the restrictive covenants set forth in the Senior
Discount Indenture.
Limitation on Asset Sales. Holdings will not, and will not cause or permit
any of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset
Sale, unless (x) Holdings or its Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the fair
market value (as determined in good faith by Holdings) of the assets sold or
otherwise disposed of and (y) at least 75% of the consideration therefor
received by Holdings or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents; provided that the amount of (a) any
liabilities (as shown on Holdings' or such Restricted Subsidiary's most recent
balance sheet or in the notes thereto) of Holdings or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Senior
Discount Notes) that are assumed by the transferee of any such assets without
recourse to Holdings or any of the Restricted Subsidiaries, (b) any notes or
other obligations received by Holdings or such Restricted Subsidiary from such
transferee that are converted by Holdings or such Restricted Subsidiary into
cash (to the extent of the cash received) within 180 days following the closing
of such Asset Sale, (c) any Designated Noncash Consideration received by
Holdings or any of its Restricted Subsidiaries in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (c) that is at that time
outstanding, not to exceed 15% of Total Assets at the time of the receipt of
such Designated Noncash Consideration (with the fair market value of each item
of Designated Noncash Consideration being measured at the time received and
without
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giving effect to subsequent changes in value) and (d) any assets received in
exchange for assets related to a Similar Business of comparable market value in
the good faith determination of, the Board of Directors of Holdings, shall be
deemed to be cash for purposes of this provision.
Within 365 days after Holdings' or any Restricted Subsidiary's receipt of
the Net Proceeds of any Asset Sale, Holdings or such Restricted Subsidiary may
apply the Net Proceeds from such Asset Sale, at its option, (i) to permanently
reduce Obligations under the New Credit Facility (and to correspondingly reduce
commitments with respect thereto) or other Indebtedness of a Restricted
Subsidiary or Pari Passu Indebtedness (provided that if Holdings shall so reduce
Obligations under Pari Passu Indebtedness, it will equally and ratably reduce
Obligations under the Senior Discount Notes if the Senior Discount Notes are
then redeemable or, if the Senior Discount Notes may not be then redeemed,
Holdings shall make an offer (in accordance with the procedures set forth below
for an Asset Sale Offer) to all Holders to purchase at 100% of the Accreted
Value thereof the amount of Senior Discount Notes that would otherwise be
redeemed), (ii) to an investment in any one or more businesses, capital
expenditures or acquisitions of other assets in each case, used or useful in a
Similar Business and/or (iii) to make an investment in properties or assets that
replace the properties and assets that are the subject of such Asset Sale.
Pending the final application of any such Net Proceeds, Holdings or such
Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. The Senior Discount Indenture
provides that any Net Proceeds from the Asset Sale that are not invested as
provided and within the time period set forth in the first sentence of this
paragraph (it being understood that any portion of such Net Proceeds used to
make an offer to purchase Senior Discount Notes, as described in clause (i)
above, shall be deemed to have been invested whether or not such offer is
accepted) will be deemed to constitute 'Excess Proceeds.' When the aggregate
amount of Excess Proceeds exceeds $15.0 million, the Holdings Issuers shall make
an offer to all Holders of Senior Discount Notes (an 'Asset Sale Offer') to
purchase the maximum principal amount at maturity of Senior Discount Notes, that
is an integral multiple of $1,000, that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the Accreted
Value thereof, plus accrued and unpaid interest, if any, to, the date fixed for
the closing of such offer, in accordance with the procedures set forth in the
Senior Discount Indenture. The Holdings Issuers will commence an Asset Sale
Offer with respect to Excess Proceeds within ten Business Days after the date
that Excess Proceeds exceeds $15.0 million by mailing the notice required
pursuant to the terms of the Senior Discount Indenture, with a copy to the
Trustee. To the extent that the aggregate Accreted Value of Senior Discount
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
Holdings may use any remaining Excess Proceeds for general corporate or
partnership purposes. If the Accreted Value of Senior Discount Notes surrendered
by Holders thereof exceeds the amount of Excess Proceeds, the Senior Discount
Trustee shall select the Senior Discount Notes to be purchased in the manner
described under the caption 'Selection and Notice of Redemption' above. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
The Holdings Issuers will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Senior Discount Notes pursuant to an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of the Senior Discount Indenture, the Holdings Issuers will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in the Senior Discount Indenture by
virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. Holdings will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to: (a)(i) pay dividends
or make any other distributions to Holdings or any of its Restricted
Subsidiaries (1) on their Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
Indebtedness owed to Holdings or any of its Restricted Subsidiaries; (b) make
loans or advances to Holdings or any of its Restricted Subsidiaries; or (c)
sell, lease or transfer any of its properties or assets to Holdings or any of
its Restricted Subsidiaries; except (in each case) for such encumbrances or
restrictions existing under or by reason of: (1) contractual encumbrances or
restrictions in effect on the Issue Date, including pursuant to the New Credit
Facility and its related documentation and the Senior Subordinated Indenture;
(2) the Senior Discount Indenture and the Senior Discount Notes; (3) purchase
money obligations for
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property acquired in the ordinary course of business that impose restrictions of
the nature discussed in clause (c) above on the property so acquired; (4)
applicable law or any applicable rule, regulation or order; (5) any agreement or
other instrument of a Person acquired by Holdings or any Restricted Subsidiary
in existence at the time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired; (6) contracts for the sale of assets,
including, without limitation, customary restrictions with respect to a
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary; (7) secured Indebtedness otherwise permitted to be incurred pursuant
to the covenants described under 'Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock' and 'Limitation on Liens' that limit the right
of the debtor to dispose of the assets securing such Indebtedness; (8)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business; (9) other
Indebtedness of Foreign Subsidiaries permitted to be incurred subsequent to the
Issue Date pursuant to the provisions of the covenant described under
'Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock';
(10) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business; (11) customary
provisions contained in leases and other agreements entered into in the ordinary
course of business; (12) any encumbrances or restrictions of the type referred
to in clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in clauses
(1) through (11) above, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Board of Directors of
Holdings, no more restrictive with respect to such dividend and other payment
restrictions than those contained in the dividend or other payment restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; (13) any encumbrances or
restrictions that are no more restrictive than those contained in the New Credit
Facility as in effect on the Issue Date or (14) which will not in the aggregate
cause Holdings not to have the funds necessary to pay the principal of, premium,
if any, or interest on, the Senior Discount Notes.
Limitation on Liens. Holdings will not directly or indirectly create,
incur, assume or suffer to exist any Lien (other than a Permitted Lien) that
secures any Indebtedness of Holdings on any asset or property of Holdings, or
any income or profits therefrom, or assign or convey any right to receive income
therefrom, unless the Senior Discount Notes are equally and ratably secured with
the obligations so secured or until such time as such obligations are no longer
secured by a Lien.
The Senior Subordinated Indenture provides that no Guarantor will directly
or indirectly create, incur, assume or suffer to exist any Lien (other than a
Permitted Lien) that secures any guarantee of Indebtedness of Holdings by such
Guarantor on any asset or property of such Guarantor or any income or profits
therefrom, or assign or convey any right to receive income therefrom, unless the
Guarantee of such Guarantor is equally and ratably secured with the obligations
so secured or until such time as such guarantee is no longer secured by a Lien.
Merger, Consolidation and Sale of Assets. Holdings may not consolidate or
merge with or into or wind up into (whether or not Holdings is the surviving
entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to any Person unless (i) Holdings is the surviving entity or the
Person formed by or surviving any such consolidation or merger (if other than
Holdings) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation, partnership or limited
liability company organized or existing under the laws of the United States, any
state thereof, the District of Columbia, or any territory thereof (Holdings or
such Person, as the case may be, being herein called the 'Successor Company');
(ii) the Successor Company (if other than Holdings or CapCo II) expressly
assumes all the obligations of Holdings under the Senior Discount Indenture and
the Senior Discount Notes pursuant to a supplemental indenture or other
documents or instruments in form reasonably satisfactory to the Senior Discount
Trustee; (iii) immediately after such transaction no Default or Event of Default
shall have occurred and be continuing; (iv) immediately after giving pro forma
effect to such transaction, as if such transaction had occurred at the beginning
of the applicable four-quarter period, either (A) the Successor Company (if
other than CapCo II) would be permitted to incur at least $1.00 of additional
Indebtedness pursuant
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to the Fixed Charge Coverage Ratio test set forth in the first sentence of the
covenant described under 'Limitations on Incurrence of Indebtedness and Issuance
of Disqualified Stock' or (B) the Fixed Charge Coverage Ratio for the Successor
Company (if other than CapCo II) and its Restricted Subsidiaries would be
greater than such ratio for Holdings and its Restricted Subsidiaries immediately
prior to such transaction; and (v) Holdings shall have delivered to the Senior
Discount Trustee an Officers' Certificate and an opinion of counsel, each
stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Senior Discount Indenture. The Successor
Company will succeed to, and be substituted for, Holdings under the Senior
Discount Indenture and the Senior Discount Notes. Notwithstanding the foregoing
clauses (iii) and (iv), (a) any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties and assets to Holdings or
to another Restricted Subsidiary and (b) Holdings may merge with or transfer all
of its properties and assets to an Affiliate incorporated or formed solely for
the purpose of either reincorporating or reforming Holdings in another State of
the United States or changing the legal structure of Holdings to a corporation
so long as the amount of Indebtedness of Holdings and its Restricted
Subsidiaries is not increased thereby (it being understood that after the
transfer of such property and assets for the purpose of changing legal structure
to a corporation, Holdings may dissolve).
Each Guarantor, if any, shall not, and Holdings will not permit a Guarantor
to, consolidate or merge with or into or wind up into (whether or not such
Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation, partnership or limited liability company organized
or existing under the laws of the United States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such Person, as the
case may be, being herein called the 'Successor Guarantor'); (ii) the Successor
Guarantor (if other than such Guarantor) expressly assumes all the obligations
of such Guarantor under the Senior Discount Indenture and such Guarantor's
Guarantee pursuant to a supplemental indenture or other documents or instruments
in form reasonably satisfactory to the Senior Discount Trustee; (iii)
immediately after such transaction no Default or Event of Default shall have
occurred and be continuing; and (iv) the Guarantor shall have delivered or
caused to be delivered to the Senior Discount Trustee an Officers' Certificate
and an opinion of counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with the Senior
Discount Indenture. The Successor Guarantor will succeed to, and be substituted
for, such Guarantor under the Senior Discount Indenture and such Guarantor's
Guarantee.
Limitations on Transactions with Affiliates. (a) Holdings will not, and
will not cause or permit any of its Restricted Subsidiaries to, make any payment
to, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
'Affiliate Transaction') involving aggregate consideration in excess of $5.0
million, unless (a) such Affiliate Transaction is on terms that are not
materially less favorable to Holdings or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by Holdings or
such Restricted Subsidiary with an unrelated Person and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, Holdings delivers to the
Senior Discount Trustee a resolution adopted by the majority of the Board of
Directors of Holdings, approving such Affiliate Transaction and set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above.
The foregoing provisions do not apply to the following: (i) transactions
between or among Holdings and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by the provisions of the Senior Discount Indenture
described above under the covenant 'Limitation on Restricted Payments'; (iii)
the payment of annual management, consulting, monitoring and advisory fees and
related expenses to Blackstone, Graham Packaging Corporation and their
respective Affiliates; (iv) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of Holdings or any Restricted Subsidiary; (v) payments by Holdings
or any of its Restricted Subsidiaries to Blackstone and its Affiliates made for
any financial advisory, financing, underwriting or placement services or in
respect of other investment
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banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by, the majority of the
Board of Directors of Holdings, in good faith; (vi) transactions in which
Holdings or any of its Restricted Subsidiaries, as the case may be, delivers to
the Senior Discount Trustee a letter from an Independent Financial Advisor
stating that such transaction is fair to Holdings or such Restricted Subsidiary
from a financial point of view or meets the requirements of clause (a) of the
preceding paragraph; (vii) payments or loans to employees or consultants which
are approved by a majority of the Board of Directors of Holdings, in good faith;
(viii) any agreement as in effect as of the Issue Date or any amendment thereto
(so long as any such amendment is not disadvantageous to the holders of the
Senior Discount Notes in any material respect) or any transaction contemplated
thereby; (ix) the existence of, or the performance by Holdings or any Restricted
Subsidiary of its obligations under the terms of, the Recapitalization
Agreement, or agreement contemplated thereunder (including any registration
rights agreement or purchase agreement related thereto) to which it is a party
as of the Issue Date and any similar agreements which it may enter into
thereafter; provided, however, that the existence of, or the performance by
Holdings or any Restricted Subsidiary of obligations under any future amendment
to any such existing agreement or under any similar agreement entered into after
the Issue Date shall only be permitted by this clause (ix) to the extent that
the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders of the Senior Discount Notes in any material
respect; (x) the payment of all fees, expenses, bonuses and awards related to
the transactions contemplated by the Recapitalization Agreement, including fees
to Blackstone; and (xi) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the ordinary course
of business and otherwise in compliance with the terms of the Senior Discount
Indenture which are fair to Holdings and its Restricted Subsidiaries, in the
reasonable determination of the majority of the Board of Directors of Holdings,
or are on terms at least as favorable as might reasonably have been obtained at
such time from an unaffiliated party.
Limitations on Guarantees of Indebtedness by Restricted Subsidiaries. (a)
Holdings will not permit any Restricted Subsidiary to guarantee the payment of
any Indebtedness of Holdings unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the Senior Discount Indenture
providing for a guarantee of payment of the Senior Discount Notes by such
Restricted Subsidiary, except that if such Indebtedness is by its express terms
subordinated in right of payment to the Senior Discount Notes, any such
guarantee of such Restricted Subsidiary with respect to such Indebtedness shall
be subordinated in right of payment to such Restricted Subsidiary's Guarantee
with respect to the Senior Discount Notes substantially to the same extent as
such Indebtedness is subordinated to the Senior Discount Notes; provided that
this paragraph (a) shall not be applicable to any guarantee by any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of Holdings and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of Holdings or
(y) that guarantees the payment of Obligations of Holdings under the New Credit
Facility or any other bank facility which is Pari Passu Indebtedness of Holdings
and any refunding, refinancing or replacement thereof, in whole or in part,
provided that such refunding, refinancing or replacement thereof constitutes
Pari Passu Indebtedness of Holdings and is not incurred pursuant to a registered
offering of securities under the Securities Act or a private placement of
securities (including under Rule 144A) pursuant to an exemption from the
registration requirements of the Securities Act (other than Securities issued
pursuant to a bank or similar credit facility (including the New Credit
Facility)), which private placement provides for registration rights under the
Securities Act (any guarantee excluded by operations of this clause (y) being an
'Excluded Guarantee').
(b) Notwithstanding the foregoing and the other provisions of the Senior
Discount Indenture, any Guarantee by a Restricted Subsidiary of the Senior
Discount Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer
to any person not an Affiliate of Holdings, of all of Holdings' Capital Stock
in, or all or substantially all of the assets of, such Restricted Subsidiary
(which sale, exchange or transfer is not prohibited by the Senior Discount
Indenture) or (ii) the release or discharge of the guarantee which resulted in
the creation of such Guarantee, except a discharge or release by or a result of
payment under such Guarantee.
Reports to Holders. The Holdings Issuers will deliver to the Senior
Discount Trustee within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which the Holdings Issuers are required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
The Senior Discount Indenture further provides that,
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notwithstanding that the Holdings Issuers may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Securities and
Exchange Commission (the 'Commission'), the Senior Discount Indenture will
require the Holdings Issuers to file with the Commission (and provide the Senior
Discount Trustee and Holders with copies thereof, without cost to each Holder,
within 15 days after it files them with the Commission), (a) within 90 days
after the end of each fiscal year, annual reports on Form 10-K (or any successor
or comparable form) containing the information required to be contained therein
(or required in such successor or comparable form); (b) within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, reports on
Form 10-Q (or any successor or comparable form); (c) promptly from time to time
after the occurrence of an event required to be therein reported, such other
reports on Form 8-K (or any successor or comparable form); and (d) any other
information, documents and other reports which the Holdings Issuers would be
required to file with the Commission if they were subject to Section 13 or 15(d)
of the Exchange Act; provided, however, that the Holdings Issuers shall not be
so obligated to file such reports with the Commission if the Commission does not
permit such filing, in which event the Holdings Issuers will make available such
information to prospective purchasers of Senior Discount Notes, in addition to
providing such information to the Senior Discount Trustee and the Holders, in
each case within 15 days after the time the Holdings Issuers would be required
to file such information with the Commission, if they were subject to Sections
13 or 15(d) of the Exchange Act. Notwithstanding the foregoing, such
requirements shall be deemed satisfied (x) prior to April 30, 1998, if the
Holdings Issuers deliver to the Senior Discount Trustee and the holders of the
Senior Discount Notes on or prior to such date copies of the audited financial
statements of the Holdings Issuers and (y) prior to May 31, 1998, by filing with
the Commission and delivering to the Senior Discount Trustee and the holders of
the Senior Discount Notes on or prior to such date a registration statement
under the Securities Act that contains the information that would be required in
a Form 10-K for the Holdings Issuers for the year ended December 31, 1997 and a
Form 10-Q for the Holdings Issuers for the quarter ended March 31, 1998. The
Holdings Issuers will also comply with the other provisions of TIA Section
314(a).
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EVENTS OF DEFAULT
The following events are defined in the Senior Discount Indenture as
'Events of Default':
(i) the failure to pay interest on any Senior Discount Notes when the
same becomes due and payable and the default continues for a period of 30
days;
(ii) the failure to pay the Accreted Value of or the principal on any
Senior Discount Notes, when the same becomes due and payable, at maturity,
upon redemption or otherwise (including the failure to make a payment to
purchase Senior Discount Notes tendered pursuant to a Change of Control
Offer or an Asset Sale Offer which has actually been made);
(iii) a default in the observance or performance of any other covenant
or agreement contained in the Senior Discount Indenture which default
continues for a period of 60 days after Holdings receives written notice
specifying the default (and demanding that such default be remedied) from
the Senior Discount Trustee or the Holders of at least 25% of the
outstanding principal amount of the Senior Discount Notes (except in the
case of a default with respect to the 'Merger, Consolidation and Sale of
Assets' covenant, which will constitute an Event of Default with such
notice requirement but without such passage of time requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of Holdings or any Significant Restricted Subsidiary,
or the acceleration of the final stated maturity of any such Indebtedness
if the aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to
pay principal at final maturity or which has been accelerated, aggregates
$20.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $20.0
million shall have been rendered against Holdings or any Significant
Restricted Subsidiary and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor
upon such judgment or decree which is not promptly stayed;
(vi) any Guarantee by a Significant Restricted Subsidiary shall become
null or void or unenforceable (other than in accordance with the terms of
the Senior Discount Indenture) or any such Guarantor shall deny its
obligations under its Guarantee; or
(vii) certain events of bankruptcy affecting Holdings or any of its
Significant Restricted Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause (vii)
with respect to Holdings) shall occur and be continuing, the Senior Discount
Trustee or the Holders of at least 25% in principal amount of outstanding Senior
Discount Notes may declare the Accreted Value of and accrued interest, if any,
on all the Senior Discount Notes to be due and payable by notice in writing to
Holdings and the Senior Discount Trustee specifying the respective Event of
Default and that it is a 'notice of acceleration' (the 'Acceleration Notice'),
and the same (i) shall become immediately due and payable or (ii) if there are
any amounts outstanding under the New Credit Facility, shall become immediately
due and payable upon the first to occur of an acceleration under the New Credit
Facility or 5 Business Days after receipt by Holdings and the Agent under the
New Credit Facility of such Acceleration Notice, but only if such Event of
Default is then continuing. If an Event of Default specified in clause (vii)
with respect to Holdings occurs, then the Accreted Value of and any accrued
interest on the Senior Discount Notes shall ipso facto become immediately due
and payable without any further action, by the Senior Discount Trustee or the
Holders.
The Senior Discount Indenture provides that, at any time after a
declaration of acceleration with respect to the Senior Discount Notes as
described in the preceding paragraph, the Holders of a majority in principal
amount at maturity of the Senior Discount Notes may rescind and cancel such
declaration and its consequences (i) if the rescission would not conflict with
any judgment or decree, (ii) if all existing Events of Default have been cured
or waived except nonpayment of Accreted Value or interest that has become due
solely because of the acceleration, (iii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest
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and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid and (iv) if Holdings has paid the Senior Discount
Trustee its reasonable compensation and reimbursed the Senior Discount Trustee
for its expenses, disbursements and advances. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
The Holders of a majority in principal amount at maturity of the Senior
Discount Notes may waive any existing Default or Event of Default under the
Senior Discount Indenture, and its consequences, except a default in the payment
of the Accreted Value of or interest on any Senior Discount Notes.
Holders of the Senior Discount Notes may not enforce the Senior Discount
Indenture or the Senior Discount Notes except as provided in the Senior Discount
Indenture and under the TIA. Subject to the provisions of the Senior Discount
Indenture relating to the duties of the Senior Discount Trustee, the Senior
Discount Trustee is under no obligation to exercise any of its rights or powers
under the Senior Discount Indenture at the request, order or direction of any of
the Holders, unless such Holders have offered to the Senior Discount Trustee
reasonable indemnity. Subject to all provisions of the Senior Discount Indenture
and applicable law, the Holders of a majority in aggregate principal amount at
maturity of the then outstanding Senior Discount Notes have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Senior Discount Trustee or exercising any trust or power conferred on the
Senior Discount Trustee.
Under the Senior Discount Indenture, Holdings is required to provide an
Officers' Certificate to the Senior Discount Trustee promptly upon Holdings
obtaining knowledge of any Default or Event of Default (provided that such
certification shall be provided at least annually whether or not Holdings knows
of any Default or Event of Default) that has occurred and, if applicable,
describe such Default or Event of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Holdings Issuers may, at their option and at any time, elect to have
their obligations discharged with respect to the outstanding Senior Discount
Notes ('Legal Defeasance'). Such Legal Defeasance means that the Holdings
Issuers shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Senior Discount Notes, except for (i) the rights
of Holders to receive payments in respect of the principal of, premium, if any,
and interest on the Senior Discount Notes when such payments are due, (ii) the
Holdings Issuers' obligations with respect to the Senior Discount Notes
concerning issuing temporary Senior Discount Notes, registration of Senior
Discount Notes, mutilated, destroyed, lost or stolen Senior Discount Notes and
the maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Senior Discount Trustee and the Holdings
Issuers' obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Senior Discount Indenture. In addition, the Holdings Issuers
may, at their option and at any time, elect to have the obligations of the
Holdings Issuers released with respect to certain covenants that are described
in the Senior Discount Indenture ('Covenant Defeasance') and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Senior Discount Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, reorganization and insolvency events) described under 'Events of
Default' will no longer constitute an Event of Default with respect to the
Senior Discount Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Holdings must irrevocably deposit with the Senior Discount Trustee, in trust,
for the benefit of the Holders 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
Senior Discount Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be; (ii) in the case of Legal
Defeasance, Holdings shall have delivered to the Senior Discount Trustee an
opinion of counsel in the United States reasonably acceptable to the Senior
Discount Trustee confirming that (A) the Holdings Issuers have received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of the Senior Discount Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders 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
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Covenant Defeasance, Holdings shall have delivered to the Senior Discount
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that the Holders 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 shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under the Senior Discount Indenture or any other material agreement or
instrument to which Holdings or any of its Subsidiaries is a party or by which
Holdings or any of its Subsidiaries are bound; (vi) Holdings shall have
delivered to the Senior Discount Trustee an Officers' Certificate stating that
the deposit was not made by Holdings with the intent of preferring the Holders
over any other creditors of Holdings or with the intent of defeating, hindering,
delaying or defrauding any other creditors of Holdings or others; (vii) Holdings
shall have delivered to the Senior Discount Trustee an Officers' Certificate and
an opinion of counsel, each stating that all conditions precedent provided for
or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with; (viii) Holdings shall have delivered to the Senior Discount
Trustee an opinion of counsel to the effect that 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; and (ix) certain other customary conditions precedent are
satisfied.
SATISFACTION AND DISCHARGE
The Senior Discount Indenture will be discharged and will cease to be of
further effect (except as to surviving rights or registration of transfer or
exchange of the Senior Discount Notes, as expressly provided for in the Senior
Discount Indenture) as to all outstanding Senior Discount Notes when (i) either
(a) all the Senior Discount Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Senior Discount Notes for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Holdings Issuers and thereafter
repaid to the Holdings Issuers or discharged from such trust) have been
delivered to the Senior Discount Trustee for cancellation or (b) all Senior
Discount Notes not theretofore delivered to the Senior Discount Trustee for
cancellation have become due and payable and Holdings has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount sufficient to pay
and discharge the entire Indebtedness on the Senior Discount Notes not
theretofore delivered to the Senior Discount Trustee for cancellation, for
principal of, premium, if any, and interest on the Senior Discount Notes to the
date of deposit together with irrevocable instructions from Holdings directing
the Senior Discount Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (ii) Holdings has paid all other
sums payable under the Senior Discount Indenture by Holdings; and (iii) Holdings
has delivered to the Senior Discount Trustee an Officers' Certificate and an
opinion of counsel stating that all conditions precedent under the Senior
Discount Indenture relating to the satisfaction and discharge of the Senior
Discount Indenture have been complied with.
MODIFICATION OF THE SENIOR DISCOUNT INDENTURE
From time to time, the Holdings Issuers and the Senior Discount Trustee,
without the consent of the Holders, may amend the Senior Discount Indenture for
certain specified purposes, including curing ambiguities, defects or
inconsistencies, so long as such change does not, in the opinion of the Senior
Discount Trustee, adversely affect the rights of any of the Holders in any
material respect. In formulating its opinion on such matters, the Senior
Discount Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an opinion of counsel.
Other modifications and amendments of the Senior Discount Indenture may be made
with the consent of the Holders of a majority in principal amount at maturity of
the then outstanding Senior Discount Notes issued under the Senior Discount
Indenture, except that, without the consent of each Holder affected thereby, no
amendment may: (i) reduce the amount of Senior Discount Notes whose Holders must
consent to an amendment; (ii) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted interest, on any
Senior Discount Notes, or change or have the effect of changing the definition
of Accreted Value; (iii) reduce the principal of or change or have the effect of
changing the fixed maturity of any Senior Discount Notes, or change the date on
which any Senior Discount
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Notes may be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor; (iv) make any Senior Discount Notes payable in money
other than that stated in the Senior Discount Notes; (v) make any change in
provisions of the Senior Discount Indenture protecting the right of each Holder
to receive payment of principal or Accreted Value of and interest on such Senior
Discount Note on or after the due date thereof or to bring suit to enforce such
payment, or permitting Holders of a majority in principal amount at maturity of
Senior Discount Notes to waive Defaults or Events of Default; (vi) amend, change
or modify in any material respect the obligation of the Holdings Issuers to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate an Asset Sale Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; or (vii) modify or change any provision of the Senior Discount
Indenture or the related definitions affecting the ranking of the Senior
Discount Notes in a manner which adversely affects the Holders.
GOVERNING LAW
The Senior Discount Indenture provides that it and the Senior Discount
Notes will be governed by, and construed in accordance with, the laws of the
State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the law of another
jurisdiction would be required thereby.
THE SENIOR DISCOUNT TRUSTEE
The Senior Discount Indenture provides that, except during the continuance
of an Event of Default, the Senior Discount Trustee will perform only such
duties as are specifically set forth in the Senior Discount Indenture. During
the existence of an Event of Default, the Senior Discount Trustee will exercise
such rights and powers vested in it by the Senior Discount Indenture, and use
the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
The Senior Discount Indenture and the provisions of the TIA contain certain
limitations on the rights of the Senior Discount Trustee, should it become a
creditor of either of the Holdings Issuers, to obtain payments of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. Subject to the TIA, the Senior Discount Trustee
will be permitted to engage in other transactions; provided that if the Trustee
acquires any conflicting interest as described in the TIA, it must eliminate
such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Senior Discount Indenture. Reference is made to the Senior Discount Indenture
for the full definition of all such terms, as well as any other terms used
herein for which no definition is provided.
'Accreted Value' means as of any date prior to January 15, 2003, an amount
per $1,000 principal amount at maturity of the Senior Discount Notes that is
equal to the sum of (a) the initial offering price of each Senior Discount Note
and (b) the portion of the excess of the principal amount at maturity of each
Senior Discount Note over such initial offering price which shall have been
amortized through such date, such amount to be so amortized on a daily basis and
compounded semi-annually on each January 15, and July 15 at the rate of 10 3/4%
per annum from the Issue Date through the date of determination computed on the
basis of a 360-day year of twelve 30-day months.
'Acquired Indebtedness' means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. 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, shall mean
the possession, directly or indirectly, of the power
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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.
'Asset Sale' means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of Holdings or any
Restricted Subsidiary thereof (each referred to in this definition as a
'disposition') or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than: (a) a disposition of Cash Equivalents
or Investment Grade Securities or obsolete or worn out equipment in the ordinary
course of business; (b) the disposition of all or substantially all of the
assets of Holdings in a manner permitted pursuant to the provisions described
above under 'Certain Covenants--Merger, Consolidation and Sale of Assets' or any
disposition that constitutes a Change of Control pursuant to the Senior Discount
Indenture; (c) any Restricted Payment that is permitted to be made, and is made,
under the covenant described above under 'Limitation on Restricted Payments;'
(d) any disposition of assets with an aggregate fair market value of less than
$2.0 million; (e) any disposition of property or assets by a Restricted
Subsidiary to Holdings or by Holdings or a Restricted Subsidiary to a Restricted
Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, for use in a Similar Business; (g)
any financing transaction with respect to property built or acquired by Holdings
or any of its Restricted Subsidiaries after the Issue Date including, without
limitation, sale-leasebacks and asset securitizations; (h) foreclosures on
assets; and (i) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary.
'Blackstone' means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its Affiliates.
'Board of Directors' means, as to any Person, the board of directors of
such Person (or, if such Person is a partnership, the board of directors or
other governing body of the general partner of such Person) or any duly
authorized committee thereof.
'Board Resolution' means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
(or, if such Person is a partnership, its general partner) to have been duly
adopted by the Board of Directors of such Person and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
'Business Day' means a day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open.
'Capitalized Lease Obligation' means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet in accordance with GAAP.
'Capital Stock' means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
'Cash Equivalents' means (i) U.S. dollars (and foreign currency exchanged
into U.S. dollars within 180 days), (ii) securities issued or directly and fully
guaranteed or insured by the U.S. Government or any agency or instrumentality
thereof, (iii) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having capital and surplus in
excess of $500.0 million, (iv) repurchase obligations for underlying securities
of the types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in
each case maturing within one year after the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(v) above, (vii) readily marketable direct obligations
issued by any state of the United States of America or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with
a rating of 'A' or higher from S&P or 'A2' or higher from Moody's.
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'Change of Control' means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of Holdings and its Restricted Subsidiaries,
taken as a whole, to a Person other than the Permitted Holders and their Related
Parties; or (ii) Holdings becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than the Permitted Holders and their Related Parties, in a
single transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 50% or more of the total voting power of the Voting Stock of
Holdings.
'Common Stock' of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common equity, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common equity.
'Consolidated Depreciation and Amortization Expense' means with respect to
any Person for any period, the total amount of depreciation and amortization
expense of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.
'Consolidated EBITDA' means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based on income or profits of such Person, or Permitted Tax Distributions
made by such Person, for such period deducted in computing Consolidated Net
Income, plus (b) Consolidated Interest Expense of such Person for such period to
the extent the same was deducted in calculating such Consolidated Net Income,
plus (c) Consolidated Depreciation and Amortization Expense of such Person for
such period to the extent such depreciation and amortization expense was
deducted in computing Consolidated Net Income, plus (d) any fees, expenses or
charges related to any Equity Offering, Permitted Investment, acquisition or
recapitalization or Indebtedness permitted to be incurred by the Senior Discount
Indenture (whether or not successful) and fees, expenses or charges related to
the transactions contemplated by the Recapitalization Agreement (including fees
to Blackstone), plus (e) the amount of any non-recurring charges (including any
one-time costs incurred in connection with acquisitions after the Issue Date)
deducted in such period in computing Consolidated Net Income, plus (f) without
duplication, any other non-cash charges reducing Consolidated Net Income for
such period (excluding any such charge which requires an accrual of a cash
reserve for anticipated cash charges for any future period), plus (g) the amount
of any minority interest expense deducted in calculating Consolidated Net
Income, plus (h) special charges and unusual items during any period ending on
or prior to the second anniversary of the Issue Date not to exceed $15.0 million
in the aggregate, plus (i) the amount of management, consulting monitoring and
advisory fees paid to Blackstone and its Affiliates during such period not to
exceed $1.0 million during any four quarter period, less, without duplication
(j) non-cash items increasing Consolidated Net Income of such Person for such
period (excluding any items which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges in any prior period).
'Consolidated Interest Expense' means, with respect to any Person for any
period, the sum, without duplication, of: (a) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest component of Capitalized
Lease Obligations and net payments and receipts (if any) pursuant to Hedging
Obligations to the extent included in Consolidated Interest Expense and
excluding amortization of deferred financing fees and (b) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued ; provided, however, that Consolidated Interest
Expense of Holdings shall not include the interest with respect to the Senior
Discount Notes until January 15, 2003.
'Consolidated Net Income' means, with respect to any Person for any period,
the aggregate of the Net Income, of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis; provided, however, that (i) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto) shall be excluded, (ii) any increase in the cost of sales or other
incremental expenses resulting from purchase accounting in relation to any
acquisition, net of taxes, shall be excluded, (iii) the Net Income for such
period shall
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not include the cumulative effect of a change in accounting principles during
such period, (iv) any net after-tax income (loss) from discontinued operations
and any net after-tax gains or losses on disposal of discontinued operations
shall be excluded, (v) any net after-tax gains or losses (less all fees and
expenses relating thereto) attributable to asset dispositions other than in the
ordinary course of business (as determined in good faith by Holdings) shall be
excluded, (vi) the Net Income for such period of any Person that is not a
Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the
equity method of accounting, shall be included only to the extent of the amount
of dividends or distributions or other payments paid in cash (or to the extent
converted into cash) to the referent Person or a Restricted Subsidiary thereof
in respect of such period, (vii) the Net Income of any Person acquired in a
pooling of interests transaction shall not be included for any period prior to
the date of such acquisition, (viii) the Net Income for such period of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Subsidiary of
its Net Income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or in similar distributions has been legally
waived; provided that such Net Income shall not be so excluded in calculating
Consolidated Net Income (a) as a component of Consolidated EBITDA for purposes
of calculating the Fixed Charge Coverage Ratio in determining whether (I) a
Restricted Subsidiary can incur additional Indebtedness or issue Disqualified
Stock or (II) Holdings can incur $1.00 of Indebtedness for purposes of (A)
clause (b) of the first paragraph or clauses (vi) and (x) of the second
paragraph of the covenant 'Limitation on Restricted Payments', (B) clause (iv)
of the covenant 'Merger, Consolidation and Sale of Assets' or (C) the definition
of 'Unrestricted Subsidiary' or (b) for purposes of clause (c) of the first
paragraph of the covenant 'Limitation on Restricted Payments' in determining
whether a Restricted Investment can be made (including the designation of a
Subsidiary as an Unrestricted Subsidiary) and (ix) the Net Income for such
period of Holdings and its Restricted Subsidiaries shall be decreased by the
amount of Permitted Tax Distributions during such period.
'Contingent Obligations' means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ('primary obligations') of any other Person (the
'primary obligor') in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
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'Default' means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
'Designated Noncash Consideration' means the fair market value of noncash
consideration received by Holdings or any of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of cash or Cash Equivalents received in
connection with a subsequent sale of such Designated Noncash Consideration.
'Designated Preferred Stock' means preferred stock of Holdings or a
Restricted Subsidiary (other than Disqualified Stock) that is issued for cash
(other than to a Restricted Subsidiary) and is so designated as Designated
Preferred Stock, pursuant to an Officers' Certificate, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (c) of the covenant described under 'Limitation on Restricted
Payments.'
'Disqualified Stock' means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the maturity date of the
Senior Discount Notes; provided, however, that if such Capital Stock is issued
to any employee or to any plan for the benefit of employees of Holdings or any
of its Subsidiaries or by any such plan to such employees, such Capital Stock
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by Holdings or such Subsidiary in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee's death or
disability.
'Equity Interests' means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
'Equity Offering' means any public or private sale of common stock or
preferred stock of Holdings (other than Disqualified Stock), other than (i)
public offerings with respect to the Common Stock registered on Form S-8 and
(ii) any such public or private sale the proceeds of which have been designated
by Holdings as an Excluded Contribution or Permanent Qualified Equity
Contributions.
'Exchange Act' means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
'Excluded Contributions' means the net cash proceeds received by Holdings
after the Issue Date from (a) contributions to its common equity capital and (b)
the sale (other than to a Subsidiary or to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement of
Holdings or any of its Subsidiaries) of Capital Stock (other than Disqualified
Stock) of Holdings, in each case designated as Excluded Contributions pursuant
to an Officers' Certificate, the cash proceeds of which are excluded from the
calculation set forth in paragraph (c) of the 'Limitation on Restricted
Payments' covenant.
'fair market value' means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
'Fixed Charge Coverage Ratio' means, with respect to any Person for any
period, the ratio of Consolidated EBITDA of such Person for such period to the
Fixed Charges of such Person for such period. In the event that Holdings or any
of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average daily balance of
such Indebtedness during the applicable period) or issues or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the 'Calculation Date'),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. With respect to any
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Calculation Date that occurs on or after January 15, 2003 and prior to January
15, 2004, the Fixed Charge Coverage Ratio shall be calculated giving pro forma
effect to the interest expense of Holdings with respect to the Senior Discount
Notes. For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP) that have been made by Holdings or any
of its Restricted Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or simultaneously with
the Calculation Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, discontinued operations, mergers
and consolidations (and the reduction of any associated fixed charge obligations
and the change in Consolidated EBITDA resulting therefrom) had occurred on the
first day of the four-quarter reference period. If since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into Holdings or any Restricted Subsidiary since the beginning of
such period) shall have made any Investment, acquisition, disposition,
discontinued operation, merger or consolidation that would have required
adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, discontinued operation, merger or
consolidation had occurred at the beginning of the applicable four-quarter
period. For purposes of this definition, whenever pro forma effect is to be
given to a transaction, the pro forma calculations shall be made as determined
in good faith by a responsible financial or accounting officer of Holdings. If
any Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such
Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or
accounting officer of Holdings to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period.
Interest on Indebtedness that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually
chosen, or, if none, then based upon such optional rate chosen as Holdings may
designate. Any such pro forma calculation may include adjustments in the
reasonable determination of Holdings as set forth in an Officers' Certificate,
to (i) reflect operating expense reductions reasonably expected to result from
any acquisition or merger or (ii) eliminate the effect of any extraordinary
accounting event with respect to any acquired Person on Consolidated Net Income.
'Fixed Charges' means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period and (b) the
product of (x) all cash dividend payments (excluding items eliminated in
consolidation) on any series of Disqualified Stock of such Person or its
Restricted Subsidiaries and (y) (A) if such Person is not a taxable entity for
U.S. federal income tax purposes, one, or (B) if such Person is an entity
taxable for U.S. federal income tax purposes, a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
'Foreign Subsidiary' means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia, or any territory thereof.
'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 have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of the
Senior Discount Indenture, the term 'consolidated' with respect to any Person
shall mean such Person consolidated with its Restricted Subsidiaries, and shall
not include any Unrestricted Subsidiary.
'Government Securities' means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which,
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in either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with respect to
any such Government Securities or a specific payment of principal of or interest
on any such Government Securities held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Securities or the specific payment of
principal of or interest on the Government Securities evidenced by such
depository receipt.
'guarantee' means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
'Guarantee' means any guarantee of the obligations of the Holdings Issuers
under the Senior Discount Indenture and the Senior Discount Notes by any
Restricted Subsidiary in accordance with the provisions of the Senior Discount
Indenture. When used as a verb, 'Guarantee' shall have a corresponding meaning.
'Guarantor' means any Restricted Subsidiary that incurs a Guarantee;
provided that upon the release and discharge of such Restricted Subsidiary from
its Guarantee in accordance with the Senior Discount Indenture, such Restricted
Subsidiary shall cease to be a Guarantor.
'Hedging Obligations' means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates or commodity prices.
'Indebtedness' means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) and (c) to the
extent not otherwise included, Indebtedness of another Person secured by a Lien
on any asset owned by such Person (whether or not such Indebtedness is assumed
by such Person); provided, however, that Contingent Obligations incurred in the
ordinary course of business shall be deemed not to constitute Indebtedness.
'Independent Financial Advisor' means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith determination of
Holdings, qualified to perform the task for which it has been engaged.
'Investment Grade Securities' means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances between and among the
respective Company Issuers and their respective Subsidiaries, and (iii)
investments in any fund that invests exclusively in investments of the type
described in clauses (i) and (ii) which fund may also hold immaterial amounts of
cash pending investment and/or distribution.
'Investments' means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and
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employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes thereto) of such
Person in the same manner as the other investments included in this definition
to the extent such transactions involve the transfer of cash or other property.
For purposes of the definition of 'Unrestricted Subsidiary' and the covenant
described under 'Certain Covenants--Limitation on Restricted Payments,' (i)
'Investments' shall include the portion (proportionate to Holdings' equity
interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of Holdings at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, Holdings shall be deemed to continue to
have a permanent 'Investment' in an Unrestricted Subsidiary equal to an amount
(if positive) equal to (x) Holdings' 'Investment' in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to Holdings' equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by
Holdings.
'Issue Date' means the closing date for the sale and original issuance of
the Senior Discount Notes under the Senior Discount Indenture.
'Lien' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
'Management Group' means the group consisting of the executive officers of
Holdings.
'Moody's' means Moody's Investors Service, Inc.
'Net Income' means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
'Net Proceeds' means the aggregate cash proceeds received by Holdings or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration (including, without limitation, legal, accounting and
investment banking fees, and brokerage and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of 'Certain Covenants--Limitation on Asset Sales') to be paid as a result of
such transaction and any deduction of appropriate amounts to be provided by
Holdings as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by Holdings after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.
'New Credit Facility' means that certain credit facility among Bankers
Trust Company, the Company and certain of its Subsidiaries and affiliates and
the lenders from time to time party thereto, together with any related
documents, instruments and agreements executed in connection therewith
(including, without limitation, any guaranty agreements and security documents),
in each case as such credit facility and related documents, instruments and
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
additional obligors or guarantors thereunder) all or any portion of the
Indebtedness under such credit
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facility or any successor or replacement credit facility and whether by the same
or any other agent, lender or group of lenders.
'Obligations' means all obligations for principal, interest, penalties,
fees, indemnifications other than fees and indemnifications in favor of the
Senior Discount Trustee and other third parties), reimbursements (including,
without limitation, reimbursement obligations with respect to letters of credit
and banker's acceptances), damages and other liabilities payable under the
documentation governing any Indebtedness.
'Officer' of any Person means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer
or the Secretary of such Person.
'Officers' Certificate' of any Person means a certificate signed on behalf
of such Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of such Person that meets the requirements set
forth in the Senior Discount Indenture.
'Pari Passu Indebtedness' means, with respect to the Senior Discount Notes
or a Guarantee, Indebtedness which ranks pari passu in right of payment to the
Senior Discount Notes or such Guarantee, as the case may be.
'Permanent Qualified Equity Contributions' means net cash proceeds to the
Company in the form of contributions to the common equity capital of the Company
or from the sale (other than to a Subsidiary of the Company or to any management
equity plan or stock option plan or any other management or employee benefit
plan of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Permanent
Qualified Equity Contributions pursuant to an Officers' Certificate, the cash
proceeds of which are excluded from the calculation set forth in paragraph (c)
of the 'Limitation on Restricted Payments' covenant.
'Permitted Holders' means Blackstone and any of its Affiliates.
'Permitted Investments' means (a) any Investment in Holdings or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by Holdings or any Restricted
Subsidiary in a Person that is a Similar Business if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Holdings or a Restricted Subsidiary; (d) any
Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to the
provisions of 'Certain Covenants--Limitation on Asset Sales' or any other
disposition of assets not constituting an Asset Sale; (e) any Investment
existing on the Issue Date; (f) advances to employees not in excess of $10.0
million outstanding at any one time, in the aggregate; (g) any Investment
acquired by Holdings or any of its Restricted Subsidiaries (i) in exchange for
any other Investment or accounts receivable held by Holdings or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (ii) as a result of a foreclosure by
Holdings or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default; (h) Hedging Obligations permitted under clause (j) of the 'Limitation
of Incurrence of Indebtedness and Issuance of Disqualified Stock' covenant; (i)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (j) any Investment in a Similar
Business (other than an Investment in an Unrestricted Subsidiary) having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (j) that are at that time outstanding, not to exceed 10%
of Total Assets at the time of such Investment (with the fair market value of
each Investment being measured at the time made and without giving effect to
subsequent changes in value); (k) Investments the payment for which consists of
Equity Interests of Holdings (other than Disqualified Stock); provided, however,
that such Equity Interests will not increase the amount available for Restricted
Payments under clause (c) of the 'Limitation on Restricted Payments' covenant;
(l) additional Investments having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (l) that are at that
time outstanding, not to exceed $10.0 million at the time of such Investment
(with the fair market value of each Investment being measured at the time made
and
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without giving effect to subsequent changes in value); (m) any transaction to
the extent it constitutes an Investment that is permitted by and made in
accordance with the provisions of clauses (iii) and (xi) of the second paragraph
of the covenant described under 'Certain Covenants--Transactions with
Affiliates'; (n) any Investment by Restricted Subsidiaries in other Restricted
Subsidiaries; (o) Investments consisting of the licensing or contribution of
intellectual property pursuant to joint marketing arrangements with other
Persons; and (p) Investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property, in any case, in the ordinary course of business.
'Permitted Liens' means the following types of Liens:
(i) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(ii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(iii) purchase money Liens to finance property or assets of Holdings
or any Restricted Subsidiary acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness shall
not exceed the cost of such property or assets and shall not be secured by
any property or assets of Holdings or any Restricted Subsidiary other than
the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 180 days of such acquisition;
(iv) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(v) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(vi) Liens securing Indebtedness under Hedging Obligations;
(vii) Liens securing Acquired Indebtedness incurred in accordance with
the 'Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock' covenant; provided that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by Holdings or a Restricted Subsidiary thereof and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by Holdings or a Restricted Subsidiary thereof and
(B) such Liens do not extend to or cover any property or assets of Holdings
or any of the Restricted Subsidiaries other than the property or assets
that secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of Holdings or such Restricted Subsidiary and
are no more favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness by
Holdings or such Restricted Subsidiary;
(viii) Liens securing obligations under the New Credit Facility;
(ix) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(x) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business, consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money); and
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(xi) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements, including
rights of offset and set off.
'Person' means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
'Recapitalization Agreement' means the Agreement and Plan of
Recapitalization, Redemption and Purchase, dated as of December 18, 1997 by and
among the Company, BMP/Graham Holdings Corporation and the other parties
thereto.
'Related Parties' means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or its Affiliates is the
general partner.
'Restricted Investment' means an Investment other than a Permitted
Investment.
'Restricted Subsidiary' means, at any time, any direct or indirect
Subsidiary of Holdings that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
'Restricted Subsidiary.'
'S&P' means Standard and Poor's Ratings Group.
'Securities Act' means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
'Significant Restricted Subsidiary' means any Restricted Subsidiary that
would be a 'significant subsidiary' of Holdings as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
'Similar Business' means a business, the majority of whose revenues are
derived from the manufacture, marketing or sale of containers or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
'Subordinated Indebtedness' means with respect to the Senior Discount Notes
or a Guarantee, any Indebtedness of Holdings or a Guarantor, as the case may be,
which is by its terms subordinated in right of payment to the Senior Discount
Notes or the Guarantee of such Guarantor, as the case may be.
'Subsidiary' means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.
'Total Assets' means the total consolidated assets of Holdings and its
Restricted Subsidiaries, as shown on the most recent balance sheet of Holdings.
'Unrestricted Subsidiary' means (i) any Subsidiary of Holdings which at the
time of determination is an Unrestricted Subsidiary (as designated by the Board
of Directors of Holdings, as provided below) and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors of Holdings may designate any
Subsidiary of Holdings (including any existing Subsidiary and any newly acquired
or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interests of, or owns, or
holds any Lien on, any property of, Holdings or any Subsidiary thereof (other
than any Subsidiary of the Subsidiary to be so designated), provided that each
Subsidiary to be so designated and its Subsidiaries have not at the time of
designation, and do not thereafter, create, incur, issue, assume, guarantee or
otherwise become
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directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of Holdings or any of its
Restricted Subsidiaries. The Board of Directors of Holdings may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that,
immediately after giving effect to such designation, (i) Holdings could incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test described under 'Certain Covenants--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock' or (ii) the Fixed Charge
Coverage Ratio for Holdings and its Restricted Subsidiaries would be greater
than such ratio for Holdings and its Restricted Subsidiaries immediately prior
to such designation, in each case on a pro forma basis taking into account such
designation. Any such designation by the Board of Directors of Holdings shall be
notified by Holdings to the Senior Discount Trustee by promptly filing with the
Senior Discount Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
'Voting Stock' of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
'Weighted Average Life to Maturity' means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
'Wholly Owned Restricted Subsidiary' is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
'Wholly Owned Subsidiary' of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
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SENIOR SUBORDINATED EXCHANGE OFFERS;
SENIOR SUBORDINATED REGISTRATION RIGHTS
The summary set forth below of certain provisions of the Senior
Subordinated Registration Rights Agreement does not purport to be complete and
is qualified in its entirety by reference to all the provisions of the Senior
Subordinated Registration Rights Agreement. The Senior Subordinated Registration
Rights Agreement is an exhibit to the Registration Statement of which this
Prospectus is a part.
On February 2, 1998, the Company Issuers, Holdings, as guarantor, and the
Initial Purchasers entered into a registration rights agreement (the 'Senior
Subordinated Registration Rights Agreement'). In the Senior Subordinated
Registration Rights Agreement, the Company Issuers and Holdings agree, for the
benefit of holders of the Senior Subordinated Old Notes, that they will, at
their expense, use their reasonable best efforts to (i) within 120 days after
the Issue Date, file a registration statement on an appropriate registration
form (the 'Senior Subordinated Registration Statement') with the Commission with
respect to registered offers (the 'Senior Subordinated Exchange Offers') to
exchange the Fixed Rate Senior Subordinated Old Notes and the Floating Rate
Senior Subordinated Old Notes for the Fixed Rate Senior Subordinated Exchange
Notes and the Floating Rate Senior Subordinated Exchange Notes, respectively,
which will have terms (including a guarantee of Holdings) substantially
identical to the terms of the Fixed Rate Senior Subordinated Old Notes and the
Floating Rate Senior Subordinated Old Notes, respectively (except that the
Senior Subordinated Exchange Notes will not contain terms with respect to the
transfer restrictions) and (ii) cause the Senior Subordinated Registration
Statement to be declared effective under the Securities Act within 180 days
after the Issue Date. Upon the Senior Subordinated Registration Statement being
declared effective, the Company Issuers and Holdings will offer to all holders
of Fixed Rate Senior Subordinated Old Notes and Floating Rate Senior
Subordinated Old Notes an opportunity to exchange their securities for a like
principal amount of Fixed Rate Senior Subordinated Exchange Notes or Floating
Rate Senior Subordinated Exchange Notes, as the case may be. The Company Issuers
and Holdings will keep the Senior Subordinated Exchange Offers open for
acceptance for not less than 20 business days (or longer if required by
applicable law) after the date on which notice of the Senior Subordinated
Exchange Offers is mailed to the holders. For each Fixed Rate Senior
Subordinated Old Note or Floating Rate Senior Subordinated Old Note surrendered
for exchange pursuant to the Senior Subordinated Exchange Offers, the holder of
such Fixed Rate Senior Subordinated Old Note or Floating Rate Senior
Subordinated Old Note will receive a Fixed Rate Senior Subordinated Exchange
Note or Floating Rate Senior Subordinated Exchange Note, as the case may be,
having a principal amount equal to that of the surrendered Senior Subordinated
Old Note. Interest on each Senior Subordinated Exchange Note will accrue (A)
from the later of (i) the last interest payment date on which interest was paid
on the Senior Subordinated Old Note surrendered in exchange therefor or (ii) if
the Senior Subordinated Old Note is 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 such
Senior Subordinated Old Note, from the Issue Date.
Under existing interpretations of the Commission contained in several
no-action letters to third parties, the Senior Subordinated Exchange Notes will
be freely transferable by holders thereof (other than affiliates of the Company
Issuers or Holdings) after the Senior Subordinated Exchange Offers without
further registration under the Securities Act; provided, however, that each
holder that wishes to exchange its Senior Subordinated Old Notes for Senior
Subordinated Exchange Notes will be required to represent (i) that any Senior
Subordinated Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) that at the time of the commencement of
the Senior Subordinated Exchange Offers, it has no arrangement or understanding
with any person to participate in the distribution (within the meaning of
Securities Act) of the Senior Subordinated Exchange Notes in violation of the
Securities Act, (iii) that it is not an 'affiliate' (as defined in Rule 405
promulgated under the Securities Act) of the Company Issuers or Holdings, (iv)
if such holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of Senior Subordinated Exchange Notes and
(v) if such holder is a broker-dealer (a 'Participating Broker-Dealer') that
will receive Senior Subordinated Exchange Notes for its own account in exchange
for Senior Subordinated Old Notes that were acquired as a result of
market-making or other trading activities, that it will deliver a prospectus in
connection with any resale of such Senior Subordinated Exchange Notes. The
Commission has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to the Senior
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Subordinated Exchange Notes (other than a resale of an unsold allotment from the
original sale of the Senior Subordinated Old Notes) with the prospectus
contained in the Senior Subordinated Registration Statement. The Company Issuers
and Holdings will agree to make available, during the period required by the
Securities Act, a prospectus meeting the requirements of the Securities Act for
use by Participating Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements for use in connection with any resale of Senior
Subordinated Exchange Notes.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Company Issuers and Holdings
are not permitted to effect the Senior Subordinated Exchange Offers, (ii) the
Senior Subordinated Exchange Offers are not consummated within 210 days of the
Issue Date or (iii) in the case of any holder that participates in the Senior
Subordinated Exchange Offers, such holder does not receive Senior Subordinated
Exchange Notes 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 Issuers or Holdings within the
meaning of the Securities Act), then in each case, the Company Issuers and
Holdings will (x) promptly deliver to the holders and the applicable Trustee
written notice thereof and (y) at their sole expense, (a) as promptly as
practicable, file a shelf registration statement covering resales of the Senior
Subordinated Old Notes (the 'Senior Subordinated Shelf Registration Statement'),
(b) use their reasonable best efforts to cause the Senior Subordinated Shelf
Registration Statement to be declared effective under the Securities Act and (c)
use their reasonable best efforts to keep effective the Senior Subordinated
Shelf Registration Statement until the earlier of two years after the Issue Date
or such time as all of the applicable Senior Subordinated Old Notes have been
sold thereunder. The Company Issuers and Holdings will, in the event that a
Senior Subordinated Shelf Registration Statement is filed, provide to each
holder copies of the prospectus that is a part of the Senior Subordinated Shelf
Registration Statement, notify each such holder when the Senior Subordinated
Shelf Registration Statement for the Senior Subordinated Old Notes has become
effective and take certain other actions as are required to permit unrestricted
resales of the Senior Subordinated Old Notes. A holder that sells Senior
Subordinated Old Notes pursuant to the Senior Subordinated Shelf Registration
Statement 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 Senior Subordinated
Registration Rights Agreement that are applicable to such Holder (including
certain indemnification rights and obligations).
If the Company Issuers and Holdings fail to comply with the above
provisions or if the Senior Subordinated Registration Statement or the Senior
Subordinated Shelf Registration Statement fails to become effective, then, as
liquidated damages, additional interest (the 'Additional Interest') shall become
payable in respect of the Senior Subordinated Old Notes as follows:
(i) if (A) the Senior Subordinated Registration Statement is not filed
with the Commission within 120 days following the Issue Date or (B)
notwithstanding that the Company Issuers and Holdings have consummated or
will consummate the Senior Subordinated Exchange Offers, the Company
Issuers and Holdings are required to file a Senior Subordinated Shelf
Registration Statement and such Senior Subordinated Shelf Registration
Statement is not filed on or prior to the 60th day following the date on
which the obligation to file such Senior Subordinated Shelf Registration
Statement arises, then commencing on the day after either such required
filing date, Additional Interest shall accrue on the principal amount of
the Senior Subordinated Old Notes at a rate of .25% per annum for the first
90 days immediately following each such filing date, such Additional
Interest rate increasing by an additional .25% per annum at the beginning
of each subsequent 90-day period; or
(ii) if (A) the Senior Subordinated Registration Statement is not
declared effective by the Commission within 180 days following the Issue
Date or (B) notwithstanding that the Company Issuers and Holdings have
consummated or will consummate the Senior Subordinated Exchange Offers, the
Company Issuers and Holdings are required to file a Senior Subordinated
Shelf Registration Statement and such Senior Subordinated Shelf
Registration Statement is not declared effective by the Commission on or
prior to the 120th day following the date on which the obligation to file
such Senior Subordinated Shelf Registration Statement arises, then,
commencing on the day after either such required effective date, Additional
Interest shall accrue on the principal amount of the Senior Subordinated
Old Notes at a rate of .25% per annum for
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the first 90 days immediately following such date, such Additional Interest
rate increasing by an additional .25% per annum at the beginning of each
subsequent 90-day period; or
(iii) if (A) the Company Issuers and Holdings have not exchanged
Senior Subordinated Exchange Notes for all Senior Subordinated Old Notes
validly tendered in accordance with the terms of the Senior Subordinated
Exchange Offers on or prior to the later of the 45th day after the date on
which the Senior Subordinated Registration Statement was declared effective
or the 210th day after the Issue Date or (B) if applicable, the Senior
Subordinated Shelf Registration Statement has been declared effective and
such Senior Subordinated Shelf Registration Statement ceases to be
effective at any time prior to the second anniversary of the Issue Date
(other than as a result of a Suspension Period (as defined) and other than
after such time as all Senior Subordinated Old Notes have been disposed of
thereunder), then Additional Interest shall accrue on the principal amount
of the Senior Subordinated Old Notes at a rate of .25% per annum for the
first 90 days commencing on (x) the 46th or 211th, as the case may be, day
after such effective date, in the case of (A) above, or (y) the day such
Senior Subordinated Shelf Registration Statement ceases to be effective in
the case of (B) above (or in the event of a Suspension Period, on the
earlier of the last day of such Suspension Period or the 60th day after
notice of such Suspension Period), such Additional Interest rate increasing
by an additional .25% per annum at the beginning of each subsequent 90-day
period; provided, however, that the Additional Interest rate on the Senior
Subordinated Old Notes may not exceed in the aggregate 1.0% per annum;
provided, further, however, that (1) upon the filing of the Senior
Subordinated Registration Statement or a Senior Subordinated Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Senior Subordinated Registration Statement or a Senior
Subordinated Shelf Registration Statement (in the case of clause (ii)
above), or (3) upon the exchange of Senior Subordinated Exchange Notes for
all Senior Subordinated Old Notes tendered (in the case of clause (iii) (A)
above), or upon the effectiveness of the Senior Subordinated Shelf
Registration Statement which had ceased to remain effective (other than as
a result of a Suspension Period) (in the case of clause (iii) (B) above),
Additional Interest on the Senior Subordinated Old Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall
cease to accrue. Any amounts of Additional Interest due pursuant to clause
(i), (ii) or (iii) above will be payable in cash on the same original
interest payment dates as provided in the terms of the Senior Subordinated
Old Notes.
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SENIOR DISCOUNT EXCHANGE OFFER;
SENIOR DISCOUNT REGISTRATION RIGHTS
The summary set forth below of certain provisions of the Senior Discount
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Senior Discount
Registration Rights Agreement. The Senior Discount Registration Rights Agreement
is an exhibit to the Registration Statement of which this Prospectus is a part.
On February 2, 1998, the Holdings Issuers and the Initial Purchasers
entered into a registration rights agreement (the 'Senior Discount Registration
Rights Agreement' and, together with the Senior Subordinated Registration Rights
Agreement, the 'Registration Rights Agreements'). In the Senior Discount
Registration Rights Agreement, the Holdings Issuers agree, for the benefit of
holders of the Senior Discount Old Notes, that they will, at their expense, use
their reasonable best efforts to (i) within 120 days after the Issue Date, file
a registration statement on an appropriate registration form (the 'Senior
Discount Registration Statement') with the Commission with respect to a
registered offer (the 'Senior Discount Exchange Offer') to exchange the Senior
Discount Old Notes for Senior Discount Exchange Notes, which will have terms
substantially identical to the terms of the Senior Discount Old Notes (except
that the Senior Discount Exchange Notes will not contain terms with respect to
the transfer restrictions) and (ii) cause the Senior Discount Registration
Statement to be declared effective under the Securities Act within 180 days
after the Issue Date. Upon the Senior Discount Registration Statement being
declared effective, the Holdings Issuers will offer to all holders of the Senior
Discount Old Notes an opportunity to exchange their securities for a like
principal amount at maturity of the Senior Discount Exchange Notes. The Holdings
Issuers will keep the Senior Discount Exchange Offer open for acceptance for not
less than 20 business days (or longer if required by applicable law) after the
date notice of the Senior Discount Exchange Offer is mailed to the holders. For
each Senior Discount Old Note surrendered for exchange pursuant to the Senior
Discount Exchange Offer, the Holder of such Senior Discount Old Note will
receive a Senior Discount Exchange Note having an Accreted Value and a principal
amount at maturity equal to that of the surrendered Senior Discount Old Note.
Under existing interpretations of the Commission contained in several
no-action letters to third parties, the Senior Discount Exchange Notes will be
freely transferable by holders thereof (other than affiliates of the Holdings
Issuers) after the Senior Discount Exchange Offer without further registration
under the Securities Act; provided, however, that each Holder that wishes to
exchange its Senior Discount Old Notes for Senior Discount Exchange Notes will
be required to represent (i) that any Senior Discount Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii)
that at the time of the commencement of the Senior Discount 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 Senior Discount
Exchange Notes in violation of the Securities Act, (iii) that it is not an
'affiliate' (as defined in Rule 405 promulgated under the Securities Act) of the
Holdings Issuers, (iv) if such holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of Senior
Discount Exchange Notes and (v) if such holder is a Participating Broker-Dealer
that will receive Senior Discount Exchange Notes for its own account in exchange
for Senior Discount Old Notes that were acquired as a result of market-making or
other trading activities, that it will deliver a prospectus in connection with
any resale of such Senior Discount Exchange Notes. The Commission has taken the
position that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the Senior Discount Exchange Notes (other than a
resale of an unsold allotment from the original sale of the Senior Discount Old
Notes) with the prospectus contained in the Senior Discount Registration
Statement. The Holdings Issuers agree to make available, during the period
required by the Securities Act, a prospectus meeting the requirements of the
Securities Act for use by Participating Broker-Dealers and other persons, if
any, with similar prospectus delivery requirements for use in connection with
any resale of Senior Discount Exchange Notes.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Holdings Issuers are not
permitted to effect a Senior Discount Exchange Offer, (ii) the Senior Discount
Exchange Offer is not consummated within 210 days of the Issue Date, or (iii) in
the case of any holder that participates in the Senior Discount Exchange Offer,
such holder does not receive Senior Discount Exchange Notes 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
Holdings Issuers within the meaning of the
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Securities Act), then in each case, the Holdings Issuers will (x) promptly
deliver to the holders and the Trustee written notice thereof and (y) at their
sole expense, (a) as promptly as practicable, file a shelf registration
statement covering resales of the Senior Discount Old Notes (the 'Senior
Discount Shelf Registration Statement'), (b) use their reasonable best efforts
to cause the Senior Discount Shelf Registration Statement to be declared
effective under the Securities Act and (c) use their reasonable best efforts to
keep effective the Senior Discount Shelf Registration Statement until the
earlier of two years after the Issue Date or such time as all of the applicable
Senior Discount Old Notes have been sold thereunder. The Holdings Issuers will,
in the event that a Senior Discount Shelf Registration Statement is filed,
provide to each holder copies of the prospectus that it is a part of the Senior
Discount Shelf Registration Statement, notify each such holder when the Senior
Discount Shelf Registration Statement for the Senior Discount Old Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Senior Discount Old Notes. A holder that sells
Senior Discount Old Notes pursuant to the Senior Discount Shelf Registration
Statement 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 Senior Discount
Registration Rights Agreement that are applicable to such holder (including
certain indemnification rights and obligations).
If the Holdings Issuers fail to comply with the above provisions or if the
Senior Discount Registration Statement or the Senior Discount Shelf Registration
Statement fails to become effective, then, as liquidated damages, Additional
Interest shall become payable in cash in respect of the Senior Discount Old
Notes, whether or not cash interest is otherwise payable with respect to the
Senior Discount Old Notes, as follows:
(i) if (A) the Senior Discount Registration Statement is not filed
with the Commission within 120 days following the Issue Date or (B)
notwithstanding that the Holdings Issuers have consummated or will
consummate a Senior Discount Exchange Offer, the Holdings Issuers are
required to file a Senior Discount Shelf Registration Statement and such
Senior Discount Shelf Registration Statement is not filed on or prior to
the 60th day following the date on which the obligation to file such Senior
Discount Shelf Registration Statement arises, then commencing on the day
after either such required filing date, Additional Interest shall accrue on
the average Accreted Value of the Senior Discount Old Notes at a rate of
.25% per annum for the first 90 days immediately following each such filing
date, such Additional Interest rate increasing by an additional .25% per
annum at the beginning of each subsequent 90-day period; or
(ii) if (A) the Senior Discount Registration Statement is not declared
effective by the Commission within 180 days following the Issue Date or (B)
notwithstanding that the Holdings Issuers have consummated or will
consummate a Senior Discount Exchange Offer, the Holdings Issuers are
required to file a Senior Discount Shelf Registration Statement and such
Senior Discount Shelf Registration Statement is not declared effective by
the Commission on or prior to the 120th day following the date on which the
obligation to file such Senior Discount Shelf Registration Statement
arises, then, commencing on the day after either such required effective
date, Additional Interest shall accrue on the average Accreted Value of the
Senior Discount Old Notes at a rate of .25% per annum for the first 90 days
immediately following such date, such Additional Interest rate increasing
by an additional .25% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) the Holdings Issuers have not exchanged Senior Discount
Exchange Notes for all Senior Discount Old Notes validly tendered in
accordance with the terms of the Senior Discount Exchange Offer on or prior
to the later of the 45th day after the date on which the Senior Discount
Registration Statement was declared effective or the 210th day after the
Issue Date or (B) if applicable, the Senior Discount Shelf Registration
Statement has been declared effective and such Senior Discount Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of the Issue Date (other than as a result of a
Suspension Period (as defined) and other than after such time as all Senior
Discount Old Notes have been disposed of thereunder), then Additional
Interest shall accrue on the average Accreted Value of the Senior Discount
Old Notes at a rate of .25% per annum for the first 90 days commencing on
(x) the 46th or the 211th, as the case may be, day after such effective
date, in the case of (A) above, or (y) the day such Senior Discount Shelf
Registration Statement ceases to be effective in the case of (B) above (or
in the event of a Suspension Period, on the earlier of the last day of such
Suspension Period or the 60th day after notice of such Suspension Period),
such Additional Interest rate increasing by an additional .25% per annum at
the
169
<PAGE>
beginning of each subsequent 90-day period; provided, however, that the
Additional Interest rate on the Senior Discount Old Notes may not exceed in
the aggregate 1.0% per annum; provided, further, however, that (1) upon the
filing of the Senior Discount Registration Statement or a Senior Discount
Shelf Registration Statement (in the case of clause (i) above), (2) upon
the effectiveness of the Senior Discount Registration Statement or a Senior
Discount Shelf Registration Statement (in the case of clause (ii) above),
or (3) upon the exchange of Senior Discount Exchange Notes for all Senior
Discount Old Notes tendered (in the case of clause (iii) (A) above), or
upon the effectiveness of the Senior Discount Shelf Registration Statement
which had ceased to remain effective (other than as a result of a
Suspension Period) (in the case of clause (iii) (B) above), Additional
Interest on the Senior Discount Old Notes as a result of such clause (or
the relevant subclause thereof), as the case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to clause (i), (ii) or
(iii) above will be payable in cash on January 15 and July 15 of each year
during which such Additional Interest is payable, commencing with the first such
date to occur after the obligation to pay Additional Interest arises.
170
<PAGE>
BOOK ENTRY; DELIVERY AND FORM
The certificates representing the Senior Subordinated Exchange Notes and
the Senior Discount Exchange Notes will be issued in fully registered form. The
Fixed Rate Senior Subordinated Exchange Notes, the Floating Rate Senior
Subordinated Exchange Notes and the Senior Discount Exchange Notes will each
initially be represented by a single, permanent global Exchange Note, in
definitive, fully registered form without interest coupons (each a 'Global
Exchange Note') and will be deposited with the applicable Trustee as custodian
for The Depository Trust Company, New York, New York ('DTC') and registered in
the name of a nominee of DTC.
DTC has advised the Issuers as follows:
DTC is a limited purpose trust company organized under the laws of the
State of New York, a 'banking organization' within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a 'clearing corporation'
within the meaning of the Uniform Commercial Code and a 'Clearing Agency'
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participants (the 'Participants') and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ('indirect participants').
So long as DTC, or its nominee, is the registered owner or holder of the
Fixed Rate Senior Subordinated Exchange Notes, the Floating Rate Senior
Subordinated Exchange Notes and the Senior Discount Exchange Notes, DTC or such
nominee, as the case may be, will be considered the sole owner or holder of the
Fixed Rate Senior Subordinated Exchange Notes, the Floating Rate Senior
Subordinated Exchange Notes and the Senior Discount Exchange Notes represented
by such Global Exchange Notes for all purposes under the respective Indentures.
No beneficial owner of an interest in any Global Exchange Note will be able to
transfer that interest except in accordance with DTC's procedures, in addition
to those provided for under the applicable Indenture.
Payments of the principal of, premium if any, and interest on, the
respective Global Exchange Notes will be made to DTC or its nominee, as the case
may be, as the registered owner thereof. None of the Company Issuers, the
Holdings Issuers, Holdings as guarantor, the Senior Subordinated Trustee, the
Senior Discount Trustee or any paying agent will have any responsibility or
liability for any aspect of the records, relating to or payments made on account
of beneficial ownership in any of the Global Exchange Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
The respective Issuers expect that DTC or its nominee, upon receipt of any
payment of principal, premium, if any, and interest (including liquidated
damages) on any Global Exchange Note, will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Exchange Note as shown on the records of DTC
or its nominee. The Issuers also expect that payments by participants to owners
of beneficial interests in any Global Exchange Note held through such
Participants will be governed by standing instructions and customary practice,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same-day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Exchange Notes to
persons in states which require physical delivery of the Exchange Notes, or to
pledge such securities, such holder must transfer its interest in the applicable
Global Exchange Note, in accordance with the normal procedures of DTC and with
the procedures set forth in the applicable Indenture.
DTC has advised the respective Issuers that it will take any action
permitted to be taken by a holder of Exchange Notes (including the presentation
of Exchange Notes for exchange as described below) only at the direction of one
or more Participants to whose account the DTC interests in the applicable Global
Exchange Note are credited and only in respect of such portion of the aggregate
principal amount of Exchange Notes as to which
171
<PAGE>
such Participant or Participants has or have given such direction. However, if
there is an Event of Default under the applicable Indenture, DTC will exchange
the related Global Exchange Note for Certificated Securities, which it will
distribute to its Participants.
Upon the issuance of each Global Exchange Note, DTC or its custodian will
credit, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Exchange Note to the
accounts of persons who have accounts with such depositary. Ownership of
beneficial interests in each Global Exchange Note will be limited to
Participants or persons who hold interests through Participants. Ownership of
beneficial interests in each Global Exchange Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of Participants) and the records
of Participants (with respect to interests of persons other than Participants).
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Exchange Notes among Participants, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company Issuers, Holdings, as guarantor,
the Holdings Issuers, the Senior Subordinated Trustee nor the Senior Discount
Trustee will have any responsibility for the performance by DTC or its
Participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
any Global Exchange Note and a successor depositary is not appointed by the
related Issuers within 90 days, Certificated Securities will be issued in
exchange for such Global Exchange Note.
172
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to any of the Exchange Offers must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange 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 Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. A broker-dealer may not
participate in any Exchange Offer with respect to Old Notes acquired other than
as a result of market-making activities or other trading activities. To the
extent any such broker-dealer participates in any Exchange Offer and so notifies
the applicable Issuers, or causes such Issuers to be so notified in writing, the
Issuers have agreed that for a period of 90 days after the date of this
Prospectus, they will make this Prospectus, as amended or supplemented,
available to such broker-dealer for use in connection with any such resale, and
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the applicable Letter of Transmittal. In addition, until , 1998
(90 days after the date of this Prospectus), all dealers effecting transactions
in the Exchange Notes may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to any of the Exchange Offers 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 Exchange Notes or a
combination of such methods of resale, at prevailing market prices at the time
of resale, at prices related to such prevailing market prices or at 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 Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to any of the Exchange Offers and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an 'underwriter' within the meaning of the Securities Act, and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. Each 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 Issuers have agreed to pay all expenses incident to each of the
Exchange Offers (other than commissions and concessions of any broker-dealers),
subject to certain prescribed limitations, and will indemnify the holders of the
Old Notes against certain liabilities, including certain liabilities that may
arise under the Securities Act.
By its acceptance of any Exchange Offer, any broker-dealer that receives
Exchange Notes pursuant to such Exchange Offer hereby agrees to notify the
applicable Issuers prior to using this Prospectus in connection with the sale or
transfer of Exchange Notes, and acknowledges and agrees that, upon receipt of
notice from the applicable Issuers of the happening of any event which makes any
statement in this Prospectus untrue in any material respect or which requires
the making of any changes in this Prospectus in order to make the statements
herein not misleading or which may impose upon the Issuers disclosure
obligations that may have a material adverse effect on the Issuers (which notice
the Issuers agree to deliver promptly to such broker-dealer), such broker-dealer
will suspend use of this Prospectus until the Issuers have notified such
broker-dealer that delivery of this Prospectus may resume and have furnished
copies of any amendment or supplement to this Prospectus to such broker-dealer.
173
<PAGE>
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Senior Subordinated Old Notes or Senior Discount Old Notes
for Senior Subordinated Exchange Notes or Senior Discount Exchange Notes, as the
case may be, in the applicable Exchange Offer should not constitute a taxable
event to the holders. Consequently, no gain or loss will be recognized by a
holder upon receipt of an Exchange Note, the holding period of the Exchange Note
will include the holding period of the Old Note for which it is exchanged and
the basis of the Exchange Note will be the same as the basis of the Old Note for
which it is exchanged immediately before the exchange.
In any event, persons considering the exchange of Old Notes for Exchange
Notes should consult their own tax advisors concerning the United States federal
income tax consequences in light of their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
CHANGE IN INDEPENDENT ACCOUNTANTS
Holdings, which is composed of the legal entities and operations that prior
to the Recapitalization, which occurred on February 2, 1998, were known as the
Graham Packaging Group (the 'Group') has engaged Deloitte & Touche LLP as its
independent auditors for the year ending December 31, 1998 to replace the firm
of Ernst & Young LLP, who were dismissed as auditors of Holdings effective April
30, 1998.
The reports of Ernst & Young LLP on the combined financial statements of
the Group for the years ended December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the audits of the Group's combined financial statements
for each of the two years in the period ended December 31, 1997, and in the
subsequent interim period, there were no disagreements with Ernst & Young LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the matter in their report.
LEGAL MATTERS
Certain legal matters relating to the Exchange Offers will be passed upon
for the Issuers by Simpson Thacher & Bartlett, New York, New York, and certain
legal matters relating to Pennsylvania law will be passed upon for the Issuers
by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
EXPERTS
The combined financial statements and schedule of Graham Packaging Group at
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997 appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
174
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................................................. F-2
Audited Combined Financial Statements
Combined Balance Sheets at December 31, 1996 and 1997...................................................... F-3
Combined Statements of Income for the years ended December 31, 1995, 1996 and 1997......................... F-4
Combined Statements of Owners' Equity for the years ended December 31, 1995, 1996 and 1997................. F-5
Combined Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997..................... F-6
Notes to Combined Financial Statements..................................................................... F-7
Unaudited Condensed Financial Statements
Condensed Balance Sheets at December 31, 1997 and March 29, 1998........................................... F-21
Condensed Statements of Operations for the three months ended March 30, 1997 and
March 29, 1998........................................................................................... F-22
Condensed Statements of Partners' Capital/Owners' Equity (Deficit) for the year ended December 31, 1997 and
the three months ended March 29, 1998.................................................................... F-23
Condensed Statements of Cash Flows for the three months ended
March 30, 1997 and March 29, 1998........................................................................ F-24
Notes to Condensed Financial Statements.................................................................... F-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Owners
Graham Packaging Group
We have audited the accompanying combined balance sheets of the entities and
operations listed in Note 1, collectively referred to as the Graham Packaging
Group, as of December 31, 1996 and 1997, and the related combined statements of
income, owners' equity, and cash flows for each of the three years in the period
ended December 31, 1997. Our audit also included the financial statement
schedule listed in the Index at Item 21(b). These financial statements and
schedule are the responsibility of the Group's management. Our responsibility is
to express an opinion on these financial statements and schedule 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 combined financial position of the entities and
operations listed in Note 1, at December 31, 1996 and 1997, and the combined
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
/s/ ERNST & YOUNG LLP
Harrisburg, Pennsylvania
March 23, 1998,
except for the matters
discussed in the last paragraph
of Notes 13 and 17, as to which
the date is April 24, 1998
F-2
<PAGE>
GRAHAM PACKAGING GROUP
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 3,431 $ 7,218
Accounts receivable..................................................................... 59,903 69,295
Inventories............................................................................. 28,918 32,236
Prepaid expenses and other current assets............................................... 6,442 9,198
-------- --------
Total current assets...................................................................... 98,694 117,947
Property, plant, and equipment:
Machinery and equipment................................................................. 439,770 478,534
Land, buildings, and leasehold improvements............................................. 70,100 68,146
Construction in progress................................................................ 24,642 41,230
-------- --------
534,512 587,910
Less accumulated depreciation and amortization.......................................... 303,156 327,614
-------- --------
231,356 260,296
Other assets.............................................................................. 8,763 7,248
-------- --------
Total assets.............................................................................. $338,813 $385,491
-------- --------
-------- --------
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable........................................................................ $ 47,814 $ 56,547
Accrued expenses........................................................................ 30,462 51,814
Current portion of long-term debt....................................................... 5,150 4,771
-------- --------
Total current liabilities................................................................. 83,426 113,132
Long-term debt............................................................................ 235,366 263,694
Other non-current liabilities............................................................. 3,216 3,345
Minority interest......................................................................... -- 4,983
Owners' equity:
Owners' capital......................................................................... 38,715 20,383
Notes receivable for ownership interests................................................ (20,240) (20,240)
Other comprehensive income.............................................................. (1,670) 194
-------- --------
Total owners' equity...................................................................... 16,805 337
-------- --------
Total liabilities and owners' equity...................................................... $338,813 $385,491
-------- --------
-------- --------
</TABLE>
See accompanying notes.
F-3
<PAGE>
GRAHAM PACKAGING GROUP
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales.................................................................... $466,766 $459,740 $521,707
Cost of goods sold........................................................... 399,946 382,547 437,301
-------- -------- --------
66,820 77,193 84,406
Selling, general, and administrative expenses................................ 35,540 35,472 34,882
Special charges and unusual items............................................ 5,904 7,037 24,361
-------- -------- --------
Operating income............................................................. 25,376 34,684 25,163
Interest expense............................................................. 18,178 15,686 14,940
Interest income.............................................................. (1,999) (1,233) (1,510)
Other (income) expense....................................................... (11,048) (977) 755
Minority interest............................................................ -- -- 165
-------- -------- --------
Income before income taxes and extraordinary item............................ 20,245 21,208 10,813
Income tax provision (benefit)............................................... (288) (24) 600
-------- -------- --------
Income before extraordinary item............................................. 20,533 21,232 10,213
Extraordinary loss from early extinguishment of debt......................... 1,859 -- --
-------- -------- --------
Net income................................................................... $ 18,674 $ 21,232 $ 10,213
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes.
F-4
<PAGE>
GRAHAM PACKAGING GROUP
COMBINED STATEMENTS OF OWNERS' EQUITY
<TABLE>
<CAPTION>
NOTES
RECEIVABLE FOR OTHER
OWNERS' OWNERSHIP COMPREHENSIVE
CAPITAL INTERESTS INCOME TOTAL
-------- -------------- ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1995................................. $ 37,512 $(20,240) $(1,715) $ 15,557
--------
Net income for the year.................................. 18,674 -- -- 18,674
Cumulative translation adjustment........................ -- -- (611) (611)
--------
Comprehensive income..................................... 18,063
--------
Cash distributions to owners............................. (18,364) -- -- (18,364)
-------- -------------- ------------- --------
Balance at December 31, 1995............................... 37,822 (20,240) (2,326) 15,256
--------
Net income for the year.................................. 21,232 -- -- 21,232
Cumulative translation adjustment........................ -- -- 656 656
--------
Comprehensive income..................................... 21,888
--------
Cash distributions to owners............................. (20,339) -- -- (20,339)
-------- -------------- ------------- --------
Balance at December 31, 1996............................... 38,715 (20,240) (1,670) 16,805
--------
Net income for the year.................................. 10,213 -- -- 10,213
Cumulative translation adjustment........................ -- -- 1,864 1,864
--------
Comprehensive income..................................... 12,077
--------
Cash distributions to owners............................. (28,737) -- -- (28,737)
Other.................................................... 192 -- -- 192
-------- -------------- ------------- --------
Balance at December 31, 1997............................... $ 20,383 $(20,240) $ 194 $ 337
-------- -------------- ------------- --------
-------- -------------- ------------- --------
</TABLE>
See accompanying notes.
F-5
<PAGE>
GRAHAM PACKAGING GROUP
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net income............................................................... $ 18,674 $ 21,232 $ 10,213
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization....................................... 45,696 48,218 41,039
Amortization of debt issuance fees.................................. 379 216 320
Extraordinary loss.................................................. 1,859 -- --
Gain on disposition of business..................................... (4,415) -- --
Minority interest................................................... -- -- 165
Equity income in earnings of joint venture.......................... (125) (257) (200)
Foreign currency transaction (gain) loss............................ 364 (1,045) 1,124
Other non-current assets and liabilities............................ (364) (1,499) 565
Changes in operating assets and liabilities, net of acquisition
of business:
Accounts receivable................................................. (5,203) (996) (10,918)
Inventories......................................................... (1,790) 1,773 (3,605)
Prepaid expenses and other current assets........................... 329 3,751 (3,935)
Accounts payable and accrued expenses............................... 5,072 (3,375) 32,137
--------- --------- ---------
Net cash provided by operating activities.................................. 60,476 68,018 66,905
Investing activities:
Net purchases of property, plant, and equipment.......................... (68,639) (31,252) (53,173)
Proceeds from disposition of subsidiary, net of cash sold................ 3,440 -- --
Acquisition of Brazilian business........................................ -- -- (19,016)
Joint ventures and other investments..................................... (3,185) (1,239) --
Other.................................................................... -- (271) (88)
--------- --------- ---------
Net cash used in investing activities...................................... (68,384) (32,762) (72,277)
Financing activities:
Proceeds from issuance of long-term debt................................. 399,699 117,528 174,049
Payment of long-term debt................................................ (370,833) (131,321) (136,430)
Cash distributions to owners............................................. (18,364) (20,339) (28,073)
Debt issuance fees....................................................... (1,285) (541) --
Other.................................................................... -- 51 --
--------- --------- ---------
Net cash (used in) provided by financing activities........................ 9,217 (34,622) 9,546
Effect of exchange rate changes............................................ (118) 352 (387)
--------- --------- ---------
Increase in cash and cash equivalents...................................... 1,191 986 3,787
Cash and cash equivalents at beginning of year............................. 1,254 2,445 3,431
--------- --------- ---------
Cash and cash equivalents at end of year................................... $ 2,445 $ 3,431 $ 7,218
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes.
F-6
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The combined financial statements include the operations of Graham
Packaging Holdings Company, a Pennsylvania limited partnership formerly known as
Graham Packaging Company ('Holdings'); Graham Packaging Italy, an Italian SRL;
Graham Packaging France Partners, G.P.; Graham Packaging Poland, L.P.; Graham
Packaging do Brasil Industriais e Comerciais S.A.; Graham Packaging Canada,
Ltd., a Canadian limited liability company; Graham Packaging Company, a Delaware
limited partnership formerly known as Graham Packaging Holdings I, L.P. (the
'Operating Company'); Graham Recycling Company, L.P.; subsidiaries thereof; and
land and buildings that were used in the operations, owned by the control group
of owners and contributed to the Group (see Note 19 to the Combined Financial
Statements). Prior to February 2, 1998, these operations were under common
control by virtue of ownership by the Donald C. Graham family. The combined
financial statements include the accounts and results of operations of the Group
for all periods that the operations were under common control. All amounts are
those reported in the historical financial statements of the individual
operations. All significant intercompany accounts and transactions have been
eliminated in the combined financial statements. These entities and assets are
collectively referred to as Graham Packaging Group (the 'Group'). With respect
to the periods subsequent to the Recapitalization on February 2, 1998,
references to the 'Group' refer to Holdings and its subsidiaries.
Description of Business
The Group sells plastic packaging products to large, multinational
companies in the automotive, food and beverage, and household cleaning and
personal care industries. The Group has manufacturing facilities in the United
States, Canada, France, Italy, Poland and Brazil.
Investment in Joint Venture
The Group accounts for its investment in a joint venture in Poland under
the equity method of accounting.
Revenue Recognition
Sales are recognized as products are shipped and upon passage of title to
the customer and as services are rendered.
Cash and Cash Equivalents
The Group considers cash and investments with a maturity of three months or
less when purchased to be cash and cash equivalents.
Inventories
Inventories are stated at the lower of cost or market with cost determined
by the last-in, first-out (LIFO) and first-in, first-out (FIFO) methods.
Property, Plant and Equipment
Property, plant, and equipment are stated on the basis of cost.
Depreciation and amortization are computed by the straight-line method over the
estimated useful lives of the various assets ranging from 3 to 31.5 years. Lease
amortization is included in depreciation expense.
F-7
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Other Assets
Other assets include debt issuance fees, goodwill and license fees for
which amortization is computed by the straight-line method over the term of the
related debt for debt issuance fees and otherwise for periods ranging
principally from five to ten years.
Derivatives
The Group enters into interest rate collar and swap agreements to hedge the
exposure to increasing rates with respect to its Credit Agreement. The
differential to be paid or received as a result of these collar and swap
agreements is accrued as interest rates change and recognized as an adjustment
to interest expense related to the Credit Agreement.
The Group also enters into forward exchange contracts, when appropriate, to
hedge the exchange rate exposure on transactions that are denominated in a
foreign currency. The Group enters into foreign currency borrowings to hedge the
net income exposure from translating certain intercompany accounts and the
foreign currency net asset exposure of foreign operations.
Foreign Currency Translation
The Group uses the local currency as the functional currency for all
foreign operations. All assets and liabilities of foreign operations are
translated into U.S. dollars at year-end exchange rates. Income statement items
are translated at average exchange rates prevailing during the year. The
resulting translation adjustments are recorded as a separate component of
owners' equity.
Comprehensive Income
As of January 1, 1998, the Group adopted Statement of Financial Accounting
Standards No. 130 ('Statement 130'), Reporting Comprehensive Income. Statement
130 establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement had no impact on the
Group's net income or owners' equity. Statement 130 requires foreign currency
translation adjustments, which prior to adoption were reported separately in
owners' equity, to be included in other comprehensive income and added with net
income to determine total comprehensive income which is displayed in the
Combined Statements of Owners' Equity. Prior year financial statements have been
reclassified to conform to the requirements of Statement 130.
Income Taxes
The Group does not pay U.S. federal income taxes under the provisions of
the Internal Revenue Code, as the applicable income or loss is included in the
tax returns of the owners. For the Group's foreign operations subject to tax in
their local jurisdictions, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and are measured using enacted tax rates expected to
apply to taxable income in the years in which the temporary differences are
expected to reverse.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-8
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Reclassifications
Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform to the 1997 presentation.
New Accounting Pronouncements Not Yet Adopted
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
('Statement 131'). Statement 131 establishes standards for the way that public
business enterprises report selected information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Statement 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore,
the Group will adopt the new requirements in 1998, which will require
retroactive disclosure. Management has not completed its review of Statement 131
and has not determined the impact adoption will have on the Group's financial
statements.
In March 1998, the AICPA issued SOP 98-1, Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use. The SOP is
effective for the Group on January 1, 1999. The SOP will require the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal-use. The Group
currently capitalizes certain external costs and expenses all other costs as
incurred. The Group has not yet assessed what the impact of the SOP will be on
the Group's future earnings or financial position.
2. PURCHASE OF RHEEM-GRAHAM EMBALAGENS, LTDA.
On April 30, 1997, Graham Packaging do Brasil Industriais e Comerciais
S.A., then a wholly owned subsidiary, with no operations, of Holdings and owners
of Holdings, acquired 80% of the operating assets of Rheem-Graham Embalagens
Ltda., which manufactures and sells plastic packaging products, from Rheem
Empreendimentos Industrialis e Comerciais. Rheem Empreendimentos Industrialis e
Comerciais contributed the remaining 20% of the operating assets of Rheem-Graham
Embalagens Ltda. in exchange for a 20% minority interest in Graham Packaging do
Brasil Industriais e Comerciais S.A. The purchase price related to the 80% of
the operating assets of Rheem-Graham Embalagens Ltda. was approximately $21.1
million, which was funded through borrowings under the Group's bank facilities.
The acquisition was recorded under the purchase method of accounting and
accordingly, the results of operations of the business acquired by Graham
Packaging do Brasil Industriais e Comerciais S.A. are included in the combined
financial statements of the Group beginning on April 30, 1997, less a minority
interest amount equal to 20% of Graham Packaging do Brasil Industriais e
Comerciais S.A. owned by the unaffiliated entity. The purchase price has been
allocated to assets acquired and liabilities assumed based upon fair values on
the date of acquisition. The fair value of assets and liabilities acquired and
contributed to Graham Packaging do Brasil Industriais e Comerciais S.A. is
summarized as follows (in thousands):
<TABLE>
<S> <C>
Net working capital............................................ $ 2,451
Property, plant and equipment.................................. 23,679
-------
$26,130
-------
-------
</TABLE>
F-9
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
2. PURCHASE OF RHEEM-GRAHAM EMBALAGENS, LTDA.--(CONTINUED)
The following table sets forth unaudited pro forma combined results of
operations assuming that the acquisition had taken place on January 1, 1996.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1997
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
Net sales......................................................... $482,840 $529,207
Net income........................................................ 22,368 10,647
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional depreciation
expense as a result of a step-up in the basis of fixed assets, increased
interest expense on acquisition debt, and a 20% minority interest reduction in
earnings of Graham Packaging do Brasil Industriais e Comerciais S.A. relating to
the interest in the company owned by an unaffiliated entity. They do not purport
to be indicative of the results of operations which actually would have resulted
had the combination been in effect on January 1, 1996, or of future results of
operations of the combined entities.
In February 1998, the Group acquired the remaining 20% minority interest in
Graham Packaging do Brasil Industriais e Comerciais S.A. from Rheem
Empreendimentos Industrialis e Comerciais for $2,995,000.
3. ACCOUNTS RECEIVABLE
Accounts receivable are presented net of an allowance for doubtful accounts
of $1,202,000 and $1,635,000 at December 31, 1996 and 1997 respectively.
Management performs ongoing credit evaluations of its customers and generally
does not require collateral.
The Group's sales to two customers, each of which exceeded 10% of total
sales in 1995 and one of which exceeded 10% of total sales in 1996 and 1997,
totaled 23%, 22% and 22% for the years ended December 31, 1995, 1996 and 1997,
respectively. On an annual basis, approximately 80%, 13% and 7% of the sales to
these two customers were made in the United States, Europe and Canada,
respectively.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Finished goods.......................................................... $15,770 $18,759
Raw materials and parts................................................. 14,818 15,447
------- -------
30,588 34,206
Less LIFO allowance..................................................... 1,670 1,970
------- -------
$28,918 $32,236
------- -------
------- -------
</TABLE>
The December 31, 1996 and 1997 inventories valued using the LIFO method
totaled $19,570,000 and $22,446,000, respectively.
F-10
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
5. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued employee compensation and benefits.......................... $14,037 $16,305
Special charges and unusual items................................... 1,667 18,472
Other............................................................... 14,758 17,037
------- -------
$30,462 $51,814
------- -------
------- -------
</TABLE>
6. DEBT ARRANGEMENTS
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Credit agreement:
Term loan......................................................... $125,000 $125,000
Revolving loan.................................................... 101,662 132,179
Revolving credit facilities....................................... 8,080 6,653
Other............................................................. 5,774 4,633
-------- --------
240,516 268,465
Less amounts classified as current.................................. 5,150 4,771
-------- --------
$235,366 $263,694
-------- --------
-------- --------
</TABLE>
In 1995, the Group refinanced its existing credit agreement and executed a
new $350 million Credit Agreement with a consortium of banks. The Credit
Agreement consisted of a term loan of $125 million and a revolving loan
providing availability of $225 million. The term loan was payable in annual
installments beginning March 31, 1998 through March 31, 2000. The revolving loan
was scheduled to expire on April 18, 2000. The refinancing resulted in an
extraordinary charge to income of $1,859,000 in 1995. This extraordinary charge
consisted of the write-off of unamortized debt issuance fees.
The Group's effective rate on the outstanding borrowings under the term
loan and revolving loan was 5.78% and 6.03% at December 31, 1996 and 1997,
respectively.
At December 31, 1997, the Group had two U.S. Dollar interest rate swap
agreements outstanding which effectively fixed the Eurocurrency Rate on the term
loan, through the duration of such loan. The average rate of the two U.S. Dollar
interest rate swap agreements at December 31, 1997, was 5.55%. At December 31,
1997, the U.S. Dollar Eurocurrency Rate was 6.0%.
At December 31, 1997, the Group had a French Franc interest rate swap
agreement which effectively fixed the Eurocurrency Rate at 4.59% on a notional
amount of French Franc denominated borrowings equivalent to $37,500,000 through
April, 2000. The Group had also entered into a French Franc interest rate collar
agreement that set a minimum and maximum Eurocurrency Rate at 3.5% and 6.52%,
respectively, on a notional amount of French Franc denominated borrowings
equivalent to $16,700,000. At December 31, 1997, the French Franc Eurocurrency
Rate was 3.61%.
The Group had several variable-rate revolving credit facilities denominated
in U.S. Dollars, French Francs and Italian Lire, with aggregate available
borrowings equivalent to $16,200,000. The Group's average effective
F-11
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
6. DEBT ARRANGEMENTS--(CONTINUED)
rate on borrowings of $8,080,000 on these credit facilities was 6.25% at
December 31, 1996. The Group's average effective rate on borrowings of
$6,653,000 on these credit facilities was 6.70% at December 31, 1997.
Interest paid during 1995, 1996 and 1997, net of amounts capitalized of
$869,000, $572,000 and $615,000, respectively, totaled $18,115,000, $15,868,000
and $14,900,000, respectively.
On February 2, 1998, as discussed in Note 19 to the Combined Financial
Statements, the Group refinanced the majority of its existing credit facilities
in connection with the Recapitalization and entered into a new Credit Agreement
(the 'New Credit Agreement') with a consortium of banks. The New Credit
Agreement consists of three term loans to the Operating Company totaling $395
million and two revolving loan facilities to the Operating Company totaling $255
million. The obligations of the Operating Company under the New Credit Agreement
are guaranteed by Holdings and certain other subsidiaries of Holdings. The term
loans are payable in quarterly installments beginning June 30, 1998 through
January 31, 2007, and require payments of $3,200,000 in 1998, $3,200,000 in
1999, $13,200,000 in 2000, $18,200,000 in 2001 and $23,200,000 in 2002. The
revolving loan facilities expire on January 31, 2004. Interest is payable at (a)
the 'Alternate Base Rate' (the higher of the Prime Rate or the Federal Funds
Rate plus 0.50%) plus a margin ranging from 0% to 2.00%; or (b) the
'Eurocurrency Rate' (the applicable interest rate offered to banks in the London
interbank eurocurrency market) plus a margin ranging from 0.625% to 3.00%. A
commitment fee ranging from 0.20% to 0.50% is due on the unused portion of the
revolving loan commitment. In addition, the New Credit Agreement contains
certain affirmative and negative covenants as to the operations and financial
condition of the Group. The Group's effective Eurocurrency rate on initial
outstanding borrowings of $403,530,000 under the New Credit Agreement was 8.36%.
The refinancing resulted in the write-off of unamortized debt issuance fees and
costs associated with the termination of the interest rate collar and swap
agreements, which resulted in a corresponding charge to earnings of $1.1 million
in 1998.
The Recapitalization also included the issuance of $225 million in Senior
Subordinated Notes of the Operating Company and $100.6 million gross proceeds in
Senior Discount Notes ($169 million aggregate principal amount at maturity) of
Holdings. The Senior Subordinated Notes are unconditionally guaranteed on a
senior subordinated basis by Holdings and mature on January 15, 2008, with
interest payable on $150 million at 8.75% and with interest payable on $75
million at LIBOR plus 3.625% (9.25% at February 2, 1998). The Senior Discount
Notes mature on January 15, 2009, with interest payable at 10.75%. Cash interest
on the Senior Discount Notes does not accrue until January 15, 2003.
Based upon the repayment terms under the New Credit Agreement, maturities
of long-term debt for the succeeding five years are as follows:
1998--$4,771,000; 1999--$3,334,000; 2000--$13,333,000; 2001-- $18,337,000;
2002--$23,469,000.
The Operating Company has entered into two U.S. Dollar interest rate swap
agreements that will, beginning April 9, 1998, effectively fix the Eurocurrency
Rate on $300 million of the term loans, on $200 million through April 9, 2002 at
5.8075% and on $100 million through April 9, 2003 at 5.77%.
F-12
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair values
of each class of financial instruments:
Cash and Cash Equivalents, Accounts Receivable and Accounts Payable
The fair values of these financial instruments approximate their carrying
amounts.
Long-Term Debt
The fair values of the variable-rate, long-term debt instruments
approximate their carrying amounts. The fair value of other long-term debt was
estimated using discounted cash flow analyses based on current incremental
borrowing rates for similar types of borrowing arrangements. The fair value of
other long-term debt, including the current portion, approximates the carrying
amounts at December 31, 1996 and 1997.
Interest Rate Collar and Swap Agreements
The fair value of the Group's interest rate collar and swap agreements was
approximately $680,000, and $354,000 as of December 31, 1996 and 1997,
respectively.
8. LEASE COMMITMENTS
The Group was a party to various leases involving real property and
equipment during 1995, 1996 and 1997. Total rent expense for operating leases
amounted to $8,991,000 in 1995; $8,432,000 in 1996 and $9,599,000 in 1997.
Minimum future lease obligations on long-term noncancelable operating leases in
effect at December 31, 1997, are as follows: 1998--$5,259,000; 1999--$4,159,000;
2000--$2,911,000; 2001--$2,236,000; 2002-- $1,516,000; and
thereafter--$2,213,000.
9. TRANSACTIONS WITH AFFILIATES
Transactions with entities affiliated through common ownership included the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Equipment purchases from affiliates....................................... $6,536 $5,223 $11,104
Management services provided by affiliates including management, legal,
tax, accounting, insurance, treasury, and employee benefits
administration services................................................. 2,411 2,623 2,820
Management services provided and sales to affiliates including engineering
services and raw materials.............................................. 758 742 945
Interest income on notes receivable from owners........................... 1,026 1,026 1,026
</TABLE>
Account balances with affiliates include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable................................................. $ 471 $ 361
Prepaid expenses and other current assets........................... 1,395 917
Accounts payable.................................................... 3,642 3,470
</TABLE>
F-13
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
9. TRANSACTIONS WITH AFFILIATES--(CONTINUED)
Certain land and buildings included in the accompanying combined financial
statements were leased by the Group from the control group of owners under
operating leases until the assets were contributed to the Group. The lease
payments totaling approximately $2.8 million in 1995 and 1996 and $2.6 million
in 1997 are classified as distributions to owners in the accompanying combined
financial statements. The depreciation and operating expenses related to the
land and buildings are included in the operations of the Group. Certain of the
real property leased from the control group was contributed to the Group as part
of the Recapitalization and the related leases were terminated.
10. PENSION PLANS
The Group participates in a noncontributory, defined benefit plan and a
defined contribution plan sponsored by an affiliate. In addition, the Group
sponsors other noncontributory defined benefit plans. These plans cover
substantially all of the Group's U.S. employees.
The defined benefit plan covering salaried employees provides retirement
benefits based on the final five years average compensation, while plans
covering hourly employees provide benefits based on years of service. The
Group's policy is to fund the normal cost plus amounts required to amortize
actuarial gains and losses and prior service costs over a period of ten years.
Plan assets consist of a diversified portfolio including U.S. Government
securities, certificates of deposit issued by commercial banks, and domestic
common stocks and bonds.
The following table sets forth the Group's funded status for its defined
benefit pension plans:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation....................................... $ (8,167) $(10,164)
Nonvested benefits.............................................. (464) (757)
-------- --------
Accumulated benefit obligation.................................... (8,631) (10,921)
Effect of projected future salary increases....................... (3,267) (4,097)
-------- --------
Projected benefit obligation...................................... (11,898) (15,018)
Plan assets at market value....................................... 9,489 12,092
-------- --------
Projected benefit obligation in excess of plan assets............. (2,409) (2,926)
Unrecognized net gain from past experience different from that
assumed and effects of changes in assumptions................... (1,416) (440)
Unrecognized prior service cost................................... 471 446
Unrecognized net transition obligation............................ 508 436
-------- --------
Accrued pension expense........................................... $ (2,846) $ (2,484)
-------- --------
-------- --------
</TABLE>
F-14
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
10. PENSION PLANS--(CONTINUED)
The Group's net pension cost for its defined benefit pension plans includes
the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................................... $1,324 $1,349 $1,317
Interest cost.............................................................. 692 793 947
Actual return on plan assets............................................... (879) (320) (850)
Net amortization and deferral.............................................. 459 (238) 135
------ ------ ------
Net periodic pension costs................................................. $1,596 $1,584 $1,549
------ ------ ------
</TABLE>
Significant actuarial assumptions used to develop the projected benefit
obligations were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1996 1997
---- ----
<S> <C> <C>
Assumed discount rate.......................................................... 8.0 % 7.5 %
Assumed rate of compensation increase (salaried plan).......................... 5.0 % 5.0 %
</TABLE>
Additionally, an expected rate of return on plan assets of 8.0% was used in
the determination of net pension cost in 1995, 1996, and 1997.
The Group participates in a defined contribution plan under Internal
Revenue Code Section 401(k) sponsored by an affiliate, which covers all U.S.
employees except those represented by a collective bargaining unit. The Group's
contributions are determined as a specified percentage of employee
contributions, subject to certain maximum limitations. The Group's cost for this
plan for 1995, 1996, and 1997 was $668,000, $722,000 and $742,000, respectively.
11. OWNERS' EQUITY
Owners' equity included the partners' capital and shareholders' equity of
the various entities and operations included in the combined financial
statements, as described in Note 1. Effective January 1, 1994, pursuant to an
ownership structure reorganization of Holdings and several affiliated entities,
Holdings obtained 60% of the outstanding voting interests of members of the
Group operating in France, Italy, and the United Kingdom. The remaining 40% of
the outstanding voting interests was obtained directly by owners of Holdings.
Also, Holdings obtained 99% of the voting interest in Graham Recycling Company
L.P. During 1995, the members operating in France and Italy issued 100% of their
nonvoting preferred interests to Holdings.
At December 31, 1997, Holdings owned 100% of the outstanding stock of
Graham Packaging Canada, Ltd., a Canadian limited liability company, 15.8% of
the outstanding stock of Graham Packaging do Brasil Industriais e Comerciais
S.A. and a 99% limited partnership interest in the Operating Company. The
remaining 1% interest in Graham Recycling Company, L.P. and the Operating
Company were owned directly by owners of Holdings. In addition, 64.2% of Graham
Packaging do Brasil Industriais e Comerciais S.A. was owned directly by owners
of Holdings and the remaining 20% was owned by an unrelated entity.
During 1995, Holdings and the affiliated owners of the Group member in the
United Kingdom sold their ownership interests to an unaffiliated company.
Holdings recognized a gain of $4.4 million based on the portion of the total
proceeds received for its ownership interests and the Group received $6.4
million for technical support services provided to the buyer. These amounts are
included in other income. The operating results of the United Kingdom operations
are included in the accompanying combined financial statements from January 1,
1995 through the date of disposition in 1995 and are not material.
F-15
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
11. OWNERS' EQUITY--(CONTINUED)
At December 31, 1997, Holdings held notes receivable from limited partners
of $20,240,000, bearing interest at 5.07% for partnership interests in it. The
notes were classified as a reduction of owners' equity in the combined balance
sheets.
12. EQUITY APPRECIATION PLAN
Holdings administers an equity appreciation incentive unit plan for certain
management level employees, which provides for the award of 'phantom units'
representing hypothetical investments in units of Holdings at no cost to the
employees. Under the terms of the plan, 1,000,000 equity appreciation units are
available of which 7,400 units were issued and outstanding as of December 31,
1997. These units change in value based on (i) earnings before interest, taxes,
depreciation and amortization and (ii) average net invested capital, as defined
in the Plan, with the corresponding charge being recognized as compensation
expense in the year of change. The liability of $468,000 at December 31, 1997 is
recorded in accrued expenses.
13. SPECIAL CHARGES AND UNUSUAL ITEMS
The special charges and unusual items were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Restructuring of facilities............................................... $3,262 $ 754 $ 1,222
Systems conversion........................................................ -- -- 515
Litigation................................................................ 2,642 6,283 22,624
------ ------ -------
$5,904 $7,037 $24,361
------ ------ -------
------ ------ -------
</TABLE>
The restructuring charges relate to the decision reached in 1995 to close
the Lagnieu, France plant. The Group incurred a charge of $3,262,000 to
terminate approximately 100 people at Lagnieu and to write off assets that had
no continuing use to the Group. In addition, in 1996, the Group incurred
$754,000 to move assets from its plant in Lagnieu, France to Blyes, France, and
in 1997, the Group incurred an additional $746,000 related to the restructuring
of the facilities in France. Also in 1997, the Group incurred $476,000 in
restructuring costs at its corporate offices. Approximately $630,000 of the
restructuring charges incurred remain accrued for actions that will be
substantially complete in 1998.
The systems conversion expenses relate to outside consulting costs incurred
by Holdings in 1997 as it commenced a project to evaluate and assess its
information systems and related hardware to ensure that they will be year 2000
compliant. As part of this process, the Group has engaged outside consultants to
assist with the evaluation and assessment of its information systems
requirements and the selection and implementation of enterprise resource
planning software.
The litigation costs are primarily costs incurred and accrued by the Group
for legal fees in connection with the claims against the Group for alleged
patent infringements and the counterclaims brought by the Group alleging
violations of federal antitrust law by the plaintiffs and, for the year ended
December 31, 1997, amounts expected to be paid in settlement of all claims in
the JCI Schmalbach-Lubeca matter. See Note 17 to the Combined Financial
Statements.
F-16
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
14. OTHER (INCOME) EXPENSE
Other (income) expense consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1996 1997
-------- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Foreign exchange (gain) loss............................................... $ (25) $(720) $ 955
Equity income in earnings of joint ventures................................ (125) (257) (200)
Gain on sale of subsidiary*................................................ (4,415) -- --
Technical support services*................................................ (6,411) -- --
Other...................................................................... (72) -- --
-------- ----- -----
$(11,048) $(977) $ 755
-------- ----- -----
-------- ----- -----
</TABLE>
- ------------------
* Relates to sale of United Kingdom operations described in Note 11 to the
Combined Financial Statements.
15. INCOME TAXES
Certain legal entities in the Group do not pay income taxes because their
income is taxed to the owners. For those entities, the reported amount of their
assets net of the reported amount of their liabilities exceeds the related tax
bases of their assets net of liabilities by $32.3 million and $14.8 million at
December 31, 1996 and 1997, respectively.
Income of certain legal entities related principally to the foreign
operations of the Group is taxable to the legal entities. The following table
sets forth the deferred tax assets and liabilities that result from temporary
differences between the reported amounts and the tax bases of the assets and
liabilities of such entities:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................................................... $10,708 $13,613
Accrued retirement indemnities............................................................ 676 799
Inventories............................................................................... 450 253
Other items............................................................................... 323 273
------- -------
Gross deferred tax assets................................................................... 12,157 14,938
Valuation allowance......................................................................... (2,984) (7,034)
------- -------
Net deferred tax assets..................................................................... 9,173 7,904
Deferred tax liabilities:
Fixed Assets, principally due to differences in depreciation and assigned values.......... 9,092 8,359
Other items............................................................................... 129 328
------- -------
Gross deferred tax liabilities.............................................................. 9,221 8,687
------- -------
Net deferred tax liabilities................................................................ $ 48 $ 783
------- -------
------- -------
</TABLE>
At December 31, 1997, the Group's various taxable entities had net
operating loss carryforwards for purposes of reducing future taxable income by
approximately $32,998,000, for which no benefit has been recognized. Of this
amount, $12,414,000 related to carryforwards that will expire, if unused, at
various dates ranging from 1998 to 2002 and the remaining carryforwards have no
expiration date.
F-17
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
16. COMMITMENTS
In connection with plant expansion and improvement programs, the Group had
commitments for capital expenditures of approximately $14,917,000 at December
31, 1997.
17. CONTINGENCIES
The Group is party to various litigation matters arising in the ordinary
course of business. The ultimate legal and financial liability of the Group with
respect to litigation cannot be estimated with certainty, but Management
believes, based on its examination of such matters, experience to date and
discussions with counsel, that such ultimate liability will not be material to
the business, financial condition or results of operations of the Group.
Holdings was sued in May, 1995, for alleged patent infringement, trade
secret misappropriation and other related state law claims by Hoover Universal,
Inc., a subsidiary of Johnson Controls, Inc. ('JCI'), in the U.S. District Court
for the Central District of California (the 'JCI Litigation'). JCI alleged that
Holdings was misappropriating or threatened to misappropriate trade secrets
allegedly owned by JCI relating to the manufacture of hot-fill PET plastic
containers through the hiring of JCI employees and alleged that Holdings
infringed two patents owned by JCI by manufacturing hot-fill PET plastic
containers for several of its largest customers using a certain 'pinch grip'
structural design. In December, 1995, JCI filed a second lawsuit alleging
infringement of two additional patents, which relate to a ring and base
structure for hot-fill PET plastic containers. The two suits have been
consolidated for all purposes. Holdings has answered the complaints, denying
infringement and misappropriation in all respects and asserting various
defenses, including invalidity and unenforceability of the patents at issue
based upon inequitable conduct on the part of JCI in prosecuting the relevant
patent applications before the U.S. Patent Office and anticompetitive patent
misuse by JCI. Holdings has also asserted counterclaims against JCI alleging
violations of federal antitrust law, based upon certain agreements regarding
market division allegedly entered into by JCI with another competitor and other
alleged conduct engaged in by JCI allegedly intended to raise prices and limit
competition in the market for hot-fill PET plastic containers. In March, 1997,
JCI's plastic container business was acquired by Schmalbach-Lubeca Plastic
Containers USA Inc. ('Schmalbach-Lubeca'). Schmalbach-Lubeca and certain
affiliates were joined as successors to JCI and as counter-claim defendants.
On March 10, 1998, the U.S. District Court in California entered summary
judgment in favor of JCI and against the Group regarding infringement of two
patents, but did not resolve certain issues related to the patents including
certain of the Group's defenses. On March 6, 1998, the Group also filed suit
against Schmalbach-Lubeca in Federal Court in Delaware for infringement of the
Group's patent concerning pinch grip bottle design. On April 24, 1998, the
parties to the litigation reached an understanding on the terms of a settlement
of all claims in all of the litigation with JCI and Schmalbach-Lubeca, subject
to agreement upon and execution of a formal settlement agreement. Management
believes that the amounts that will ultimately be paid in settlement, as well as
estimated litigation expenses and professional fees, will not differ materially
from the amounts accrued in Special Charges and Unusual Items in respect thereof
for the year ended December 31, 1997. See Note 13 to the Combined Financial
Statements.
F-18
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
18. GEOGRAPHICAL REGION INFORMATION
Information by geographic area is as follows:
<TABLE>
<CAPTION>
UNITED LATIN
STATES CANADA EUROPE AMERICA ELIMINATIONS TOTAL
-------- ------- -------- ------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Net sales................................. $355,790 $25,113 $ 85,863 $ -- $ -- $466,766
Net income (loss)......................... 28,119 1,248 (10,693) -- -- 18,674
Identifiable assets....................... 314,146 14,332 93,155 -- (60,980) 360,653
Year ended December 31, 1996
Net sales................................. $357,386 $24,530 $77,824 $ -- $ -- $459,740
Net income (loss)......................... 27,019 1,140 (6,927) -- -- 21,232
Identifiable assets....................... 319,403 18,910 88,106 -- (87,606) 338,813
Year ended December 31, 1997
Net sales................................. $411,031 $28,946 $67,408 $14,322 $ -- $521,707
Net income (loss)......................... 19,564 651 (10,794) 792 -- 10,213
Identifiable assets....................... 341,191 22,827 82,241 29,738 (90,506) 385,491
</TABLE>
19. SUBSEQUENT EVENTS
Pursuant to an Agreement and Plan of Recapitalization, Redemption and
Purchase, dated as of December 18, 1997 (the 'Recapitalization Agreement'), (i)
Holdings, (ii) the owners of the Group (the 'Graham Partners') and (iii)
BMP/Graham Holdings Corporation, a Delaware corporation formed by Blackstone
Capital Partners III Merchant Banking Fund L.P. ('Investor LP'), and BCP/Graham
Holdings L.L.C., a Delaware limited liability company and a wholly owned
subsidiary of Investor LP ('Investor GP' and together with Investor LP, the
'Equity Investors') agreed to a recapitalization of Holdings (the
'Recapitalization'). Closing under the Recapitalization Agreement occurred on
February 2, 1998.
The principal components and consequences of the Recapitalization included
the following:
o A change in the name of Holdings to Graham Packaging Holdings
Company;
o The contribution by Holdings of substantially all of its assets and
liabilities to the Operating Company, which was renamed 'Graham
Packaging Company';
o The contribution by certain Graham Partners to the Group of their
ownership interests in certain partially-owned subsidiaries of
Holdings and certain real estate used but not owned by Holdings and
its subsidiaries;
o The initial borrowing by the Operating Company of $395.0 million
(the 'Bank Borrowings') in connection with the New Credit Agreement
entered into by and among the Operating Company, Holdings and a
syndicate of lenders;
o The issuance of $225 million Senior Subordinated Notes by the
Operating Company and $100.6 million gross proceeds ($169 million
aggregate principal amount at maturity) Senior Discount Notes by
Holdings. A wholly owned subsidiary of each of the Operating Company
and Holdings serves as co-issuer with its parent for its respective
issue of Notes;
o The repayment by the Operating Company of substantially all of the
existing indebtedness and accrued interest of Holdings and its
subsidiaries;
F-19
<PAGE>
GRAHAM PACKAGING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
19. SUBSEQUENT EVENTS--(CONTINUED)
o The distribution by the Operating Company to Holdings of all of the
remaining net proceeds of the Bank Borrowings and the Senior
Subordinated Notes (other than amounts necessary to pay certain fees
and expenses and payments to Management);
o The redemption by Holdings of certain partnership interests in
Holdings held by the Graham Partners for $429.6 million;
o The purchase by the Equity Investors of certain partnership
interests in Holdings held by the Graham Partners for $208.3
million.
o The repayment by the Graham Partners of amounts owed to Holdings
under the $20.2 million promissory notes;
o The recognition of additional compensation expense under the Equity
Appreciation Plan;
o The payment of certain bonuses and other cash payments and the
granting of certain equity awards to senior and middle level
management; and
o The execution of various other agreements among the parties.
As a result of the consummation of the Recapitalization, Investor LP owns
an 81% limited partnership interest in Holdings, and Investor GP owns a 4%
general partnership interest in Holdings. Certain Graham Partners or affiliates
thereof or other entities controlled by Donald C. Graham and his family, have
retained a 1% general partnership interest and a 14% limited partnership
interest in Holdings. Additionally, Holdings owns a 99% limited partnership
interest in the Operating Company, and GPC Opco GP L.L.C., a wholly owned
subsidiary of Holdings, owns a 1% general partnership interest in the Operating
Company.
Also, the Graham Partners have agreed that neither they nor their
affiliates will, subject to certain exceptions, for a period of five years from
and after the Closing of the Recapitalization, engage in the manufacture,
assembly, design, distribution or marketing for sale of rigid plastic containers
for the packaging of consumer products less than ten liters in volume.
Pursuant to the Recapitalization Agreement, Holdings entered into an
Equipment Sales, Service and Licensing Agreement and a Consulting Agreement with
certain entities controlled by Donald C. Graham and members of his family and a
Partners Registration Rights Agreement with partners of Holdings and certain
other entities.
As a result of the Recapitalization, the Group incurred charges of
approximately $31 million related to the issuance of debt which will be
recognized as interest expense over 6 to 11 years based upon the terms of the
related debt instruments. In addition, charges of approximately $34 million were
incurred, including cash payments of $30 million and non-cash charges of $4
million, which relate to transaction fees, expenses, compensation and
unamortized licensing fees which will be expensed immediately; and to deferred
compensation expense and stay bonuses which will be recognized by the Group over
a period up to three years.
The issuers of the Senior Subordinated Notes and the Senior Discount Notes
(the 'Notes') have agreed to file registration statements relating to exchange
offers pursuant to which other series of notes of the respective issuers covered
by such registration statements and containing substantially the same terms as
the Notes, would be offered in exchange for the Notes.
F-20
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 29,
1997 1998
------------ ---------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 7,218 $ 4,197
Accounts receivable................................................................. 69,295 80,712
Inventories......................................................................... 32,236 30,182
Prepaid expenses and other current assets........................................... 9,198 8,429
------------ ---------
Total current assets.................................................................. 117,947 123,520
Property, plant, and equipment, net................................................... 260,296 261,932
Other assets.......................................................................... 7,248 38,311
------------ ---------
Total assets.......................................................................... $385,491 $ 423,763
------------ ---------
------------ ---------
LIABILITIES AND PARTNERS' CAPITAL/OWNERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses............................................... $108,361 $ 112,393
Current portion of long-term debt................................................... 4,771 3,344
------------ ---------
Total current liabilities............................................................. 113,132 115,737
Long-term debt........................................................................ 263,694 740,448
Other non-current liabilities......................................................... 3,345 3,867
Minority interest..................................................................... 4,983 --
Commitments and contingencies......................................................... -- --
Partners' capital/Owners' equity (deficit):
Partners'/Owners' capital (deficit)................................................... 20,383 (435,784)
Notes receivable for ownership interests.............................................. (20,240) --
Other comprehensive income............................................................ 194 (505)
------------ ---------
Total Partners' capital/Owners' equity (deficit)...................................... 337 (436,289)
------------ ---------
Total liabilities and Partners' capital/Owners' equity (deficit)...................... $385,491 $ 423,763
------------ ---------
------------ ---------
</TABLE>
See accompanying notes.
F-21
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 30, 1997 MARCH 29, 1998
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Net sales........................................................................ $116,460 $134,418
Cost of goods sold............................................................... 98,655 109,841
-------------- --------------
17,805 24,577
Selling, general, and administrative expenses.................................... 8,318 8,422
Special charges and unusual items................................................ 1,532 14,898
-------------- --------------
Operating income................................................................. 7,955 1,257
Recapitalization expenses........................................................ -- 11,496
Interest expense, net............................................................ 3,260 11,939
Other expense.................................................................... 329 161
-------------- --------------
Income (loss) before income taxes and extraordinary item......................... 4,366 (22,339)
Income tax provision............................................................. -- 8
-------------- --------------
Income (loss) before extraordinary item.......................................... 4,366 (22,347)
Extraordinary loss from early extinguishment of debt............................. -- 675
-------------- --------------
Net income (loss)................................................................ $ 4,366 $(23,022)
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-22
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED STATEMENTS OF PARTNERS' CAPITAL/OWNERS' EQUITY (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
NOTES
PARTNERS'/ RECEIVABLE
OWNERS' FOR OTHER
CAPITAL OWNERSHIP COMPREHENSIVE
(DEFICIT) INTERESTS INCOME TOTAL
---------- --------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1997................................. $ 38,715 $(20,240 ) $(1,670) $ 16,805
---------
Net income for the year.................................. 10,213 -- -- 10,213
Cumulative translation adjustment........................ -- -- 1,864 1,864
---------
Comprehensive income..................................... 12,077
---------
Cash distributions to owners............................. (28,737) -- -- (28,737)
Other.................................................... 192 -- -- 192
---------- --------- ------------- ---------
Balance at December 31, 1997............................... 20,383 (20,240 ) 194 337
---------
Net loss for the period.................................. (23,022) -- -- (23,022)
Cumulative translation adjustment........................ -- -- (699) (699)
---------
Comprehensive income..................................... (23,721)
---------
Cash distributions to owners............................. (624) -- -- (624)
Recapitalization......................................... (432,521) 20,240 -- (412,281)
---------- --------- ------------- ---------
Balance at March 29, 1998.................................. $ (435,784) $ -- $ (505) $(436,289)
---------- --------- ------------- ---------
---------- --------- ------------- ---------
</TABLE>
See accompanying notes.
F-23
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 30, 1997 MARCH 29, 1998
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Operating activities:
Net income (loss).............................................................. $ 4,366 $ (23,022)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................................... 9,878 9,243
Amortization of debt issuance fees.......................................... 78 661
Extraordinary loss.......................................................... -- 675
Write-off of license fees................................................... -- 1,436
Equity income in earnings of joint venture.................................. (41) (75)
Foreign currency transaction loss........................................... 87 10
Changes in operating assets and liabilities, net of
acquisition of business:
Accounts receivable....................................................... (3,068) (11,560)
Inventories............................................................... (2,188) (1,992)
Prepaid expenses and other current assets................................. 732 889
Accounts payable and accrued expenses..................................... (3,023) 1,991
Changes in non-operating assets and liabilities............................. -- 622
-------------- --------------
Net cash provided by (used in) operating activities.............................. 6,821 (17,138)
Investing activities:
Net purchases of property, plant, and equipment................................ (8,532) (13,505)
Acquisition of Brazilian business.............................................. -- (2,995)
Other.......................................................................... (9) (66)
-------------- --------------
Net cash used in investing activities............................................ (8,541) (16,566)
Financing activities:
Net proceeds from issuance of long-term debt................................... 3,928 735,987
Recapitalization debt repayments............................................... -- (264,410)
Recapitalization owner note payments........................................... -- 20,240
Recapitalization cash distributions to owners.................................. -- (429,566)
Other cash distributions to owners............................................. (2,983) (624)
Debt issuance fees............................................................. -- (30,876)
-------------- --------------
Net cash provided by financing activities........................................ 945 30,751
Effect of exchange rate changes.................................................. 763 (68)
-------------- --------------
Decrease in cash and cash equivalents............................................ (12) (3,021)
Cash and cash equivalents at beginning of period................................. 3,431 7,218
-------------- --------------
Cash and cash equivalents at end of period....................................... $ 3,419 $ 4,197
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-24
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 29, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of Graham
Packaging Holdings Company have been prepared in accordance with generally
accepted accounting principles for interim financial statement information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X and
therefore do not include all of the information and footnotes required by
generally accepted accounting principles for complete annual financial
statements. In the opinion of management, all adjustments (consisting only of
usual recurring adjustments) considered necessary for a fair presentation are
reflected in the condensed financial statements. The condensed combined balance
sheet as of December 31, 1997, is derived from audited financial statements. The
condensed combined financial statements and notes thereto should be read in
conjunction with the combined financial statements and notes thereto for the
year ended December 31, 1997. The results of operations for the three months
ended March 29, 1998, are not necessarily indicative of the results to be
expected for the full year ending December 31, 1998.
The financial statements include the operations of Graham Packaging
Holdings Company, a Pennsylvania limited partnership formerly known as Graham
Packaging Company ('Holdings'); Graham Packaging Company, a Delaware limited
partnership formerly known as Graham Packaging Holdings I, L.P. (the 'Operating
Company'); Graham Packaging Italy, an Italian SRL; Graham Packaging France
Partners, G.P.; Graham Packaging Poland, L.P.; Graham Packaging do Brasil
Industriais e Commerciais S.A.; Graham Packaging Canada, Ltd. a Canadian limited
liability company; Graham Recycling Company, L.P.; subsidiaries thereof; and
land and buildings that were used in the operations, owned by the control group
of owners and contributed to the Group. Prior to February 2, 1998, these
operations were under common control by virtue of ownership by the Donald C.
Graham family. These entities and assets are collectively referred to as Graham
Packaging Group (the 'Group'). With respect to the periods subsequent to the
Recapitalization on February 2, 1998, the condensed financial statements and
references to the 'Group' relate to Holdings and its subsidiaries on a
consolidated basis and for the period prior to the Recapitalization to the
'Group' on a combined basis. The combined financial statements include the
accounts and results of operations of the Group for all periods that the
operations were under common control. All amounts in the combined financial
statements are those reported in the historical financial statements of the
individual operations. All significant intercompany accounts and transactions
have been eliminated in the combined and consolidated financial statements.
2. RECAPITALIZATION
Pursuant to an Agreement and Plan of Recapitalization, Redemption and
Purchase, dated as of December 18, 1997 (the 'Recapitalization Agreement'), (i)
Holdings, (ii) the owners of the Group (the 'Graham Partners') and (iii)
BMP/Graham Holdings Corporation, a Delaware corporation formed by Blackstone
Capital Partners III Merchant Banking Fund L.P. ('Investor LP'), and BCP/Graham
Holdings L.L.C., a Delaware limited liability company and a wholly owned
subsidiary of Investor LP ('Investor GP' and together with Investor LP, the
'Equity Investors') agreed to a recapitalization of Holdings (the
'Recapitalization'). Closing under the Recapitalization Agreement occurred on
February 2, 1998.
The principal components and consequences of the Recapitalization included
the following:
o A change in the name of Holdings to Graham Packaging Holdings
Company;
o The contribution by Holdings of substantially all of its assets and
liabilities to the Operating Company, which was renamed 'Graham
Packaging Company';
o The contribution by certain Graham Partners to the Group of their
ownership interests in certain partially-owned subsidiaries of
Holdings and certain real estate used but not owned by Holdings and
its subsidiaries;
F-25
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
MARCH 29, 1998
2. RECAPITALIZATION--(CONTINUED)
o The initial borrowing by the Operating Company of $395.0 million
(the 'Bank Borrowings') in connection with the New Credit Agreement
entered into by and among the Operating Company, Holdings and a
syndicate of lenders;
o The issuance of $225 million Senior Subordinated Notes by the
Operating Company and $100.6 million gross proceeds ($169 million
aggregate principal amount at maturity) Senior Discount Notes by
Holdings. A wholly owned subsidiary of each of the Operating Company
and Holdings serves as co-issuer with its parent for its respective
issue of Notes;
o The repayment by the Operating Company of substantially all of the
existing indebtedness and accrued interest of Holdings and its
subsidiaries;
o The distribution by the Operating Company to Holdings of all of the
remaining net proceeds of the Bank Borrowings and the Senior
Subordinated Notes (other than amounts necessary to pay certain fees
and expenses and payments to Management);
o The redemption by Holdings of certain partnership interests in
Holdings held by the Graham Partners for $429.6 million;
o The purchase by the Equity Investors of certain partnership
interests in Holdings held by the Graham Partners for $208.3
million;
o The repayment by the Graham Partners of amounts owed to Holdings
under the $20.2 million promissory notes;
o The recognition of additional compensation expense under the Equity
Appreciation Plan;
o The payment of certain bonuses and other cash payments and the
granting of certain equity awards to senior and middle level
management; and
o The execution of various other agreements among the parties.
As a result of the consummation of the Recapitalization, Investor LP owns
an 81% limited partnership interest in Holdings, and Investor GP owns a 4%
general partnership interest in Holdings. Certain Graham Partners or affiliates
thereof or other entities controlled by Donald C. Graham and his family, have
retained a 1% general partnership interest and a 14% limited partnership
interest in Holdings. Additionally, Holdings owns a 99% limited partnership
interest in the Operating Company, and GPC Opco GP L.L.C., a wholly owned
subsidiary of Holdings, owns a 1% general partnership interest in the Operating
Company.
As a result of the Recapitalization, the Group incurred charges of
approximately $31 million related to the issuance of debt which will be
recognized as interest expense over 6 to 11 years based upon the terms of the
related debt instruments. In addition, Recapitalization expenses of
approximately $24.8 million which related to transaction fees, expenses,
compensation, unamortized licensing fees and costs associated with the
termination of the interest rate collar and swap agreements were incurred. The
Recapitalization also resulted in the write-off of unamortized debt issuance
fees which is reflected as an extraordinary loss in the consolidated financial
statements. The Group will also incur compensation expense of $10.7 million
related to stay bonuses and the granting of certain ownership interests to
management which will be recognized over a period up to three years.
3. DEBT ARRANGEMENTS
On February 2, 1998, the Group refinanced the majority of its existing
credit facilities in connection with the Recapitalization and entered into a new
Credit Agreement (the 'New Credit Agreement') with a consortium of banks. The
New Credit Agreement consists of three term loans to the Operating Company
totaling $395 million
F-26
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
MARCH 29, 1998
3. DEBT ARRANGEMENTS--(CONTINUED)
and two revolving loan facilities to the Operating Company totaling $255
million. The obligations of the Operating Company under the New Credit Agreement
are guaranteed by Holdings and certain other subsidiaries of Holdings. The term
loans are payable in quarterly installments beginning June 30, 1998 through
January 31, 2007, and require payments of $3,200,000 in 1998, $3,200,000 in
1999, $13,200,000 in 2000, $18,200,000 in 2001 and $23,200,000 in 2002. The
revolving loan facilities expire on January 31, 2004. Interest is payable at (a)
the 'Alternate Base Rate' (the higher of the Prime Rate or the Federal Funds
Rate plus 0.50%) plus a margin ranging from 0% to 2.00%; or (b) the
'Eurocurrency Rate' (the applicable interest rate offered to banks in the London
interbank eurocurrency market) plus a margin ranging from 0.625% to 3.00%. A
commitment fee ranging from 0.20% to 0.50% is due on the unused portion of the
revolving loan commitment. In addition, the New Credit Agreement contains
certain affirmative and negative covenants as to the operations and financial
condition of the Group, as well as certain restrictions on the payment of
dividends and other distributions to Holdings.
The Recapitalization also included the issuance of $225 million in Senior
Subordinated Notes of the Operating Company and $100.6 million gross proceeds in
Senior Discount Notes ($169 million aggregate principal amount at maturity) of
Holdings. The Senior Subordinated Notes are unconditionally guaranteed on a
senior subordinated basis by Holdings and mature on January 15, 2008, with
interest payable on $150 million at 8.75% and with interest payable on $75
million at LIBOR plus 3.625% (9.25% at February 2, 1998). The Senior Discount
Notes mature on January 15, 2009, with interest payable at 10.75%. Cash interest
on the Senior Discount Notes does not accrue until January 15, 2003.
The Operating Company has entered into two U.S. Dollar interest rate swap
agreements that will, beginning April 9, 1998, effectively fix the Eurocurrency
Rate on $300 million of the term loans, on $200 million through April 9, 2002,
at 5.8075% and on $100 million through April 9, 2003 at 5.77%.
4. RELATED PARTY TRANSACTIONS
Pursuant to the Recapitalization Agreement, the Graham Partners have agreed
that neither they nor their affiliates will, subject to certain exceptions, for
a period of five years from and after the Closing of the Recapitalization,
engage in the manufacture, assembly, design, distribution or marketing for sale
of rigid plastic containers for the packaging of consumer products less than ten
liters in volume.
Also pursuant to the Recapitalization Agreement, Holdings entered into an
Equipment Sales, Service and Licensing Agreement and a Consulting Agreement with
certain entities controlled by Donald C. Graham and members of his family and a
Partners Registration Rights Agreement with partners of Holdings and certain
other entities. Additionally, Holdings has entered into a Monitoring Agreement
with Blackstone Management Partners III for advisory and consulting services.
5. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 29, 1998
----------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Finished goods............................................ $18,759 $ 18,924
Raw materials and parts................................... 15,447 13,228
----------------- --------------
34,206 32,152
Less LIFO allowances...................................... 1,970 1,970
----------------- --------------
$32,236 $ 30,182
----------------- --------------
----------------- --------------
</TABLE>
F-27
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
MARCH 29, 1998
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses included the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 29, 1998
----------------- --------------
<S> <C> <C>
Accounts payable.......................................... $ 56,547 $ 48,822
Accrued employee compensation and benefits................ 16,305 12,445
Special charges and unusual items......................... 18,472 17,359
Other..................................................... 17,037 33,767
----------------- --------------
$ 108,361 $112,393
----------------- --------------
----------------- --------------
</TABLE>
7. INCOME TAXES
The Group does not pay U.S. federal income taxes under the provisions of
the Internal Revenue Code, as the applicable income or loss is included in the
tax returns of the owners. For the Group's foreign operations subject to tax in
their local jurisdictions, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and are measured using enacted tax rates expected to
apply to taxable income in the years in which the temporary differences are
expected to reverse. During 1998 and 1997, the Group's various taxable entities
incurred additional net operating loss carryforwards for which no benefit has
been recognized.
8. SPECIAL CHARGES AND UNUSUAL ITEMS
The special charges and unusual items recorded in the three months ended
March 30, 1997 and March 29, 1998 were as follows:
<TABLE>
<CAPTION>
1997 1998
----------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Systems conversion........................................ $ -- $ 366
Recapitalization expenses................................. -- 14,532
Litigation................................................ 1,532 --
------- --------------
$ 1,532 $ 14,898
------- --------------
------- --------------
</TABLE>
The systems conversion expenses relate to outside consulting costs incurred
by Holdings in 1998 as it commenced a project to evaluate and assess its
information systems and related hardware to ensure that they will be year 2000
compliant. As part of this process, the Group has engaged outside consultants to
assist with the evaluation and assessment of its information systems
requirements and the selection and implementation of enterprise resource
planning software.
Recapitalization expenses relate to compensation and to the write-off of
unamortized licensing fees. Additionally recapitalization expenses relate to
stay bonuses and the granting of certain ownership interests to Management
pursuant to the terms of the Recapitalization (see Note 2), which are being
recognized over a period of up to three years.
The litigation costs are primarily costs incurred and accrued by the Group
for legal fees in connection with the claims against the Group for alleged
patent infringements and the counterclaims brought by the Group alleging
violations of federal antitrust law by the plaintiffs. See Note 9.
F-28
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
MARCH 29, 1998
9. CONTINGENCIES
The Group is party to various litigation matters arising in the ordinary
course of business. The ultimate legal and financial liability of the Group with
respect to litigation cannot be estimated with certainty, but Management
believes, based on its examination of such matters, experience to date and
discussions with counsel, that such liability will not be material to the
business, financial condition, results of operations or cash flows of the Group.
Holdings was sued in May, 1995, for alleged patent infringement, trade
secret misappropriation and other related state law claims by Hoover Universal,
Inc., a subsidiary of Johnson Controls, Inc. ('JCI'), in the U.S. District Court
for the Central District of California (the 'JCI Litigation'). JCI alleged that
Holdings was misappropriating or threatened to misappropriate trade secrets
allegedly owned by JCI relating to the manufacture of hot-fill PET plastic
containers through the hiring of JCI employees and alleged that Holdings
infringed two patents owned by JCI by manufacturing hot-fill PET plastic
containers for several of its largest customers using a certain 'pinch grip'
structural design. In December, 1995, JCI filed a second lawsuit alleging
infringement of two additional patents, which relate to a ring and base
structure for hot-fill PET plastic containers. The two suits have been
consolidated for all purposes. Holdings has answered the complaints, denying
infringement and misappropriation in all respects and asserting various
defenses, including invalidity and unenforceability of the patents at issue
based upon inequitable conduct on the part of JCI in prosecuting the relevant
patent applications before the U.S. Patent Office and anticompetitive patent
misuse by JCI. Holdings has also asserted counterclaims against JCI alleging
violations of federal antitrust law, based upon certain agreements regarding
market division allegedly entered into by JCI with another competitor and other
alleged conduct engaged in by JCI allegedly intended to raise prices and limit
competition in the market for hot-fill PET plastic containers. In March, 1997,
JCI's plastic container business was acquired by Schmalbach-Lubeca Plastic
Containers USA Inc. ('Schmalbach-Lubeca'). Schmalbach-Lubeca and certain
affiliates were joined as successors to JCI and as counter-claim defendants.
On March 10, 1998, the U.S. District Court in California entered summary
judgment in favor of JCI and against the Group regarding infringement of two
patents, but did not resolve certain issues related to the patents including
certain of the Group's defenses. On March 6, 1998, the Group also filed suit
against Schmalbach-Lubeca in Federal Court in Delaware for infringement of the
Group's patent concerning pinch grip bottle design. On April 24, 1998, the
parties to the litigation reached an understanding on the terms of a settlement
of all claims in all of the litigation with JCI and Schmalbach-Lubeca, subject
to agreement upon and execution of a formal settlement agreement. Management
believes that the amounts that will ultimately be paid in settlement, as well as
estimated litigation expenses and professional fees, will not differ materially
from the amounts accrued in Special Charges and Unusual Items in respect thereof
for the year ended December 31, 1997 and the March 29, 1998 unaudited condensed
consolidated financial statements.
10. CONDENSED OPERATING COMPANY DATA
Condensed financial data for the Operating Company as of March 29, 1998, in
thousands of dollars, was as follows:
<TABLE>
<S> <C>
Current assets.................................................................... $124,520
Noncurrent assets................................................................. 298,892
Total assets...................................................................... 423,412
Current liabilities............................................................... 115,737
Noncurrent liabilities............................................................ 646,643
Partners' capital (deficit)....................................................... (338,968)
</TABLE>
F-29
<PAGE>
GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
MARCH 29, 1998
10. CONDENSED OPERATING COMPANY DATA--(CONTINUED)
Condensed financial data for the Operating Company for the three months
ended March 29, 1998, in thousands of dollars, was as follows:
<TABLE>
<S> <C>
Sales............................................................................. $134,418
Gross profit...................................................................... 24,577
Loss from continuing operations................................................... (19,614)
Net loss.......................................................................... (20,289)
</TABLE>
Condensed financial data of the Operating Company is not presented for
periods prior to February 2, 1998.
11. COMPREHENSIVE INCOME
Effective January 1, 1998, the Group adopted the provisions of Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income.
Comprehensive income for the three months ended March 30, 1997 and March 29,
1998, in thousands of dollars, was as follows:
<TABLE>
<CAPTION>
1997 1998
------ ---------
<S> <C> <C>
Net income (loss)....................................................... $4,366 $ (23,022)
Foreign currency translation adjustments................................ 2,221 (699)
------ ---------
Comprehensive income (loss)............................................. $6,587 $ (23,721)
------ ---------
------ ---------
</TABLE>
12. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
('Statement 131'). Statement 131 establishes standards for the way that public
business enterprises report selected information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Statement 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore,
the Group will adopt the new requirements in 1998, which will require
retroactive disclosure. Management has not completed its review of Statement 131
and has not determined the impact adoption will have on the Group's financial
statement disclosures.
In March 1998, the AICPA issued SOP 98-1, Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use. The SOP is
effective for the Group on January 1, 1999. The SOP will require the
capitalization of certain costs incurred after the date of adoption in
connection with developing or obtaining software for internal-use. The Group
currently capitalizes certain external costs and expenses all other costs as
incurred. The Group has not yet assessed what the impact of the SOP will be on
the Group's future earnings or financial position.
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132 Employers' Disclosures about Pensions
and Other Post Retirement Benefits. This standard revises employers' disclosures
about pensions and other post-retirement plans, but does not change the
measurement or recognition of those plans. This standard will be effective for
the Group's financial statements for the year ended December 31, 1998.
F-30
<PAGE>
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN, 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 SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. 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 ISSUERS SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PAGE
----
Available Information.......................... 1
Cautionary Statement for Purposes of the 'Safe
Harbor' Provisions of the Private Securities
Litigation Reform Act of 1995................ 1
Prospectus Summary............................. 2
Risk Factors................................... 23
The Recapitalization........................... 32
Use of Proceeds................................ 34
Capitalization................................. 36
Unaudited Pro Forma Financial Information...... 37
Selected Historical Financial Data............. 43
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 46
Business....................................... 53
Management..................................... 66
Security Ownership............................. 72
The Partnership Agreements..................... 73
Certain Relationships and Related Party
Transactions................................. 76
Description of the New Credit Facility......... 79
The Senior Subordinated Exchange Offers........ 82
The Senior Discount Exchange Offer............. 94
Description of the Senior Subordinated Exchange
Notes........................................ 106
Description of the Senior Discount Exchange
Notes........................................ 137
Senior Subordinated Exchange Offers; Senior
Subordinated Registration Rights............. 165
Senior Discount Exchange Offer; Senior Discount
Registration Rights.......................... 168
Book Entry; Delivery and Form.................. 171
Plan of Distribution........................... 173
Certain U.S. Federal Income Tax
Considerations............................... 174
Change in Accountants.......................... 174
Legal Matters.................................. 174
Experts........................................ 174
Index to Financial Statements.................. F-1
===============================================================================
===============================================================================
---------------------------
PROSPECTUS
---------------------------
GRAHAM PACKAGING COMPANY
AND
GPC CAPITAL CORP. I
OFFER TO EXCHANGE UP TO $150,000,000 OF THEIR
8 3/4% SENIOR SUBORDINATED NOTES DUE 2008,
SERIES B, AND $75,000,000 OF THEIR FLOATING
INTEREST RATE SUBORDINATED TERM SECURITIES DUE
2008, SERIES B (FIRSTS(service mark)*), WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, FOR ANY AND
ALL OF THEIR OUTSTANDING 8 3/4% SENIOR
SUBORDINATED NOTES DUE 2008, SERIES A, AND
ANY AND ALL OF THEIR OUTSTANDING FLOATING INTEREST RATE
SUBORDINATED TERM SECURITIES DUE 2008,
SERIES A (FIRSTS(service mark)*)
GRAHAM PACKAGING
HOLDINGS COMPANY
AND
GPC CAPITAL CORP. II
OFFER TO EXCHANGE UP TO $169,000,000 OF THEIR 10 3/4%
SENIOR DISCOUNT NOTES DUE 2009, SERIES B, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF THEIR OUTSTANDING 10 3/4%
SENIOR DISCOUNT NOTES DUE 2009, SERIES A
, 1998
* FIRSTS IS A SERVICE MARK OF BT ALEX. BROWN INCORPORATED.
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subject to any terms, conditions or restrictions set forth in the Limited
Partnership Agreement of the Operating Company, Section 17-108 of the Delaware
Revised Uniform Limited Partnership Act empowers a Delaware limited partnership
to indemnify and hold harmless any partner or other person from and against all
claims and demands whatsoever. The Partnership Agreement of the Operating
Company provides that the Operating Company will, defend and hold harmless, to
the fullest extent not prohibited by law, its general partner and each of its
affiliates and their respective partners, shareholders, officers, directors,
employees and agents, from and against any claim, loss or liability of any
nature whatsoever (including attorneys' fees) arising out of or in connection
with the assets or business of the Operating Company, unless the act or failure
to act giving rise to the claim for indemnification is determined by a court to
have constituted intentional misconduct or a knowing violation of law by such
person or (in the case of the general partner only) a breach by the general
partner of any of the material terms and provisions of the Partnership Agreement
of the Operating Company. The foregoing obligation of the Operating Company will
be satisfied only out of the assets of the Operating Company and under no
circumstances will any recourse be available against the general partner or any
other partner or the assets of any partner. The Partnership Agreement of the
Operating Company further provides that the Operating Company will indemnify
each partner from and against any damage, liability, loss, cost or deficiency
(including, but not limited to, reasonable attorneys' fees) which each such
partner pays or becomes obligated to pay on account of the imposition upon or
assessment against such partner of any obligation or liability of the Operating
Company. The foregoing obligation of the Operating Company will be satisfied
only out of the assets of the Operating Company and under no circumstances will
any recourse be available against the general partner or any other partner or
the assets of any partner with respect thereto.
Subject to any terms, conditions or restrictions set forth in the Limited
Partnership Agreement of Holdings, Section 8510 of the Pennsylvania Revised
Uniform Limited Partnership Act empowers a Pennsylvania limited partnership to
indemnify and hold harmless any partner or other person from and against all
claims and demands whatsoever. Indemnification shall not be made in any case
where the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness.
The Partnership Agreement of Holdings provides that no general partner nor any
of its affiliates nor any of its respective partners, shareholders, officers,
directors, employees or agents will be liable, in damages or otherwise, to
Holdings or to any of the limited partners for any act or omission on its or his
part, except for (i) any act or omission resulting from its own willful
misconduct or bad faith, (ii) any breach by the general partner of its duty of
loyalty and obligations under applicable law as a fiduciary to Holdings or (iii)
any breach by the general partner of any of the terms and provisions of the
Partnership Agreement of Holdings. Holdings will indemnify, defend and hold
harmless, to the fullest extent permitted by law, the general partners and each
of their affiliates and their respective partners, shareholders, officers,
directors, employees and agents, from and against any claim or liability of any
nature whatsoever arising out of or in connection with the assets or business of
Holdings, except where attributable to the willful misconduct or bad faith of
such individual or entity or where relating to a breach by the general partner
of its obligations as a fiduciary of Holdings or to a breach by the general
partner of any of the terms and provisions of the Partnership Agreement of
Holdings. Notwithstanding the foregoing and anything in the Partnership
Agreement of Holdings to the contrary, no general partner will be liable to
Holdings or its partners for monetary damages for breach of its fiduciary duties
or its duties set forth in Partnership Agreement of Holdings, in each case other
than a willful and flagrant breach thereof, or a breach of its duty of loyalty.
Expenses incurred by a partner or other person in defending any action or
proceeding against which indemnification may be made pursuant to the foregoing
shall be paid by the Operating Company in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that it is not
entitled to be indemnified by the Operating Company. In addition, the
Partnership Agreement of Holdings provides that Holdings will indemnify, to the
fullest extent not prohibited by law, each member of the advisory committee
against losses, claims, damages or liabilities arising from any act or omission
performed or omitted by him or her as a member of the advisory committee.
II-1
<PAGE>
Under Section 145 of the Delaware General Corporation Law (the 'Delaware
Law'), a corporation may indemnify its directors, officers, employees and agents
and its former directors, officers, employees and agents and those who serve, at
the corporation's request, in such capacity with another enterprise, against
expenses (including attorney's fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The Delaware General
Corporation Law provides, however, that such person must have acted in good
faith and in a manner such person reasonably believed to be in (or not opposed
to) the best interests of the corporation and, in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and only
to the extent that a court determines that such person fairly and reasonably is
entitled to indemnity for costs the court deems proper in light of liability
adjudication. Indemnity is mandatory to the extent a claim, issue or matter has
been successfully defended.
The Certificate of Incorporation and By-Laws of CapCo I and CapCo II
provide for mandatory indemnification of directors and officers on generally the
same terms as permitted by the Delaware General Corporation Law.
Reference is made to the forms of Purchase Agreement, Senior Subordinated
Registration Rights Agreement and Senior Discount Registration Rights Agreement,
filed as Exhibits 2.2, 4.6 and 4.10, respectively, to this Registration
Statement, which provide for the indemnification of certain officers, directors
and other representatives of each of the Registrants or their partners signing
this Registration Statement and certain controlling persons of each of the
Registrants against certain liabilities (including those arising under the
Securities Act), in certain instances by the Initial Purchasers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
See the Exhibit Index included immediately preceding the exhibits to
this registration Statement.
(b) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts.
All other schedules have been omitted because they are not applicable or
not required or the required information is included in the financial statements
or notes thereto.
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereto), which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
<PAGE>
The undersigned Registrants hereby undertake as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed to be underwriters, in addition to the information
called for by the other Items of the applicable form.
The Registrants undertake that every prospectus: (i) that is filed pursuant
to the immediately preceding undertaking or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of a Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN YORK, PENNSYLVANIA, ON MAY 26, 1998.
GRAHAM PACKAGING COMPANY
BY GPC OPCO GP LLC, ITS GENERAL
PARTNER
By: _______/s/ JOHN E. HAMILTON_______
Name: John E. Hamilton
Title: Vice President, Finance and
Administration
POWER OF ATTORNEY
We, the undersigned officers of GPC Opco GP LLC, as general partner of
Graham Packaging Company and directors of BMP/Graham Holdings Corporation, as
sole member of BCP/Graham Holdings L.L.C., which is a general partner of Graham
Packaging Holdings Company, the sole member of GPC Opco GP LLC, do hereby
constitute and appoint Philip R. Yates and John E. Hamilton, or either of them,
our true and lawful attorneys and agents, to do any and all acts and things in
our name and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said Limited Partnership to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto and we do hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 26TH DAY OF MAY, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED, WITH RESPECT TO GPC OPCO GP LLC,
AS GENERAL PARTNER OF GRAHAM PACKAGING COMPANY, OR BMP/GRAHAM HOLDINGS
CORPORATION, AS SOLE MEMBER OF BCP/GRAHAM HOLDINGS L.L.C., WHICH IS A GENERAL
PARTNER OF GRAHAM PACKAGING HOLDINGS COMPANY, THE SOLE MEMBER OF GPC OPCO GP
LLC:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PHILIP R. YATES President and Chief Executive Officer (Principal Executive
- ------------------------------------------ Officer) of GPC Opco GP LLC
Philip R. Yates
/s/ JOHN E. HAMILTON Vice President, Finance and Administration, Secretary and
- ------------------------------------------ Treasurer (Principal Financial Officer and Principal Accounting
John E. Hamilton Officer) of GPC Opco GP LLC
/s/ HOWARD A. LIPSON Director of BMP/Graham Holdings Corporation
- ------------------------------------------
Howard A. Lipson
/s/ CHINH E. CHU Director of BMP/Graham Holdings Corporation
- ------------------------------------------
Chinh E. Chu
/s/ SIMON P. LONERGAN Director of BMP/Graham Holdings Corporation
- ------------------------------------------
Simon P. Lonergan
</TABLE>
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN YORK, PENNSYLVANIA, ON MAY 26, 1998.
GPC CAPITAL CORP. I
By: ________/s/ PHILIP R. YATES_______
Name: Philip R. Yates
Title: President
POWER OF ATTORNEY
We, the undersigned directors and officers of GPC Capital Corp. I, do
hereby constitute and appoint Philip R. Yates and John E. Hamilton, or either of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto and we do hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 26TH DAY OF MAY, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED, WITH RESPECT TO GPC CAPITAL CORP.
I:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PHILIP R. YATES President, Treasurer and Assistant Secretary and
- ------------------------------------------------------ Director (Principal Executive Officer)
Philip R. Yates
/s/ JOHN E. HAMILTON Vice President, Secretary and Assistant Treasurer and
- ------------------------------------------------------ Director (Principal Financial Officer and Principal
John E. Hamilton Accounting Officer)
/s/ CHINH E. CHU Director
- ------------------------------------------------------
Chinh E. Chu
/s/ SIMON P. LONERGAN Director
- ------------------------------------------------------
Simon P. Lonergan
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN YORK, PENNSYLVANIA, ON MAY 26, 1998.
GRAHAM PACKAGING HOLDINGS COMPANY
By BCP/Graham Holdings L.L.C., its
General Partner
By: _______/s/ JOHN E. HAMILTON_______
Name: John E. Hamilton
Title: Vice President, Finance and
Administration
POWER OF ATTORNEY
We, the undersigned officers of BCP Graham Holdings L.L.C., as general
partner of Graham Packaging Holdings Company and directors of BMP/Graham
Corporation as sole member of BCP/Graham Holdings L.L.C., as the general partner
of Graham Packaging Holdings Company, do hereby constitute and appoint Philip R.
Yates and John E. Hamilton, or either of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable said
Limited Partnership to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but without
limitation, power and authority to sign for us or any of us in our names in the
capacities indicated below, any and all amendments (including post-effective
amendments) hereto and we do hereby ratify and confirm all that said attorneys
and agents, or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 26th day of May, 1998 by the
following persons in the capacities indicated, with respect to BCP/Graham
Holdings L.L.C., as general partner of Graham Packaging Holdings Company, or
BMP/Graham Holdings Corporation as sole member of BCP/Graham Holdings L.L.C.,
as indicated below:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ HOWARD A. LIPSON President, Treasurer and Assistant Secretary
- ------------------------------------------------------ (Principal Executive Officer) of BCP/Graham Holdings
Howard A. Lipson L.L.C.
/s/ JOHN E. HAMILTON Vice President, Finance and Administration, Assistant
- ------------------------------------------------------ Secretary and Assistant Treasurer (Principal Financial
John E. Hamilton Officer and Principal Accounting Officer) of
BCP/Graham Holdings L.L.C.
/s/ HOWARD A. LIPSON Director of BMP/Graham Holdings Corporation
- ------------------------------------------------------
Howard A. Lipson
/s/ CHINH E. CHU Director of BMP/Graham Holdings Corporation
- ------------------------------------------------------
Chinh E. Chu
/s/ SIMON P. LONERGAN Director of BMP/Graham Holdings Corporation
- ------------------------------------------------------
Simon P. Lonergan
</TABLE>
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN YORK, PENNSYLVANIA, ON MAY 26, 1998.
GPC CAPITAL CORP. II
By: ________/s/ PHILIP R. YATES_______
Name: Philip R. Yates
Title: President
POWER OF ATTORNEY
We, the undersigned directors and officers of GPC Capital Corp. II, do
hereby constitute and appoint Philip R. Yates and John E. Hamilton, or either of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our name and on our behalf in our capacities as directors and officers
and to execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto and we do hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 26TH DAY OF MAY, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED, WITH RESPECT TO GPC CAPITAL CORP.
II:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PHILIP R. YATES President, Treasurer and Assistant Secretary and
- ------------------------------------------------------ Director (Principal Executive Officer)
Philip R. Yates
/s/ JOHN E. HAMILTON Vice President, Secretary and Assistant Treasurer and
- ------------------------------------------------------ Director (Principal Financial Officer and Principal
John E. Hamilton Accounting Officer)
/s/ CHINH E. CHU Director
- ------------------------------------------------------
Chinh E. Chu
/s/ SIMON P. LONERGAN Director
- ------------------------------------------------------
Simon P. Lonergan
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------
<C> <C> <S>
2.1* -- Agreement and Plan of Recapitalization, Redemption and Purchase dated as of December 18, 1997, as
amended as of January 29, 1998, by and among Graham Packaging Holdings Company, BCP/Graham
Holdings LLC, BMP/Graham Holdings Corporation and the other parties named therein.
2.2 -- Purchase Agreement dated January 23, 1998 among Graham Packaging Holdings Company, Graham
Packaging Company, GPC Capital Corp. I, GPC Capital Corp. II, BT Alex. Brown Incorporated, Bankers
Trust International PLC, Lazard Freres & Co. LLC and Salomon Brothers Inc.
3.1* -- Certificate of Limited Partnership of Graham Packaging Company.
3.2 -- Amended and Restated Agreement of Limited Partnership of Graham Packaging Company dated as of
February 2, 1998.
3.3 -- Certificate of Incorporation of GPC Capital Corp. I.
3.4 -- By-Laws of GPC Capital Corp. I.
3.5* -- Certificate of Limited Partnership of Graham Packaging Holdings Company.
3.6 -- Fifth Amended and Restated Agreement of Limited Partnership of Graham Packaging Holdings Company
dated as of February 2, 1998.
3.7 -- Certificate of Incorporation of GPC Capital Corp. II.
3.8 -- By-Laws of GPC Capital Corp. II.
4.1 -- Indenture dated as of February 2, 1998 among Graham Packaging Company and GPC Capital Corp. I and
Graham Packaging Holdings Company, as guarantor, and United States Trust Company of New York, as
Trustee, relating to the Senior Subordinated Notes Due 2008 of Graham Packaging Company and GPC
Capital Corp. I, unconditionally guaranteed by Graham Packaging Holdings Company.
4.2 -- Form of 8 3/4% Senior Subordinated Note Due 2008, Series A (included in Exhibit 4.1).
4.3 -- Form of 8 3/4% Senior Subordinated Note Due 2008, Series B (included in Exhibit 4.1).
4.4 -- Form of Floating Interest Rate Term Security Due 2008, Series A (included in Exhibit 4.1).
4.5 -- Form of Floating Interest Rate Term Security Due 2008, Series B (included in Exhibit 4.1).
4.6 -- Registration Rights Agreement dated as of February 2, 1998 among Graham Packaging Company and GPC
Capital Corp. I and Graham Packaging Holdings Company, as guarantor, and BT Alex. Brown
Incorporated, Bankers Trust International PLC, Lazard Freres & Co. LLC and Salomon Brothers Inc,
relating to the Senior Subordinated Notes Due 2008 of Graham Packaging Company and GPC Capital
Corp. I, unconditionally guaranteed by Graham Packaging Holdings Company.
4.7 -- Indenture dated as of February 2, 1998 among Graham Packaging Holdings Company and GPC Capital
Corp. II and The Bank of New York, as Trustee, relating to the Senior Discount Notes Due 2009 of Graham
Packaging Holdings Company and GPC Capital Corp. II.
4.8 -- Form of 10 3/4% Senior Discount Note Due 2009, Series A (included in Exhibit 4.7).
4.9 -- Form of 10 3/4% Senior Discount Note Due 2009, Series B (included in Exhibit 4.7).
4.10 -- Registration Rights Agreement dated as of February 2, 1998 among Graham Packaging Holdings
Company, GPC Capital Corp. II, BT Alex. Brown Incorporated, Bankers Trust International PLC,
Lazard Freres & Co. LLC and Salomon Brothers Inc. relating to the Senior Discount Notes Due 2009
of Graham Packaging Holdings Company and GPC Capital Corp. II.
5.1* -- Opinion of Simpson Thacher & Bartlett relating to the Senior Subordinated Notes.
5.2* -- Opinion of Morgan, Lewis & Bockius LLP relating to the Senior Subordinated Notes.
5.3* -- Opinion of Simpson Thacher & Bartlett relating to the Senior Discount Notes.
5.4* -- Opinion of Morgan, Lewis & Bockius LLP relating to the Senior Discount Notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.1* -- Credit Agreement dated as of February 2, 1998 among Graham Packaging Holdings Company, Graham
Packaging Company, GPC Capital Corp. I, the lending institutions identified in the Credit
Agreement and the agents identified in the Credit Agreement.
10.2* -- Consulting Agreement dated as of February 2, 1998 between Graham Packaging Holdings Company and
Graham Capital Corporation.
10.3* -- Equipment Sales, Service and License Agreement dated February 2, 1998 between Graham Engineering
Corporation and Graham Packaging Holdings Company.
10.4* -- Forms of Retention Incentive Agreement (and List of Parties).
10.5* -- Forms of Severance Agreement (and List of Parties).
10.6* -- Registration Rights Agreement by and among Graham Packaging Company, GPC Capital Corp. II, Graham
Capital Corporation, Graham Family Growth Partnership, BCP/Graham Holdings LLC, BMP/Graham
Holdings Corporation and the other parties named therein.
10.7* -- Monitoring Agreement dated as of February 2, 1998 among Graham Packaging Holdings Company, Graham
Packaging Company and Blackstone.
10.8* -- Management Stockholders Agreement.
10.9* -- Form of Equity Incentive Agreement (and List of Parties).
10.10* -- Stockholders' Agreement dated as of February 2, 1998 among Blackstone Capital Partners III
Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III L.P., Blackstone Family
Investment Partners III, L.P., BMP/Graham Holdings Corporation, Graham Packaging Holdings Company,
GPC Capital Corp. II and BT Investment Partners, Inc.
10.11* -- Graham Engineering Corporation Amended Supplemental Income Plan.
12 -- Computation of Ratios of Earnings to Fixed Charges.
16.1 -- Letter of Ernst & Young LLP re: change in independent accountants.
21.1* -- Subsidiaries of Graham Packaging Company.
21.2* -- Subsidiaries of Graham Packaging Holdings Company.
23.1* -- Consents of Simpson Thacher & Bartlett (included in its opinions filed as Exhibits 5.1 and 5.3
hereto).
23.2* -- Consents of Morgan, Lewis & Bockius LLP (included in its opinions filed as Exhibits 5.2 and 5.4
hereto).
23.3 -- Consent of Ernst & Young LLP, Independent Auditors.
24 -- Powers of Attorney--Pages II-4 through II-7 of the Registration Statement.
25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of United
States Trust Company of New York, as Trustee.
25.2 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Trustee.
27 -- Financial Data Schedule.
99.1 -- Form of Fixed Rate Senior Subordinated Letter of Transmittal.
99.2 -- Form of Fixed Rate Senior Subordinated Notice of Guaranteed Delivery.
99.3 -- Form of Floating Rate Senior Subordinated Letter of Transmittal.
99.4 -- Form of Floating Rate Senior Subordinated Notice of Guaranteed Delivery.
99.5 -- Form of Senior Discount Letter of Transmittal.
99.6 -- Form of Senior Discount Notice of Guaranteed Delivery.
</TABLE>
- ------------------
* To be filed by amendment.
<PAGE>
(b) Financial Statement Schedules:
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS.
All other schedules have been omitted because they are not applicable or
not required or the required information is included in the financial statements
or notes thereto.
<PAGE>
EXHIBIT 2.2
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
$225,000,000
$150,000,000 8 3/4% Senior Subordinated Notes Due 2008
$75,000,000 Floating
Interest Rate Subordinated
Term Securities Due 2008
(FIRSTS SM1)
GRAHAM PACKAGING HOLDINGS COMPANY
GPC CAPITAL CORP. II
$169,000,000
10 3/4% Senior Discount Notes Due 2009
PURCHASE AGREEMENT
January 23, 1998
BT ALEX. BROWN INCORPORATED
BANKERS TRUST INTERNATIONAL PLC
LAZARD FRERES & CO. LLC
SALOMON BROTHERS INC
c/o BT Alex. Brown Incorporated
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
GRAHAM PACKAGING COMPANY, a Delaware Limited Partnership (the "Operating
Company"), and GPC CAPITAL CORP. I, a Delaware Corporation ("GPC I" and,
together with the Operating Company, the "Company Issuers"), and GRAHAM
PACKAGING HOLDINGS COMPANY, a Pennsylvania Limited Partnership ("Holdings"), and
GPC CAPITAL CORP. II, a Delaware Corporation ("GPC II" and, together with
Holdings, the "Holdings Issuers," and together with the Company Issuers, the
"Issuers"), hereby confirm their agreement with you (the "Initial Purchasers"),
as set forth below.
The Notes (as defined in Section 1 below) are being issued and sold to (i)
redeem certain partnership interests in Holdings pursuant to the
Recapitalization (as defined in the Final
- ----------
1 FIRSTS is a service mark of BT Alex. Brown Incorporated.
<PAGE>
2
Memorandum (as defined in Section 1 below)), (ii) repay existing debt of
Holdings and its subsidiaries, (iii) pay certain bonuses and other cash payments
to certain members of Management (as defined in the Final Memorandum), and (iv)
pay related transaction fees and expenses. As part of the Recapitalization,
certain general and limited partnership interests in Holdings will be acquired
by BMP/Graham Holdings Corporation, a Delaware Corporation ("Investor LP"), and
BCP/Graham Holdings L.L.C., a Delaware limited liability company and wholly
owned subsidiary of Investor LP ("Investor GP"), pursuant to the
Recapitalization Agreement (as defined in the Final Memorandum). Following the
consummation of the Recapitalization: (1) GPC I will be a wholly owned
subsidiary of the Operating Company, whose general partner will be GPC Opco GP,
L.L.C., a Delaware limited liability company and a wholly owned subsidiary of
Holdings ("Opco GP"); and (2) GPC II will be a wholly owned subsidiary of
Holdings, whose managing general partner will be Investor LP.
Neither the Operating Company, substantially all of whose assets (including
the equity interests in entities that are to be its subsidiaries after the
consummation of the Recapitalization) are to be acquired on the Closing Date (as
defined), nor Holdings shall be a signatory to this Agreement until the Closing
Date, on which date it is anticipated that each of them shall become a party to
this Agreement upon executing the signature pages provided for that purpose. For
all purposes of this Agreement, the term "subsidiary" when used with reference
to the Operating Company shall refer collectively to each of the entities listed
on Schedule 2 hereto assuming that the Recapitalization has been consummated.
All representations and warranties pertaining to the Operating Company, its
subsidiaries listed in Schedule 2 and Holdings made as of the date hereof shall
be deemed to have been made to the best knowledge of the Issuers and all such
representations and warranties on the Closing Date shall not be subject to such
knowledge qualification except as expressly provided in any such representations
and warranties. In connection with the representations and warranties set forth
in Sections 2(h), (i) and (q), the Issuers have advised the Initial Purchasers
that aspects of the Recapitalization other than the issue and sale of the Notes
to the Initial Purchasers may conflict with, or require consents (which are not
expected to be obtained on or before the Closing Date) under, certain Contracts
(as defined in Section 2(h)) (including, without limitation, leases that
constitute Contracts); provided that the Issuers represent to the Initial
Purchasers that any such conflicts and the failure to obtain such consents are
not, individually or in the aggregate, reasonably expected to have a Material
Adverse Effect (as defined in Section 2(c)).
Each of the Indentures (as defined below) under which the Notes (as defined
below) will be respectively issued will provide that all obligations under the
Indentures, the Notes and the Holdings Guarantee (and the notes and, as
applicable, related guarantees by Holdings, issued in the exchange offers
described in the Final Memorandum) shall be expressly non-recourse to the
partners of Holdings in their capacities as such, and that, by purchasing the
Notes, each holder of Notes waives any liability of any partner of Holdings
under the Indentures, the Notes and the Holdings Guarantee (and the notes and
related guarantees issued in such exchange offers). In addition, the obligations
of the Issuers and the Guarantor under this Agreement shall be non-recourse to
the partners of Holdings, and the partners of Holdings shall not incur any
liabilities or bear any costs or expenses in connection with this Agreement or
the issuance and sale of the Notes, including but not limited to any such costs
and expenses as
<PAGE>
3
provided in Section 6 hereof or any liabilities for indemnification or
contribution as provided in Section 9 hereof, and by purchasing the Notes, each
holder of Notes, including, without limitation, each Initial Purchaser, waives
any such obligation or liability of any partner of Holdings and waives any
requirement that any such partner bear any such costs or expenses.
1. The Securities. Subject to the terms and conditions herein contained,
the Company Issuers propose to issue and sell to the Initial Purchasers
$150,000,000 aggregate principal amount of their 8 3/4% Senior Subordinated
Notes Due 2008, Series A (the "Fixed Rate Senior Subordinated Notes"), and
$75,000,000 aggregate principal amount of their Floating Interest Rate
Subordinated Term Securities Due 2008 (the "Floating Rate Senior Subordinated
Notes" and, together with the Fixed Rate Senior Subordinated Notes, the "Senior
Subordinated Notes"), and the Holdings Issuers propose to issue and sell to the
Initial Purchasers $169,000,000 aggregate principal amount at maturity of their
10 3/4% Senior Discount Notes Due 2009, Series A (the "Senior Discount Notes,"
and together with the Senior Subordinated Notes, the "Notes"). The Senior
Subordinated Notes are unconditionally guaranteed on a senior subordinated basis
by Holdings (the "Holdings Guarantee"). The Senior Subordinated Notes are to be
issued under an indenture (the "Senior Subordinated Indenture") to be dated as
of February 2, 1998 by and among the Company Issuers, Holdings, as guarantor (in
such capacity, the "Guarantor"), and United States Trust Company of New York, as
Trustee (the "Senior Subordinated Trustee"), and the Senior Discount Notes are
to be issued under an indenture (the "Senior Discount Indenture," and together
with the Senior Subordinated Indenture, the "Indentures") to be dated as of
February 2, 1998 by and among the Holdings Issuers and The Bank of New York, as
Trustee (the "Senior Discount Trustee," and together with the Senior
Subordinated Trustee, the "Trustees").
The Notes will be offered and sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
on exemptions therefrom.
In connection with the sale of the Notes, the Issuers have prepared a
preliminary offering memorandum dated January 8, 1998 (the "Preliminary
Memorandum") and a final offering memorandum dated January 23, 1998, as
supplemented or amended (the "Final Memorandum"; the Preliminary Memorandum and
the Final Memorandum each herein being referred to as a "Memorandum") setting
forth or including, among other things, a description of the terms of the Notes,
the Holdings Guarantee, the terms of the offering of the Notes, a description of
the Issuers and a description of the Recapitalization.
The Initial Purchasers and their direct and indirect transferees of the
Senior Subordinated Notes and the Senior Discount Notes will be entitled to the
benefits of the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit A (the "Senior Subordinated Registration Rights
Agreement") and the Registration Rights Agreement substantially in the form
attached hereto as Exhibit B (the "Senior Discount Registration Rights
Agreement" and, together with the Senior Subordinated Registration Rights
Agreement, the "Registration Rights Agreements"), pursuant to which the
respective Issuers, and in the case of the Senior Subordinated Notes, the
Guarantor, have agreed, among other things, to file registration statements (the
"Registration Statements") with the Securities and Exchange
<PAGE>
4
Commission (the "Commission") registering the Senior Subordinated Notes
(including the Holdings Guarantee) and the Senior Discount Notes or the
applicable Exchange Notes (as defined in the respective Registration Rights
Agreements and including, where applicable, the related guarantee of Holdings)
under the Act.
2. Representations and Warranties. The Issuers represent and warrant to and
agree with each of the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof
contained, nor the Final Memorandum nor any amendment or supplement thereto
as of the date thereof and at the Closing Date contained or contains or
will contain any untrue statement of a material fact or omitted or will
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section
2(a) do not apply to statements or omissions made in reliance upon and in
conformity with information relating to any of the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers expressly for
use in the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) After giving effect to the Recapitalization on the Closing Date:
(i) Holdings and the Operating Company will have the authorized, issued and
outstanding capitalization set forth in the Final Memorandum; (ii) all of
the entities listed in Schedule 2 attached hereto will be subsidiaries of
the Operating Company (each, a "Subsidiary" and collectively, the
"Subsidiaries"); (iii) the only subsidiaries of Holdings will be the
Operating Company, GPC II and, indirectly through the Operating Company,
the Subsidiaries; (iv) all of the outstanding shares of capital stock of
the Issuers and Subsidiaries that are corporations will be duly authorized
and validly issued, fully paid and nonassessable and will not have been
issued in violation of any preemptive or similar rights; (v) except as
disclosed in the Final Memorandum all of the outstanding shares of capital
stock or other equity interests of the Issuers and of each of the
Subsidiaries constituting a "Significant Subsidiary" within the meaning of
the Act (each a "Significant Subsidiary") will have been free and clear of
all liens, encumbrances, equities and claims or restrictions on
transferability or voting (other than liens, encumbrances and restrictions
imposed in favor of the lenders under the New Credit Facility or permitted
thereunder and by the Act and state securities or "Blue Sky" laws of
certain jurisdictions); and (vi) except as set forth in the Final
Memorandum, there are no (A) options, warrants or other rights to purchase,
(B) agreements or other obligations to issue or (C) other rights to convert
any obligation into, or exchange any securities for, shares of capital
stock of or ownership interests in the Issuers or any of the Significant
Subsidiaries outstanding. Except for the Subsidiaries (in the case of the
Operating Company) or the Operating Company and the Subsidiaries (in the
case of Holdings) or as disclosed in the Final Memorandum, as of the
Closing Date neither Holdings nor the Operating Company will own, directly
or indirectly, any shares of capital stock or any other equity or long-term
debt securities or have any equity interest in any firm, partnership, joint
venture or other entity.
<PAGE>
5
(c) Each of GPC I and GPC II has been, and, as of the Closing Date,
each of the Issuers and the Significant Subsidiaries will have been duly
incorporated or formed, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation or formation and has
all requisite corporate or partnership power and authority to own its
properties and conduct its business as now conducted as described in the
Final Memorandum; each of GPC I and GPC II has been, and, as of the Closing
Date each of the Issuers and the Significant Subsidiaries that is a
corporation will have been duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise) or
results of operations of either (x) Holdings, the Operating Company and the
Subsidiaries taken as a whole, or (y) the Operating Company and the
Subsidiaries, taken as a whole (any such event with respect to clause (x)
or (y), a "Material Adverse Effect").
(d) Each of GPC I and GPC II has and, as of the Closing Date, each of
the Issuers will have, all requisite corporate or partnership power and
authority, as the case may be, to execute, deliver and perform each of
their applicable obligations under the Notes and, with respect to Holdings,
the Holdings Guarantee. The Notes and the Holdings Guarantee, when issued,
will be in the forms contemplated by the Indentures. The applicable Notes
have been duly authorized by GPC I and GPC II, and, on the Closing Date,
the Notes and the Holdings Guarantee will have been duly and validly
authorized by the applicable Issuers and the Guarantor and the Notes and
the Holdings Guarantee, when executed by the applicable Issuers and
authenticated by the applicable Trustees in accordance with the provisions
of the applicable Indentures and when delivered and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will constitute
valid and legally binding obligations of the applicable Issuers, entitled
to the benefits of the applicable Indentures, and enforceable against the
applicable Issuers in accordance with their respective terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
(e) GPC I and GPC II have, and on the Closing Date the Issuers will
have all requisite corporate or partnership power and authority, as the
case may be, to execute, deliver and perform their obligations under the
applicable Indentures. The Indentures meet the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the
"TIA"). The Indentures have been duly and validly authorized by GPC I and
GPC II, and on the Closing Date, will have been duly and validly authorized
by the applicable Issuers and, when executed and delivered by the
applicable Issuers (assuming the due authorization, execution and delivery
by the Trustees), will constitute valid and legally binding agreements of
the applicable Issuers, enforceable against the applicable Issuers in
accordance with their respective terms, subject to the effects of
bankruptcy,
<PAGE>
6
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(f) GPC I and GPC II have, and on the Closing Date the Issuers will
have all requisite corporate or partnership power and authority, as the
case may be, to execute, deliver and perform their applicable obligations
under the applicable Registration Rights Agreements. The Registration
Rights Agreements have been duly and validly authorized by GPC I and GPC II
and, on the Closing Date, the Registration Rights Agreements will have been
duly and validly authorized by the applicable Issuers and, when executed
and delivered by the applicable Issuers, will constitute valid and legally
binding agreements of the applicable Issuers enforceable against the
applicable Issuers in accordance with their respective terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
(g) GPC I and GPC II have, and on the Closing Date the Issuers will
have all requisite corporate or partnership power and authority, as the
case may be, to execute, deliver and perform their obligations under this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by GPC I and GPC II of the transactions
contemplated hereby have been duly and validly authorized by GPC I and GPC
II. This Agreement has been duly executed and delivered by GPC I and GPC
II. On or before the Closing Date, this Agreement and the consummation by
the Operating Company and Holdings of the transactions contemplated hereby
will have been duly authorized by or on behalf of the Operating Company and
Holdings, and this Agreement will have been duly executed and delivered by
the Operating Company and Holdings, respectively.
(h) No consent, approval, authorization or order of any court or
governmental agency or body, or third party (x) is required for GPC I or
GPC II for the issuance and sale by them of the Notes to the Initial
Purchasers or the consummation by them of the other transactions
contemplated hereby on the Closing Date or (y) will be required on the
Closing Date for the issuance by Operating Company and Holdings of the
Notes (and the Holdings Guarantee) or the consummation by the Operating
Company and Holdings of the other transactions contemplated hereby, except,
in the case of either (x) or (y) such as have been obtained and such as may
be required under state securities or "Blue Sky" laws in connection with
the purchase and resale of the Notes (and the Holdings Guarantee) by the
Initial Purchasers. Neither GPC I or GPC II is, and, on the Closing Date,
none of the Issuers or the Significant Subsidiaries will be (i) in
violation of its certificate of incorporation or bylaws (or its partnership
agreement or similar organizational document in the case of limited
partnerships), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or violation
which would not,
<PAGE>
7
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or their
respective properties or assets is subject (collectively, "Contracts"),
except for any such breach, default, violation or event which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(i) The execution, delivery and performance by the Issuers of this
Agreement, the Indentures and the Registration Rights Agreements and the
consummation by the Issuers of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the Notes
to the Initial Purchasers) will not conflict with or constitute or result
in a breach of or a default under (or an event which with notice or passage
of time or both would constitute a default under) or violation of any of
(i) the terms or provisions of any Contract, except for any such conflict,
breach, violation, default or event which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii)
the certificate of incorporation or bylaws (or partnership agreement or
similar organizational document in the case of limited partnerships) of the
Issuers or any of the Significant Subsidiaries, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 8 hereof) any statute, judgment, decree, order, rule
or regulation applicable to the Issuers or any of the Significant
Subsidiaries or any of their respective properties or assets, except for
any such conflict, breach or violation which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(j) The audited Combined Financial Statements of Graham Packaging
Group (as such term is used in the Final Memorandum) included in the Final
Memorandum present fairly in all material respects the financial position,
results of operations and cash flows of Graham Packaging Group at the dates
and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except as otherwise stated therein. The summary and
selected financial data in the Final Memorandum present fairly in all
material respects the information shown therein and have been prepared on a
basis consistent with the audited financial statements included therein,
except as otherwise stated therein. To the Issuers' knowledge, Ernst &
Young LLP (the "Independent Accountants") is an independent public
accounting firm with respect to the Issuers under Rule 101 of the American
Institute of Certified Public Accountants' Code of Professional Conduct and
its interpretations and rulings.
(k) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final
Memorandum have been prepared in accordance with the Commission's rules and
guidelines with respect to pro
<PAGE>
8
forma financial statements, and have been properly computed on the bases
described therein; the assumptions used in the preparation of the pro forma
financial data and other pro forma financial information included in the
Final Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(l) Except as set forth in the Final Memorandum, there is not pending
or, to the knowledge of the Issuers, threatened any action, suit,
proceeding, inquiry or investigation to which the Issuers or any of the
Significant Subsidiaries is a party, or to which the property or assets of
the Issuers or any of the Significant Subsidiaries are subject, before or
brought by any court, arbitrator or governmental agency or body which, if
determined adversely to the Issuers or any of the Significant Subsidiaries,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Notes to
be sold hereunder or the consummation of the Recapitalization.
(m) Except as disclosed in the Final Memorandum, GPC I and GPC II
possess, and, on the Closing Date, each of the Issuers and the Significant
Subsidiaries will possess, all licenses, permits, certificates, consents,
orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on
its respective businesses as now or proposed to be conducted as set forth
in the Final Memorandum ("Permits"), except where the failure to obtain
such Permits would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; GPC I and GPC II have fulfilled
and performed, and, on the Closing Date, each of the Issuers and the
Significant Subsidiaries will have fulfilled and performed, in all material
respects all of their respective obligations with respect to such Permits
and, to the Issuers' knowledge, as of the Recapitalization Closing Date no
event will have occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or will result in any other
material impairment of the rights of the holder of any such Permit; and
neither GPC I nor GPC II has received, and, as of the Closing Date, none of
the Issuers or the Significant Subsidiaries will have received any notice
of any proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(n) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described or contemplated therein, (i)
none of the Issuers or the Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into or agreed to enter into
any transactions or contracts (written or oral) which liabilities,
obligations, transactions or contracts would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii)
except for tax distributions
<PAGE>
9
consistent with past practice, none of the Issuers or the Subsidiaries has
purchased any of its outstanding equity interests, nor declared, paid or
otherwise made any dividend or distribution of any kind on its equity
interests (other than with respect to any of such Significant Subsidiaries,
the purchase of, or dividend or distribution on, equity interests owned by
the Issuers) and (iii) there shall not have been any change in the capital
stock or long-term indebtedness of the Issuers or the Significant
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect.
(o) Each of the Issuers and the Significant Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, and
has paid all taxes shown as due thereon, except where the failure to so
file such returns or pay such taxes would not, individually or in the
aggregate, have a Material Adverse Effect and other than tax deficiencies
which the Issuers or any Significant Subsidiary is contesting in good faith
and for which the Issuers or such Significant Subsidiary has provided
adequate reserves, there is no tax deficiency that has been asserted
against the Issuers or any of the Subsidiaries that would have,
individually or in the aggregate, a Material Adverse Effect.
(p) [Intentionally Omitted.]
(q) Each of GPC I and GPC II has, and, on the Closing Date, each of
the Issuers and the Subsidiaries will have good and marketable title to all
real property and good title to all personal property described in the
Final Memorandum as being owned by it and good and marketable title to a
leasehold estate in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Final Memorandum,
except for liens, encumbrances and restrictions in favor of the lenders
under the New Credit Facility or permitted thereunder or to the extent the
failure to have such title or the existence of such liens, charges,
encumbrances or restrictions would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, all leases, contracts and agreements to which the Issuers or any of
the Significant Subsidiaries is a party or by which any of them is bound
will be valid and enforceable against the Issuers or such Subsidiary, and,
to the knowledge of the Issuers, will be valid and enforceable against the
other party or parties thereto and will be in full force and effect with
only such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Final Memorandum, GPC I and GPC II own and possess, and, as of
the Closing Date, the Issuers and the Significant Subsidiaries will own or
possess, adequate licenses or other rights to use all material patents,
trademarks, service marks, trade names, copyrights and know-how necessary
to conduct the businesses to be operated by them as described in the Final
Memorandum, and neither GPC I or GPC II has received, and, as of the
Closing Date, none of the Issuers or the Subsidiaries will have received,
any notice of infringement of or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
which, if such assertion of infringement or conflict were sustained, would
reasonably be expected to have a Material Adverse Effect.
<PAGE>
10
(r) Except as set forth in the Final Memorandum (or any amendment or
supplement thereto), except as would not, individually or in the aggregate,
have a Material Adverse Effect to the knowledge of the Issuers and the
Significant Subsidiaries (A) each of the Issuers and the Significant
Subsidiaries is in compliance with and not subject to liability under
applicable Environmental Laws (as defined below), (B) each of the Issuers
and the Significant Subsidiaries has made all filings and provided all
notices required under any applicable Environmental Law, and has and is in
compliance with all Permits required under any applicable Environmental
Laws and each of them is in full force and effect, (C) there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter or request
for information pending or, to the knowledge of the Issuers or any of the
Significant Subsidiaries, threatened against the Issuers or any of the
Significant Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or
controlled by the Issuers or any of the Significant Subsidiaries, (E) none
of the Issuers or the Significant Subsidiaries has received notice that it
has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or any comparable state law, (F) no property or
facility of the Issuers or any of the Significant Subsidiaries is (i)
listed or proposed for listing on the National Priorities List under CERCLA
or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of the environment,
including, without limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of hazardous materials into the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of hazardous materials, and (iii) underground and above ground
storage tanks and related piping, and emissions, discharges, releases or
threatened releases therefrom.
(s) Except as set forth in the Final Memorandum (or any amendment or
supplement thereto), except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect to the knowledge
of the Issuers and the Significant Subsidiaries, there is no strike, labor
dispute or work stoppage with the employees of the Issuers or any of the
Significant Subsidiaries which is pending or, to the knowledge of the
Issuers or any of the Subsidiaries, threatened.
(t) Each of the Issuers and the Subsidiaries carries insurance in such
amounts and covering such risks as is adequate for the conduct of their
respective businesses and
<PAGE>
11
the value of their respective properties that insures against such losses
and risks as is adequate in their respective business judgments to protect
them their businesses.
(u) None of the Issuers or the Significant Subsidiaries has any
liability for any prohibited transaction or material funding deficiency or
any complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the Issuers or
any of the Significant Subsidiaries makes or ever has made a contribution
and in which any employee of the Issuers or of any Significant Subsidiary
is or has ever been a participant. With respect to such plans, the Issuers
and each Significant Subsidiary is in compliance in all material respects
with all applicable provisions of ERISA.
(v) As of the Closing Date, none of the Issuers will be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(w) The Notes, the Holdings Guarantee, the Indentures and the
Registration Rights Agreements will conform in all material respects to the
descriptions thereof in the Final Memorandum.
(x) No holder of securities of the Issuers will be entitled to have
such securities registered under the registration statements required to be
filed by the Issuers pursuant to the Registration Rights Agreements other
than as expressly permitted thereby.
(y) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of (i) Holdings, the Operating Company and the
Subsidiaries and (ii) the Operating Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of their respective stated
liabilities and identified contingent liabilities; each of (i) Holdings,
the Operating Company and the Subsidiaries and (ii) the Operating Company
and the Subsidiaries (each on a consolidated basis) is not, nor will they
be after giving effect to the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
(a) left with unreasonably small capital with which to carry on their
business as it is proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise insolvent.
(z) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 8 hereof, none of the Issuers, the
Subsidiaries or any of their respective Affiliates (as defined in Rule
501(b) of Regulation D under the Act) has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any "security" (as defined in the Act) which is or could be
integrated with the sale of the Notes in a manner that would require the
registration under the Act of the Notes or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Notes or
in any manner involving a public offering within the meaning
<PAGE>
12
of Section 4(2) of the Act. Assuming the accuracy of the representations
and warranties of the Initial Purchasers in Section 8 hereof, it is not
necessary in connection with the offer, sale and delivery of the Notes to
the Initial Purchasers in the manner contemplated by this Agreement, the
Final Memorandum and the Indentures to register any of the Notes under the
Act or to qualify either of the Indentures under the TIA.
(aa) No securities of the Issuers or any Subsidiary are of the
same class (within the meaning of Rule 144A under the Act) as the
Notes and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system.
(ab) None of the Issuers or the Subsidiaries has taken, nor will
any of them take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Notes.
(ac) None of the Issuers, the Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchasers) has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Notes; the Issuers, the
Subsidiaries and their respective Affiliates and any person acting on
its or their behalf (other than the Initial Purchasers) have complied
with the offering restrictions requirement of Regulation S.
(ad) The Issuers have delivered to the Initial Purchasers a
complete copy of the Recapitalization Agreement (as defined in the
Final Memorandum).
Any certificate signed by any officer or general partner of any Issuer and
delivered to any Initial Purchaser or to counsel for the Initial Purchasers
pursuant to the terms of this Agreement shall be deemed a representation and
warranty by that Issuer to each Initial Purchaser as to the matters covered
thereby.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the applicable Issuers
agree to issue and sell to the Initial Purchasers, and the Initial Purchasers,
acting severally and not jointly, agree to purchase the applicable Notes in the
respective amounts set forth on Schedule 1 hereto from the applicable Issuers at
97% of the principal amount of the Senior Subordinated Notes and 57.15264% of
the principal amount at maturity of the Senior Discount Notes. One or more
certificates in definitive form for each series of Notes that the Initial
Purchasers have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Issuers at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Issuers to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (same day funds) to such account or accounts as the
Issuers shall specify prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. Such delivery of and payment for
the Notes shall be made at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, NY 10017 at 10:00
<PAGE>
13
A.M., New York time, on February 2, 1998, or at such other place, time or date
as the Initial Purchasers, on the one hand, and the Issuers, on the other hand,
may agree upon, such time and date of delivery against payment being herein
referred to as the "Closing Date." The Issuers will make such certificate or
certificates for the Notes available for checking by the Initial Purchasers at
the offices of Simpson Thacher & Bartlett at least 12 hours prior to the Closing
Date.
4. Offering by the Initial Purchasers. The Initial Purchasers propose to
make an offering of the Notes at the prices and upon the terms set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Issuers. The Issuers covenant and agree with each of
the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for their reasonable
review and comment a reasonable period of time prior to the proposed
amendment or supplement.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale under
state securities or "Blue Sky" laws of which jurisdictions as the Initial
Purchasers may designate and will continue such qualifications in effect
for as long as may be necessary to complete the resale of the Notes;
provided, however, that in connection therewith, the Issuers shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by the
Initial Purchasers of the Notes, any event occurs or information becomes
known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if for any other reason it is reasonably necessary at any time to amend or
supplement the Final Memorandum to comply with applicable law or
facilitates the resale of Notes by the Initial Purchasers, the Issuers will
promptly notify the Initial Purchasers thereof and will prepare, at the
expense of the Issuers, an amendment or supplement to the Final Memorandum
that corrects such statement or omission or effects such compliance or
facilitates such resales.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Final Memorandum or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
<PAGE>
14
(e) The Issuers will apply the net proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the Issuers
will furnish to the Initial Purchasers copies of all reports and other
communications (financial or otherwise) furnished by the Issuers to the
Trustees or to the holders of the Notes.
(g) Prior to the Closing Date, the Issuers will furnish to the Initial
Purchasers, as soon as they have been prepared, a copy of any unaudited
interim financial statements of Graham Packaging Group for any period
subsequent to the period covered by the most recent financial statements
appearing in the Final Memorandum.
(h) None of the Issuers or any of their Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale
of the Notes in a manner which would require the registration under the Act
of the Notes.
(i) Except in connection with the Exchange Offers (as defined in the
Registration Rights Agreements) or the Shelf Registration Statements (as
defined in the Registration Rights Agreements), the Issuers will not, and
will not permit any of the Subsidiaries to, engage in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) in connection with the offering of the Notes or in any
manner involving a public offering within the meaning of Section 4(2) of
the Act.
(j) For so long as any of the Notes remain outstanding, the Issuers
will make available at their expense, upon request, to any holder of such
Notes and any prospective purchasers thereof the information specified in
Rule 144A(d)(4) under the Act, unless the Issuers are then subject to
Section 13 or 15(d) of the Exchange Act.
(k) The Issuers will use their reasonable best efforts to (i) permit
the Notes to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers,
Inc. (the "NASD)" relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages market (the "Portal Market") and (ii)
permit the Notes to be eligible for clearance and settlement through The
Depository Trust Company.
(l) In connection with Notes offered and sold in an offshore
transaction (as defined in Regulation S) the Issuers will not register any
transfer of such Notes not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of definitive
securities.
6. Expenses. The Issuers agree to pay all costs and expenses incident to
the performance of their obligations under this Agreement, whether or not the
transactions
<PAGE>
15
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memorandum, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Issuers, (iv) preparation, issuance and delivery to
the Initial Purchasers of the Notes, (v) the qualification of the Notes under
state securities and "Blue Sky" laws, including filing fees and fees and
disbursements not to exceed $1,000 of counsel for the Initial Purchasers
relating thereto, (vi) expenses of the Issuers in connection with any meetings
with prospective investors in the Notes and the expenses relating to chartering
of the plane utilized during the roadshow, (vii) fees and expenses of the
Trustees including fees and expenses of counsel to the Trustees, (viii) all
expenses and listing fees incurred in connection with the application for
quotation of the Notes on the PORTAL Market and (ix) any fees charged by
investment rating agencies for the rating of the Notes. If this Agreement is
terminated because (i) of any failure, refusal or inability on the part of the
Issuers to perform their obligations and satisfy all conditions in Section 7
hereof on their part to be performed or satisfied hereunder (other than solely
by reason of a default by the Initial Purchasers of their obligations
hereunder), (ii) another material default by the Issuers under this Agreement,
or (iii) the occurrence and continuance of an event specified in Section
11(a)(i) or 11(a)(vi) hereof, the Issuers agree to promptly reimburse the
Initial Purchasers upon demand for all out-of-pocket expenses (including fees,
disbursements and charges of Cahill Gordon & Reindel, counsel for the Initial
Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Notes, and if this
Agreement is terminated for any other reason, the Issuers shall have no
liability for any such expenses of the Initial Purchasers.
7. Conditions of the Initial Purchasers' Obligations. The obligation of the
Initial Purchasers to purchase and pay for the Notes shall be subject to the
satisfaction in all material respects or waiver of the following conditions on
or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinions, dated as of the Closing Date and addressed to the Initial
Purchasers, of each of Simpson Thacher & Bartlett and Morgan, Lewis &
Bockius LLP, counsel for the Issuers, in form and substance satisfactory to
counsel for the Initial Purchasers, to the effect set forth in Exhibit A
and Exhibit B, respectively.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers,
dated as of the Closing Date and addressed to the Initial Purchasers, of
Cahill Gordon & Reindel, counsel for the Initial Purchasers, with respect
to certain legal matters relating to this Agreement and such other related
matters as the Initial Purchasers may reasonably require. In rendering such
opinion, Cahill Gordon & Reindel shall have received and may rely upon such
certificates and other documents and information as it may reasonably
request to pass upon such matters.
<PAGE>
16
(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the
Closing Date, in form and substance satisfactory to counsel for the Initial
Purchasers.
(d) The representations and warranties of the Issuers contained in
this Agreement shall be true and correct in all material respects on and as
of the date hereof and on and as of the Closing Date as if made on and as
of the Closing Date; the statements of the Issuers' respective officers
made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct in all material respects on and
as of the date made and on and as of the Closing Date; the Issuers shall
have performed all covenants and agreements and satisfied all conditions on
their part to be performed or satisfied hereunder in all material respects
at or prior to the Closing Date; and, except as described in the Final
Memorandum (exclusive of any amendment or supplement thereto after the date
hereof), subsequent to the date of the most recent financial statements in
such Final Memorandum, there shall have been no event or development, and
no information shall have become known, that, individually or in the
aggregate, has had or would be reasonably likely to have a Material Adverse
Effect.
(e) The sale of the Notes hereunder shall not be enjoined (temporarily
or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), none of the Issuers or any of the Subsidiaries
shall have sustained any loss or interference with respect to its business
or properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute or
work stoppage or from any legal or governmental proceeding, order or
decree, which loss or interference, individually or in the aggregate, has
or would be reasonably likely to have a Material Adverse Effect.
(g) The Initial Purchasers shall have received a certificate of each
of the Issuers, dated the Closing Date, signed on behalf of each of the
Issuers by its, or its general partner's, Chairman of the Board, President
or any Vice President and by the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer, to the effect that:
(i) The representations and warranties of the Issuers contained
in this Agreement are true and correct in all material respects on and
as of the date hereof and on and as of the Closing Date, and the
Issuers have performed all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder in all
material respects at or prior to the Closing Date; and
(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development
<PAGE>
17
has occurred, and no information has become known, that, individually
or in the aggregate, has or would be reasonably likely to have a
Material Adverse Effect.
(h) On the Closing Date, the Registration Rights Agreements shall have
been executed and delivered by the Issuers.
(i) In connection with the Recapitalization, (i) the Operating Company
and Holdings (to the extent signatories thereto) shall have executed and
delivered this Agreement, (ii) the Operating Company and Holdings shall
have entered into the New Credit Facility (as defined in the Final
Memorandum) and (iii) the Recapitalization shall have been consummated
contemporaneously with the purchase of the Notes hereunder.
On or before the Closing Date, the Initial Purchasers and counsel for the
Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Issuers and the Subsidiaries as
they shall have heretofore reasonably requested from the Issuers.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Issuers shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. (a) Each of the Initial
Purchasers represents and warrants (as to itself only) that it is a QIB. Each of
the Initial Purchasers agrees with the Issuers (as to itself only) that (i) it
has not and will not solicit offers for, or offer or sell, the Notes by any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (ii) it has solicited and will
solicit offers for the Notes only from, and will offer the Notes only to (A) in
the case of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Notes such
persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum (or, if the Final
Memorandum is not in existence, in the most recent Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to
itself only) with respect to offers and sales outside the United States
that (i) it has complied and will
<PAGE>
18
comply with all applicable laws and regulations in each jurisdiction in
which it acquires, offers, sells or delivers Notes or has in its possession
or distributes any Memorandum or any such other material, in all cases at
its own expense; (ii) the Notes have not been and will not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S under the Act or pursuant to
Rule 144A; (iii) it has offered the Notes and will offer and sell the Notes
(A) as part of its distribution at any time and (B) otherwise until 40 days
after the later of the commencement of the offering and the Closing Date,
only in accordance with Rule 903 of Regulation S and, accordingly, neither
it nor any persons acting on its behalf have engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with respect
to the Notes, and any such persons have complied and will comply with the
offering restrictions requirement of Regulation S; and (iv) it agrees that,
at or prior to confirmation of sales of the Notes, it will have sent to
each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of the distribution of
the Securities at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering and the closing date of the
offering, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above
have the meaning given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement have the
meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) The Issuers agree to indemnify and
hold harmless the Initial Purchasers, and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to which
any Initial Purchaser or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in (A) any Memorandum or any amendment or supplement thereto
or (B) any application or other document, or any amendment or supplement
thereto, executed by the Issuers or based upon written information
furnished by or on behalf of the Issuers filed in any jurisdiction in order
to qualify the Notes under state securities or "Blue Sky" laws thereof or
filed with any securities association or securities exchange (each an
"Application"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
necessary to make
<PAGE>
19
the statements therein in light of the circumstances under which they were
made, not misleading, or required to be stated in any Application,
and, subject to the limitations set forth in the proviso to this sentence, will
reimburse, as incurred, the Initial Purchasers and each such controlling person
for any reasonable legal or other expenses incurred by the Initial Purchasers or
such controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, the Issuers will not be liable
in any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in any Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information concerning the Initial Purchasers furnished to the Issuers
by the Initial Purchasers specifically for use therein; provided further, that
as to any Preliminary Memorandum, this indemnity agreement shall not inure to
the benefit of any Initial Purchaser or any person controlling any Initial
Purchaser on account of any loss, claim, damage, liability or action arising
from any sale of Notes to any person by that Initial Purchaser if that Initial
Purchaser failed to send or give a copy of the Final Memorandum (or the Final
Memorandum as amended or supplemented) to such person at or prior to the written
confirmation of sale to such person and if the untrue statement or omission was
corrected in the Final Memorandum (as amended or supplemented) giving rise to
such loss, claim, damage, liability or action, unless such failure resulted from
non-compliance by the Issuers with Section 5(d); provided further, that (i) no
Company Issuer shall be liable pursuant to this Section 9(a) on account of any
loss, claim, damage, liability or action arising from any sale of Senior
Discount Notes to any person by any Initial Purchaser and (ii) GPC II shall not
be liable pursuant to this Section 9(a) on account of any loss, claim, damage,
liability or action arising from any sale of Senior Subordinated Notes or the
Holdings Guarantee to any person by any Initial Purchaser; and provided further,
that no partner of Holdings in such partner's capacity as such shall be liable
for indemnification or contribution pursuant to this Section 9 on account of any
loss, claim, damage, liability or action arising from any sale of Notes to any
person, and by purchasing the Notes, each holder of Notes (including, without
limitation, each Initial Purchaser) waives any such liability of any partner of
Holdings. This indemnity agreement will be in addition to any liability that the
Issuers may otherwise have to the indemnified parties. The Issuers shall not be
liable under this Section 9 for any settlement of any claim or action effected
without its prior written consent, which shall not be unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Issuers, their partners, their directors (or the equivalent thereof) , their
officers and each person, if any, who controls the Issuers within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Issuers or any such partner,
director (or equivalent thereof), officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement thereto
or any Application, or (ii) the omission or the alleged omission to state
therein a material fact necessary to make the statements therein, in light of
the circumstances
<PAGE>
20
under which they were made, not misleading or required to be stated in any
Application, 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 reliance upon and in conformity with written information concerning such
Initial Purchaser, furnished to the Issuers by the Initial Purchasers
specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any reasonable
legal or other expenses incurred by the Issuers or any such director, officer or
controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will be
in addition to any liability that the Initial Purchasers may otherwise have to
the indemnified parties. The Initial Purchasers shall not be liable under this
Section 9 for any settlement of any claim or action effected without their
consent, which shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of the commencement of any action for which such indemnified party is
entitled to indemnification under this Section 9, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 9, notify the indemnifying party of the commencement thereof in
writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in substantial prejudice to the indemnifying party
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party,
or (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 9 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that in connection with such
action the indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action or
separate but substantially similar
<PAGE>
21
actions in the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchasers in the case of paragraph (a)
of this Section 9 or the Issuers in the case of paragraph (b) of this Section 9,
representing the indemnified parties under such paragraph (a) or paragraph (b),
as the case may be, who are parties to such action or actions) or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld), unless
such indemnified party waived in writing its rights under this Section 9, in
which case the indemnified party may effect such a settlement without such
consent. The indemnifying party shall not, without the prior written consent of
each indemnified party, effect any settlement or compromise of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party, or indemnity could have been sought hereunder by any indemnified
party, unless such settlement (A) includes an unconditional written release of
each indemnified party, in form and substance reasonably satisfactory to each
indemnified party, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any indemnified party.
(d) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (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 on the other from the
offering of the Notes 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 on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Issuers on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Issuers bear to the total discounts
and commissions received by such Initial Purchaser. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuers
on the one hand, or such Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Issuers and the
Initial Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding
<PAGE>
22
any other provision of this paragraph (d), no Initial Purchaser shall be
obligated to make contributions hereunder that in the aggregate exceed the total
discounts, commissions and other compensation received by such Initial Purchaser
under this Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a material
fact, and no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls an Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Initial Purchasers, and each director (or
the equivalent thereof) of an Issuer, each partner of an Issuer, each officer of
an Issuer and each person, if any, who controls an Issuer within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Issuers.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, its
officers and the Initial Purchasers set forth in this Agreement or made by or on
behalf of them pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Issuers, any of
their officers, directors or general partners, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 (to the extent set forth in said
Section 6), 9 and 15 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Issuers given prior to the
Closing Date in the event that the Issuers shall have failed, refused or been
unable to perform their obligations and satisfy all conditions on their part to
be performed or satisfied hereunder at or prior thereto or, if after the date of
this Agreement and at or prior to the Closing Date:
(i) any of the Issuers or the Subsidiaries shall have sustained any
loss or interference with respect to its businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute or work stoppage or any
legal or governmental proceeding, which loss or interference has had or has
a Material Adverse Effect, or there shall have been any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Issuers or the Subsidiaries), except
in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the NASDAQ National Market shall have been
suspended and continuing such that, in the sole judgment of the Initial
Purchasers, it is impracticable or inadvisable to proceed with any of the
offerings or the delivery of the Notes as contemplated by the Final
Memorandum;
<PAGE>
23
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national emergency which, in the
case of (A) or (B) above and in the sole judgment of the Initial
Purchasers, makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Notes as contemplated by the Final
Memorandum;
(v) there shall have occurred any material disruption of or material
adverse change in the financial, banking or capital markets of the United
States that, in the reasonable judgment of the Initial Purchasers, has
impaired or would be reasonably likely to impair the offering or delivery
of the Notes as contemplated by the Final Memorandum; or
(vi) any securities of the Issuers shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.Termination of this Agreement
pursuant to this Section 11(a) shall be without liability of any party to
any other party except as provided in Section 10 hereof.
(b) If any Initial Purchaser shall fail on the Closing Date to purchase the
Notes that it is obligated to purchase under this Agreement (the "Defaulted
Notes"), the Initial Purchasers shall have the right, within 24 hours
thereafter, to make arrangements for the non-defaulting Initial Purchasers, or
any other QIB, to purchase all, but not less than all, of the Defaulted Notes in
such amounts as may be agreed upon and upon the terms herein set forth. If
within 24 hours after such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of the Defaulted Notes, then
the Issuers shall be entitled to a further period of 36 hours within which to
procure another party or parties satisfactory to the non-defaulting Initial
Purchasers to purchase such Defaulted Notes upon such terms herein set forth.
If, however, the Initial Purchasers shall not have completed such arrangements
within 24 hours after the default or the Issuers have not completed such
arrangements within 60 hours after such default, then:
(i) if the principal amount of Defaulted Notes does not exceed 10% of
the aggregate principal amount of Notes to be purchased on such date, each
of the non-defaulting Initial Purchasers shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions that
their respective obligations hereunder bear to the obligations of all
non-defaulting Initial Purchasers, or
(ii) if the principal amount of Defaulted Notes exceeds 10% of the
aggregate principal amount of Notes to be purchased on such date, or if the
Issuers shall not exercise the right described in subsection (b) above to
require the non-defaulting Initial Purchasers to purchase the Notes of a
defaulting Initial Purchaser, this Agreement shall terminate without
liability on the part of any non-defaulting Initial Purchaser or the
Issuers, except as provided in Section 10.No action pursuant to this
Section 11(b) shall
<PAGE>
24
relieve any defaulting Initial Purchaser from liability in respect of its
default. In the event of any such default that does not result in a
termination of this Agreement, either the Initial Purchasers or the Issuers
shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Final
Memorandum or in any other document or arrangement regarding such events
and arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section 11(b).
12. Information Supplied by the Initial Purchasers. The statements set
forth in the last paragraph on the front cover page, the last paragraph of page
ii, in the second and third sentences of the third paragraph and the sixth and
seventh paragraphs under the heading "Private Placement" in the Final Memorandum
(to the extent such statements relate to the Initial Purchasers) constitute the
only information furnished by the Initial Purchasers to the Issuers for the
purposes of Sections 2(a) and 9 hereof.
13. 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, including courier
service, or facsimile:
(i) if to the Initial Purchasers, at the address as follows:
c/o BT Alex. Brown Incorporated
130 Liberty Street
New York, New York 10006
Attention: Corporate Finance Department
Facsimile No.: (212) 250-7200
(ii) if to the Issuers, at the address as follows:
c/o Graham Packaging Holdings Company
1110 East Princess Street
York, Pennsylvania 17403
Attention: John E. Hamilton, V.P.,
Finance & Administration
Telephone No.: (717) 849-8521
Facsimile No.: (717) 849-8541
with copies to:
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson, Senior
Managing Director
<PAGE>
25
Telephone No.: (212) 836-9844
Facsimile No.: (212) 754-8703
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson S. Neely, Esq.
Telephone No.: (212) 455-7063
Facsimile No.: (212) 455-2502
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; and one business day after
being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be binding
upon the Initial Purchasers, the Issuers and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Issuers contained in Section 9 of this Agreement shall also be for the benefit
of any person or persons who control the Initial Purchasers within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchasers contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Issuers, its officers and
any person or persons who control the Issuers within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of Notes from the
Initial Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND
THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among such of the Issuers as
shall have executed and delivered this Agreement and the Initial Purchasers.
<PAGE>
26
Very truly yours,
GPC CAPITAL CORP. I
By: /s/ John E. Hamilton
------------------------------
Name: John E. Hamilton
Title: Vice President,
Secretary and
Assistant Treasurer
GPC CAPITAL CORP. II
By: /s/ John E. Hamilton
-----------------------------
Name: John E. Hamilton
Title: Vice President,
Secretary and
Assistant Treasurer
<PAGE>
27
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED
By: /s/ Julie Persily
-------------------------------------------
Name: Julie Persily
Title: Principal
BANKERS TRUST INTERNATIONAL PLC
By: /s/ Mark H. Radin
-------------------------------------------
Name: Mark H. Radin
Title: Vice President
LAZARD FRERES & CO. LLC
By: /s/ Donald A. Wagner
-------------------------------------------
Name: Donald A. Wagner
Title: Managing Director
SALOMON BROTHERS INC
By: /s/ Michael Del Giudice
------------------------------------------
Name: Michael Del Giudice
Title: Director
<PAGE>
1
<TABLE>
<CAPTION>
SCHEDULE 1
Aggregate Aggregate
Principal Amount Principal Amount Aggregate
of Fixed Rate of Floating Rate Principal Amount
Senior Senior at Maturity of
Subordinated Subordinated Senior Discount
Initial Purchasers Notes Notes Notes
------------------ ------------ ----------------- ---------------
- ----------------------------- ------------ ----------------- ---------------
<S> <C> <C> <C>
BT Alex. Brown .............. $109,500,000 $ 56,250,000 $120,250,000
Incorporated
Bankers Trust ............... 3,000,000 0 6,500,000
International PLC
Lazard Freres & Co. ......... 15,000,000 7,500,000 16,900,000
LLC
Salomon Brothers Inc. ....... 22,500,000 11,250,000 25,350,000
========== ============ ============
Total ..................... $150,000,000 $ 75,000,000 $169,000,000
</TABLE>
<PAGE>
SCHEDULE 2
<TABLE>
<CAPTION>
Subsidiaries
Jurisdiction and Type of
Name Formation
- ---- ------------------------
<S> <C>
GPC Capital Corp. I Delaware corporation
GPC Sub GP LLC Delaware limited liability
company
Graham Packaging Canada Limited Canadian Ltda.
Graham Packaging France Partners Pennsylvania general
partnership
Graham Packaging France Holdings S.A. French S.A.
Graham Packaging France, S.A. French S.A.
Graham Packaging Italy, S.r.L Italian S.r.L.
S.I.P. Srl Italian S.r.L.
LIDO Plast-Graham Argentine S.r.L.
Graham Packaging Poland, L.P. Pennsylvania limited
partnership
Masko Graham Polish Ltda.
Graham Recycling Company Pennsylvania limited
partnership
Graham Packaging Latin America, LLC Delaware limited liability
company
Graham Brasil Participacoes Brazilian Ltda.
Graham Packaging do Brasil Brazilian S.A.
</TABLE>
Note: Certain foreign subsidiaries' statutory shares are not included in the
Table above.
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among such of the Issuers as
shall have executed this Agreement on February 2, 1998 and the Initial
Purchasers.
Very truly yours,
GRAHAM PACKAGING COMPANY
By: GPC Opco GP, LLC,
its general partner
By: /s/ John E. Hamilton
----------------------------
Name: John E. Hamilton
Title: Vice President, Finance and
Administration, Treasurer
and Secretary
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings LLC,
its general partner
By: /s/ Frank Nico
---------------------------
Name: Frank Nico
Title: Assistant Treasurer and
Assistant Secretrary
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF GRAHAM PACKAGING COMPANY
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") of Graham Packaging Company (formerly known as Graham Packaging
Holdings I, L.P., the "Partnership") is made and entered into as of February 2,
1998 by and between GPC Opco GP LLC, a Delaware limited liability Company with
its offices at 1110 E. Princess Street, York Pennsylvania 17403 ("Opco GP"), as
general partner, and Graham Packaging Holdings Company, a Pennsylvania limited
partnership with its offices at 1110 E. Princess Street, York, Pennsylvania
17403 (formerly known as Graham Packaging Company, "GPHC"), as limited partner
(Opco GP and GPHC shall be collectively referred to herein as "Partners" and
individually as a "Partner").
W I T N E S S E T H :
WHEREAS, the Partnership was originally formed under the name Graham
Packaging Holdings I, L.P. under the provisions of the Delaware Revised Uniform
Limited Partnership Act (as amended, the "Act"), with Graham Recycling
Corporation, a Pennsylvania corporation with its offices at 1420 6th Avenue,
York, Pennsylvania 17405-1104 ("Recycling"), as general partner, and GPHC, as
limited partner; and
WHEREAS, pursuant to the terms of an Agreement and Plan of
Recapitalization, Redemption and Purchase dated as of December 18, 1997 (the
"Recapitalization Agreement") by and among GPHC, Graham Capital Corporation, a
Pennsylvania corporation, Graham Family Growth Partnership, a Pennsylvania
limited partnership, Graham Packaging Corporation, a Pennsylvania corporation,
Graham Engineering Corporation, a Pennsylvania corporation, Recycling, Donald C.
Graham, BCP/Graham Holdings L.L.C., a Delaware limited liability company, and
BMP/Graham Holdings Corporation, a Delaware corporation, on the date hereof,
Recycling has assigned to Opco GP all of its general partnership interest in the
Partnership;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree that the Agreement of Limited
Partnership of the Partnership is hereby amended and restated in its entirety by
this Amended and Restated Agreement of Limited Partnership and, as so amended
and restated hereby, shall read in its entirety as follows:
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ARTICLE I
THE PARTNERSHIP
Section 1.1 Glossary. Certain terms used herein are defined in the Glossary
attached hereto as Exhibit A, which is incorporated herein and made a part
hereof.
Section 1.2 Organization. Recycling, by the filing on September 21, 1994 of
the Certificate, formed the Partnership as a limited partnership pursuant to the
Delaware Revised Uniform Limited Partnership Act (as amended, the "Act") for the
purposes and upon the terms and conditions set forth herein. On the date hereof,
Recycling has withdrawn from the Partnership as a general partner, and Opco GP
has become the general partner of the Partnership. Except as otherwise provided
herein, the relative rights and obligations of the Partners shall be as provided
in the Act.
Section 1.3 Name. The name of the Partnership has been Graham Packaging
Holdings I, L.P. and, from and after the date hereof, shall be Graham Packaging
Company. All business of the Partnership shall be conducted in such name and/or
such other assumed, trade, or fictitious names as the General Partner shall from
time to time determine.
Section 1.4 Place of Business. The initial principal office of the
Partnership shall be located c/o The Corporation Trust Company, 1209 Orange
Street, Wilmington, Delaware 19801. The Partnership may also maintain such
additional offices as the General Partner may from time to time determine.
Section 1.5 Purpose. The purpose of the Partnership shall be the sale and
manufacturing of rigid plastic containers and any business necessary or
incidental to the foregoing. For such purposes, the Partnership shall have and
exercise all the powers now or hereafter conferred by the laws of the State of
Delaware on limited partnerships formed under the laws of that State, and to do
any and all things as fully as natural persons might or could do as are not
prohibited by law, in furtherance of the aforesaid purpose of the Partnership.
The business of the Partnership shall be conducted in compliance with, and any
action required or permitted to be taken by the General Partner or any Limited
Partner shall be taken in accordance with, all applicable laws, rules and
regulations. Such business may be conducted directly by the Partnership or
thorough such subsidiary corporations, partnerships or other entities as the
General Partner deems advisable.
Section 1.6 Term. The Partnership commenced its existence upon the filing
of a Certificate of Limited Partnership with respect thereto (the "Certificate")
with the Secretary of State of the State of Delaware and shall dissolve at 11:59
p.m. on December 31, 2044 unless sooner dissolved pursuant to law or this
Agreement.
Section 1.7 Powers of the Partnership. The Partnership shall have and may
exercise all powers now or
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hereafter permitted by the State of Delaware to be exercised by a limited
partnership formed under the laws of that state, and to do any and all things
not prohibited by law in furtherance of the business of the Partnership as fully
as natural persons might or could do.
Section 1.8 Fiscal Year. The fiscal year ("Fiscal Year") of the Partnership
shall be the calendar year.
Section 1.9 Partnership Assets.
(a) The Partners shall use the Partnership's credit and assets solely for
the benefit of the Partnership. All real and personal property owned by the
Partnership shall be owned by the Partnership as an Entity. Each Partner's
interest in the Partnership shall be personal property for all purposes.
(b) No Partner shall, either directly or indirectly, take any action to
require partition or appraisement of the Partnership or of any of its assets or
properties or cause the sale of any Partnership property for other than a
Partnership purpose, and notwithstanding any provision of applicable law to the
contrary, each Partner (and its legal representatives, successors and assigns)
hereby irrevocably waives any and all right to maintain any action for partition
or to compel any sale with respect to its Partnership Interest or with respect
to any assets or properties of the Partnership, except as expressly provided in
this Agreement.
Section 1.10 Limitation on Liability of Partners. Except as otherwise
required by the Act or applicable law or as expressly agreed in writing, neither
the Limited Partner nor any director, officer, shareholder, partner, employee or
agent of any Partner shall be personally liable for the payment of any sums
owing by such Partner to the Partnership or any other Partner under the terms of
this Agreement or for the performance of any other covenant or agreement of such
Partner contained herein.
Section 1.11 Conflicts of Interest and Transactions with Affiliates.
(a) Any Partner and any Affiliate of any Partner may engage in or possess
an interest in any business or activity whatsoever, whether presently existing
or hereafter created, without any accountability to the Partnership or any
Partner.
(b) The Partnership may enter into any arrangement, contract, agreement or
business venture that is not prohibited under the Act with any Partner or any
Partner's Affiliates. Each Partner understands and acknowledges that the conduct
of the business of the Partnership will involve business dealings with such
other business ventures or undertakings of the Partners and their Affiliates. It
is expressly understood and agreed that the Partnership, at the discretion of
the General Partner, may borrow funds from any Partner or its Affiliates;
provided, however, that any material transaction of the Partnership with any
Partner or Affiliate of a Partner shall be on terms reasonably determined by
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the General Partner to be comparable to the terms which could be obtained from
third parties.
Section 1.12 Statutory Compliance. The General Partner has executed an
Amended and Restated Certificate of Limited Partnership of the Partnership (the
"Amended Certificate") and caused it to be filed in the office of the Secretary
of State of the State of Delaware pursuant to 17 Del. Laws ss.17-204 and
ss.17-206 and hereafter shall execute such further documents and take such
further action as shall be appropriate to comply with the Act and all other all
requirements of law for the formation and operation of a limited partnership in
the State of Delaware and all other jurisdictions in which the Partnership may
elect to do business.
Section 1.13 Power of Attorney. The Limited Partner hereby irrevocably
constitutes and appoints the General Partner and its authorized agents and
officers with full power of substitution as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead,
to:
(a) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices: (i) all certificates and other instruments and all
amendments or restatements thereof which the General Partner deems appropriate
or necessary to qualify, or continue the qualification of, the Partnership as a
limited partnership in all jurisdictions in which the Partnership may conduct
business or own property; (ii) all instruments, including any amendment or
restatement of this Agreement, which the General Partner deems appropriate or
necessary to reflect any amendment, change or modification of this Agreement
made in accordance with this Agreement; (iii) all conveyances and other
instruments or documents which the General Partner deems appropriate or
necessary to reflect the dissolution, merger or liquidation of the Partnership
pursuant to the terms of this Agreement; and (iv) all instruments relating to
the admission or substitution of any Partner pursuant to this Agreement; and
(b) sign, execute, swear to and acknowledge all ballots, consents,
approvals, waivers, certificates and other instruments which the General Partner
deems appropriate or necessary to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action which is made or given by the
Partners hereunder, is deemed to be made or given by the Partners hereunder, or
is consistent with the terms of this Agreement and/or appropriate or necessary,
in the sole discretion of the General Partner, to effectuate the terms or intent
of this Agreement.
ARTICLE II
CAPITAL AND INITIAL PARTNERSHIP INTERESTS
Section 2.1 Capitalization. All Capital Contributions to the Partnership
shall be made in cash or in such other form (including, in lieu of cash,
property, services, notes, other evidences of indebtedness or obligations) as
the General Partner
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may determine to be appropriate and shall be made 1% by the General Partner and
99% by the Limited Partner. The initial Capital Contribution of the Partners was
$100.00 in cash. Any future non-cash contribution to the capital of the
Partnership shall be valued at its fair market value as determined in the
reasonable judgment of the General Partner.
Section 2.2 Capital Contributions Generally. Except as otherwise expressly
provided herein or to the extent that a Partner agrees to make a Capital
Contribution to, or to purchase interests from, the Partnership: (a) no Partner
shall be required to contribute any capital to the Partnership; (b) no Partner
may withdraw any of its capital from the Partnership; (c) no Partner shall be
required to make any loan to the Partnership; (d) loans by a Partner to the
Partnership shall not be considered a contribution of capital, shall not
increase the Capital Account of the lending Partner or its ownership interest of
the Partnership and the repayment of such loans by the Partnership shall not
decrease, or result in any adjustment to, the Capital Account of the Partner
making the loans; (e) no interest shall be paid on any capital contributed to
the Partnership by any Partner; (f) under any circumstances requiring a return
of all or any portion of a Capital Contribution, no Partner shall have the right
to receive property other than cash; and (g) no Partner shall be required at any
time to restore any deficit in its Capital Account.
ARTICLE III
CAPITAL ACCOUNTS
Section 3.1 Establishment and Maintenance of Capital Accounts. A capital
account ("Capital Account") shall be established for each Partner in the amount
of such Partner's initial Capital Contribution to the Partnership. Each
Partner's Capital Account shall be determined and maintained in accordance with
the rules of Treas. Reg. ss.1.704-l(b)(2)(iv). Pursuant to those rules, a
Partner's Capital Account shall be increased by:
(a) the amount of any money contributed by such Partner to the Partnership;
(b) the fair market value, on the date of contribution, of property (other
than money) contributed by such Partner to the Partnership (net of liabilities
secured by such contributed property that the Partnership either assumes or to
which it takes subject); and
(c) allocations of Partnership income and gain (or items thereof),
including income and gain exempt from tax;
and shall be decreased by:
(d) the amount of money distributed to such Partner by the Partnership
(except as payments of principal and interest on any loans);
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(e) except as provided in Section 3.2 below, the fair market value of
property (other than money) distributed to such Partner by the Partnership (net
of liabilities secured by such distributed property that the Partner assumes or
subject to which it takes the property);
(f) such Partner's allocable share of expenditures of the Partnership not
deductible in computing its taxable income and not properly capitalized for
federal income tax purposes; and
(g) allocations of Partnership loss and deduction (or items thereof), but
excluding items described in (f) above.
Section 3.2 Distribution Upon Liquidation in Accordance with Capital
Account. Upon liquidation of the Partnership, liquidating distributions shall in
all cases be made in accordance with the positive Capital Account balances of
the Partners, as determined after taking into account all Capital Account
adjustments for the Partnership's taxable year during which such liquidation
occurs (other than those made pursuant to this Section), by the end of such
taxable year or, if later, within ninety (90) days after the date of such
liquidation, except as permitted by Treas. Reg. ss.1.704-l(b)(2)(ii)(b).
Section 3.3 Succession to Capital Accounts. In the event any Partnership
Interest in the Partnership is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Partnership Interest. For purposes
of the preceding sentence, the portion of the Capital Account to which the
transferee succeeds shall be that percentage of the transferor's total Capital
Account as the Partnership Interest being transferred bears to the total
Partnership Interest of the transferor.
ARTICLE IV
DISTRIBUTIONS
Section 4.1 Distributions Prior to Dissolution.
(a) From time to time the General Partner may make such distributions as it
in its sole discretion may determine are appropriate, without being limited to
current or accumulated income or gains. Such distributions may be made from
Partnership revenues, borrowings or Capital Contributions. The General Partner
may in its sole discretion distribute to Partners Partnership property other
than cash.
(b) Except as provided in Section 3.2 above, all distributions shall be
made to the Partners in the following priorities and proportions: 99% to the
Limited Partner and 1% to the General Partner.
Section 4.2 In-Kind Distributions. If, at the dis- cretion of the General
Partner, any assets of the Partnership are distributed to the Partners in kind,
such assets shall be valued
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on the basis of the fair market value thereof as determined by the General
Partner in its reasonable discretion on the date of distribution. Without
limiting the General Partner's discretion to make such a valuation or requiring
that any such appraisal be made, the valuation of any asset by the General
Partner on the basis of the determination of its fair market value by an
independent appraiser shall be deemed to be a reasonable value for such asset
and a reasonable exercise of such discretion.
ARTICLE V
ALLOCATIONS
(a) All Gross Income and Gross Deductions for each taxable year shall,
first, be allocated among the Partners to the extent necessary to eliminate any
negative Economic Capital Accounts, and, second, to the maximum extent possible,
be allocated among the Partners so that, if liquidating distributions were to be
made to the Partners under Section 3.2 above in accordance with the positive
balances in the Partners' then respective Economic Capital Accounts (rather than
their Capital Accounts), such liquidating distributions would be made in the
following manner: 99% to the Limited Partner and 1% to the General Partner.
(b) Any federal, state or local income tax credits available to the
Partnership shall be allocated among the Partners in accordance with Treas. Reg.
ss.1.704-l(b)(4)(ii).
(c) Notwithstanding anything to the contrary in this Section 5, the
following special allocations shall be made in the following order:
(i) If there is a net decrease in Minimum Gain during a taxable year,
then the Partners shall be allocated items of gross income and gain for
such year (and, if necessary, subsequent years) in the amount and in the
proportions necessary to satisfy the requirements of a "minimum gain
chargeback" under Treas. Reg. ss.1.704-2(f).
(ii) If there is a net decrease in Partner Minimum Gain attributable
to a partner Nonrecourse Debt during a taxable year, then any Partner with
a share of the Partner Minimum Gain attributable to such debt at the
beginning of such year shall be allocated items of income and gain for such
year (and, if necessary, subsequent years) in the amount and proportions
necessary to satisfy the provision of Treas. Reg. ss.1.704-2(i)(4).
(iii) Any Partner who unexpectedly receives an adjustment, allocation
or distribution described in clauses (4), (5) or (6) of Treas. Reg.
ss.1.704-l(b)(2)(ii)(d) that produces a deficit in its Hypothetical Capital
Account shall be allocated items of gross income and gain in an amount and
manner sufficient to eliminate the deficit in its Hypothetical Capital
Account as quickly as possible. This paragraph (iii) is intended to comply
with the "qualified
<PAGE>
income offset" requirement in Treas. Reg. ss.1.704- 1(b)(2)(ii)(d)(3), and
shall be interpreted consistently therewith.
(iv) All Nonrecourse Deductions, if any, for each taxable year shall
be allocated 99% to the Limited Partner, and 1% to the General Partner.
(v) All Partner Nonrecourse Deductions for each taxable year shall be
allocated to the Partner or Partners who bear the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable, in accordance with the ratio in
which the Partners bear such economic risk of loss and Treas. Reg.
ss.1.704-2(i)(1).
(vi) No Partner shall be allocated Gross Deductions to the extent such
allocation would cause a deficit in its Hypothetical Capital Account, and
any such Gross Deductions shall be allocated to the other Partner in
proportion to their positive Hypothetical Capital Accounts.
(d) For income tax purposes:
(i) If property is contributed to the Partnership, income, gain, loss
and deductions with respect to such property (and, to the extent necessary,
other gross income, gain, loss and deductions of the Partnership), as
computed for income tax purposes, shall be allocated among the Partners so
as to take account of any variation between the adjusted tax basis of such
property and its Book Value, in accordance with Code section 704(c); and
(ii) In any other case where the Book Value of any Partnership asset
differs from its adjusted tax basis (including any difference attributable
to the revaluation of Partnership property as of the date hereof),
subsequent allocations of income, gain, loss and deduction with respect to
such asset (and, to the extent necessary, other gross income, gain, loss
and deductions of the Partnership), as computed for federal income tax
purposes, shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Book Value in the same
manner as under Code section 704(c).
ARTICLE VI
CONTROL AND MANAGEMENT
Section 6.1 General. The General Partner shall, except as expressly limited
by this Agreement, to the fullest extent not prohibited by the Act, exercise all
of the powers of the Partnership, implement all Partnership decisions and have
full, exclusive and complete discretion in the management and control of the
Partnership including, without limitation, the power, authority, and right to:
<PAGE>
(a) expend the capital and revenues of the Partnership in furtherance of
the Partnership's business and pay all expenses, debts and obligations of the
Partnership to the extent that funds of the Partnership are available therefor;
(b) invest the Partnership's funds pending disbursement thereof in
furtherance of the Partnership's business or to provide a source from which to
meet contingencies;
(c) purchase property and assets in furtherance of the business of the
Partnership, protect and preserve the Partnership's title and interest in such
properties and assets, and sell, Transfer or otherwise dispose of such
properties and assets;
(d) institute, defend and settle litigation arising in connection with the
Partnership's business, submit claims to arbitration and confess judgment
against the Partnership, and give receipts, releases and discharges with respect
to all of the foregoing;
(e) maintain, at the expense of the Partnership, records and accounts of
operations and expenditures;
(f) purchase, at the expense of the Partnership, liability, casualty, fire
and other insurance and bonds to protect the Partnership's properties, business,
Partners and employees and to protect the General Partner and its employees;
(g) at the expense of the Partnership, consultants, accountants, attorneys,
and others and terminate such employment;
(h) negotiate, enter into, perform and terminate any and all agreements,
documents, licenses and other instruments necessary or incidental to the conduct
of the business of the Partnership (including, without limitation, agreements of
merger or consolidation in which the Partnership is the surviving entity);
(i) incur indebtedness, borrow funds and/or issue guarantees, and pledge
the Partnership's assets to secure the same, in each case in furtherance of the
Partnership's business;
(j) issue or cause to be issued, and purchase, interests in the
Partnership, including, without limitation, rights, options, warrants, notes,
and bonds and admit additional or substitute Partners;
(k) amend this Agreement in accordance with its terms; and
(l) perform all other functions related to the business and affairs of the
Partnership.
By executing this Agreement, the Limited Partner hereby expressly consents to
any exercise by the General Partner of all or any of the foregoing powers.
<PAGE>
Section 6.2 Third Parties.
(a) As to any third Person, any officer of the General Partner shall have
full power and authority to execute all documents and take all other actions of
the General Partner and thereby bind the Partnership with respect thereto. The
duly adopted resolution of the board of directors of the General Partner
authorizing any officer or director of the General Partner to undertake any
action shall be conclusive evidence of such officer's authority with respect
thereto.
(b) The Limited Partner shall not be personally liable for any debts or
other obligations of the Partnership to third parties, except to the extent
provided herein or in the Act.
Section 6.3 Exculpation; Indemnification.
(a) Neither the General Partner nor any Affiliate of the General Partner
nor any of their respective partners, shareholders, officers, directors,
employees or agents shall be liable, in damages or otherwise, to the Partnership
or to any Partner for any breach of such Person's duty of loyalty to the
Partnership or the Partners or for acts of omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or (in the case of
the General Partner only) any breach by the General Partner of any of the
material terms and provisions of this Agreement. The Partnership shall
indemnify, defend and hold harmless, to the fullest extent not prohibited by
law, the General Partner and each of its Affiliates and their respective
partners, shareholders, officers, directors, employees and agents, from and
against any claim, loss or liability of any nature whatsoever (including
attorneys' fees) arising out of or in connection with the assets or business of
the Partnership, unless the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted intentional
misconduct or a knowing violation of law by such Person or (in the case of the
General Partner only) a breach by the General Partner of any of the material
terms and provisions of this Agreement. The foregoing obligation of the
Partnership shall be satisfied only out of the assets of the Partnership and
under no circumstances shall any recourse be available against the General
Partner or any other Partner or the assets of any Partner.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it and any opinion of any such Person as to matters which
such General Partner believes to be within such Person's professional or expert
competence shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by the General Partner hereunder in
accordance with such opinion. The General Partner may also rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, agreement, report, notice, request, order, bond,
debenture, or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
<PAGE>
(c) Expenses incurred by a Partner or other Person in defending any action
or proceeding against which indemnification may be made pursuant to this Section
shall be paid by the Partnership in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of such
Person to repay such amount if it shall ultimately be determined that it is not
entitled to be indemnified by the Partnership.
(d) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section shall, continue as to a Person who has ceased to serve
in the capacity as to which it was indemnified and shall inure to the benefit of
the heirs, executors, administrators, successors and assigns of such Person.
Section 6.4 Expenses; Compensation. Except as otherwise provided herein,
the Partnership shall pay or cause to be paid (a) all costs and expenses
incurred in connection with the formation and organization of the Partnership,
(b) all costs and expenses of the Partnership incurred in pursuing and
conducting, or otherwise related to, the business of the Partnership, and (c)
all employment-related costs and expenses incurred by the General Partner in
pursuing and conducting the business of the Partnership. The General Partner
shall also be entitled to reimbursement of all of its other expenses
attributable to the performance of its obligations hereunder. Subject to the
Act, no amount so paid to the General Partner shall be deemed to be a
distribution of Partnership assets for purposes of this Agreement. Except for
reimbursement of its expenses and its right to distributions as provided in this
Agreement, the General Partner shall not receive any compensation for its
services as such.
Section 6.5 No Right of Limited Partner in Management. The Limited Partner
shall not (a) have the power to sign for or to bind the Partnership, (b) take
any part in the management of the business of, or transact any business for, the
Partnership, or (c) except as required by the Act or expressly provided by this
Agreement, have any right to vote on or consent to any matter.
Section 6.6 Restrictions on General Partner's Authority. Notwithstanding
any other provision of this Agreement, the General Partner shall not have
authority to do any of the following:
(i) act in contravention of this Agreement;
(ii) any act which would make it impossible to carry on the ordinary
business of the Partnership, except as otherwise provided in this
Agreement;
(iii) possess Partnership property or assign any rights in specific
Partnership property, for other than a Partnership purpose; or
(iv) knowingly commit any act which would subject any Limited Partner
to liability as a general partner in any jurisdiction in which the
Partnership transacts business.
<PAGE>
ARTICLE VII
ACCOUNTING AND RECORDS
Section 7.1 Books and Records. The General Partner shall keep books of
account for the Partnership in accordance with the accrual method of accounting
used for federal income tax purposes.
Section 7.2 Annual Report. By ninety (90) days after the end of each Fiscal
Year (or such earlier date as may be required under the Code) the General
Partner shall cause to be delivered to each Partner a report indicating each
Partner's share for federal income tax purposes of the Partnership's income,
credits and deductions for the immediately preceding Fiscal Year together with
all other information concerning the Partnership which may be required by the
Code from time to time. The General Partner shall also cause an annual report of
the operation of the Partnership to be distributed to the Partners within ninety
(90) days after the end of each Fiscal Year together with financial statements
reflecting the Partnership's operation during such year.
Section 7.3 Tax Returns. The General Partner shall prepare all income and
other tax returns of the Partnership and cause the same to be filed in a timely
manner. The General Partner shall be the tax matters partner (as defined in Code
section 6231(a)(7)).
ARTICLE VIII
RESTRICTIONS ON TRANSFER OF INTERESTS
Section 8.1 Restrictions on Transfer. Partnership Interests may not be
sold, transferred, assigned, pledged or otherwise disposed of without the
consent of the General Partner, except that Partnership Interests may be pledged
as collateral and such pledge may be foreclosed upon in the event of a default.
ARTICLE IX
DISSOLUTION AND WINDING UP OF THE PARTNERSHIP
Section 9.1 Events of Dissolution. The occurrence of any of the following
shall constitute an event of dissolution of the Partnership (an "Event of
Dissolution"):
(a) the expiration of the term of the Partnership as provided in Section
1.6 above;
(b) the sale or other disposition in a single transaction or series of
related transactions of all or substantially all of the assets of the
Partnership unless such sale or other disposition involves any deferred payment
of the consideration for such sale or disposition, in which case the Partnership
shall not dissolve until the last day of the calendar
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year during which the Partnership shall receive the balance of such deferred
payment;
(c) the resignation, withdrawal, or dissolution of the General Partner or
the occurrence of an Event of Bankruptcy of the General Partner, which is not,
in the case of an involuntary Event of Bankruptcy, discharged or stayed within
one hundred and twenty (120) days of occurrence, unless at the time of such
withdrawal, dissolution, resignation, bankruptcy or death, there shall be one or
more other General Partners who are members of or simultaneously admitted to the
Partnership;
(d) the occurrence of an Event of Bankruptcy of the Limited Partner, which
is not, in the case of an involuntary Event of Bankruptcy, discharged or stayed
within one hundred and twenty (120) days of occurrence, unless at the time of
such bankruptcy, there shall be one or more other Limited Partners who are
members of or simultaneously admitted to the Partnership;
(e) the acquisition by a single Person of all of the Partnership Interests;
(f) the issuance of a decree of dissolution by a court of competent
jurisdiction pursuant to the Act; or
(g) as otherwise required by the Act.
Section 9.2 Effect of Dissolution. Upon the occurrence of an Event of
Dissolution, the Partnership shall not terminate but shall continue solely for
the purposes of winding up its business and liquidating in accordance with this
Article 9 all of its assets and collecting the proceeds from such sales and
liquidations at which time the Partnership shall be wound up. After the
occurrence of an Event of Dissolution the Partnership shall engage in no further
business other than as necessary to operate on an interim basis and for the
Partnership to collect its receivables, liquidate its assets and pay or
discharge its liabilities in accordance with this Article 9.
Section 9.3 Sale of Assets by Liquidator.
(a) Upon dissolution of the Partnership, the General Partner shall, as
"Liquidator," proceed to wind up the affairs of the Partnership and distribute
its assets in accordance with this Article 9, unless the General Partner is
unable or unwilling to serve as Liquidator, in which case a substitute
Liquidator shall be appointed by the Limited Partner. If the Liquidator shall
determine that an immediate sale of part or all of the Partnership's assets
would cause undue loss to the Partners, then the Liquidator, in order to avoid
or lessen such loss, may either (i) defer liquidation of, and withhold from such
distribution for a reasonable time, any assets of the Partnership, except those
necessary to satisfy Partnership debts and obligations, or (ii) distribute the
assets to the Partners or their assigns in kind in the manner set forth in this
Section 9.3.
(b) Upon dissolution of the Partnership, the Liquidator shall cause a final
accounting to be made by an
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independent accountant and, upon termination and subject to due provision for
the payment of all the expenses of the liquidation and all other debts and
obligations of the Partnership:
(i) Any or all non-cash assets of the Partnership may be sold by
public or private sale, at the discretion of and on terms set by the
General Partner, at which any Partner or any Affiliate of a Partner may bid
for such assets; and
(ii) Following such sale, if any, of noncash assets, Partnership cash
shall be distributed to the Partners in accordance with Section 9.3(e).
(c) If any assets of the Partnership are to be distributed in kind, such
assets shall be distributed on the basis of the fair market value thereof as
determined in the reasonable judgment of the General Partner. Without limiting
the General Partner's discretion to make such valuation or requiring that any
such appraisal be made, the valuation given to any such assets by an independent
appraiser shall be conclusively deemed a reasonable fair value and the use of
such valuation by the General Partner a reasonable exercise of its discretion. A
Partner entitled to an interest in such distributed assets shall receive such
interest therein as a tenant-in-common with the other Partners so entitled. The
fair market value of such assets shall be determined by an independent appraiser
to be selected by the General Partner. In the event of such liquidation in kind,
a distributee Partner shall not thereafter sell or otherwise transfer or dispose
of any interest in any assets so distributed which it holds as a
tenant-in-common without first offering such interest in writing to the other
tenants-in-common upon the same terms and conditions and for the same price as
such proposed sale or transfer. The other tenants-in-common shall have 30 days
after the receipt of such offer within which to accept the same and shall have
the right to acquire such interest in proportion to their Partnership Interest
formerly held in the Partnership. If the other tenants-in-common shall fail to
accept such offer within such period of time, such distributee Partner shall be
free to sell the interest in said assets upon the terms and conditions described
in the offer disclosed to the other tenants-in-common.
(d) The Partners specifically intend and agree that any distribution under
this Section 9.3 shall confer upon the distributee the actual economic ownership
and equitable title to all such properties distributed. If the title or form of
ownership by which any Partnership property is held is different from that
necessary to fully accomplish the foregoing intent, then all Partners agree to
execute and deliver such deeds, bills of sale and other documents, and to take
such other steps, as may be necessary or appropriate to secure to each Partner
the full economic ownership and title in such property to which such Partner is
so entitled hereunder.
(e) Any distributions of cash and/or other assets pursuant to this Section
9.3 shall be made in accordance with Section 3.2.
<PAGE>
(f) The liquidation of the Partnership shall be final when all of the
Partnership's assets have been collected and applied to the Partnership's
obligations and its remaining assets, if any, have been distributed to the
Partners in accordance with this Agreement.
Section 9.4 Time Limitations on Liquidating Distributions. Nothing in this
Article 9 shall be construed to extend the time period prescribed under Section
3.2 above and Treas. Reg. ss.1.704-1(b)(2)(ii)(b) for making liquidating
distributions of the Partnership's assets. If the Liquidator deems it
impracticable to cause the Partnership to make distributions of the liquidating
proceeds to the Partners within the time period described under Treas. Reg.
ss.1.704-1(b)(2)(ii)(b), the Liquidator may make any arrangement that is
considered for federal income tax purposes to effectuate liquidating
distributions of all of the Partnership's assets to the Partners within the time
period prescribed in such regulation and that will permit the sale of the
non-cash assets considered so distributed in a manner that gives effect, to the
extent possible, to the intent of the preceding provisions of this Article 9.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Separability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 10.2 Assignment and Benefit. This Agreement and the rights and
obligations set forth herein shall inure to the benefit of, and be binding upon,
the parties hereto and each of their respective permitted successors and
assigns. This Agreement and the rights and obligations set forth herein may not
be assigned or delegated by any party without the written consent of each other
party hereto, except as provided herein. Nothing in this Agreement shall be
deemed to create any right in any person not a party hereto (other than the
permitted successors and assigns of a party hereto) and this Agreement shall not
be construed in any respect to be a contract in whole or in part for the benefit
of any third party.
Section 10.3 Indemnification and Contribution. The Partnership shall
indemnify each Partner from and against any damage, liability, loss, cost or
deficiency (including, but not limited to, reasonable attorneys' fees)
("Damages") which each such Partner pays or becomes obligated to pay on account
of the imposition upon or assessment against such Partner of any obligation or
liability of the Partnership. The foregoing obligation of the Partnership shall
be satisfied only out of the assets of the Partnership and under no
circumstances shall any recourse be
<PAGE>
available against the General Partner or any other Partner or the assets of any
Partner with respect thereto.
Section 10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto by executing a counterpart hereof, but all of such
counterparts together shall be deemed to be one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
Section 10.5 Governing Law. This Agreement is made pursuant to, and shall
be construed and enforced in accordance with, the internal laws of the State of
Delaware (and United States federal law, to the extent applicable), without
giving effect to otherwise applicable principles of conflicts of law.
Section 10.6 Terms. Common nouns and pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular and plural, as the identity of the
Person may in the context require. Any reference to the Code, Act or other
statutes or laws shall include all amendments, modifications or replacements of
the specific sections and provisions concerned.
Section 10.7 Further Assurances. The Partners hereto agree that they will
execute and deliver, or cause to be delivered, all such instruments, and will
take all such other actions, as may be reasonably required from time to time in
order to effectuate the provisions and purposes hereof.
Section 10.8 References to Agreement. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated. The words
"herein," "hereof," "hereunder, "this Agreement" and other similar references
shall be construed to mean and include this Partnership Agreement and all
amendments and supplements thereto unless the context shall clearly indicate or
require otherwise.
Section 10.9 Complete Agreement. This Agreement constitutes the complete
and exclusive statement of the agreement between the Partners with respect to
the matters to which it relates. It supersedes all prior written and oral
statements and no representation, statement, covenant, condition or warranty not
contained in this Agreement shall be binding on the Partners or have any force
or effect whatsoever.
Section 10.10 Reliance on Authority of Person Signing Agreement. If a
Partner is a trust (with or without disclosed beneficiaries), general
partnership, limited partnership, joint venture, corporation, or any Entity
other than a natural Person, the Partnership and the Partners shall:
(a) not be required to determine the authority of the Person signing this
Agreement to make any commitment or undertaking on behalf of such Entity or to
determine any fact or circumstance bearing upon the existence of the authority
of such
<PAGE>
Entity or to determine any fact or circumstance bearing upon the existence or
the authority of such Person;
(b) not be required to see to the application or distribution of proceeds
paid or credited to Persons signing this Agreement on behalf of such Entity;
(c) be entitled to rely on the authority of the Person signing this
Agreement with respect to the voting of the Partnership Interest of such Entity
and with respect to the giving of consent on behalf of such Entity in connection
with any matter for which consent is permitted or required under this Agreement;
and
(d) be entitled to rely upon the authority of any general partner, joint
venturer, trustee, or president or vice president, as the case may be, of any
such Entity the same as if such Person were the Person originally signing this
Agreement on behalf of such Entity.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
GENERAL PARTNER:
GPC OPCO GP LLC
By: Graham Packaging Holdings
Company, member
By: Graham Packaging
Corporation, general
partner
By: /s/ William H. Kerlin
--------------------------
Title: CEO Graham
Packaging
LIMITED PARTNER:
GRAHAM PACKAGING HOLDINGS
COMPANY
By: Graham Packaging
Corporation, general
partner
By: /s/ William H. Kerlin
--------------------------
Title: CEO Graham
Packaging
<PAGE>
Exhibit A
GLOSSARY OF DEFINED TERMS
Graham Packaging Company
Amended and Restated Agreement of Limited Partnership
dated as of February 2, 1998
Term (Definition or Section in which definition appears)
Act 1.2
Affiliate A Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with the Person in question and any officer,
director, general partner, trustee, employee, or limited
partner or stockholder (in either case owning 10% or more of
the equity)of the Person in question or such other Person.
For purposes of this definition, "control" of an Entity
means the power to direct the management of such Entity,
whether by ownership, contract or otherwise.
Agreement Preamble
Book Value With respect to any asset, that asset's adjusted basis for
federal income tax purposes, except that (i) where an asset
has been revalued on the books of the Partnership the Book
Value of such asset shall be adjusted to reflect such
revaluation; (ii) where an asset has been contributed by a
Partner to the Partnership or distributed by the Partnership
to a Partner its Book Value shall be its fair market value
as determined pursuant to the provisions of this Agreement;
and (iii) the Book Value of Partnership assets shall be
adjusted to reflect the Depreciation taken into account with
respect to such assets for purposes of determining Gross
Income or Gross Deductions.
<PAGE>
Capital Account Section 3.1
Capital
Contribution Any amount of cash, property, or services contributed by a
Partner to the Partnership in respect of its equity interest
therein in accordance with the Partnership Agreement.
Certificate Section 1.6
Code The Internal Revenue Code of 1986, as the same may be
amended from time to time. Any reference herein to any
section of the Code shall mean and include any and all
corresponding provisions of succeeding law.
Depreciation For each taxable year, an amount equal to the depreciation,
amortization or other cost recovery reduction allowable with
respect to an asset for such year or other period, except
that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of
such taxable year (as a result of the revaluation of such
asset or its contribution to the Partnership by a Partner),
Depreciation shall be an amount that bears the same ratio to
such beginning Book Value as the federal income tax
depreciation, amortization or other cost recovery deduction
for such taxable year bears to such beginning adjusted tax
basis; provided that if the beginning adjusted tax basis is
zero, Depreciation for such fiscal year shall be determined
with reference to such beginning Book Value using any
reasonable method selected by the General Partner, and
provided further that "Depreciation" with respect to any
asset for which the Partnership uses the "remedial
allocation method" shall be computed in accordance with
Treas. Reg.ss.1.704-3(d)(2).
Entity Any general partnership, limited partnership, corporation,
joint venture, trust, business trust, limited liability
company, cooperative or association.
<PAGE>
Event of Bankruptcy As to the Partnership or a Partner:
- filing a voluntary petition in bankruptcy or for
reorganization or for the adoption of an arrangement under
the Bankruptcy Code (as now or in the future amended) or an
admission seeking the relief therein provided;
- making a general assignment for the benefit of its
creditors;
- consenting to the appointment of a receiver for all or a
substantial part of its property;
- in the case of the filing of an involuntary petition in
bankruptcy, an entry of an order for relief;
- the entry of a court order appointing a receiver or
trustee for all or a substantial part of its property
without its consent; or
- the assumption of custody or sequestration by a court of
competent jurisdiction of all or substantially all of its
property.
Event of
Dissolution Section 9.1
Fiscal Year Section 1.8
General Partner Opco GP or any other Person or Entity that becomes a general
partner of the Partnership in accordance with this
Agreement.
GPHC Preamble.
Gross Income or
Gross Deductions Respectively, the Partnership's gross income and gains or
gross losses and deductions for a taxable year, as computed
for federal income tax purposes (including all items of
Partnership income, gain, loss, or deduction regardless of
whether such items are required to be separately stated
under Code section 702(a)), with the following adjustments:
A. Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in
determining Gross Income shall be added to such Gross
Income;
<PAGE>
B. Any expenditures of the Partnership described in Code
section 705(a)(2)(B) or treated as section 705(a)(2)(B)
expenditures pursuant to Treas. Reg. ss.1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Gross
Deductions shall be taken into account in computing such
Gross Deductions;
C. In any case where, in accordance with Treas. Reg.
ss.1.704-1(b)(2)(iv)(e) or (f), Partnership property is
revalued on the books of the Partnership to reflect its fair
market value, the amount of such upward or downward
adjustment (to the extent not previously taken into account)
shall be taken into account as gain or loss from a taxable
disposition of such property for purposes of computing Gross
Income or Gross Deductions;
D. Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed
by reference to the Book Value of the Property disposed of,
notwithstanding that the adjusted tax basis of such property
differs from such Book Value;
E. In lieu of the depreciation, amortization and other cost
recovery deductions taken into account for federal income
tax purposes, Depreciation as defined herein shall be taken
into account in computing Gross Deductions; and
F. Notwithstanding any other provisions of this definition,
Nonrecourse Deductions, Partner Nonrecourse Deductions, and
any items of income, gain, loss or deduction that are
specially allocated pursuant to one or more Partners shall
not be taken into account in computing Gross Income or Gross
Deductions.
<PAGE>
Hypothetical
Capital Account A Partner's Capital Account, after giving effect to the
following adjustments:
A. Such Capital Account shall be reduced to reflect the
items described in clauses (4), (5) and (6) of Treas. Reg.
ss.1.704-1(b)(2)(ii)(d) (provided that any anticipated
distribution of the proceeds of a nonrecourse liability
shall be offset by an anticipated increase in Minimum Gain,
as provided in Treas. Reg. ss.1.704-2(h)); and
B. Such Capital Account shall be increased by any amount
such Partner is obligated to restore or is treated as being
obligated to restore for purposes of Treas. Reg.
ss.1.704-1(b)(2)(ii)(d), including such Partner's Minimum
Gain Share and such Partner's share of Partner Minimum Gain.
Limited Partner GPHC or any other Person or Entity that becomes a limited
partner in accordance with the Agreement.
Liquidator Section 9.3
Minimum Gain An amount determined by computing, with respect to each
nonrecourse liability of the Partnership, the amount of gain
(of whatever character), if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction)
the Partnership property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so
computed. Such amount shall be determined in a manner
consistent with Treas. Reg.ss.1.704-2(d).
Minimum Gain Share For each Partner, such Partner's share of any Minimum Gain
as of the end of a taxable year, as determined under Treas.
Reg. ss.1.704-2(g).
<PAGE>
Nonrecourse
Deductions For each taxable year, the Partnership deductions (and all
other items that would otherwise be included in Gross
Deductions) that are characterized as "nonrecourse
deductions" under Treas. Reg. ss.1.704-2(c).
Opco GP Preamble.
Partner Preamble.
Partnership Preamble.
Partnership
Interest The entire ownership interest of a Partner in the
Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner may
be entitled as provided in this Agreement and in the Act,
together with the obligations of such Partner to comply with
all the terms and provisions of this Agreement and of the
Act.
Partner Minimum
Gain An amount determined by computing, with respect to each
Partner Nonrecourse Debt, the Minimum Gain that would result
if such Partner Nonrecourse Debt were treated as a
nonrecourse liability, determined in accordance with Treas.
Reg. ss.1.704-l(i)(3).
Partner Nonrecourse
Deductions For each taxable year, the partnership deductions (and all
other items that would otherwise be included in Gross
Deductions) that are attributable to Partner Nonrecourse
Debt and are characterized as partner nonrecourse deductions
under Treas. Reg.ss.1.704-2(i)(1).
Partner Nonrecourse
Debt Nonrecourse Partnership debt for which one or more Partners
bears an economic risk of loss, as defined in Treas. Reg.
ss.1.704-2(b)(4).
Person Any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and
assigns of such Person where the context so admits.
Recycling Preamble.
<PAGE>
Treas. Reg. The Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time.
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
GPC CAPITAL CORP. I
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the
provisions of the Delaware General Corporation Law, does hereby certify as
follows:
FIRST: The name of the Corporation is GPC Capital Corp. I.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805, in the county of New
Castle. The name of the Corporation's registered agent at such address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is one thousand (1,000) shares, par value $.01 per
share, all of which are of one class and are designated as Common Stock.
FIFTH: The name and mailing address of the incorporator are as follows:
Name Mailing Address
---- ---------------
Sharon L. Dougherty Drinker Biddle & Reath LLP
1100 Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
SIXTH: In furtherance and not in limitation of the general powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, alter or repeal the Bylaws of the Corporation, except as
specifically otherwise provided therein.
<PAGE>
SEVENTH: A director of the Corporation shall have no personal liability to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except to the extent that Section 102(b)(7) (or any successor
provision) of the Delaware General Corporation Law, as amended from time to
time, expressly provides that the liability of a director may not be eliminated
or limited. No amendment or repeal of this paragraph SEVENTH shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 5th day of
January, 1998.
/s/ Sharon Dougherty
--------------------
Sharon L. Dougherty
Incorporator
<PAGE>
EXHIBIT 3.4
GPC CAPITAL CORP. I
BY-LAWS
ARTICLE I
MEETING OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of the
Corporation shall be held at such place either within or without the State of
Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the Chairman for any purpose and shall be
called by the Chairman or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and not
more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall be not less than
one nor more than fifteen. The first Board of Directors shall consist of four
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or by the stockholders.
The Directors shall be elected by the stockholders at their annual meeting.
Vacancies and newly created directorships resulting from any increase in the
number of Directors
<PAGE>
may be filled by a majority of the Directors then in office, although less than
a quorum, or by the sole remaining Director or by the stockholders. A Director
may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting. Special meetings of the
Board of Directors may be held at any time upon the call of the President and
shall be called by the President or Secretary if directed by the Board of
Directors. Telegraphic or written notice of each special meeting of the Board of
Directors shall be sent to each Director not less than two hours before such
meeting. A meeting of the Board of Directors may be held without notice
immediately after the annual meeting of the stockholders. Notice need not be
given of regular meetings of the Board of Directors.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees of Directors. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
committees, including without limitation an Executive Committee, to have and
exercise such power and authority as the Board of Directors shall specify. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another Director
to act at the meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall initially consist of a President, two
Vice Presidents, a Treasurer, a Secretary, two Assistant Secretaries, two
Assistant Treasurers and such other additional officers with such titles as the
Board of Directors shall determine, all of whom shall be chosen by and shall
serve at the pleasure of the Board of Directors. Such officers shall have the
usual powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the Chairman of the Board of Directors with
or without cause. Any officer elected or appointed by the Board of Directors may
be removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
<PAGE>
3
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party or is threatened to be made a party by reason of his
current or former position with the Corporation or by reason of the fact that he
is or was serving, at the request of the Corporation, as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors.
<PAGE>
GPC CAPITAL CORP. I
Action Taken by Unanimous Written
Consent of the Board of Directors
January 5, 1998
The undersigned Directors, constituting the entire Board of Directors of
GPC Capital Corp. I (the "Corporation"), acting without a meeting pursuant to
Section 141(f) of the Delaware General Corporation Law, hereby take the
following action by unanimous written consent:
1. The adoption by the sole incorporator of By-Laws in the form
inserted in the Minute Book of the Corporation is ratified and approved.
2. The following persons are elected to the offices set forth opposite
their respective names, to serve in accordance with the By-Laws of the
Corporation:
Name Office
---- ------
Philip R. Yates President, Treasurer,
Assistant Secretary
John E. Hamilton Vice President,
Assistant Treasurer,
Secretary
Chinh Chu Vice President
Simon Lonergan Vice President
3. The seal imprinted in the form of a circle bearing the name of the
Corporation and the words and figures "Corporate Seal 1998 Delaware" is
adopted as the corporate seal of the Corporation.
4. The form of share certificate attached hereto as Exhibit A is
adopted as the certificate for the Corporation's Common Stock, par value
$0.01 per share.
5. The offer of Graham Packaging Holdings I, L.P., to purchase 100 of
the authorized shares of Common Stock of the Corporation, pursuant to a
subscription agreement which will be approved by the officers of the
Corporation, is accepted, and the Corporation is authorized to enter into
such subscription agreement and to issue to such offeror 100 fully paid,
non-assessable shares of the Common Stock of
<PAGE>
2
the Corporation, par value $0.01 per share, for a purchase price of $0.01
per share; and upon delivery to the Corporation of said purchase price, the
officers of the Corporation are authorized and directed to execute and
deliver a certificate representing 100 shares of the Common Stock of the
Corporation to Graham Packaging Holdings I, L.P.
6. The fiscal year of the Corporation shall be the twelve-month period
ending on the 31st day of December in each year.
7. The proper officers of the Corporation are authorized to open in
the name of the Corporation whatever bank accounts may be necessary for the
expeditious conduct of the Corporation's affairs and to draw checks thereon
and to make deposits therein.
8. For the purpose of authorizing the Corporation to do business in
any state, territory or dependency of the United States or any foreign
country in which it is necessary or expedient for the Corporation to
transact business, the officers of the Corporation are authorized to
appoint and substitute such agents or attorneys for service of process, to
designate and change the location of such statutory office and, under the
corporate seal, to make and file such certificates as may be required by
the laws of any state, territory, dependency or country to authorize the
Corporation to transact business therein; and whenever it is expedient for
the Corporation to cease doing business therein and to withdraw therefrom,
the officers of the Corporation are authorized to revoke any such
appointment of agent or attorney for service of process and to file any
necessary certificates, reports, revocations of appointment or surrender of
authority of the Corporation to do business in any such state, territory,
dependency or country.
Philip R. Yates
John E. Hamilton
Chinh Chu
Simon Lonergan
<PAGE>
EXHIBIT 3.6
FIFTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GRAHAM PACKAGING HOLDINGS COMPANY
DATED AS OF FEBRUARY 2, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
THE LIMITED PARTNERSHIP............................. 2
1.1 Prior Formation and Recapitalization and Redemption...... 2
1.2 Certificate of Limited Partnership....................... 2
1.3 Name..................................................... 2
1.4 Character of Business.................................... 3
1.5 Principal Offices........................................ 3
1.6 Fiscal Year.............................................. 3
1.7 Accounting Matters....................................... 3
ARTICLE 2
DEFINITIONS......................................... 3
2.1 Act...................................................... 3
2.2 Affiliate................................................ 3
2.3 Agreement................................................ 3
2.4 Auditor.................................................. 4
2.5 Available Cash........................................... 4
2.6 Bankruptcy............................................... 4
2.7 Capital.................................................. 4
2.8 Capital Account.......................................... 4
2.9 Catch Up Amount.......................................... 4
2.10 Certificate.............................................. 4
2.11 Code..................................................... 4
2.12 DCG...................................................... 4
2.13 Depreciation............................................. 5
2.14 Engineering.............................................. 5
2.15 Event of Withdrawal...................................... 5
2.16 Family Growth............................................ 5
2.17 General Partners......................................... 5
2.18 Generally Accepted Accounting Principles................. 5
2.19 GP Action................................................ 5
2.20 GP Corp.................................................. 5
2.21 Graham Partners.......................................... 5
2.22 Graham Partners Excess Distribution Amount............... 5
2.23 Gross Asset Value........................................ 5
2.24 Investor GP.............................................. 6
2.25 IPO Reorganization....................................... 6
2.26 Investor LP.............................................. 6
2.27 Limited Partner.......................................... 6
2.28 Managing General Partner................................. 6
2.29 New Partners............................................. 6
2.32 Partner.................................................. 6
i
<PAGE>
Page
----
2.33 Partnership.............................................. 7
2.34 Partnership Interest..................................... 7
2.35 Partnership Year......................................... 7
2.36 Percentage Interest...................................... 7
2.38 Profits and Losses....................................... 7
2.39 Recycling................................................ 8
2.40 Regulations or Treas. Reg................................ 8
2.41 Return Amount............................................ 8
2.42 Transfer................................................. 8
2.44 General Provisions....................................... 8
ARTICLE 3
CAPITAL ACCOUNTS.................................... 8
3.1 Capital Accounts......................................... 8
3.2 Negative Capital Accounts................................ 8
3.3 Compliance with Treasury Regulations..................... 8
3.4 Succession to Capital Accounts........................... 8
3.5 Certain Adjustments...................................... 9
3.6 No Withdrawal of Capital Contributions................... 9
3.7 Other Payments........................................... 9
ARTICLE 4
COSTS AND EXPENSES.................................. 9
ARTICLE 5
DISTRIBUTIONS; PARTNERSHIP ALLOCATIONS; TAX MATTERS. 9
5.1 Distributions Prior to Dissolution....................... 9
5.2 Partnership Allocations.................................. 10
5.3 Tax Allocations; Code Section 704(c)..................... 12
5.4 Accounting Method........................................ 12
5.5 Withholding.............................................. 12
5.6 Tax Treatment of Return Amounts.......................... 13
5.7 Distribution by Opco..................................... 13
ARTICLE 6 ................................................................. 13
6.1 Rights and Duties of the Partners........................ 13
6.2 Duty of Managing General Partner......................... 14
6.3 Powers of Managing General Partner....................... 14
6.4 Restrictions on Managing General Partner Authority. .... 15
6.5 Advisory Committee....................................... 17
6.6 Other Activities......................................... 17
6.7 Transactions with Affiliates............................. 18
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6.8 Exculpation and Indemnification.......................... 18
ARTICLE 7
COMPENSATION........................................ 18
ARTICLE 8
ACCOUNTS............................................ 19
8.1 Books and Records........................................ 19
8.2 Reports, Returns and Audits.............................. 19
ARTICLE 9
TRANSFERS........................................... 20
9.1 Transfer of General Partners' Interest................... 20
9.2 Transfer of a Limited Partner's Interest................. 21
9.3 Allocation of Distributions Subsequent to Assignment..... 21
9.4 Death, Incompetence, Bankruptcy, Liquidation or
Withdrawal of a Limited Partner.......................... 21
9.5 Permitted Transfers of the New Partners.................. 21
9.6 Permitted Transfers of Graham Partners................... 22
9.7 Satisfactory Written Assignment Required................. 23
9.8 Transferee's Rights...................................... 23
9.9 Transferees Admitted as Partners......................... 23
9.10 Additional Restriction on Transfer....................... 24
ARTICLE 10
DISSOLUTION......................................... 24
10.1 Events of Dissolution.................................... 24
10.2 Final Accounting......................................... 24
10.3 Liquidation.............................................. 24
10.4 Cancellation of Certificate.............................. 25
ARTICLE 11
AMENDMENTS TO AGREEMENT............................. 25
ARTICLE 12
NOTICES............................................. 25
12.1 Method of Notice......................................... 25
12.2 Computation of Time...................................... 26
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ARTICLE 13
INVESTMENT REPRESENTATIONS.......................... 26
13.1 Investment Purpose....................................... 26
13.2 Investment Restriction................................... 26
ARTICLE 14
GENERAL PROVISIONS.................................. 26
14.1 Entire Agreement......................................... 27
14.2 Amendment; Waiver........................................ 27
14.3 Governing Law............................................ 27
14.4 Binding Effect........................................... 27
14.5 Separability............................................. 27
14.6 Headings................................................. 27
14.7 No Third-Party Rights.................................... 27
14.8 Waiver of Partition...................................... 27
14.9 Nature of Interests...................................... 27
14.10 Power of Attorney........................................ 27
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FIFTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
GRAHAM PACKAGING HOLDINGS COMPANY
THIS FIFTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is entered
into as of the 2nd day of February, 1998 by and among Graham Capital
Corporation, a Pennsylvania corporation ("Capital"), Graham Family Growth
Partnership, a Pennsylvania limited partnership ("Family Growth"), Graham
Packaging Corporation, a Pennsylvania corporation ("GP Corp"), BCP/Graham
Holdings L.L.C., a Delaware limited liability company ("Investor GP" and,
together with GP Corp, the "General Partners"), and BMP/Graham Holdings
Corporation, a Delaware corporation ("Investor LP"). Capital, Family Growth and
GP Corp are hereinafter sometimes referred to collectively as the "Graham
Partners." Investor GP and Investor LP are hereinafter sometimes referred to
collectively as the "New Partners." The Graham Partners and Investor LP are
hereinafter sometimes referred to collectively as the "Limited Partners" and
individually as a "Limited Partner." The General Partners and the Limited
Partners are hereinafter sometimes referred to collectively as the "Partners"
and individually as a "Partner."
W I T N E S E T H
WHEREAS, Graham Packaging Holdings Company (formerly known as Graham
Packaging Company, the "Partnership") is an existing limited partnership that
was formed in accordance with the provisions of the Pennsylvania Uniform Limited
Partnership Act (59 Pa. Cons. Stat. ch. 5) and has been continued in accordance
with the provisions of the Act (as herein defined);
WHEREAS, pursuant to the terms of an Agreement and Plan of
Recapitalization, Redemption and Purchase dated as of December 18, 1997 (the
"Recapitalization Agreement") by and among the Partnership, the Graham Partners,
the New Partners, Graham Engineering Corporation ("Engineering"), Graham
Recycling Corporation ("Recycling") and Donald C. Graham ("DCG"), on the date
hereof:
(a) Family Growth, GP Corp and Recycling have each made an additional
capital contribution to the Partnership by contributing all of their respective
ownership interests to the Partnership, less a 1% ownership interest which has
been transferred to a subsidiary of the Partnership, in the entities identified
on Schedule 5.18 to the Recapitalization Agreement, as consideration for an
increase in their respective partnership interests in the Partnership;
(b) DCG has made an additional capital contribution to the Partnership
by contributing or causing the contribution to a subsidiary of the Partnership
of certain real estate that is identified on Schedule 5.19 to the
Recapitalization Agreement, as consideration for an increase in DCG's limited
partnership interest in the Partnership;
(c) the Partnership has redeemed portions of the limited partnership
interests of Engineering, Recycling and DCG (the "Withdrawn Partners") and of
the limited partnership interests of Capital and Family Growth and of the
partnership interests of GP Corp pursuant to the Recapitalization Agreement;
(d) Investor GP and Investor LP have purchased portions of the
partnership interests of GP Corp, Capital and Family Growth and all of the
remaining partnership interests of the Withdrawn Partners pursuant to the
Recapitalization Agreement; and
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(e) the Withdrawn Partners have withdrawn from the Partnership as
limited partners.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree that the Fourth Amended and
Restated Agreement of Limited Partnership of the Partnership dated as of
February 28, 1994 is hereby amended and restated in its entirety by this Fifth
Amended and Restated Agreement of Limited Partnership and, as so amended and
restated hereby, shall read in its entirety as follows:
ARTICLE 1
THE LIMITED PARTNERSHIP
1.1 Prior Formation and Recapitalization and Redemption.
(a) The Graham Partners have heretofore become partners in the Partnership
which was formed on April 3, 1989 to engage in the business hereinafter
described for the period and upon the terms and conditions hereinafter set
forth.
(b) On the date hereof, the Partnership has redeemed a portion of the
general partnership interest of GP Corp, GP Corp has sold a portion of its
general partnership interest and GP Corp will continue to retain a general
partnership interest with a 1% interest in profit and capital in the
Partnership.
(c) On the date hereof, (i) the Partnership has redeemed a portion of the
limited partnership interests of Capital, Family Growth and the Withdrawn
Partners, (ii) Capital and Family Growth have sold a portion of their limited
partnership interests to Investor LP and Investor GP, and (iii) the Withdrawn
Partners have sold all of their remaining partnership interests to Investor LP
and Investor GP.
(d) On the date hereof, the Withdrawn Partners that have heretofore been
partners in the Partnership have withdrawn from the Partnership as limited
partners.
(e) On the date hereof, Investor GP has become a general partner in the
Partnership, and Investor LP has become a limited partner in the Partnership.
1.2 Certificate of Limited Partnership. GP Corp and Investor GP have on the
date hereof executed and caused to be filed an Amended and Restated Certificate
of Limited Partnership of the Partnership (hereinafter referred to as the
"Certificate") in the office of the Secretary of State of the Commonwealth of
Pennsylvania, and hereafter shall execute such further documents (including any
further amendments to the Certificate) and take such further action as shall be
appropriate to comply with all requirements of law for the continuing operation
of a limited partnership in the Commonwealth of Pennsylvania and all other
counties and states where the Partnership may elect to do business.
1.3 Name. The name of the Partnership has been Graham Packaging Company
and, upon the Closing of the transactions contemplated by the Recapitalization
Agreement, shall be Graham Packaging Holdings Company. Managing General Partner
by GP Action may change the name of the Partnership or cause the business of the
Partnership to be conducted under any other name.
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1.4 Character of Business. The business of the Partnership shall be the
sale and manufacturing of rigid plastic containers and any business necessary or
incidental to the foregoing. For such purposes, the Partnership shall have and
exercise all the powers now or hereafter conferred by the laws of the
Commonwealth of Pennsylvania on limited partnerships formed under the laws of
that Commonwealth, and to do any and all things as fully as natural persons
might or could do as are not prohibited by law, in furtherance of the aforesaid
business of the Partnership. The business of the Partnership shall be conducted
in accordance with, and any action required or permitted to be taken by the
General Partners or any Limited Partner shall be taken in compliance with, all
applicable laws, rules and regulations. Such business may be conducted directly
by the Partnership or through such subsidiary corporations, partnerships or
other entities as Managing General Partner by GP Action deems advisable.
1.5 Principal Offices. The location of the principal offices of the
Partnership shall be at 1110 East Princess Street, York, Pennsylvania, 17403, or
at such other location as may be selected from time to time by Managing General
Partner by GP Action. The Partnership may maintain such other offices at such
other places as Managing General Partner deems advisable.
1.6 Fiscal Year. The fiscal year of the Partnership shall be the calendar
year (the "Partnership Year").
1.7 Accounting Matters. Unless otherwise specified herein, all accounting
determinations hereunder shall be made, all accounting terms used herein shall
be interpreted, and all financial statements required to be delivered hereunder
shall be prepared, in accordance with Generally Accepted Accounting Principles
(as herein defined).
ARTICLE 2
DEFINITIONS
The following defined terms used in this Agreement shall have the
respective meanings specified below.
2.1 Act. "Act" shall mean the Pennsylvania Revised Uniform Limited
Partnership Act (15 Pa. Cons. Stat. ch. 85), as amended from time to time and
any successor to such Act.
2.2 Affiliate. "Affiliate" of any Person means any other Person that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such person or entity. A Person
shall be deemed to be controlled by another Person if such other Person
possesses, directly or indirectly, power to direct or cause the direction of
management and policies of such Person whether by ownership of equity or other
securities, by contract or otherwise, provided that any Person of which any
other Person owns beneficially or of record, either directly or through one or
more intermediaries, more than twenty-five percent (25%) of the ownership
interests, shall be conclusively presumed to be an "Affiliate," provided that
Techne Techipack Engineering Italia SPA shall not be an Affiliate of the Graham
Partners or any of their Affiliates.
2.3 Agreement. This "Agreement" shall refer to this Fifth Amended and
Restated Agreement of Limited Partnership, including the Schedules hereto, as
the same may be amended from time to time.
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2.4 Auditor. "Auditor" shall mean Ernst & Young LLP or any successor firm
of independent auditors selected by a GP Action.
2.5 Available Cash. "Available Cash" shall mean at any point in time all
cash and cash equivalents on hand of the Partnership and other cash generated
from any other source (including, without limitation, any proceeds from any
borrowings made under the credit facilities of the Partnership and its
subsidiaries to effect the distributions under Section 5.1(b)(i) hereof (for
which the Managing General Partner shall cause such borrowing, if necessary, to
fund such distribution to the extent permitted under such credit facilities)),
less cash reasonably reserved or reasonably anticipated to be required for debts
and expenses, interest and scheduled principal payments on any indebtedness,
capital expenditures, taxes or the activities of the Partnership (including
payments to Partners under any agreement other than this Agreement).
2.6 Bankruptcy. The "Bankruptcy" of a Partner shall mean (i) the filing by
a Partner of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code or any other federal or state insolvency law, or a Partner's
filing an answer consenting to or acquiescing in any such petition, (ii) the
making by a Partner of any assignment for the benefit of its creditors or (iii)
the expiration of sixty days after the filing of an involuntary petition under
Title 11 of the United States Code, an application for the appointment of a
receiver for the assets of a Partner, or an involuntary petition seeking
liquidation, reorganization, arrangement or readjustment of its debts under any
other federal or state insolvency law, provided that the same shall not have
been vacated, set aside or stayed within such sixty day period.
2.7 Capital. "Capital" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
2.8 Capital Account. The "Capital Account" of a Partner shall be (a)
credited with (i) the amount of cash or, in the case of non-cash asset
contributions, the gross fair market value of such capital contributions as
agreed upon by the Partners at the time such contribution is made less
liabilities assumed by the Partnership in connection with such contributions (or
to which any such contributed assets are subject) and (ii) such Partner's
allocable share of Profits of the Partnership and (b) debited with (i) the
amount of any cash and the fair market value of any property distributed to it
pursuant to Section 5.1, and (ii) such Partner's allocable share of Losses of
the Partnership.
2.9 Catch Up Amount. The "Catch Up Amount" shall mean an amount equal to
the sum of (i) the product of (A) the Graham Partners Excess Distribution
Amount, multiplied by (B) the Investor Partners aggregate Percentage Interest
divided by the Graham Partners' aggregate Percentage Interest and (ii) the
Return Amount.
2.10 Certificate. The "Certificate" shall have the meaning ascribed to such
term in Section 1.2 of this Agreement.
2.11 Code. The "Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time, or the corresponding provisions of any
successor statute.
2.12 DCG. "DCG" shall mean Donald C. Graham.
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2.13 Depreciation. "Depreciation" shall mean, for each fiscal year or other
period, an amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization or other
cost recovery deduction for such year or other period bears to such beginning
adjusted tax basis.
2.14 Engineering. "Engineering" shall have the meaning ascribed to such
term in the second WHEREAS clause of this Agreement.
2.15 Event of Withdrawal. "Event of Withdrawal" shall have the meaning
ascribed to such term in Section 10.1 of this Agreement.
2.16 Family Growth. "Family Growth" shall have the meaning ascribed to such
term in the first paragraph of this Agreement.
2.17 General Partners. "General Partners" shall have the meaning ascribed
to such term in the first paragraph of this Agreement.
2.18 Generally Accepted Accounting Principles. "Generally Accepted
Accounting Principles" shall refer to generally accepted accounting principles
as in effect from time to time in the United States of America.
2.19 GP Action. Action taken by one or more General Partners on behalf of
the Partnership after a vote approving or ratifying such action of the holders
of a majority of the general partner interests in the Partnership or a written
consent approving or ratifying such action executed by such holders; provided
that any action taken by a General Partner that by itself holds a majority of
the general partner interest in the Partnership shall be conclusive evidence of
any such approval or satisfaction and a vote or written consent shall not be
required in connection therewith.
2.20 GP Corp. "GP Corp" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
2.21 Graham Partners. "Graham Partners" shall have the meaning ascribed to
such term in the first paragraph of this Agreement.
2.22 Graham Partners Excess Distribution Amount. "Graham Partners Excess
Distribution Amount" shall mean an amount equal to the excess of (i)
distributions made to the Graham Partners pursuant to Section 5.1(b)(i) over
(ii) distributions made to the New Partners pursuant to Section 5.1(b)(i)
multiplied by the Graham Partners' aggregate Percentage Interests divided by the
New Partners' aggregate Percentage Interests.
2.23 Gross Asset Value. "Gross Asset Value" shall mean, with respect to any
asset, the asset's adjusted basis for federal income tax purposes, except as
follows:
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(1) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset at
the time of such contribution, as agreed to by the Partners;
(2) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as agreed to by the
Partners, as of the following times: (a) the date of this Agreement and the date
of any other acquisition of an additional interest in the Partnership by any new
or existing Partner in exchange for more than a de minimis capital contribution;
(b) the distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership property other than money, unless all Partners receive
simultaneous distributions of undivided interests in the distributed property in
proportion to their respective Percentage Interests; and (c) the liquidation of
the Partnership within the meaning of Treas. Reg. ss.1.704-l(b)(2)(ii)(g); and
(3) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date of
distribution.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
Subsections 2.23(1) or (2) hereof, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for
purposes of computing Profits and Losses.
2.24 Investor GP. "Investor GP" shall have the meaning ascribed to such
term in the first paragraph of this Agreement.
2.25 IPO Reorganization. "IPO Reorganization" shall have the meaning
ascribed to such term in Section 9.1.
2.26 Investor LP. "Investor LP" shall have the meaning ascribed to such
term in the first paragraph of this Agreement.
2.27 Limited Partner. "Limited Partner" shall have the meaning ascribed to
such term in the first paragraph of this Agreement.
2.28 Managing General Partner. "Managing General Partner" shall mean the
General Partner elected by the General Partner(s) holding a majority of the
general partner interests in the Partnership pursuant to a GP Action.
2.29 New Partners. "New Partners" shall have the meaning ascribed to such
term to the first paragraph of this Agreement.
2.30 Opco. "Opco" shall mean Graham Packaging Company, L.P., a Delaware
limited partnership (formerly known as Graham Packaging Holdings I, L.P.).
2.31 Opco Partnership Agreement. "Opco Partnership Agreement" shall mean
the Agreement of Limited Partnership of Opco.
2.32 Partner. "Partner" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
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2.33 Partnership. "Partnership" shall have the meaning ascribed to such
term in the first WHEREAS clause of this Agreement.
2.34 Partnership Interest. "Partnership Interest" shall refer, with respect
to a given Partner as of a given date, to such Partner's general partner
interest in the Partnership (if any) and such Partner's limited partner interest
in the Partnership (if any), in each case as of such date.
2.35 Partnership Year. "Partnership Year" shall have the meaning ascribed
to such term in Section 1.6.
2.36 Percentage Interest. The Percentage Interest of each Partner as of the
close of business on the date hereof, and thereafter, shall be the percentage
set forth in Schedule 1 hereto as the same shall be amended from time to time in
order to effect transfers of Partnership Interests, the exercise of options with
respect to Partnership Interests or otherwise.
2.37 Person. "Person" shall include an individual, a partnership, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government or any department or agency thereof, and any other
entity.
2.38 Profits and Losses. "Profits" and "Losses" shall mean, for each fiscal
year or other period, an amount equal to the Partnership's taxable income or
loss for such year or period, determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses pursuant
to this Section 2.38 shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treas. Reg. ' 1.704-l(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this Section 2.38, shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Subsection 2.23(2) or (3) hereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value; and
(v) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year or other period.
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(vi) Prior to a distribution in kind assets shall be marked to market
and the book gain shall be considered an item of Profit.
2.39 Recycling. "Recycling" shall have the meaning ascribed to such term in
the second WHEREAS clause of this Agreement.
2.40 Regulations or Treas. Reg. "Regulations" or "Treas. Reg." shall mean
the regulations promulgated under the Code.
2.41 Return Amount. "Return Amount" shall mean an amount equal to a 5%
annual compounded return on the Graham Partners Excess Distribution Amount
running from the date such excess distribution is made until the related Catch
Up Amount is paid.
2.42 Transfer. "Transfer" shall mean any assignment, mortgage,
hypothecation, transfer, pledge, creation of a security interest in or lien
upon, encumbrance, gift or other disposition.
2.43 Withdrawn Partners. "Withdrawn Partners" shall have the meaning
ascribed to such term in the second WHEREAS clause of this Agreement.
2.44 General Provisions. As used in this Agreement, except as the context
otherwise requires, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine and the neuter.
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole, including the Schedules hereto, and not to
any particular Article, Section, Subsection, Clause or Subdivision contained in
this Agreement.
ARTICLE 3
CAPITAL ACCOUNTS
3.1 Capital Accounts. A Capital Account shall be maintained for each
Partner on the books of the Partnership. Schedule 1 hereto reflects the
Partners' respective Capital Accounts as of the close of business on the date
hereof, computed consistently with the provisions of this Agreement.
3.2 Negative Capital Accounts. At no time during the term of the
Partnership or upon dissolution and liquidation thereof shall a Limited Partner
with a negative balance in its Capital Account have any obligation to the
Partnership or the other Partners to restore such negative balance.
3.3 Compliance with Treasury Regulations. The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of capital
accounts are intended to comply with Section 704(b) of the Code and Treas. Reg.
ss. 1.704-l(b) and ss. 1.704-2 (or any corresponding provision of succeeding
law) and shall be interpreted and applied in a manner consistent with such
Regulation.
3.4 Succession to Capital Accounts. In the event any interest in the
Partnership is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest. For purposes of the preceding
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sentence, the portion of the Capital Account to which the transferee succeeds
shall be that percentage of the transferor's total Capital Account as the
Percentage Interest being transferred bears to the total Percentage Interest of
the transferor.
3.5 Certain Adjustments. In the event the Gross Asset Values of the assets
of the Partnership are adjusted pursuant to the provisions of this Agreement,
the Capital Accounts of all Partners shall be adjusted simultaneously to reflect
the aggregate net adjustment as if the Partnership recognized gain or loss equal
to the amount of such aggregate net adjustment.
3.6 No Withdrawal of Capital Contributions. No Partner shall withdraw the
balance of its Capital Account without the unanimous written approval of the
other Partners. No Partner shall receive any interest with respect to the
balance of its Capital Account.
3.7 Other Payments. Notwithstanding anything herein to the contrary, the
Capital Account of a Partner will not be adjusted by a payment, if any, made
pursuant to either Section 1.2 (Adjustments) or Section 10.1 (Indemnification)
of the Recapitalization Agreement or the event giving rise to such payment.
ARTICLE 4
COSTS AND EXPENSES
The Partnership shall (i) pay or cause to be paid all reasonable costs and
expenses of the Partnership incurred in pursuing and conducting, or otherwise
related to, the business of the Partnership, and (ii) reimburse the General
Partners for any reasonable out-of-pocket costs and expenses reasonably incurred
by either of them in connection therewith (including, without limitation, in the
performance of its duties as tax matters partner) subject to Section 6.4(vii)
hereto.
ARTICLE 5
DISTRIBUTIONS; PARTNERSHIP ALLOCATIONS; TAX MATTERS
5.1 Distributions Prior to Dissolution. (a) Except as provided in Section
10.3 and Section 5.1(b), all distributions on and after the date of this
Agreement shall be made to the Partners in proportion to their respective
Percentage Interests.
(b) Available Cash shall be distributed to the Partners at the following
times and in the following amounts:
(i) Subject to the provisions of the outstanding indebtedness of the
Partnership, on or before the fifth business day prior to the date an estimated
tax payment is due for a Partner, Available Cash shall be distributed to each
Partner in an amount equal to the product of (1) the highest combined marginal
individual or corporate federal, state and local income tax rates ((i)
including, to the extent applicable, if any, alternative minimum tax and (ii)
taking into account any federal tax benefit for a deduction for state and local
taxes) applicable to the taxable income of the Partnership allocated to a
Partner and in effect at the time of the distribution, times (2) the remainder,
if any, of (A) the product of 25, 50, 75 or 100 percent for the first (1st),
second (2nd), third (3rd) or fourth (4th)
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required estimated tax installment payment for the fiscal year, respectively,
times (a) the cumulative (as annualized) taxable income to be allocated to such
Partner pursuant to Section 5.3 for such fiscal year less (b) the cumulative
taxable loss that has been allocated to such Partner to the extent such loss has
not previously reduced taxable income pursuant to this provision, as estimated
by Managing General Partner by GP Action in good faith as of the day for
payment, minus (B) the sum of the cumulative distributions to such Partner
pursuant to this provision for each prior required estimated tax installment
payment during such fiscal year and the cumulative distributions made to the
Partners pursuant to Section 5.1(b)(iii)(B) to the extent such distributions
have not previously reduced distributions pursuant to this Section 5.1(b)(i);
and
(ii) Upon notice from the Managing General Partner by GP Action, the
Partners or the Partnership, as the case may be, will reimburse the other for
any difference between the amount of distributions made to the Partners pursuant
to Section 5.1(b)(i) and the amount of distributions that would have been made
based on the actual taxable income reported on the Partnership's tax return for
such fiscal year (the "Reimbursed Amount"). The Managing General Partner shall
provide notice to the Partners of the Reimbursed Amount as soon as practicable
after the end of each fiscal year of the Partnership. Such Reimbursed Amount
shall be effected by adjusting
distributions made to Partners in the next succeeding fiscal year and,
thereafter, by the Reimbursed Amount until the Reimbursed Amount is zero; and
(iii) Any remaining Available Cash shall be distributed to the
Partners at such times and in such amounts as Managing General Partner by GP
Action shall determine as follows:
(A) First, 100% to Investor GP and Investor LP in proportion to their
Percentage Interests until such Partners receive aggregate
distributions equal to the Catch Up Amount; and
(B) Thereafter, to the Partners in proportion to their Percentage
Interests.
5.2 Partnership Allocations.
(a) Except as otherwise provided in this Section 5.2 or elsewhere in this
Agreement, for purposes of this Agreement, and for federal, state and local
income tax purposes, all items of Profits and Losses shall be determined with
respect to each taxable year of the Partnership as of the end thereof, and
allocated to the Partners in accordance with their then Percentage Interests,
except that Profits and all Losses from the sale or exchange of substantially
all of the assets of the Partnership shall, in any event, be allocated to and
among the Partners, as the case may be, so as to produce Capital Accounts for
the Partners equal to the amounts, sequence and priority that would be
distributed to the Partners if all the Partnership Assets were distributed to
the Partners in accordance with the provisions of Section 5.1(b)(iii) of this
Agreement. Each Partner's Percentage Interest shall constitute its interest in
partnership profits for purposes of determining such Partner's share of
nonrecourse liabilities of the Partnership under Treas. Reg. ss. 1.752-3(a)(3).
Accordingly, as of the date of this Agreement, the liabilities shall be
allocated among the Partners based on each Partner's Percentage Interest.
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(b) Notwithstanding Subsection 5.2(a):
(i) Minimum Gain and Hypothetical Capital Accounts. For purposes of
complying with Treasury Regulations relating to tax allocation, the
Partnership's "minimum gain," "minimum gain attributable to partner nonrecourse
debt" and the Partners' hypothetically adjusted Capital Accounts ("Hypothetical
Capital Accounts") must be determined from time to time. The amount of minimum
gain or minimum gain attributable to partner nonrecourse debt is determined in
accordance with Treas. Reg. ss.1.704-2(d) or ss.1.704-2(i), as the case may be,
by computing, with respect to each
nonrecourse liability of the Partnership, the amount of gain (of whatever
character), if any, that would be realized by the Partnership if it disposed of
(in a taxable transaction) the Partnership property subject to such liability in
full satisfaction thereof, and by then aggregating the amounts so computed. A
Partners' Hypothetical Capital Account shall equal its true Capital Account,
increased by any amount that such Partner is treated as being obligated to
restore under Treas. Reg. ss.1.704-l(b)(2)(ii)(c) (including the Partner's share
of minimum gain, computed as provided in Treas. Reg. ss.1.704-2(g), and of
minimum gain attributable to partner nonrecourse debt, computed as provided in
Treas. Reg. ss.1.704-2(i)(5)), and decreased by the items described in Treas.
Reg. ss.1.704-l(b)(2)(ii)(d), clauses (4), (5) and (6). For purposes of
determining each Partner's share of minimum gain or minimum gain attributable to
partner nonrecourse debt, any distributions funded with the proceeds of
nonrecourse liabilities shall be treated as allocable to the nonrecourse
liabilities, if any, that were incurred by the Partnership in connection with
such distributions.
(ii) Qualified Income Offset. A Partner who unexpectedly receives an
adjustment, allocation, or distribution described in Treas. Reg.
ss.1.704-l(b)(2)(ii)(d), clauses (4), (5) and (6), that creates a deficit in his
Hypothetical Capital Account shall be allocated items of income and gain
(consisting of a pro rata portion of each item of Partnership income, including
gross income, and gain for such year) in an amount and manner sufficient to
eliminate such deficit as quickly as possible.
(iii) Minimum Gain Chargeback. If there is a net decrease in the
Partnership's minimum gain or minimum gain attributable to partner nonrecourse
debt during a Partnership taxable year, any Partner with a share of such minimum
gain at the beginning of such year shall be allocated, before any other
allocation is made of Partnership items for such taxable year, items of income
and gain for such year (and, if necessary, subsequent years) in proportion to,
and to the extent of, such Partner's share of such decrease in minimum gain in
accordance with Treas. Reg. ss.1.704-2(f) and ss.1.704-2(i) (the "Minimum Gain
Chargeback"). The Minimum Gain Chargeback allocated in any taxable year shall
consist first of gains recognized from the disposition of items of Partnership
property subject to one or more nonrecourse liabilities of the Partnership to
the extent of the decrease in Minimum Gain attributable to the disposition of
such items of property, with the remainder of the Minimum Gain Chargeback, if
any, made up of a pro rata portion of the Partnership's other items of income
and gain for that year.
(iv) Special Limitation on Losses Allocated to a Partner. No loss or
deduction shall be allocated to a Partner to the extent that such allocation
would reduce such Partner's Hypothetical Capital Account below zero, and such
loss or deduction shall instead be allocated to the other Partners in proportion
to the positive balances of their respective Hypothetical Capital Accounts.
(v) Restoration. If any items of income, gain, loss or deduction shall
be specially allocated pursuant to Paragraph (ii), (iii) or (iv) of this
Subsection 5.2(b) then as quickly as
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possible thereafter (but not in such a manner as to create or increase a deficit
in any Partner's Hypothetical Capital Account) items of income, gain, loss or
deduction shall be specially allocated to the Partners so as to return all
Capital Accounts to such balances as they would have had if no such special
allocations had been made pursuant to Paragraph (ii), (iii) or (iv) of this
Subsection 5.2(b).
(vi) Rule of Construction. This Section 5.2 is intended to satisfy the
rules of Treas. Reg. ss.1.704-1(b) and the rules for allocations attributable to
nonrecourse liabilities set forth in Treas. Reg. ss.1.704-2 and should be so
construed.
5.3 Tax Allocations; Code Section 704(c).
(a) For income tax purposes only, each item of income, gain, loss,
deduction and credit of the Partnership shall be allocated among the Partners in
the same manner as the corresponding items of Profits and Losses and specially
allocated items are allocated for Capital Account purposes.
(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its initial Gross Asset Value.
(c) In the event the Gross Asset Value of any asset of the Partnership
shall be adjusted pursuant to the provisions of this Agreement, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Section 704(c) of the Code and the Treasury Regulations thereunder.
(d) Any elections or other decisions relating to such Section 704(c)
allocations and "reverse Section 704(c) allocations" shall be made by the
Partners in any manner that reasonably reflects the purpose and intention of
this Agreement. Unless otherwise agreed by the Partners, the Partnership shall
use the "traditional allocation method" for such allocations, in accordance with
Treas. Reg. ss.1.704-3(b). Section 704(c) allocations pursuant to this Section
5.3 are solely for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Partner's Capital
Account or share of Profits, Losses, other items, or distributions pursuant to
any provision of this Agreement.
5.4 Accounting Method. The books of the Partnership (for both tax and
financial reporting purposes) shall be kept on an accrual basis.
5.5 Withholding. Each Partner hereby authorizes the Partnership to withhold
and to pay over any taxes payable by the Partnership or any of its Affiliates as
a result of such Partner's participation in the Partnership; if and to the
extent that the Partnership shall be required to withhold any such taxes, such
Partner shall be deemed for all purposes of this Agreement to have received a
payment from the Partnership as of the time such withholding is required to be
paid, which payment shall be deemed to be a distribution to such Partner to the
extent that the Partner is entitled to receive a distribution. To the extent
that the aggregate of such payments to a Partner for any period exceeds the
distributions to which such Partner is entitled for such period, the amount of
such excess shall be considered a demand loan
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from the Partnership to such Partner, with interest at an interest rate of 5%
compounded annually, which interest shall be treated as an item of Partnership
income until discharged by such Partner by repayment, which may be made in the
sole discretion of the Managing General Partner out of distributions to which
such Partner would otherwise be subsequently entitled. The withholdings referred
to in this Section 5.5 shall be made at the maximum applicable statutory rate
under the applicable tax law unless the Managing General Partner receives
documentation, satisfactory to the Managing General Partner, to the effect that
a lower rate is applicable, or that no withholding is applicable.
5.6 Tax Treatment of Return Amounts. All Return Amounts shall constitute
guaranteed payments for the use of capital, within the meaning of Section 707(c)
of the Code.
5.7 Distribution by Opco. The Managing General Partner shall cause Opco to
make distributions of cash to the Partnership (to the extent funds are legally
available therefor and permitted by applicable debt instruments) necessary for
the Partnership to make the distributions required under this Article 5.
ARTICLE 6
MANAGEMENT
6.1 Rights and Duties of the Partners.
(a) The Limited Partners as limited partners in the Partnership shall not
participate in the control of the business of the Partnership, and the Limited
Partners shall have no power to act for or bind the Partnership. The General
Partners not constituting a Managing General Partner shall have no power to act
for or bind the Partnership, other than pursuant to a GP Action.
(b) Without in any way limiting (a) above, GP Corp shall resolve any
questions arising regarding the interpretation or terms of the management
incentive agreements (described in Part I of Schedule 3.18 of the
Recapitalization Agreement).
(c) Pursuant to Pennsylvania law, each Limited Partner shall not be liable
for losses or debts of the Partnership beyond the aggregate amount such Partner
has contributed to the Partnership pursuant to this Agreement plus his share of
the undistributed net profits of the Partnership, except that a Partner may be
liable under Pennsylvania law to repay certain distributions received by it.
(d) (i) If any Person or Persons that directly or indirectly own in the
aggregate 51% of the outstanding Partnership Interests (the "Selling Persons")
desire to Transfer, directly or indirectly, all or any portion of the
Partnership Interests owned by such Selling Persons to any third party (a
"Buyer") (other than to an Affiliate of such Selling Person) in accordance with
the terms of this Section 6.1(d) pursuant to a bona fide written offer to
purchase such Partnership Interests (a "Bona Fide Offer"), the Selling Persons
shall have the right to require all other Partners (the "Non-Selling Partners")
to sell to the Buyer, at the same price and on the same terms and conditions as
reflected in the Bona Fide Offer, up to the same percentage of the Partnership
Interests owned by such Non-Selling Partners as the Partnership Interests to be
sold by the Selling Persons to the Buyer represent with respect to the
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Partnership Interests owned by such Selling Persons immediately prior to the
sale of any of the Partnership Interests to the Buyer.
(ii) The Selling Persons may exercise their rights pursuant to this Section
6.1(d) by notifying the Non-Selling Partners (a "Selling Notice") within seven
days of its receipt of a Bona Fide Offer of its intention to require the
Non-Selling Partners to sell Partnership Interests to the Buyer. Such Selling
Notice shall specify the name of the proposed transferee, the price to be paid
for the Partnership Interests, the percentage of Partnership Interests to be
transferred and the other terms and conditions of the Transfer.
(iii) In accordance with such Selling Notice, each Selling Person and each
Non-Selling Partner shall sell to the Buyer all, or at the option of the Buyer,
any part of the Partnership Interests proposed to be purchased by the Buyer at
no less than the price and upon other terms and conditions, if any, not more
favorable to the Buyer than those in the Bona Fide Offer; provided, however,
that any purchase of less than all of such Partnership Interests by the Buyer
shall be made from each Selling Person and each Non-Selling Partner pro rata
based upon the relative amount of the Partnership Interests that such Selling
Persons and Non-Selling Partners are otherwise entitled to sell pursuant to (i)
above.
6.2 Duty of Managing General Partner. Managing General Partner shall have
such duties and responsibilities with respect to the Partnership as are required
under applicable law.
6.3 Powers of Managing General Partner.
(a) Subject to the terms and conditions of this Agreement (including
without limitation Section 6.4) and Section 10 of the Recapitalization
Agreement, Managing General Partner shall have full and complete charge of all
affairs of the Partnership, and the management and control of the Partnership's
business shall rest exclusively with Managing General Partner. Except as
otherwise provided in the Act or by this Agreement, Managing General Partner
shall possess all of the rights and powers of a partner in a partnership without
limited partners under Pennsylvania law. Managing General Partner shall be
required to devote to the conduct of the business of the Partnership such time
and attention as is appropriate to accomplish the purposes, and to conduct
properly the business, of the Partnership. Subject to applicable law, the
Managing General Partner shall not be obligated to do any act or thing in
connection with the Partnership other than pursuant to this Agreement.
(b) Subject to the limitations set forth in this Agreement (including
without limitation Section 6.4), Managing General Partner shall have the
authority to perform or cause to be performed all management and operational
functions relating to the business of the Partnership. Without limiting the
generality of the foregoing, except as otherwise provided in Section 6.4,
Managing General Partner is authorized on behalf of the Partnership, in its sole
discretion and without the approval of the Limited Partners, to:
(i) expend the capital and revenues of the Partnership in furtherance
of the Partnership's business as described in Section 1.4 and pay, in accordance
with the provisions of this Agreement, all expenses, debts and obligations of
the Partnership to the extent that funds of the Partnership are available
therefor;
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(ii) make investments in United States government securities,
securities of governmental agencies, commercial paper, money market funds,
bankers' acceptances, certificates of deposit, and any other debt instruments or
other securities, pending disbursement of the Partnership funds in furtherance
of the Partnership's business as described in Section 1.4 or to provide a source
from which to meet contingencies;
(iii) enter into and terminate agreements and contracts with third
parties in furtherance of the Partnership's business as described in Section
1.4, institute, defend and settle litigation arising therefrom, and give
receipts, releases and discharges with respect to all of the foregoing;
(iv) maintain, at the expense of the Partnership, adequate records and
accounts of all operations and expenditures and furnish any Partner with the
reports referred to in Section 8.2;
(v) purchase, at the expense of the Partnership, liability, casualty,
fire and other insurance and bonds to protect the Partnership's properties,
business, partners and employees and to protect the General Partners and their
employees;
(vi) employ, at the expense of the Partnership, consultants,
accountants, attorneys and others and terminate such employment; provided,
however, that if any Affiliate of any Partner is so employed, such employment
shall be in accordance with Section 6.7;
(vii) execute and deliver any and all agreements, documents and other
instruments necessary or incidental to the conduct of the business of the
Partnership;
(viii) incur indebtedness, borrow funds and/or issue guarantees, in
each case for the conduct of the Partnership's business as described in Section
1.4;
(ix) confess judgment on behalf of the Partnership;
(x) submit a Partnership claim to arbitration or reference;
(xi) issue and sell additional Partnership Interests (other than
General Partner interests) or other securities of the Partnership or any of its
subsidiaries; and
(xii) effect the IPO Reorganization including the dissolution of the
Partnership in connection therewith.
By executing this Agreement, subject to the limitations set forth in Section
6.5, each Partner shall be deemed to have consented to any exercise by Managing
General Partner of any of the foregoing powers.
(c) Notwithstanding anything to the contrary in this Agreement, all actions
taken by the Managing General Partner outside the ordinary course of business of
the Partnership (including the appointment of executive officers of the
Partnership) shall be only pursuant to a GP Action.
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6.4 Restrictions on Managing General Partner Authority.
Notwithstanding any other provision of this Agreement, the Managing General
Partner shall not have authority to do any of the following on behalf of the
Partnership or Opco, either directly or indirectly, without the prior written
approval of the other General Partners:
(i) take any action in contravention of this Agreement or the Opco
Partnership Agreement;
(ii) take any action that would make it impossible to carry on the
ordinary business of the Partnership or Opco, except as otherwise provided in
this Agreement or the Opco Partnership Agreement, respectively;
(iii) knowingly commit any act that would subject any Limited Partner
or any limited partner of Opco to liability as a general partner in any
jurisdiction in which the Partnership or Opco transacts business;
(iv) possess property of the Partnership or Opco, or assign any rights
in specific property of the Partnership or Opco, for other than a valid business
purpose (which shall include an IPO Reorganization);
(v) take any action described in clauses (i) or (ii) of the definition
of "Bankruptcy" set forth in Section 2.6;
(vi) except in connection with actions permitted by this Agreement or
the Opco Partnership Agreement or as otherwise contemplated hereby or thereby,
take any action that would result in the failure of the Partnership or Opco to
be taxable as a partnership for purposes of federal income tax, or take any
position inconsistent with treating the Partnership or Opco as a partnership for
purposes of federal income tax, except as required by law;
(vii) except in connection with actions permitted by this Agreement or
the Opco Partnership Agreement or as otherwise contemplated hereby or thereby,
enter into any understanding, agreement or transaction, either directly or
indirectly, including, without limitation, through Opco or any other subsidiary,
with any Partner or any Affiliate thereof, including, without limitation, an
agreement relating to the payment of management fees to Investor GP, which
understanding, agreement or transaction is not (a) intrinsically fair to the
Partnership and Opco and (b) equally fair to each of the Partners thereof;
(viii) except in connection with actions permitted by this Agreement
or as otherwise contemplated hereby, elect to dissolve the Partnership, except
pursuant to a sale of substantially all assets of the Partnership, an IPO
Reorganization or otherwise as expressly permitted herein;
(ix) effect the IPO Reorganization through any Person other than
through GPC Capital Corp. II, a Delaware corporation and a wholly-owned
subsidiary of the Partnership ("IPO Corporation"); and
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(x) take any action, either directly or through any subsidiary or
other Affiliate of the Partnership, to alter, amend, modify or terminate the
management incentive agreements (described in Part I of Schedule 3.18 of the
Recapitalization Agreement).
6.5 Advisory Committee.
(a) Appointment. The Partnership and the General Partners, to the extent
such General Partners are acting on behalf of the Partnership, shall be advised
by a committee comprised of five (5) natural Persons (each, a "Member"), three
(3) of whom shall be appointed from time to time by Investor GP and, for so long
as the Graham Partners or any Affiliate thereof do not sell more than two-thirds
(2/3) in the aggregate of their Partnership Interests owned on the date hereof,
two (2) of whom shall be appointed from time to time by the other General
Partners (other than General Partners who are Affiliates of Investor GP) (the
"Advisory Committee"). Members shall serve at the pleasure of either Investor GP
or such other Partners, as appointed. The Person appointing a Member may fill
any vacancy in such Member's position on the Advisory Committee caused by any
reason and may remove or replace such Member at any time and for any reason,
with or without cause. Any such appointment, replacement or removal shall be
confirmed by written notice to the Partnership and the other Members. Schedule
6.5 hereto sets forth the initial Members of the Advisory Committee.
(b) Rights of Advisory Committee. Subject to the terms and conditions of
this Agreement, the Advisory Committee shall have the right to advise the
Partnership, its subsidiaries and the General Partners, to the extent the
General Partners are acting on behalf of the Partnership, on the Partnership's
and its subsidiaries' operations, including, without limitation, matters
concerning the Partnership's and Opco's financial condition, operating
performance and operating budget, and any proposed acquisition, divestiture,
merger, reorganization, recapitalization, joint venture, financing or other
significant transaction involving the Partnership or Opco (any which transaction
shall only be taken pursuant to a GP Action). The General Partners shall permit
the Members to participate in any and all discussions involving those matters
for which the Advisory Committee may advise the Partnership. The Members
appointed by Family Growth, however, shall not be obligated to participate in
such discussions or otherwise provide advisory services hereunder for more than
200 hours in the aggregate in any 12 month period. The Advisory Committee's
rights hereunder shall be solely advisory in nature and the Advisory Committee
shall have no power to act for or bind the Partnership.
(c) Compensation. For so long as the Graham Partners or any Affiliate
thereof do not sell more than two-thirds (2/3) in the aggregate of their
Partnership Interests owned on the date hereof, the Partnership shall pay Family
Growth a fee of $1,000,000 per annum, payable in four equal quarterly
installments on March 31, June 30, September 30 and December 31 of each year.
Such fee shall not be prorated for 1998.
(d) Limitation of Liability. No Member shall be liable to the Partnership,
any Partner or any other Person for any losses, claims, damages or liabilities
arising from any act or omission performed or omitted by him or her as a Member.
The Partnership shall indemnify, to the fullest extent not prohibited by law,
each Member against losses, claims, damages or liabilities arising from any act
or omission performed or omitted by him or her as a Member.
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(e) Continuance of Rights and Obligations. The rights and obligations of
Family Growth under Section 6.5(c) and (d) with respect to advisory services
shall continue after an IPO Reorganization.
6.6 Other Activities. Subject to the limitations set forth in Section 5.12
of the Recapitalization Agreement, any Partner (other than Investor GP in such
capacity) (the "Interested Party") may engage in or possess an interest in other
business ventures of any nature or description, independently or with others,
whether presently existing or hereafter created, and neither the Partnership nor
any Partner (including Investor GP) other than the Interested Party shall have
any rights in or to such independent ventures or the income or profits derived
therefrom.
6.7 Transactions with Affiliates.
(a) Any understanding, agreement or transaction between the Partnership or
any subsidiary of the Partnership, on the one hand, and any Partner (including
Investor GP) or an Affiliate of any Partner, on the other hand, shall be on
terms that the General Partners reasonably believe to be in the best interests
of the Partnership and any such understanding, agreement or transaction shall be
subject to Section 6.4(vii) hereof.
(b) Notwithstanding anything contained herein to the contrary, the
Partnership shall be permitted to enter into and comply with (i) the Consulting
Agreement with Capital, dated as of the date hereof, and any and all amendments
thereto; (ii) the Equipment Sales, Services and License Agreement with
Engineering, dated as of the date hereof, and any and all amendments thereto;
(iii) the Monitoring Agreement entered into on the date hereof between the
Partnership and Blackstone Management Partners III L.L.C., providing for a fee
of $1,000,000 per annum, payable in four quarterly installment on March 31, June
30, September 30, and December 31 of each year; and (iv) the Recapitalization
Agreement and all of the transactions contemplated thereby.
6.8 Exculpation and Indemnification. No General Partner nor any of its
Affiliates nor any of its respective partners, shareholders, officers,
directors, employees or agents shall be liable, in damages or otherwise, to the
Partnership or to any of the Limited Partners for any act or omission on its or
his part, except for (i) any act or omission resulting from its own willful
misconduct or bad faith, (ii) any breach by the General Partner of its duty of
loyalty and obligations under applicable law as a fiduciary to the Partnership
or (iii) any breach by the General Partner of any of the terms and provisions of
this Agreement. The Partnership shall indemnify, defend and hold harmless, to
the fullest extent permitted by law, the General Partners and each of their
Affiliates and their respective partners, shareholders, officers, directors,
employees and agents, from and against any claim or liability of any nature
whatsoever arising out of or in connection with the assets or business of the
Partnership (including the indemnification of GP Corp. and its Affiliates in
connection with the Litigation (as defined in Section 5.24 of the
Recapitalization Agreement)), except where attributable to the willful
misconduct or bad faith of such individual or entity or where relating to a
breach by the General Partner of its obligations as a fiduciary of the
Partnership or to a breach by the General Partner of any of the terms and
provisions of this Agreement. Notwithstanding the foregoing and anything in this
Agreement to the contrary, no General Partner shall be liable to the Partnership
or its Partners for monetary damages for breach of its fiduciary duties or its
duties set forth in Section 6.3, in each case other than a willful and flagrant
breach thereof, or a breach of its duty of loyalty.
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ARTICLE 7
COMPENSATION
The General Partners shall be entitled to reimbursement of all of their
respective expenses attributable to the performance of their respective
obligations hereunder, as provided in Article 4 hereof, to the extent permitted
by Section 6.7 if required. Subject to the Act, no amount so paid shall be
deemed to be a distribution of Partnership assets for purposes of this
Agreement. Except for reimbursement of their expenses and their right to
distributions as provided in this Agreement, the General Partners shall not
receive any compensation for their services as such.
ARTICLE 8
ACCOUNTS
8.1 Books and Records. Managing General Partner shall maintain complete and
accurate books of account of the Partnership's affairs at the Partnership's
principal office, including a list of the names and addresses of all Partners.
Each Partner shall have the right to inspect the Partnership's and its
subsidiaries' books and records (including the list of the names and addresses
of Partners) and all financial and other information of the Partnership and its
subsidiaries. Each of the Partners shall have the right to audit independently
the books and records and all financial and other information of the Partnership
and its subsidiaries, any such audit being at the sole cost and expense of the
Partner conducting such audit. In addition, the Graham Partners shall be
permitted to audit the books and records of Managing General Partner, and the
New Partners shall be permitted to audit the books and records of GP Corp, as
they relate to costs and expenses reimbursed by the Partnership to the General
Partners pursuant to Articles 4 and 7 hereto.
8.2 Reports, Returns and Audits.
(a) The books of account shall be closed promptly after the end of each
Partnership Year. The books and records of the Partnership shall be audited on a
consolidated basis as of the end of each Partnership Year by the Auditor. Within
ninety days after the end of each Partnership Year, Managing General Partner by
GP Action shall make a written report to each person who was a Partner at any
time during such Partnership Year which shall include (i) financial statements
comprised of at least the following: a balance sheet as of the close of the
preceding Partnership Year and a statement of earnings or losses, statement of
cash flows and changes in Partners' Capital Accounts for the Partnership Year
then ended, which financial statements shall be certified by the Auditor as in
accordance with Generally Accepted Accounting Principles; (ii) an accountant's
report to management (the "Management Letter") prepared by the Auditor; and
(iii) a certificate signed by Managing General Partner by GP Action certifying
that the business and activities of the Partnership during such Partnership Year
have been conducted in accordance with the terms of this Agreement.
(b) Managing General Partner by GP Action shall also furnish the Partners,
within 15 days after the end of each month, a balance sheet and income and cash
flow statements with respect to the Partnership on a consolidated basis for such
month, prepared in accordance Generally Accepted
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Accounting Principles, including monthly accruals for financial reporting
purposes of quarterly tax distributions or any other distributions to be made to
any of the Partners pursuant to Section 5.1, together with a report of Managing
General Partner by GP Action regarding the state of the Partnership's business
and activities, including an exception report regarding any variances between
actual results and budgeted results.
(c) Prior to July 15 of each year, each person who was a Partner at any
time during the previous Partnership Year shall be provided with an information
letter (containing such Partner's Form K-1 or comparable information) with
respect to its distributive share of income, gains, deductions, losses and
credits for income tax reporting purposes for such Partnership Year, together
with any other information concerning the Partnership necessary for the
preparation of a Partner's income tax return(s), and the Partnership shall
provide each Partner with an estimate of the information to be set forth in such
information letter by no later than March 15 of each year. With the sole
exception of mathematical errors in computation, the financial statements and
the information contained in such information letter shall be deemed conclusive
and binding upon such Partner unless written objection shall be lodged with
Managing General Partner within ninety days after the giving of such information
letter to such Partner.
(d) Managing General Partner by GP Action shall prepare or cause to be
prepared all federal, state and local tax returns of the Partnership (the
"Returns") for each year or other period for which such Returns are required to
be filed. To the extent permitted by law, for purposes of preparing the Returns,
the Partnership shall use the Partnership Year. Subject to applicable law,
Managing General Partner by GP Action shall determine the appropriate treatment
of each item of income, gain, loss, deduction and credit of the Partnership and
the accounting methods and conventions under the tax laws of the United States,
the several states and other relevant jurisdictions as to the treatment of any
such item or any other method or procedure related to the preparation of such
Returns. Managing General Partner by GP Action may make any elections under the
Code and/or applicable state or local tax laws, and Managing General Partner
shall be absolved from all liability for any and all consequences to any
previously admitted or subsequently admitted Partners resulting from its making
or failing to make any such election. Notwithstanding the foregoing, Managing
General Partner shall make the election provided for in Section 754 of the Code,
if requested to do so by any Partner.
(e) Managing General Partner shall be the "tax matters partner," as such
term is defined in Section 6231(a)(7) of the Code. The Tax Matters Partner shall
be authorized to incur reasonable expenses in the performance of its duties
pursuant to this Section 8.2(e). The Partnership shall bear the cost of such
expenses.
ARTICLE 9
TRANSFERS
9.1 Transfer of General Partners' Interest.
(a) Except as provided in this Article 9 or in Section 6.1(d), in
connection with a transfer of all or substantially all of the Partnership's
assets and liabilities to IPO Corporation upon the consummation of an initial
public offering of the shares of such corporation (an "IPO Reorganization"), no
General Partner shall withdraw from the Partnership or resign as a General
Partner nor shall any
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General Partner Transfer its general partner interest in the Partnership, in
each case without the written approval of all General Partners.
(b) The General Partners shall be liable to the Partnership for any
withdrawal or resignation in violation of Subsection 9.1(a) above.
9.2 Transfer of a Limited Partner's Interest.
(a) Except as otherwise provided in this Article 9 or in Section 6.1(d) or
in connection with an IPO Reorganization, no Limited Partner may Transfer its
Partnership Interest or any portion thereof to any Person.
(b) The Limited Partners agree, upon request of Managing General Partner by
GP Action to execute such certificates or other documents and perform such acts
as Managing General Partner by GP Action reasonably deems appropriate to
preserve the status of the Partnership as a limited partnership, after the
completion of any permitted Transfer of an interest in the Partnership, under
the laws of the Commonwealth of Pennsylvania.
9.3 Allocation of Distributions Subsequent to Assignment. All Profits and
Losses of the Partnership attributable to any Partnership Interest acquired by
reason of any Transfer of such Partnership Interest and any distributions made
with respect thereto shall be allocated using a method determined by Managing
General Partner by GP Action (i) in respect of the portion of the Partnership
Year ending on the effective date of the Transfer, to the transferor and (ii) in
respect of subsequent periods, to the transferee. All distributions on or before
the date of such Transfer shall be made to transferor, and all distributions
thereafter shall be made to the transferee. The effective date of any Transfer
permitted under this Agreement, subject to the provisions of Section 9.8 below,
shall be the close of business on the day the Partnership is notified of the
Transfer.
9.4 Death, Incompetence, Bankruptcy, Liquidation or Withdrawal of a Limited
Partner. The death, incompetence, Bankruptcy, liquidation or withdrawal of a
Limited Partner shall not cause (in and of itself) a dissolution of the
Partnership, but the rights of such a Limited Partner to share in the Profits
and Losses of the Partnership, to receive distributions and to assign its
Interest pursuant to this Article 9, on the happening of such an event, shall
devolve on its beneficiary or other successor, executor, administrator, guardian
or other legal representative for the purpose of settling its estate or
administering its property, and the Partnership shall continue as a limited
partnership. Such successor or personal representative, however, shall become a
substituted limited partner only upon compliance with the requirements of
Section 9.8 hereof with respect to a transferee of a Partnership Interest. The
estate of a Bankrupt Limited Partner shall be liable for all the obligations of
the Limited Partner.
9.5 Permitted Transfers of the New Partners. Subject to the rights and
limitations in this Section 9.5, the New Partners shall be permitted to Transfer
all or any portion of their respective Partnership Interests to any Affiliate,
or to any other Person upon compliance with (a) below.
(a) Tag-Along Rights of Graham Partners.
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(i) If at any time any New Partner desires to Transfer all or any portion
of the Partnership Interests owned by it to any Person (other than to an
Affiliate of such New Partner) in accordance with the terms of this Section 9.5
pursuant to a Bona Fide Offer from a Buyer to purchase such Partnership
Interests, the New Partner shall first give written notice of its intention to
sell to the Graham Partners (a "Tag-Along Notice") specifying the name of the
proposed transferee, the percentage of Partnership Interests proposed to be
transferred, the price to be paid for the transferred Partnership Interests and,
in reasonable detail, the other terms of the Bona Fide Offer. Each of the Graham
Partners shall have the right to sell to the Buyer, as a condition to such sale
by the New Partner, at the same price and on the same terms and conditions as
reflected in the Bona Fide Offer, up to the same percentage of the Partnership
Interests owned by such Graham Partner as the Partnership Interests to be sold
by the New Partner to the Buyer represents with respect to the Partnership
Interests owned by such New Partner immediately prior to the sale of any of the
Partnership Interests to the Buyer.
(ii) Each Graham Partner wishing to so participate in any sale under this
Section 9.5(a) shall notify the New Partner in writing of such intention within
15 days of the Graham Partner's receipt of the Tag-Along Notice.
(iii) The New Partner and each participating Graham Partner shall sell to
the Buyer all, or at the option of the Buyer, any part of the Partnership
Interests proposed to be sold by them at no less than the price and upon other
terms and conditions, if any, not more favorable to the Buyer than those in the
Bona Fide Offer; provided, however, that any purchase of less than all of such
Partnership Interests by the Buyer shall be made from such New Partner and each
participating Graham Partner pro rata based upon the relative amount of the
Partnership Interests that such New Partner and the Graham Partner are otherwise
entitled to sell pursuant to (i) above.
9.6 Permitted Transfers of Graham Partners.
(a) Right of First Refusal.
(i) If any Graham Partner (a "Graham Selling Partner") proposes to transfer
any Partnership Interests to any Person (other than as provided in Section
9.6(b)(i), (ii), (iii) or (iv)) pursuant to a Bona Fide Offer, then such Graham
Selling Partner shall first give to the Partnership and to the New Partners a
written notice (a "Notice of Sale") setting forth in reasonable detail the terms
and conditions under which the Graham Selling Partner proposes to sell such
Partnership Interests pursuant to the Bona Fide Offer.
(ii) Upon receipt of a Notice of Sale from a Graham Selling Partner, the
Partnership shall have the right, exercisable upon written notice to the Graham
Selling Partner and the New Partners within 30 days after the date of the Notice
of Sale, to elect to purchase, directly or through a designee, all or a portion
(subject to (iv) below) of the Partnership Interests proposed to be sold by the
Graham Selling Partner at a purchase price equal to the purchase price per unit
specified in the Notice of Sale (the "Specified Price"). Such notice shall state
the percentage of Partnership Interests to be purchased by the Partnership and
that the Partnership shall purchase such Partnership Interests within 60 days of
the date of receipt of the Notice of Sale.
(iii) In the event that the Partnership shall elect not to purchase, or
direct to an assignee the purchase of, all of the Partnership Interests subject
to the Notice of Sale, the Partnership
22
<PAGE>
shall so notify the New Partners in writing (the "Partnership Notice") within 30
days after the date of the Notice of Sale. In such event, any New Partner shall
have the right, exercisable upon written notice to the Graham Selling Partner
within 20 days after receipt of the Partnership Notice, to elect to purchase any
or all Partnership Interests not purchased by the Partnership that are proposed
to be sold by the Graham Selling Partner at the Specified Price (the "Purchasing
Partner"). Such notice shall state the percentage of Partnership Interests to be
purchased by the Purchasing Partner and that the Purchasing Partner shall
purchase such Partnership Interests within 60 days of the date of receipt of the
Partnership Notice.
(iv) If the Partnership and the New Partners do not exercise their purchase
rights in the manner and within the time periods provided in this Section 9.6(a)
with respect to all of the Partnership Interests offered in the Notice of Sale,
the Graham Selling Partner may sell all, but not less than all, of the
Partnership Interests subject to the Notice of Sale to any Person, for not less
than the Specified Price and upon the terms set forth in the Notice of Sale. Any
such sale must be consummated within 120 days of the date of the Notice of Sale.
(v) Any Partnership Interests not sold pursuant to the provisions of
paragraphs (i) through (iv) above shall again be subject to the restrictions
contained in this Agreement and shall not thereafter be transferred, except in
compliance with this Agreement.
(b) Notwithstanding anything to the contrary contained in this Agreement,
each Graham Partner and, commencing on the anniversary of the date hereof, GP
Corp shall be permitted to Transfer all or any portion of its respective
Partnership Interests, without the consent of any other Partner, to (i) any
Affiliate of such Graham Partner, (ii) any family member of DCG and any trusts
created for their benefit, (iii) any employee of such Graham Partner or any
Withdrawn Partner, and (iv) any Person in accordance with Sections 9.5(a) or
9.6(a) hereto.
9.7 Satisfactory Written Assignment Required. Anything herein to the
contrary notwithstanding, both the Partnership and the General Partners shall be
entitled to treat the transferor of a Partnership Interest as the absolute owner
thereof in all respects, and shall incur no liability for distributions of cash
or other property made in good faith to it, until such time as a written
assignment or other evidence of the consummation of a Transfer that conforms to
the requirements of this Article 9 and is reasonably satisfactory to Managing
General Partner by GP Action has been received by and recorded on the books of
the Partnership, at which time the Transfer shall become effective for purposes
of this Agreement.
9.8 Transferee's Rights. Any purported Transfer of a Partnership Interest
which is not in compliance with this Agreement is hereby declared to be null and
void and of no force and effect whatsoever. A permitted transferee of any
Partnership Interest pursuant to Section 9.1, 9.4, 9.5 or 9.6 hereof shall be
entitled to receive distributions of cash or other property from the Partnership
and to receive allocations of the income, gains, credits, deductions, profits
and losses of the Partnership attributable to such Partnership Interest after
the effective date of the Transfer but shall not become a Partner unless and
until admitted pursuant to Section 9.9 hereof.
9.9 Transferees Admitted as Partners. The assignee or transferee of any
Partnership Interest shall be admitted as a Partner only upon the satisfaction
of the following conditions:
23
<PAGE>
(a) A duly executed and acknowledged written instrument of Transfer
approved by Managing General Partner by GP Action and either a copy of this
Agreement duly executed by the transferee or an instrument of assumption in form
and substance satisfactory to Investor GP setting forth the transferee's
agreement to be bound by the provisions of this Agreement have been delivered to
the Partnership.
(b) The transferee has paid any fees and reimbursed the Partnership
for any expenses paid by the Partnership in connection with the Transfer and
admission.
The effective date of an admission of a Partner and the withdrawal of the
transferring Partner, if any, shall be the first day which is the last business
day of a calendar month to occur following the satisfaction of the foregoing
conditions.
9.10 Additional Restriction on Transfer. Notwithstanding any other
provision of this Agreement, no Partner shall Transfer any interest in the
Partnership if such Transfer would cause the Partnership to be classified as a
"publicly traded partnership" as that term is defined in Section 7704 of the
Code and the Regulations promulgated thereunder.
ARTICLE 10
DISSOLUTION
10.1 Events of Dissolution. The Partnership shall continue until the
earliest to occur of the following events (each an "Event of Withdrawal"), which
shall cause an immediate dissolution of the Partnership:
(a) the sale, exchange or other disposition of all or substantially
all of the Partnership's assets (including pursuant to an IPO Reorganization);
(b) the withdrawal, resignation, filing of a certificate of
dissolution or revocation of the charter or Bankruptcy of a General Partner or
the occurrence of any other event which causes a General Partner to cease to be
a general partner of the Partnership under the Act, unless (i) the remaining
General Partner elects to continue the business of the Partnership, or (ii) if
there is no remaining General Partner, a
majority-in-interest of the Limited Partners elect to continue the Partnership
business and select a successor general partner in accordance with the
provisions of the Act; or
(c) such date as the Partners shall unanimously elect.
10.2 Final Accounting. Upon the dissolution of the Partnership as provided
in Section 10.1 hereof, a proper accounting shall be made by the Partnership's
Auditor from the date of the last previous accounting to the date of
dissolution.
10.3 Liquidation. Upon the dissolution of the Partnership as provided in
Section 10.1 hereof, Managing General Partner by GP Action or, if there is no
general partner, a person approved by a majority in interest of the remaining
Partners, shall cause the cancellation of the Certificate (as amended) and shall
act as liquidator to wind up the Partnership. The liquidator shall have full
power and authority to sell, assign and encumber any or all of the Partnership's
assets and to wind up and liquidate the affairs
24
<PAGE>
of the Partnership in an orderly and business-like manner. All proceeds from
liquidation shall be distributed in the following orders of priority: (a) to the
payment and discharge of the debts and liabilities of the Partnership (other
than liabilities for distributions to Partners) and expenses of liquidation, (b)
to the setting up of such reserves as the liquidator may reasonably deem
necessary for any contingent liability of the Partnership (other than
liabilities for distributions to Partners), and
(c) the balance to the Partners as follows:
(i) First, 100% to Investor GP and Investor LP in proportion to their
Percentage Interests until such Partners receive distributions equal
to the Catch Up Amount.
(ii) Thereafter, to the Partners in proportion to their Percentage
Interests.
10.4 Cancellation of Certificate. Upon the completion of the distribution
of Partnership assets as provided in Section 10.3 hereof, the Partnership shall
be terminated and the person acting as liquidator shall take such other actions
as may be necessary or appropriate to terminate the Partnership.
ARTICLE 11
AMENDMENTS TO AGREEMENT
Without the written approval of each of the General Partners, no amendment
shall be made to this Agreement. The Managing General Partner shall give written
notice to all Partners promptly after any amendment has become effective.
ARTICLE 12
NOTICES
12.1 Method of Notice. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally or transmitted by telex or telecopier, receipt
acknowledged, or in the case of documented overnight delivery service or
registered or certified mail, return receipt requested, postage prepaid, on the
date shown on the receipt therefor, addressed to the Partners at their
respective addresses set forth below (except that any Partner may from time to
time give notice changing its address for that purpose):
If to the Graham Partners or GP Corp, to:
Graham Capital Corporation
1420 Sixth Avenue
York, PA 17403
Attention: William H. Kerlin, Jr.
Facsimile: (717) 848-5951
25
<PAGE>
With a required copy to:
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
Attention: Robert Mead Jones, Jr.
Facsimile: (215) 988-2757
If to Investor GP or Investor LP, to:
BCP/Graham Holdings LLC
c/o Blackstone Capital Partners III Merchant Banking Fund LP
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson
Facsimile: (212) 754-8703
With a required copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson S. Neely
Facsimile: (212) 455-2502
12.2 Computation of Time. In computing any period of time under this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or legal holiday, in
which event the period shall run until the end of the next day which is not a
Saturday, Sunday or legal holiday.
ARTICLE 13
INVESTMENT REPRESENTATIONS
13.1 Investment Purpose. Each Limited Partner represents and warrants to
the Partnership and to each other Partner that it has acquired its limited
partner interest in the Partnership for its own account, for investment only and
not with a view to the distribution thereof, except to the extent provided in or
contemplated by this Agreement.
13.2 Investment Restriction. Each Partner recognizes that (a) the limited
partner interests in the Partnership have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an
exemption from such registration, and agrees that it will not sell, offer for
sale, transfer, pledge or hypothecate its limited partner interest in the
Partnership (i) in the absence of an effective registration statement covering
such limited partner interest under the Securities Act, unless
26
<PAGE>
such sale, offer of sale, transfer, pledge or hypothecation is exempt from
registration for any proposed sale, and (ii) except in compliance with all
applicable provisions of this Agreement, and (b) the restrictions on transfer
imposed by this Agreement may severely affect the liquidity of an investment in
limited partner interests in the Partnership.
ARTICLE 14
GENERAL PROVISIONS
14.1 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and
supersedes any prior agreement or understanding among the parties hereto with
respect to the subject matter hereof.
14.2 Amendment; Waiver. Except as provided otherwise herein, this Agreement
may not be amended nor may any rights hereunder be waived except by an
instrument in writing signed by the Managing General Partner by GP Action with
such amendment or waiver; provided that any amendment that does not treat all
limited partnership interests on the same basis (in proportion to the percentage
interests thereof) or all general partnership interests on the same basis shall
be approved by the prejudiced Partner.
14.3 Governing Law. This Agreement shall be construed in accordance with
and governed by the Act and the other laws of the Commonwealth of Pennsylvania,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
14.4 Binding Effect. Except as provided otherwise herein, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, heirs, successors and assigns.
14.5 Separability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
14.6 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
14.7 No Third-Party Rights. Nothing in this Agreement shall be deemed to
create any right in any person not a party hereto (other than the permitted
successors and assigns of a party hereto) and this Agreement shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any third party (except as aforesaid).
14.8 Waiver of Partition. Each Partner, by requesting and being granted
admission to the Partnership, is deemed to waive until termination of the
Partnership any and all rights that it may have to maintain an action for
partition of the Partnership's assets.
27
<PAGE>
14.9 Nature of Interests. All Partnership property whether real or
personal, tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and none of the Partners shall have any direct ownership of such
property.
14.10 Power of Attorney. Each of the Partners does hereby constitute and
appoint Managing General Partner by GP Action as its true and lawful
representative and attorney-in-fact, in its name, place and stead to make,
execute, sign and file any amendment to the Certificate which may be required
because of this Agreement or the making of any amendments or supplements thereto
as provided in Article 11, and to make, execute, sign and file all such other
instruments, documents and certificates which, in the opinion of Managing
General Partner by GP Action, may from time to time be required by the laws of
the United States of America, the Commonwealth of Pennsylvania or any other
jurisdiction in which the Partnership shall determine to do business, or any
political subdivision or agency thereof or which Managing General Partner by GP
Action may deem necessary or appropriate to effectuate, implement and continue
the valid and subsisting existence and business of the Partnership.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
GENERAL PARTNERS:
-----------------
GRAHAM PACKAGING CORPORATION
By:/s/ William H. Kerlin
----------------------------------
Title: Chief Executive Officer
BCP/GRAHAM HOLDINGS LLC
By:/s/ Chinh E. Chu
----------------------------------
Title: Vice President
LIMITED PARTNERS:
-----------------
BMP/GRAHAM HOLDINGS
CORPORATION
By: /s/ Chinh E. Chu
----------------------------------
Title: Vice President
GRAHAM CAPITAL CORPORATION
By: /s/ William H. Kerlin
----------------------------------
Title: President
GRAHAM FAMILY GROWTH
PARTNERSHIP
By: Graham Packaging Corporation,
its general partner
By: /s/ William H. Kerlin
----------------------------
Title: Chief Executive Officer
29
<PAGE>
WITHDRAWING LIMITED PARTNERS:
-----------------------------
GRAHAM ENGINEERING CORPORATION
By: /s/ William H. Kerlin
----------------------------------
Title: Chief Executive Officer
GRAHAM RECYCLING CORPORATION
By: /s/ William H. Kerlin
----------------------------------
Title: Chief Executive Officer
/s/ William H. Kerlin Power of Attorney
-------------------------------------
DONALD C. GRAHAM
30
<PAGE>
SCHEDULE 1
Partner Percentage Interest Capital Account
- ------- ------------------- ---------------
General Partners
- ----------------
Graham Packaging Corporation 1.0% $2,450,000
BCP/Graham Holdings LLC 4.0% $9,800,000
Limited Partners
- ----------------
BMP/Graham Holdings Corporation 81.0% $198,450,000
Graham Capital Corporation 9.0% $22,050,000
Graham Family Growth Partnership 5.0% $12,250,000
----- ------------
Total 100.0% $245,000,000
===== ============
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Schedule 6.5
------------
Advisory Committee
- ------------------
Members appointed by Family Growth: Donald C. Graham
William H. Kerlin, Jr.
Members appointed by Investor GP: Howard A. Lipson
Chinh E. Chu
Simon P. Lonergan
32
<PAGE>
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
GPC CAPITAL CORP. II
THE UNDERSIGNED, for the purpose of forming a corporation pursuant to the
provisions of the Delaware General Corporation Law, does hereby certify as
follows:
FIRST: The name of the Corporation is GPC Capital Corp. II.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805, in the county of New
Castle. The name of the Corporation's registered agent at such address is
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is one thousand (1,000) shares, par value $.01 per
share, all of which are of one class and are designated as Common Stock.
FIFTH: The name and mailing address of the incorporator are as follows:
Name Mailing Address
---- ---------------
<PAGE>
2
Sharon L. Dougherty Drinker Biddle & Reath LLP
1100 Philadelphia National Bank
Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
SIXTH: In furtherance and not in limitation of the general powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, alter or repeal the Bylaws of the Corporation, except as
specifically otherwise provided therein.
SEVENTH: A director of the Corporation shall have no personal liability to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except to the extent that Section 102(b)(7) (or any successor
provision) of the Delaware General Corporation Law, as amended from time to
time, expressly provides that the liability of a director may not be eliminated
or limited. No amendment or repeal of this paragraph SEVENTH shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinabove
named, does hereby execute this Certificate of Incorporation this 5th day of
January, 1998.
<PAGE>
3
/s/ Sharon L. Dougherty
-------------------
Sharon L. Dougherty
Incorporator
<PAGE>
EXHIBIT 3.8
GPC CAPITAL CORP. II
BY-LAWS
ARTICLE I
MEETING OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of the
Corporation shall be held at such place either within or without the State of
Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the Chairman for any purpose and shall be
called by the Chairman or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and not
more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporation's issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall be not less than
one nor more than fifteen. The first Board of Directors shall consist of four
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or by the stockholders.
The Directors shall be elected by the stockholders at their annual meeting.
Vacancies and newly created directorships resulting from any increase in the
number of Directors may be filled by a majority of the Directors then in office,
although less than a quorum, or by the sole remaining Director or by the
stockholders. A Director may be removed with or without cause by the
stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting. Special meetings of the
Board of Directors may be held at any time upon the call of the President and
shall be called by the President or Secretary if directed by the Board of
Directors. Telegraphic or written notice of each special meeting of the Board of
Directors shall be sent to each Director not less than two hours before such
meeting. A meeting of the Board of Directors may be held without notice
immediately after the annual meeting of the stockholders. Notice need not be
given of regular meetings of the Board of Directors.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees of Directors. The Board of Directors may, by
resolution adopted by a majority of the whole
<PAGE>
3
Board, designate one or more committees, including without limitation an
Executive Committee, to have and exercise such power and authority as the Board
of Directors shall specify. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another Director to act at the meeting in place of any such
absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall initially consist of a President, a
Vice President, a Treasurer, a Secretary, two Assistant Secretaries, two
Assistant Treasurers and such other additional officers with such titles as the
Board of Directors shall determine, all of whom shall be chosen by and shall
serve at the pleasure of the Board of Directors. Such officers shall have the
usual powers and shall perform all the usual duties incident to their respective
offices. All officers shall be subject to the supervision and direction of the
Board of Directors. The authority, duties or responsibilities of any officer of
the Corporation may be suspended by the Chairman of the Board of Directors with
or without cause. Any officer elected or appointed by the Board of Directors may
be removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party or is threatened to be made a party by reason of his
current or former position with the Corporation or by reason of
<PAGE>
4
the fact that he is or was serving, at the request of the Corporation, as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors.
<PAGE>
GPC CAPITAL CORP. II
Action Taken by Unanimous Written
Consent of the Board of Directors
January 5, 1998
The undersigned Directors, constituting the entire Board of Directors of
GPC Capital Corp. II (the "Corporation"), acting without a meeting pursuant to
Section 141(f) of the Delaware General Corporation Law, hereby take the
following action by unanimous written consent:
1. The adoption by the sole incorporator of By-Laws in the form
inserted in the Minute Book of the Corporation is ratified and approved.
2. The following persons are elected to the offices set forth opposite
their respective names, to serve in accordance with the By-Laws of the
Corporation:
Name Office
---- ------
Philip R. Yates President, Treasurer,
Assistant Secretary
John E. Hamilton Vice President,
Assistant Treasurer,
Secretary
Chinh Chu Vice President
Simon Lonergan Vice President
3. The seal imprinted in the form of a circle bearing the name of the
Corporation and the words and figures "Corporate Seal 1998 Delaware" is
adopted as the corporate seal of the Corporation.
<PAGE>
2
4. The form of share certificate attached hereto as Exhibit A is
adopted as the certificate for the Corporation's Common Stock, par value
$0.01 per share.
5. The offer of Graham Packaging Company, to purchase 100 of the
authorized shares of Common Stock of the Corporation, pursuant to a
subscription agreement which shall be approved by the officers of the
Corporation, is accepted, and the Corporation is authorized to enter into
such subscription agreement and to issue to such offeror 100 fully paid,
non-assessable shares of the Common Stock of the Corporation, par value
$0.01 per share, for a purchase price of $0.01 per share; and upon delivery
to the Corporation of said purchase price, the officers of the Corporation
are authorized and directed to execute and deliver a certificate
representing 100 shares of the Common Stock of the Corporation to Graham
Packaging Company.
6. The fiscal year of the Corporation shall be the twelve-month period
ending on the 31st day of December in each year.
7. The proper officers of the Corporation are authorized to open in
the name of the Corporation whatever bank accounts may be necessary for the
expeditious conduct of the Corporation's affairs and to draw checks thereon
and to make deposits therein.
8. For the purpose of authorizing the Corporation to do business in
any state, territory or dependency of the United States or any foreign
country in which it is necessary or expedient for the Corporation to
transact business, the officers of the Corporation are authorized to
appoint and substitute such agents or attorneys for service of process, to
designate and change the location of such statutory office and, under the
corporate seal, to make and file such certificates as may be required by
the laws of any state, territory, dependency or country to authorize the
Corporation to transact business therein; and whenever it is expedient for
the Corporation to cease doing business therein and to withdraw therefrom,
the officers of the Corporation are authorized to revoke any such
appointment of agent or attorney for service of process and to file any
<PAGE>
3
necessary certificates, reports, revocations of appointment or surrender of
authority of the Corporation to do business in any such state, territory,
dependency or country.
/s/ Philip R. Yates
----------------------------
Philip R. Yates
/s/ John E. Hamilton
----------------------------
John E. Hamilton
Chinh Chu
Simon Lonergan
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
INDENTURE
Dated as of February 2, 1998
Among
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I, as Issuers,
GRAHAM PACKAGING HOLDINGS COMPANY, as Guarantor,
and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
----------
Up to $325,000,000 aggregate principal amount of 8 3/4 % Senior
Subordinated Notes due 2008, Series A 8 3/4% Senior Subordinated Notes due
2008, Series B
Floating Interest Rate Subordinated Term Securities
("FIRSTS")sm* due 2008, Series A
Floating Interest Rate Subordinated Term Securities
(FIRSTS) Series B
- --------------------------------------------------------------------------------
* FIRSTS is a Service mark of BT Alex. Brown Incorporated
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Indenture
Act Section Section
- --------------- ---------
ss.310(a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5)................................................... 7.8, 7.10.
(b)...................................................... 7.8; 7.10;
13.2
(c)...................................................... N.A.
ss. 311(a)................................................. 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
ss.312(a)...................................................... 2.5
(b)...................................................... 13.3
(c)...................................................... 13.3
ss.313(a)...................................................... 7.6
(b)(1)................................................... 7.6
(b)(2)................................................... 7.6
(c)...................................................... 7.6; 13.2
(d)...................................................... 7.6
ss.314(a)...................................................... 4.11; 4.12;
13.2
(b)...................................................... N.A.
(c)(1)................................................... 13.4
(c)(2)................................................... 13.4
(c)(3)................................................... N.A.
(d)...................................................... N.A.
(e)...................................................... 13.5
(f)...................................................... N.A.
ss.315(a)...................................................... 7.1(b)
(b)...................................................... 7.5; 13.2
(c)...................................................... 7.1(a)
(d)...................................................... 7.1(c)
(e)...................................................... 6.11
ss.316(a)(last sentence)....................................... 2.9
(a)(1)(A)................................................ 6.5
(a)(1)(B)................................................ 6.4
(a)(2)................................................... N.A.
(b)...................................................... 6.7
(c)...................................................... 10.4
ss.317(a)(1)................................................... 6.8
(a)(2)................................................... 6.9
(b)...................................................... 2.4
ss.318(a)...................................................... 13.1
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE................... 1
SECTION 1.1 Definitions.................................................... 1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.............. 27
SECTION 1.3 Rules of Construction.......................................... 27
ARTICLE II
THE SECURITIES............................................... 28
SECTION 2.1 Form and Dating................................................ 28
SECTION 2.2 Execution and Authentication................................... 28
SECTION 2.3 Registrar and Paying Agent..................................... 29
SECTION 2.4 Paying Agent To Hold Assets in Trust........................... 30
SECTION 2.5 Securityholder Lists........................................... 30
SECTION 2.6 Transfer and Exchange.......................................... 31
SECTION 2.7 Replacement Securities......................................... 31
SECTION 2.8 Outstanding Securities......................................... 32
SECTION 2.9 Treasury Securities............................................ 32
SECTION 2.10 Temporary Securities.......................................... 32
SECTION 2.11 Cancellation.................................................. 33
SECTION 2.12 Defaulted Interest............................................ 33
SECTION 2.13 CUSIP Number.................................................. 34
SECTION 2.14 Deposit of Moneys............................................. 34
SECTION 2.15 Book-Entry Provisions for Global Securities................... 34
SECTION 2.16 Registration of Transfers and Exchanges....................... 35
ARTICLE III
REDEMPTION................................................... 40
SECTION 3.1 Notices to Trustee............................................. 40
SECTION 3.2 Selection of Securities To Be Redeemed......................... 40
SECTION 3.3 Notice of Redemption........................................... 40
SECTION 3.4 Effect of Notice of Redemption................................. 41
SECTION 3.5 Deposit of Redemption Price.................................... 41
SECTION 3.6 Securities Redeemed in Part.................................... 42
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ARTICLE IV
COVENANTS.................................................... 42
SECTION 4.1 Payment of Securities.......................................... 42
SECTION 4.2 Maintenance of Office or Agency................................ 42
SECTION 4.3 Limitations on Transactions with Affiliates.................... 43
SECTION 4.4 Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock......................... 44
SECTION 4.5 Limitation on Asset Sales...................................... 47
SECTION 4.6 Limitation on Restricted Payments.............................. 49
SECTION 4.7 Existence...................................................... 53
SECTION 4.8 Payment of Taxes and Other Claims.............................. 53
SECTION 4.9 Notice of Defaults............................................. 53
SECTION 4.10 Maintenance of Properties and Insurance....................... 53
SECTION 4.11 Compliance Certificate........................................ 54
SECTION 4.12 Reports to Holders............................................ 54
SECTION 4.13 Waiver of Stay, Extension or Usury Laws....................... 55
SECTION 4.14 Change of Control............................................. 56
SECTION 4.15 Limitation on Other Senior Subordinated Indebtedness.......... 57
SECTION 4.16 Limitations on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries...... 57
SECTION 4.17 [Intentionally Omitted]....................................... 58
SECTION 4.18 Limitation on Liens........................................... 59
SECTION 4.19 Limitations on Guarantees of Indebtedness by
Restricted Subsidiaries.............................. 59
ARTICLE V
MERGERS; SUCCESSORS.......................................... 60
SECTION 5.1 Mergers, Sale of Assets, etc................................... 60
SECTION 5.2 Successor Substituted.......................................... 61
ARTICLE VI
DEFAULT AND REMEDIES......................................... 62
SECTION 6.1 Events of Default.............................................. 62
SECTION 6.2 Acceleration................................................... 64
SECTION 6.3 Other Remedies................................................. 64
SECTION 6.4 Waiver of Past Default......................................... 65
SECTION 6.5 Control by Majority............................................ 65
SECTION 6.6 Limitation on Suits............................................ 66
SECTION 6.7 Rights of Holders To Receive Payment........................... 66
SECTION 6.8 Collection Suit by Trustee..................................... 66
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SECTION 6.9 Trustee May File Proofs of Claim............................... 67
SECTION 6.10 Priorities.................................................... 67
SECTION 6.11 Undertaking for Costs......................................... 68
ARTICLE VII
TRUSTEE...................................................... 68
SECTION 7.1 Duties of Trustee.............................................. 68
SECTION 7.2 Rights of Trustee.............................................. 69
SECTION 7.3 Individual Rights of Trustee................................... 70
SECTION 7.4 Trustee's Disclaimer........................................... 71
SECTION 7.5 Notice of Defaults............................................. 71
SECTION 7.6 Reports by Trustee to Holders.................................. 71
SECTION 7.7 Compensation and Indemnity..................................... 71
SECTION 7.8 Replacement of Trustee......................................... 73
SECTION 7.9 Successor Trustee by Merger, etc............................... 74
SECTION 7.10 Eligibility; Disqualification................................. 74
SECTION 7.11 Preferential Collection of Claims Against Issuers............. 74
ARTICLE VIII
SUBORDINATION OF SECURITIES.................................. 75
SECTION 8.1 Securities Subordinated to Senior Indebtedness................. 75
SECTION 8.2 No Payment on Securities in Certain Circumstances.............. 75
SECTION 8.3 Payment Over of Proceeds upon Dissolution, etc................. 76
SECTION 8.4 Subrogation.................................................... 77
SECTION 8.5 Obligations of Issuers Unconditional........................... 78
SECTION 8.6 Notice to Trustee.............................................. 78
SECTION 8.7 Reliance on Judicial Order or Certificate of Liquidating Agent. 79
SECTION 8.8 Trustee's Relation to Senior Indebtedness...................... 80
SECTION 8.9 Subordination Rights Not Impaired by Acts or Omissions of
the Issuers or Holders of Senior Indebtedness........ 80
SECTION 8.10 Securityholders Authorize Trustee To Effectuate
Subordination of Securities.......................... 80
SECTION 8.11 This Article Not To Prevent Events of Default................. 81
SECTION 8.12 Trustee's Compensation Not Prejudiced......................... 81
SECTION 8.13 No Waiver of Subordination Provisions......................... 81
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Page
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SECTION 8.14 Subordination Provisions Not Applicable to Money Held in
Trust for Securityholders............................ 81
ARTICLE IX
DISCHARGE OF INDENTURE....................................... 81
SECTION 9.1 Termination of Issuers' Obligations............................ 82
SECTION 9.2 Application of Trust Money..................................... 83
SECTION 9.3 Repayment to Issuers........................................... 83
SECTION 9.4 Reinstatement.................................................. 84
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS.......................... 84
SECTION 10.1 Without Consent of Holders.................................... 84
SECTION 10.2 With Consent of Holders....................................... 85
SECTION 10.3 Compliance with Trust Indenture Act........................... 87
SECTION 10.4 Revocation and Effect of Consents............................. 87
SECTION 10.5 Notation on or Exchange of Securities......................... 87
SECTION 10.6 Trustee To Sign Amendments, etc............................... 88
ARTICLE XI
GUARANTEE.................................................... 88
SECTION 11.1 Unconditional Guarantee....................................... 88
SECTION 11.2 Severability.................................................. 89
SECTION 11.3 Limitation of Guarantor's Liability........................... 89
SECTION 11.4 Contribution.................................................. 89
SECTION 11.5 Execution of Guarantee........................................ 90
SECTION 11.6 Subordination of Subrogation and Other Rights................. 90
ARTICLE XII
SUBORDINATION OF GUARANTEE................................... 91
SECTION 12.1 Guarantee Obligations Subordinated to Senior Indebtedness..... 91
SECTION 12.2 No Payment in Certain Circumstances; Payment
Over of Proceeds upon Dissolution, etc............... 91
SECTION 12.3 Subrogation................................................... 93
SECTION 12.4 Obligations of Guarantors Unconditional....................... 94
-iv-
<PAGE>
Page
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SECTION 12.5 Notice to Trustee............................................. 95
SECTION 12.6 Reliance on Judicial Order or Certificate of Liquidating Agent 95
SECTION 12.7 Trustee's Relation to Guarantor Senior Indebtedness........... 96
SECTION 12.8 Subordination Rights Not Impaired by Acts or
Omissions of Holdings, the Guarantors or Holders
of Senior Indebtedness............................... 96
SECTION 12.9 Securityholders Authorize Trustee To Effectuate
Subordination of Guarantee........................... 96
SECTION 12.10 This Article Not To Prevent Events of Default................ 97
SECTION 12.11 Trustee's Compensation Not Prejudiced........................ 97
SECTION 12.12 No Waiver of Guarantee Subordination Provisions.............. 97
ARTICLE XIII
MISCELLANEOUS................................................ 97
SECTION 13.1 Trust Indenture Act Controls.................................. 97
SECTION 13.2 Notices....................................................... 98
SECTION 13.3 Communications by Holders with Other Holders.................. 99
SECTION 13.4 Certificate and Opinion as to Conditions Precedent............100
SECTION 13.5 Statements Required in Certificate or Opinion.................100
SECTION 13.6 Rules by Trustee, Paying Agent, Registrar.....................100
SECTION 13.7 Governing Law.................................................101
SECTION 13.8 No Recourse Against Others....................................101
SECTION 13.9 Successors....................................................101
SECTION 13.10 Counterpart Originals........................................101
SECTION 13.11 Severability.................................................101
SECTION 13.12 No Adverse Interpretation of Other Agreements................102
SECTION 13.13 Legal Holidays...............................................102
SIGNATURES .........................................................S-1
EXHIBIT A-1 Form of Series A Fixed Rate Security.....................A-1
EXHIBIT A-2 Form of Series A Floating Rate Security..................
EXHIBIT B Form of Series B Fixed Rate Security.....................B-1
EXHIBIT B-2 Form of Series B Floating Rate Security..................
EXHIBIT C Form of Legend for Global Securities.....................C-1
EXHIBIT D Form of Transfer Certificate.............................D-1
EXHIBIT E Form of Transfer Certificate for Institutional
Accredited Investors.....................................E-1
- ----------
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-v-
<PAGE>
INDENTURE dated as of February 2, 1998, among GRAHAM PACKAGING COMPANY, a
Pennsylvania limited partnership (the "Company"), GPC CAPITAL CORP. I, a
Delaware corporation ("CapCo I"), as issuers, GRAHAM PACKAGING HOLDINGS COMPANY,
a Pennsylvania limited partnership ("Holdings"), as guarantor, and UNITED STATES
TRUST COMPANY OF NEW YORK, a New York banking corporation, as trustee (the
"Trustee"). Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Additional Interest" has the meaning provided in the Registration Rights
Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. 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, shall mean
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.
"Affiliate Transaction" see Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary thereof (each referred to
<PAGE>
in this definition as a "disposition") or (ii) the issuance or sale of Equity
Interests of any Restricted Subsidiary (whether in a single transaction or a
series of related transactions), in each case, other than: (a) a disposition of
Cash Equivalents or Investment Grade Securities or obsolete or worn out
equipment in the ordinary course of business; (b) the disposition of all or
substantially all of the assets of the Company in a manner permitted pursuant to
Section 5.01 of this Indenture or any disposition that constitutes a Change of
Control pursuant to this Indenture; (c) any Restricted Payment that is permitted
to be made, and is made, under Section 4.06 of this Indenture; (d) any
disposition of assets with an aggregate fair market value of less than $2.0
million; (e) any disposition of property or assets by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Restricted
Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, for use in a Similar Business; (g)
any financing transaction with respect to property built or acquired by the
Company or any of its Restricted Subsidiaries after the Issue Date including,
without limitation, sale-leasebacks and asset securitizations; (h) foreclosures
on assets; (i) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary; and (j) an issuance of Equity
Interests by CapCo I in connection with an IPO Reorganization.
"Bankruptcy Law" see Section 6.01.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its Affiliates.
"Board of Directors" means, as to any Person, the board of directors of
such Person (or, if such Person is a partnership, the board of directors or
other governing body of the general partner (or, if there is more than one
general partner of such person, the general partner or general partners which
may take the applicable action pursuant to the partnership agreement of such
Person) of such Person) or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
or the general partner, in the case of a limited partnership, or member, in the
case of a limited liability company, of such Person (or, if such Person is a
partnership, one of its general partners) to have been duly adopted by the Board
of Directors of such Person or the general partner, in the case of a limited
partnership, or member, in the case of a limited liability company, of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means a day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open.
"Calculation Agent" means the Person appointed by the Issuers to calculate
the
<PAGE>
interest rate on the Floating Rate Securities, which shall initially be the
Trustee.
"CapCo I" means the Person named as "CapCo I" in the first paragraph of
this Indenture and its successors; provided that any such successor shall be a
corporation organized and existing under the laws of the United States or any
state thereof.
"CapCo II" means GPC Capital Corp. II, a Delaware corporation, and its
successors; provided that any such successor shall be a corporation organized
and existing under the laws of the United States or any state thereof.
"Capitalized Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership of limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) U. S. dollars (and foreign currency exchanged
into U.S. dollars within 180 days), (ii) securities issued or directly and fully
guaranteed or insured by the U.S. Government or any agency or instrumentality
thereof, (iii) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having capital and surplus in
excess of $500.0 million, (iv) repurchase obligations for underlying securities
of the types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in
each case maturing within one year after the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(v) above, (vii) readily marketable direct obligations
issued by any state of the United States of America or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with
a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets
<PAGE>
of the Company and its Restricted Subsidiaries, taken as a whole, to a Person
other than the Permitted Holders and their Related Parties, except in so far as
such transaction or transactions relate to an IPO Reorganization in accordance
with Article Five hereof; or (ii) the Company becomes aware (by way of a report
or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote,
written notice or otherwise) of the acquisition by any Person or group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of acquiring,
holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), other than the Permitted Holders and their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the Voting
Stock of the Company.
"Change of Control Date" see Section 4.14.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of, such Person's common equity, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common equity.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determ ined in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based on income or profits of such Person, or Permitted Tax Distributions
made by such Person, for such period deducted in computing Consolidated Net
Income, plus (b) Consolidated Interest Expense of such Person for such period to
the extent the same was deducted in calculating such Consolidated Net Income,
plus (c) Consolidated Depreciation and Amortization Expense of such Person for
such period to the extent such depreciation and amortization expense was
deducted in computing Consolidated Net Income, plus (d) any fees, expenses or
charges related to any Equity Offering, Permitted Investment, acquisition or
recapitalization or Indebtedness permitted to be incurred by this Indenture
(whether or not successful) and fees, expenses or charges related
<PAGE>
to the transactions contemplated by the Recapitalization Agreement (including
fees to Blackstone), plus (e) the amount of any non-recurring charges (including
any one-time costs incurred in connection with acquisitions after the Issue
Date) deducted in such period in computing Consolidated Net Income, plus (f)
without duplication, any other non-cash charges reducing Consolidated Net Income
for such period (excluding any such charge which requires an accrual of a cash
reserve for anticipated cash charges for any future period), plus (g) the amount
of any minority interest expense deducted in calculating Consolidated Net
Income, plus (h) special charges and unusual items during any period ending on
or prior to the second anniversary of the Issue Date not to exceed $15.0 million
in the aggregate, plus (i) the amount of management, consulting monitoring and
advisory fees paid to Blackstone and its Affiliates during such period not to
exceed $1.0 million during any four quarter period, less, without duplication
(j) non-cash items increasing Consolidated Net Income of such Person for such
period (excluding any items which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges in any prior period).
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of: (a) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest component of Capitalized
Lease Obligations and net payments and receipts (if any) pursuant to Hedging
Obligations to the extent included in Consolidated Interest Expense and
excluding amortization of deferred financing fees), (b) consolidated capitalized
interest of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued and (c) on and after January 15, 2004, the interest expense of
Holdings with respect to the Holdings Senior Discount Notes.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income, of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis; provided, however, that (i) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto) shall be excluded, (ii) any increase in the cost of sales or other
incremental expenses resulting from purchase accounting in relation to any
acquisition, net of taxes, shall be excluded, (iii) the Net Income for such
period shall not include the cumulative effect of a change in accounting
principles during such period, (iv) any net after-tax income (loss) from
discontinued operations and any net after-tax gains or losses on disposal of
discontinued operations shall be excluded, (v) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to asset dispositions
other than in the ordinary course of business (as determined in good faith by
the Company) shall be excluded, (vi) the Net Income for such period of any
Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period, (vii)
<PAGE>
the Net Income of any Person acquired in a pooling of interests transaction
shall not be included for any period prior to the date of such acquisition,
(viii) the Net Income for such period of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of its Net Income is not at the date
of determination permitted without any prior governmental approval (which has
not been obtained) or, directly or indirectly, by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule, or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, unless such restriction with respect to the payment of dividends
or in similar distributions has been legally waived, and (ix) the Net Income for
such period of the Company and its Restricted Subsidiaries shall be decreased by
the amount of Permitted Tax Distributions during such period.
"Contingent Obligations" means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 or such other address as the Trustee may give
notice to the Company.
"Custodian" see Section 6.01.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Defeasance Trust Payment" see Section 8.01.
"Depository" means, with respect to the Securities issued in the form of
one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Noncash Consideration" means the fair market value of noncash
consideration received by the Company or any of its Restricted Subsidiaries in
connection with
<PAGE>
an Asset Sale that is so designated as Designated Noncash Consideration pursuant
to an Officers' Certificate, setting forth the basis of such valuation, less the
amount of cash or Cash Equivalents received in connection with a subsequent sale
of such Designated Noncash Consideration.
"Designated Preferred Stock" means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in clause (c) of Section 4.06 of
this Indenture.
"Designated Senior Indebtedness" means (i) Indebtedness under or in respect
of the New Credit Facility (except that any Indebtedness which represents a
partial refinancing of Indebtedness theretofore outstanding pursuant to the New
Credit Facility, rather than a complete refinancing thereof, shall only
constitute Designated Senior Indebtedness if such partial refinancing meets the
requirements of succeeding clause (ii)) and (ii) any other Indebtedness
constituting Senior Indebtedness which, at the time of determination, has an
aggregate principal amount or accreted value of at least $25.0 million and is
specifically designated in the instrument evidencing such Senior Indebtedness as
"Designated Senior Indebtedness" by the Issuers.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the maturity date of the
Securities; provided, however, that if such Capital Stock is issued to any
employee or to any plan for the benefit of employees of the Company or any of
its Subsidiaries or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may be required to be
repurchased by the Company or such Subsidiary in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee's death or
disability.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of common stock or
preferred stock of the Company or Holdings (other than Disqualified Stock),
other than (i) public offerings with respect to the Common Stock registered on
Form S-8 and (ii) any such public or private sale the proceeds of which have
been designated by the Company as an Excluded Contribution or Permanent
Qualified Equity Contributions.
<PAGE>
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Fixed Rate Securities" means the 8 3/4% Senior Subordinated Notes
due 2008, Series B, to be issued in exchange for the Initial Securities pursuant
to the Registration Rights Agreement.
"Exchange Floating Rate Securities" means the Floating Interest Rate
Subordinated Term Securities, due 2008 Series B, of the Issuers.
"Exchange Securities" means the Exchange Fixed Rate Securities and the
Exchange Floating Rate Securities.
"Excluded Contributions" means the net cash proceeds received by the
Company after the Issue Date from (a) contributions to its common equity capital
and (b) the sale (other than to a Subsidiary or to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement
of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Excluded
Contributions pursuant to an Officers' Certificate, the cash proceeds of which
are excluded from the calculation set forth in paragraph (c) of Section 4.06 of
this Indenture.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"Final Maturity Date" means January 15, 2008.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of Consolidated EBITDA of such Person for such period to the
Fixed Charges of such Person for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average daily balance of
such Indebtedness during the applicable period) or issues or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is
<PAGE>
being calculated but prior to the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter period. With respect to any Calculation Date that
occurs on or after January 15, 2003 and prior to January 15, 2004, the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to the
interest expense of Holdings with respect to the Holdings Senior Discount Notes
as if such interest expense was Consolidated Interest Expense of the Company.
For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP) that have been made by the Company or
any of its Restricted Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to or simultaneously with
the Calculation Date shall be calculated on a pro forma basis assuming that all
such Investments, acquisitions, dispositions, discontinued operations, mergers
and consolidations (and the reduction of any associated fixed charge obligations
and the change in Consolidated EBITDA resulting therefrom) had occurred on the
first day of the four-quarter reference period. If since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Investment, acquisition, disposition,
discontinued operation, merger or consolidation that would have required
adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, discontinued operation, merger or
consolidation had occurred at the beginning of the applicable four-quarter
period. For purposes of this definition, whenever pro forma effect is to be
given to a transaction, the pro forma calculations shall be made as determined
in good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the Calculation Date had been the applicable rate for the
entire period (taking into account any Hedging Obligations applicable to such
Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or
accounting officer of the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period.
Interest on Indebtedness that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually
chosen, or, if none, then based upon such optional rate chosen as the Company
may designate. Any such pro forma calculation may include adjustments in the
reasonable determination of the Company as set forth in an Officers'
Certificate, to (i) reflect operating expense reductions
<PAGE>
reasonably expected to result from any acquisition or merger or (ii) eliminate
the effect of any extraordinary accounting event with respect to any acquired
Person on Consolidated Net Income.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period and
(b) the product of (x) all cash dividend payments (excluding items eliminated in
consolidation) on any series of Disqualified Stock of such Person or its
Restricted Subsidiaries and (y) (A) if such Person is not a taxable entity for
U.S. federal income tax purposes, one, or (B) if such Person is an entity
taxable for U.S. federal income tax purposes, a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
"Floating Rate Securities" means the Initial Floating Rate Securities, the
Exchange Floating Rate Securities and the Floating Rate Private Exchange Notes
(as defined in the Registration Rights Agreement).
"Fixed Rate Securities" means the Initial Fixed Rate Securities, the Fixed
Rate Private Exchange Notes (as defined in the Registration Rights Agreement)
and the Exchange Fixed Rate Securities.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof.
"Funding Guarantor" see Section 11.04.
"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 have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of this
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary.
"Global Securities" means one or more IAI Global Securities, Reg. S Global
Securities and 144A Global Securities.
"Government Securities" means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as
<PAGE>
a full faith and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any such
Government Securities or a specific payment of principal of or interest on any
such Government Securities held by such custodian for the account of the holder
of such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
"Guarantee" means any guarantee of the obligations of the Issuers under
this Indenture and the Securities by any Restricted Subsidiary in accordance
with the provisions of this Indenture. When used as a verb, "Guarantee" shall
have a corresponding meaning; provided that the term "Guarantee" shall not
include the Holdings Guarantee.
"Guarantor" means any Restricted Subsidiary that incurs a Guarantee;
provided that upon the release and discharge of such Restricted Subsidiary from
its Guarantee in accordance with this Indenture, such Restricted Subsidiary
shall cease to be a Guarantor; provided that the term "Guarantor" shall not
include Holdings.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates or commodity prices.
"Holder" means the registered holder of any Security.
"Holdings" means the Person named as "Holdings" in the first paragraph of
this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture and thereafter "Holdings" shall mean
such successor and shall include, in any event, CapCo II following any Holdings
IPO Reorganization.
"Holdings Guarantee" means the guarantee of the obligations of the
Issuers under this Indenture and the Securities by Holdings in accordance with
the provisions of this Indenture.
<PAGE>
"Holdings IPO Reorganization" means the transfer of all or substantially
all of Holdings' assets (including, without limitation, all partnership or other
equity interests in the Company and Opco GP) and liabilities to CapCo II, and
the dissolution, liquidation or winding up of Holdings in connection with or in
contemplation of an initial public offering of the shares of common stock of
CapCo II).
"Holdings Issuers" means Holdings and CapCo II and their successors.
"Holdings Senior Discount Notes" means the 10 3/4 % Senior Discount Notes
of the Holdings Issuers issued under the Senior Discount Indenture.
"IAI Global Security" means a permanent global security in registered form
representing the aggregate principal amount of Securities sold to Institutional
Accredited Investors.
"IPO Reorganization" means the transfer of all or substantially all of the
Company's assets and liabilities to CapCo I upon the consummation of an initial
public offering of the shares of common stock of CapCo I.
"Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent, (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, the Indebtedness
of another Person (other than by endorsement of negotiable instruments for
collection in the ordinary course of business) and (c) to the extent not
otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is assumed by such
Person); provided, however, that Contingent Obligations incurred in the
ordinary course of business shall be deemed not to constitute Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Financial Advisor" means an accounting, appraisal, investment
<PAGE>
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith determination of the
Company, qualified to perform the task for which it has been engaged.
"Initial Fixed Rate Securities" means the 8 3/4 % Senior Subordinated Notes
due 2008, Series A, of the Issuers.
"Initial Securities" means the Initial Fixed Rate Securities and the
Initial Floating Rate Securities.
"Initial Floating Rate Securities" means the Floating Interest Rate
Subordinated Term Securities, due 2008, Series A, of the Issuers.
"Initial Purchasers" means BT Alex. Brown Incorporated, Bankers Trust
International plc, Lazard Freres & Co. LLC and Salomon Brothers Inc.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"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" means, with respect to any Securities, the sum of any cash
interest and any Additional Interest on such Securities.
"Interest Payment Date" means each semiannual interest payment date on
January 15 and July 15 of each year, commencing July 15, 1998.
"Interest Record Date" for the interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the January 1 or
July 1 (whether or not a Business Day), as the case may be, immediately
preceding such Interest Payment Date.
"Investment Grade Securities" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or
<PAGE>
instruments constituting loans or advances between and among the respective
Company Issuers and their respective Subsidiaries, and (iii) investments in any
fund that invests exclusively in investments of the type described in clauses
(i) and (ii) which fund may also hold immaterial amounts of cash pending
investment and/or distribution.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes thereto) of such
Person in the same manner as the other investments included in this definition
to the extent such transactions involve the transfer of cash or other property.
For purposes of the definition of "Unrestricted Subsidiary" and Section 4.06 of
this Indenture, (i) "Investments" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of a Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Company.
"Investor LP" means BMP/Graham Holdings Corporation, a Delaware
corporation..
"Issue Date" means the closing date for the sale and original issuance of
Securities under this Indenture.
"Issuers" means the Company and CapCo I.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
<PAGE>
"Management Group" means the group consisting of the executive officers of
the Company.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
"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, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale and the sale or disposition of such Designated
Noncash Consideration (including, without limitation, legal, accounting and
investment banking fees, and brokerage and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements related thereto), amounts required
to be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of Section 4.05 of this Indenture) to be paid as a result of such transaction
and any deduction of appropriate amounts to be provided by the Company as a
reserve in accordance with GAAP against any liabilities associated with the
asset disposed of in such transaction and retained by the Company after such
sale or other disposition thereof, including, without limitation, pension and
other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.
"New Credit Facility" means that certain credit facility among Bankers
Trust Company, Holdings and certain of its Subsidiaries and affiliates
and the lenders from time to time party thereto, together with any related
documents, instruments and agreements executed in connection therewith
(including, without limitation, any guaranty agreements and security documents),
in each case as such credit facility and related documents, instruments and
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
additional obligors or guarantors thereunder) all or any portion of the
Indebtedness under such credit facility or any successor or replacement credit
facility and whether by the same or any other agent, lender or group of lenders.
"Obligations" means all obligations for principal, interest, penalties,
fees, indemnifications, reimbursements (including, without limitation,
reimbursement obligations with
<PAGE>
respect to letters of credit and banker's acceptances), damages and other
liabilities payable under the documentation governing any Indebtedness; provided
that Obligations with respect to the Securities shall not include fees or
indemnifications in favor of the Trustee and other third parties other than the
holders of the Securities.
"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Issuers by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Securities on the date of the
Offer offering to purchase up to the principal amount of Securities specified in
such Offer at the purchase price specified in such Offer (as determined pursuant
to this Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase,
which shall be not less than 30 days nor more than 60 days after the date of
such Offer, and a settlement date (the "Purchase Date") for purchase of
Securities to occur no later than three Business Days after the Expiration Date.
The Issuers shall notify the Trustee at least five Business Days (or such
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Issuers' obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Issuers or, at the Issuers' request, by the Trustee in
the name and at the expense of the Issuers. The Offer shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Offer to Purchase. The Offer shall also state: (1) the Section
of this Indenture pursuant to which the Offer to Purchase is being made; (2) the
Expiration Date and the Purchase Date; (3) the aggregate principal amount of the
outstanding Securities offered to be purchased by the Issuers pursuant to the
Offer to Purchase (including, if less than 100%, the manner by which such amount
has been determined pursuant to the Section of this Indenture requiring the
Offer to Purchase) (the "Purchase Amount"); (4) the purchase price to be paid by
the Issuers for each $1,000 aggregate principal amount of Securities accepted
for payment (as specified pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities registered
in the name of such Holder and that any portion of a Security tendered must be
tendered in an integral multiple of $1,000 principal amount; (6) the place or
places where Securities are to be surrendered for tender pursuant to the Offer
to Purchase; (7) that interest on any Security not tendered or tendered but not
purchased by the Issuers pursuant to the Offer to Purchase will continue to
accrue; (8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date; (9) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender such
Security at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Security being, if the Issuers or the
Trustee so require, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuers and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in
<PAGE>
writing); (10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Issuers (or the Paying Agent) receives, not later
than the close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security the Holder
tendered, the certificate number of the Security the Holder tendered and a
statement that such Holder is withdrawing all or a portion of his tender; (11)
that (a) if Securities in an aggregate principal amount less than or equal to
the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to
Purchase, the Issuers shall purchase all such Securities and (b) if Securities
in an aggregate principal amount in excess of the Purchase Amount are tendered
and not withdrawn pursuant to the Offer to Purchase, the Issuers shall purchase
Securities having an aggregate principal amount equal to the Purchase Amount in
accordance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed or, if not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate (with such adjustments as may be deemed appropriate so that only
Securities in denominations of $1,000 principal amount or integral multiples
thereof shall be purchased); and (12) that in the case of any Holder whose
Security is purchased only in part, the Issuers 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 an aggregate principal amount equal to and in
exchange for the unpurchased portion of the Security so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Officer" of any Person means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President (whether or
not such title is preceded or followed by one or more words or phrases), the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of such Person.
"Officers' Certificate" of any Person means a certificate signed on behalf
of such Person or the general partner, in the case of a limited partnership, or
member, in the case of a limited liability company, of such Person by the
Chairman of the Board, the President, any Executive Vice President, Senior Vice
President or Vice President (whether or not such title is preceded or followed
by one or more words or phrases) and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary of such Person, that meets the
requirements set forth in Sections 13.04 and 13.05 of this Indenture.
"144A Global Security" means a permanent global security in registered form
representing the aggregate principal amount of Securities sold in reliance on
Rule 144A.
<PAGE>
""Opco GP" means GPC Opco GP LLC, a Delaware limited liability company and
its successors.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Issuers or the Trustee.
"Pari Passu Indebtedness" means with respect to the Securities or a
Guarantee, Indebtedness which ranks pari passu in right of payment to the
Securities or such Guarantee, as the case may be.
"Participant" has the meaning set forth in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Blockage Notice" see Section 8.02.
"Payment Blockage Period" see Section 8.02.
"Permanent Qualified Equity Contributions" means net cash proceeds to the
Company in form of contributions to the common equity capital of the Company or
from the sale (other than to a Subsidiary of the Company or to any management
equity plan or stock option plan or any other management or employee benefit
plan of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Permanent
Qualified Equity Contributions pursuant to an Officers' Certificate, the cash
proceeds of which are excluded from the calculation set forth in paragraph (c)
of Section 4.06 of this Indenture.
"Permitted Holders" means Blackstone and any of its Affiliates.
"Permitted Investments" means (a) any Investment in the Company or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary in a Person that is a Similar Business if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d)
any Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to
Section 4.05 of this Indenture or any other disposition of assets not
constituting an Asset Sale; (e) any Investment existing on the Issue Date; (f)
advances to
<PAGE>
employees not in excess of $10.0 million outstanding at any one time, in the
aggregate; (g) any Investment acquired by the Company or any of its Restricted
Subsidiaries (i) in exchange for any other Investment or accounts receivable
held by the Company or any such Restricted Subsidiary in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or accounts receivable or (ii) as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries with respect to
any secured Investment or other transfer of title with respect to any secured
Investment in default; (h) Hedging Obligations permitted under clause (j) of
Section 4.04 of this Indenture; (i) loans and advances to officers, directors
and employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of business; (j)
any Investment in a Similar Business (other than an Investment in an
Unrestricted Subsidiary) having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (j) that are at that
time outstanding, not to exceed 10% of Total Assets at the time of such
Investment (with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value); (k)
Investments the payment for which consists of Equity Interests of the Company
(other than Disqualified Stock); provided, however, that such Equity Interests
will not increase the amount available for Restricted Payments under clause (c)
of Section 4.06 of this Indenture; (l) additional Investments having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (l) that are at that time outstanding, not to exceed
$10.0 million (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value); (m) any
transaction to the extent it constitutes an Investment that is permitted by and
made in accordance with the provisions of clauses (iii) and (xi) of the second
paragraph of Section 4.03 of this Indenture; (n) any Investment by Restricted
Subsidiaries in other Restricted Subsidiaries; (o) Investments consisting of the
licensing or contribution of intellectual property pursuant to joint marketing
arrangements with other Persons; and (p) Investments consisting of purchases and
acquisitions of inventory, supplies, materials and equipment or licenses or
leases of intellectual property, in any case, in the ordinary course of
business.
"Permitted Junior Securities" shall mean debt or equity securities of an
Issuer or any successor corporation issued pursuant to a plan of reorganization
or readjustment of an Issuer that are subordinated to the payment of all then
outstanding Senior Indebtedness at least to the same extent that the Securities
are subordinated to the payment of all Senior Indebtedness on the Issue Date, so
long as (i) the effect of the use of this defined term in Article Eight or
Twelve of this Indenture is not to cause the Securities to be treated as part of
(a) the same class of claims as the Senior Indebtedness or (b) any class of
claims pari passu with, or senior to, the Senior Indebtedness for any payment or
distribution in any case or proceeding or similar event relating to the
liquidation, insolvency, bankruptcy, dissolution, winding up or reorganization
of an Issuer and (ii) to the extent that any Senior Indebtedness outstanding on
the date of consummation of any such plan or reorganization or readjustment is
not paid in full in cash on such date, either
<PAGE>
(a) the holders of any such Senior Indebtedness not so paid in full in cash have
consented to the terms of such plan or reorganization or readjustment of (b)
such holders receive securities which constitute Senior Indebtedness and which
have been determined by the relevant court to constitute satisfaction in full in
money or money's worth of any Senior Indebtedness not paid in full in cash.
"Permitted Liens" means the following types of Liens:
(i) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may
be initiated shall not have expired;
(ii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or asset
which is not leased property subject to such Capitalized Lease Obligation;
(iii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Restricted
Subsidiary other than the property and assets so acquired and (B) the Lien
securing such Indebtedness shall be created within 180 days of such
acquisition;
(iv) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(v) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(vi) Liens securing Indebtedness under Hedging Obligations;
(vii) Liens securing Acquired Indebtedness incurred in accordance with
the Section 4.04 of this Indenture; provided that (A) such Liens secured
such Acquired Indebtedness at the time of and prior to the incurrence of
such Acquired Indebtedness by the Company or a Restricted Subsidiary
thereof and were not granted in connection with, or in anticipation of, the
incurrence of such Acquired Indebtedness by the Company or
<PAGE>
a Restricted Subsidiary thereof and (B) such Liens do not extend to or
cover any property or assets of the Company or any of the Restricted
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or such Restricted Subsidiary and are no more
favorable to the lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or
such Restricted Subsidiary;
(viii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(ix) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business, consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
and
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements, including
rights of offset and setoff.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Securities" means one or more certificated Securities in
registered form.
"Principal" of a debt security means the principal of the security, plus,
when appropriate, the premium, if any, on the security.
"Private Exchange Securities" means the Private Exchange Fixed Rate Notes
and the Private Exchange Floating Rate Notes, each as defined in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
<PAGE>
Purchase" above.
"Purchase Agreement" means the Purchase Agreement dated as of January 23,
1998 by and among the Issuers, the Holdings Issuers and the Initial Purchasers.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Institutional Buyer" or "QIB" means a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act.
"Recapitalization" means the consummation of the transactions which are
contemplated to occur on or prior to the Closing under the Recapitalization
Agreement.
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Redemption and Purchase, dated as of December 18, 1997 by and
among Holdings, BMP/Graham Holdings Corporation and the other parties thereto.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"redemption price," when used with respect to any Security to be redeemed,
means the price fixed for such redemption pursuant to this Indenture as set
forth in the form of Security annexed hereto as Exhibit A.
"Reg. S Global Security" means a global security in registered form
representing the aggregate principal amount of Securities sold pursuant to
Regulation S under the Securities Act. "Registrar" see Section 2.03.
"Registration" means a registered exchange offer for the Securities by the
Issuers or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of February 2, 1998 by and among the Issuers, Holdings and the Initial
Purchasers.
<PAGE>
"Related Parties" means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or any of its Affiliates
is the general partner.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such Designated Senior Indebtedness in respect of any Designated
Senior Indebtedness.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" see Section 4.06.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under the
Securities Act; provided, however, that the Trustee shall be entitled to request
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms of this Indenture.
"S&P" means Standard and Poor's Ratings Group.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Discount Indenture" means the Indenture dated as of February 2,
1998 among the Holdings Issuers and The Bank of New York, as trustee.
"Senior Indebtedness" means the principal of, premium, if any, and interest
<PAGE>
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of Holdings, the Issuers or any Guarantor, whether outstanding on
the Issue Date or thereafter created, incurred or assumed, unless, in the case
of any particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Holdings Guarantee,
the Securities or the Guarantee of such Guarantor. Without limiting the
generality of the foregoing, "Senior Indebtedness" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, to the extent such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (x) all monetary obligations (including guarantees thereof) of every nature
of Holdings, the Issuer or a Guarantor under the New Credit Facility, including,
without limitation, obligations to pay principal and interest, reimbursement
obligations under letters of credit, fees, expenses, indemnities and Hedging
Obligations related thereto, in each case whether outstanding on the Issue Date
or thereafter incurred and (y) all monetary obligations (including guarantees
thereof) of every nature of the Issuers, Holdings and any Guarantor with respect
to Hedging Obligations, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (i) any Indebtedness of Holdings, an Issuer or a Guarantor to a
Subsidiary thereof, (ii) Indebtedness to, or guaranteed on behalf of, any
director, officer or employee of Holdings, an Issuer or a Guarantor or any
Subsidiary thereof (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services (other than amounts
incurred under the New Credit Facility), (iv) Indebtedness represented by
Disqualified Stock, (v) any liability for federal, state, local or other taxes
owed or owing, (vi) that portion of any Indebtedness incurred in violation of
Section 4.04 of this Indenture (but, as to any such obligation, no such
violation shall be deemed to exist for purposes of this clause (vi) if the
holder(s) of such obligation or their representative shall have received an
Officers' Certificate of an Issuer to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit Indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such Section), (vii)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to
Holdings, an Issuer or a Guarantor, as the case may be, and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of Holdings, an Issuer or a Guarantor, as the case may
be.
"Significant Restricted Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" of the Company as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
<PAGE>
"Similar Business" means a business the majority of whose revenues are
derived from the manufacture, marketing or sale of containers or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
"Subordinated Indebtedness" means with respect to the Securities or a
Guarantee, any Indebtedness of the Company or a Guarantor, as the case may be,
which is by its terms subordinated in right of payment to the Securities or the
Guarantee of such Guarantor, as the case may be.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except as
provided in Section 10.03) until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA.
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department (or
any successor group of the Trustee) including any vice president, assistant vice
president, assistant secretary or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at that time shall be such officers, and also means, with respect to
a particular corporate trust matter, any other officer to whom such trust matter
<PAGE>
is referred because of his knowledge of and familiarity with the particular
subject.
"United States Government Obligations" means direct non-callable
obligations of the United States for the payment of which the full faith and
credit of the United States is pledged.
"Unrestricted Securities" means one or more Securities that do not and are
not required to bear the Private Placement Legend in the form set forth in
Exhibit A-1 hereto or Exhibit A-2 hereto, as the case may be, including, without
limitation, the Exchange Securities and any Securities registered under the
Securities Act pursuant to and in accordance with the Registration Rights
Agreement.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or
owns, or holds any Lien on any property of, the Company or any Subsidiary
thereof (other than any Subsidiary of the Subsidiary to be so designated),
provided that each Subsidiary to be so designated and its Subsidiaries have not
at the time of designation, and do not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, (i) the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test described Section 4.04 of this Indenture or
(ii) the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries would be greater than such ratio for the Company and its Restricted
Subsidiaries immediately prior to such designation, in each case on a pro forma
basis taking into account such designation. Any such designation by the Board of
Directors of the Company shall be notified by the Company to the Trustee by
promptly filing with the Trustee a copy of the board resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the
<PAGE>
sum of the products of the number of years from the date of determination to the
date of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Disqualified Stock multiplied
by the amount of such payment, by (ii) the sum of all such payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities, the Holdings Guarantee and the
Guarantees.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, Holdings, a
Guarantor or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.3 Rules of Construction.
<PAGE>
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles in effect from time
to time, and any other reference in this Indenture to "generally accepted
accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
The Initial Fixed Rate Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A-1 hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Initial Floating Rate Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A-2 hereto, which is
hereby incorporated in and expressly made part of this Indenture. The Exchange
Fixed Rate Securities and the Trustee's certificate of authentication thereof
shall be substantially in the form of Exhibit B-1 hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Floating Rate Securities and the Trustee's certificate of authentication thereof
shall be substantially in the form of Exhibit B-2 hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
usage. The Issuers shall approve the forms of the Securities and any notation,
legend or endorsement on them. Each Security shall be dated the date of its
issuance and shall show the date of its authentication. Global Securities shall
bear the legend set forth in Exhibit C hereto. 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 Depository,
as hereinafter provided.
<PAGE>
SECTION 2.2 Execution and Authentication.
Two Officers, including no more than one signing solely as Assistant
Secretary, shall sign, or one Officer (other than as an Assistant Secretary)
shall sign and the Secretary or an Assistant Secretary (each of whom shall, in
each case, have been duly authorized by all requisite corporate actions) shall
attest to such Officer's signature, the Securities for each of the Issuers by
manual or facsimile signature. If an Officer whose signature is on a Security
was an Officer at the time of such execution but no longer holds that office at
the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture. The Trustee shall authenticate (i) Initial Securities for original
issue in an aggregate principal amount not to exceed $325,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of the same type of Initial Securities and (iii) Unrestricted Securities
from time to time (A) in exchange for a like principal amount of the same type
of Initial Securities or a like principal amount of the same type of Private
Exchange Securities or (B) as the Issuers may determine in accordance with this
Indenture, in each case upon a written order of each of the Issuers in the form
of an Officers' Certificate. Each such written order shall specify the amount of
and the type of Securities to be authenticated and the date on which the
Securities are to be authenticated, whether the Securities are to be Initial
Securities, Private Exchange Securities or Unrestricted Securities and whether
the Securities are to be issued as Physical Securities or Global Securities and
such other information as the Trustee may reasonably request. The aggregate
principal amount of Securities outstanding at any time may not exceed
$325,000,000, except as provided in Sections 2.07 and 2.08. Notwithstanding the
foregoing, all Securities issued under this Indenture shall vote and consent
together on all matters (as to which any of such Securities may vote or consent)
as one class and no series of Securities will have the right to vote or consent
as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Issuers and Affiliates of the
Issuers.
The Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
<PAGE>
SECTION 2.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where (a) Securities may be presented or surrendered for
registration of transfer or for exchange (the "Registrar"), (b) Securities may
be presented or surrendered for payment (the "Paying Agent") and (c) notices and
demands in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Issuers, upon notice to the Trustee, may appoint one or more co-
Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. Except as provided herein, the Company,
Holdings or any Guarantor may act as Paying Agent, Registrar or co-Registrar.
The Issuers shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which shall incorporate the provisions of the
TIA. The agreement shall implement the provisions of this Indenture that relate
to such Agent. The Issuers shall notify the Trustee of the name and address of
any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or
fail to give the foregoing notice, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Section 7.07.
The Issuers initially appoint the Trustee as Registrar and Paying Agent
until such time as the Trustee has resigned or a successor has been appointed.
SECTION 2.4 Paying Agent To Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee to agree
in writing that each Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all assets held by the Paying Agent for the payment of principal
of, or interest on, the Securities, and shall notify the Trustee of any Default
by the Issuers in making any such payment. The Issuers at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Issuers to the Paying Agent (if other than an
Issuer), the Paying Agent shall have no further liability for such assets. If an
Issuer, Holdings, any Guarantor or any of their respective Affiliates acts as
Paying Agent, it shall, on or before each due date of the principal of or
interest on the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.
<PAGE>
SECTION 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the
Trustee at least five days before each Interest Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.6 Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Issuers and the Registrar or co- Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Issuers shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Issuers may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith payable by the transferor of such Securities (other than any such
transfer taxes or other governmental charge payable upon exchanges or transfers
pursuant to Section 2.02, 2.10, 3.06, 4.05, 4.14, or 10.05). The Registrar or
co-Registrar shall not be required to register the transfer or exchange of any
Security (i) during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption of Securities and ending at the close of
business on the day of such mailing and (ii) selected for redemption in whole or
in part pursuant to Article Three hereof, except the unredeemed portion of any
Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided herein,
the Issuers, the Trustee and any Agent shall treat the person in whose name the
Security is registered as the owner thereof for all purposes whether or not the
Security shall be overdue, and neither the Issuers, the Trustee nor any Agent
shall be affected by notice to the contrary. Any Holder of a beneficial interest
in a Global Security shall, by acceptance of such beneficial interest in a
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Depository (or its agent), and that ownership of a beneficial interest in a
Global Security shall be required to be reflected in a book entry.
<PAGE>
SECTION 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Issuers shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements for replacement of Securities are met. If
required by the Issuers or the Trustee, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Issuers and the
Trustee, to protect the Issuers, the Trustee and any Agent from any loss which
any of them may suffer if a Security is replaced The Issuers may charge such
Holder for its reasonable out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel. Every replacement Security is
an additional obligation of the Issuers.
SECTION 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because an
Issuer or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date, Purchase Date or the Final Maturity Date the
Paying Agent holds money sufficient to pay all of the principal and interest due
on the Securities payable on that date, and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.9 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by an Issuer, Holdings, a Guarantor or any of their respective Affiliates shall
be disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned shall
be disregarded.
<PAGE>
The Issuers shall notify the Trustee, in writing, when an Issuer, Holdings,
a Guarantor or any of their respective Affiliates repurchases or otherwise
acquires Securities and of the aggregate principal amount of such Securities so
repurchased or otherwise acquired.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Securities upon receipt of a
written order of the Issuers in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Issuers consider appropriate for
temporary Securities. Without unreasonable delay, the Issuers shall prepare and
the Trustee shall authenticate upon receipt of a written order of the Issuers
pursuant to Section 2.02 definitive Securities in exchange for temporary
Securities.
SECTION 2.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Issuers,
dispose of and deliver evidence of such disposal of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Issuers may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If an Issuer, Holdings or any
Guarantor shall acquire any of the Securities, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by such
Securities unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest.
The Issuers shall pay interest on overdue principal from time to time on
demand at the applicable rate of interest then borne by the Securities. The
Issuers shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the rate of
interest then borne by the Securities. If the Issuers default in a payment of
interest on the Securities, they shall pay the defaulted interest, plus
(to the extent lawful) any interest payable on the defaulted interest to
the Persons
<PAGE>
who are Holders on a subsequent special record date, which date shall be the
fifteenth day preceding the date fixed by the Issuers for the payment of
defaulted interest or the next succeeding Business Day if such date is not a
Business Day. At least 15 days before the subsequent special record date, the
Issuers shall mail to each Holder, with a copy to the Trustee, a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(i) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13 CUSIP Number.
The Issuers in issuing the Securities will use a "CUSIP" number and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided , however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Issuers shall
promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14 Deposit of Moneys.
Prior to 10:00 a.m. New York City time on each Interest Payment Date,
Redemption Date, Purchase Date and the Final Maturity Date, the Issuers shall
deposit with the Paying Agent in immediately available funds money sufficient to
make cash payments, if any, due on such Interest Payment Date, Redemption Date,
Purchase Date or Final Maturity Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Redemption Date, Purchase Date or Final Maturity Date, as the case
may be.
SECTION 2.15 Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Participants") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Security, and the Depository may be treated
<PAGE>
by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the
Trustee or any agent of the Issuers or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and Participants, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Securities may be transferred or
exchanged for Physical Securities in accordance with the rules and procedures of
the Depository and the provisions of Section 2.16; provided, however, that
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in Global Securities if (i) the Depository
notifies the Issuers that it is unwilling or unable to continue as Depository
for any Global Security and a successor Depository is not appointed by the
Issuers within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request from the Depository
to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety to
beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global
Securities shall be deemed to be surrendered to the Trustee for cancellation,
and the Issuers shall execute, and the Trustee shall upon written instructions
from the Issuers authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in the Global
Securities, an equal aggregate principal amount of Physical Securities of
authorized denominations.
(d) Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to paragraph (b) of this
Section 2.15 shall, except as otherwise provided by Section 2.16, bear the
Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities.
SECTION 2.16 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical Securities
are presented to the Registrar or co-Registrar with a request:
<PAGE>
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal principal
amount of Physical Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the Physical
Securities presented or surrendered for Registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing; and
(II) in the case of Physical Securities the offer and sale of which have
not been registered under the Securities Act, such Physical Securities shall be
accompanied, in the sole discretion of the Issuers, by the following additional
information and documents, as applicable:
(A) if such Physical Security is being delivered to the Registrar or
co-Registrar by a Holder for Registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(substantially in the form of Exhibit D hereto); or
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect (substantially in
the form of Exhibit D hereto); or
(C) if such Physical Security is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and a transferee letter of
representation substantially in the form of Exhibit E hereto and, at the
option of the Issuers, an Opinion of Counsel reasonably satisfactory to the
Issuers to the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to that
effect (substantially in the form of Exhibit D hereto) and, at the option
of the Issuers, an Opinion of Counsel reasonably satisfactory to the
Issuers to the effect that such transfer is in compliance with the
Securities Act; or
(E) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the Securities Act,
a certification to that
<PAGE>
effect (substantially in the form of Exhibit D hereto) and, at the option
of the Issuers, an Opinion of Counsel reasonably acceptable to the
Issuers to the effect that such transfer is in compliance with the
Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co- Registrar of
a Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
(A) certification, substantially in the form of Exhibit D hereto, that such
Physical Security is being transferred (I) to a QIB or (II) to an Accredited
Investor and, with respect to (II), at the option of the Issuers, an Opinion of
Counsel reasonably acceptable to the Issuers to the effect that such transfer is
in compliance with the Securities Act; and
(B) written instructions directing the Registrar or co-Registrar to make,
or to direct the Depository to make, an endorsement on the applicable Global
Security to reflect an increase in the aggregate amount of the Securities
represented by the Global Security, then the Registrar or co-Registrar shall
cancel such Physical Security and cause, or direct the Depository to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Registrar or co-Registrar, the principal amount of Securities
represented by the applicable Global Security to be increased accordingly. If no
Global Security is then outstanding, the Issuers shall, unless either of the
events in the proviso to Section 2.15(b) have occurred and are continuing, issue
and the Trustee shall, upon written instructions from the Issuers in accordance
with Section 2.02, authenticate such a Global Security in the appropriate
principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and exchange
of Global Securities or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or Co-Registrar of written instructions,
or such other instruction as is customary for the Depository, from the
Depository or its nominee, requesting the Registration of transfer of an
interest in a Global Security to another type of Global Security, together with
the applicable Global Securities (or, if the applicable type of Global Security
required to represent the interest as requested to be transferred is not then
outstanding, only the Global Security representing the interest being
transferred), the Registrar or Co-Registrar shall cancel such Global Securities
(or Global Security) and the Issuers shall issue and the Trustee shall, upon
written instructions from the Issuers in accordance with
<PAGE>
Section 2.02, authenticate new Global Securities of the types so cancelled (or
the type so cancelled and applicable type required to represent the interest as
requested to be transferred) reflecting the applicable increase and decrease of
the principal amount of Securities represented by such types of Global
Securities, giving effect to such transfer. If the applicable type of Global
Security required to represent the interest as requested to be transferred is
not outstanding at the time of such request, the Issuers shall issue and the
Trustee shall, upon written instructions from the Issuers in accordance with
Section 2.02, authenticate a new Global Security of such type in principal
amount equal to the principal amount of the interest requested to be
transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a Physical
Security.
(i) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical Security;
provided, however, that prior to the Registration, a transferee that is a
QIB or Institutional Accredited Investor may not exchange a beneficial
interest in Global Security for a Physical Security. Upon receipt by the
Registrar or co-Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or its
nominee on behalf of any Person (subject to the previous sentence) having a
beneficial interest in a Global Security and upon receipt by the Trustee of
a written order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest containing registration instructions and, in the case
of any such transfer or exchange of a beneficial interest in Securities the
offer and sale of which have not been registered under the Securities Act,
the following additional information and documents:
(A) if such beneficial interest is being transferred in reliance on Rule
144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and, at
the option of the Issuers, an Opinion of Counsel reasonably
satisfactory to the Issuers to the effect that such transfer is in
compliance with the Securities Act; or
(B) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the Securities
Act, a certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Issuers, an Opinion of
Counsel reasonably satisfactory to the Issuers to the effect that such
transfer is in compliance with the Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the aggregate principal amount of the applicable Global Security
to be reduced and, following such reduction,
<PAGE>
the Issuers will execute and, upon receipt of an authentication order in the
form of an Officers' Certificate in accordance with Section 2.02, the Trustee
will authenticate and deliver to the transferee a Physical Security in the
appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in a Global
Security pursuant to this Section 2.16(d) shall be registered in such names and
in such authorized denominations as the Depository, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Registrar or co-Registrar in writing. The Registrar or co-Registrar shall
deliver such Physical Securities to the Persons in whose names such Physical
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or replacement of
Securities not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar or co-Registrar shall deliver only
Securities that bear the Private Placement Legend unless, and the Trustee is
hereby authorized to deliver Securities without the Private Placement Legend if,
(i) there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Issuers and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act; (ii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act (including pursuant to a Registration); or (iii) the date of such
transfer, exchange or replacement is two years after the later of (x) the Issue
Date and (y) the last date that an Issuer or any affiliate (as defined in Rule
144 under the Securities Act) of an Issuer was the owner of such Securities (or
any predecessor thereto).
(g) General. 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 will transfer such Security only as provided
in this Indenture. The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Participants
or beneficial owners of interest in any Global Security) other than to require
delivery
<PAGE>
of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.15 or this Section 2.16. The
Issuers shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE III
REDEMPTION
SECTION 3.1 Notices to Trustee.
If the Issuers want to redeem Securities pursuant to paragraph 5 or
6 of the Securities at the applicable redemption price set forth thereon, they
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed. The Issuers shall give such notice to the
Trustee at least 60 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.2 Selection of Securities To Be Redeemed.
If less than all of the Fixed Rate Securities or Floating Rate Securities
are to be redeemed, the Trustee shall select the Securities to be redeemed in
compliance with the requirements of the principal national securities exchange,
if any, on which such Securities are listed or, if such Securities or Floating
Rates Securities are not so listed, on a pro rata basis, by lot or in such other
manner as the Trustee shall deem fair and appropriate.
The Trustee may select for redemption portions of the principal amount of
Securities that have denominations equal to or larger than $1,000 principal
amount. Securities and portions of them the Trustee so selects shall be in
amounts of $1,000 principal amount or integral multiples thereof. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Issuers shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be
<PAGE>
redeemed at such Holder's registered address.
Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent to which the Securities are to
be surrendered for redemption;
(4) that Securities called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(5) that, unless the Issuers default in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the Holders is to receive
payment of the redemption price upon surrender to the Paying Agent; and
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the Redemption
Date, upon surrender of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be issued.
At the Issuers' request, the Trustee shall give the notice of redemption on
behalf of the Issuers, in the Issuers' name and at the Issuers' expense.
SECTION 3.4 Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price, plus accrued interest thereon, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date.
SECTION 3.5 Deposit of Redemption Price.
At least one Business Day before the Redemption Date, the Issuers shall
deposit
<PAGE>
with the Paying Agent (or if an Issuer is Paying Agent, shall, on or before the
Redemption Date, segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest, if any, on all Securities to be
redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Issuers to the Trustee
for cancellation.
If any Security surrendered for redemption in the manner provided in the
Securities shall not be so paid on the Redemption Date due to the failure of the
Issuers to deposit with the Paying Agent money sufficient to pay the redemption
price thereof, the principal and accrued and unpaid interest, if any, thereon
shall, until paid or duly provided for, bear interest as provided in Sections
2.12 and 4.01 with respect to any payment default.
SECTION 3.6 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate for the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities.
The Company shall pay the principal of and interest on the Securities in the
manner provided in the Securities and the Registration Rights Agreement. An
installment of principal or interest shall be considered paid on the date due if
the Trustee or Paying Agent (other than an Issuer, Holdings, a Guarantor or any
of their respective Affiliates) holds on that date money designated for and
sufficient to pay the installment in full and is not prohibited from paying such
money to the Holders of the Securities pursuant to the terms of this Indenture.
The Issuers shall pay cash interest on overdue principal at the same rate
per annum borne by the applicable Securities. The Issuers shall pay cash
interest on overdue installments of interest at the same rate per annum borne by
the applicable Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.2 Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.03. The Issuers shall give
prompt written notice
<PAGE>
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Issuers shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13. The Issuers hereby initially
designate the Trustee at its address set forth in Section 13.02 as their office
or agency in The Borough of Manhattan, The City of New York, for such purposes.
SECTION 4.3 Limitations on Transactions with Affiliates.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving
aggregate consideration in excess of $5.0 million, unless (a) such Affiliate
Transaction is on terms that are not materially less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, the Company delivers to the Trustee a resolution adopted by the
majority of the Board of Directors of the Company, approving such Affiliate
Transaction and set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (a) above.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by Section 4.06 of this Indenture; (iii) the
payment of annual management, consulting, monitoring and advisory fees and
related expenses to Blackstone, Graham Packaging Corporation and their
respective Affiliates; (iv) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary; (v) payments by the
Company or any of its Restricted Subsidiaries to Blackstone and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures, which payments are
approved by the majority of the Board of Directors of the Company, in good
faith; (vi) transactions in which the Company or any of its Restricted
Subsidiaries, as the case may be, delivers to the Trustee a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (a) of the preceding paragraph; (vii) payments or
loans to employees or consultants which are approved by a majority of the Board
of Directors of the Company in good faith; (viii) any agreement as in effect as
of the Issue Date or any amendment thereto (so long as any such
<PAGE>
amendment is not disadvantageous to the Holders of the Securities in any
material respect) or any transaction contemplated thereby; (ix) the existence
of, or the performance by the Company or any Restricted Subsidiary of its
obligations under the terms of, the Recapitalization Agreement, or any agreement
contemplated thereunder (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the Issue Date and any
similar agreements which it may enter into thereafter; provided, however, that
the existence of or the performance by the Company or any Restricted Subsidiary
of obligations under any future amendment to any such existing agreement or
under any similar agreement entered into after the Issue Date shall only be
permitted by this clause (ix) to the extent that the terms of any such amendment
or new agreement are not otherwise disadvantageous to the Holders of the
Securities in any material respect; (x) the payment of all fees, expenses,
bonuses and awards related to the transactions contemplated by the
Recapitalization Agreement, including fees to Blackstone; and (xi) transactions
with customers, clients, suppliers, or purchasers or sellers of goods or
services, in each case in the ordinary course of business and otherwise in
compliance with the terms of this Indenture which are fair to the Company and
its Restricted Subsidiaries, in the reasonable determination of the majority of
the Board of Directors of the Company, or are on terms at least as favorable as
might reasonably have been obtained at such time from an unaffiliated party.
SECTION 4.4 Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock.
(i) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur" and
collectively, an "incurrence") any Indebtedness (including Acquired
Indebtedness), (ii) the Company and any Guarantor will not issue any shares of
Disqualified Stock and (iii) the Company will not permit any of its Restricted
Subsidiaries that are not Guarantors (other than CapCo I) to issue any shares of
preferred stock; provided, however, that the Company and any Guarantor may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company's and the Restricted
Subsidiaries' most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 1.75 to 1.00 (determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, and the application of proceeds therefrom had occurred at the
beginning of such four-quarter period).
The foregoing limitations will not apply to: (a) the incurrence by the
Company or its Restricted Subsidiaries of Indebtedness under the New Credit
Facility and the issuance and creation of letters of credit and banker's
acceptances thereunder (with letters of credit and
<PAGE>
banker's acceptances being deemed to have a principal amount equal to the face
amount thereof) up to an aggregate principal amount of $650 million outstanding
at any one time; (b) the incurrence by the Issuers of Indebtedness represented
by the Securities in an aggregate principal amount not to exceed $225,000,000;
(c) Indebtedness existing on the Issue Date (other than Indebtedness described
in clauses (a) and (b)); (d) Indebtedness (including Capitalized Lease
Obligations) incurred by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness then outstanding
and incurred pursuant to this clause (d) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (d), does not exceed 15% of Total Assets at the
time of the respective incurrence; (e) Indebtedness incurred by the Company or
any of its Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation claims; (f)
Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
(g) Indebtedness of the Company to a Restricted Subsidiary; provided that any
such Indebtedness shall be subordinated in right of payment to the Securities;
provided, further, that any subsequent issuance or transfer of any Capital Stock
or any other event which results in any such Restricted Subsidiary ceasing to be
a Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall be
deemed, in each case, to be an incurrence of such Indebtedness; (h) shares of
preferred stock of a Restricted Subsidiary issued to the Company or another
Restricted Subsidiary; provided that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent transfer of any
such shares of preferred stock (except to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to be an issuance of such shares of
preferred stock; (i) Indebtedness of a Restricted Subsidiary to the Company or
another Restricted Subsidiary; provided that if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor, such
Indebtedness shall be subordinated in right of payment to the Guarantee of such
Guarantor; and provided, further, that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall be
deemed, in each case to be an incurrence of such Indebtedness; (j) Hedging
Obligations that are incurred in the ordinary course of business (1) for the
purpose of fixing or hedging interest rate risk with respect to any Indebtedness
that is permitted by the terms of this Indenture to be outstanding; (2) for the
<PAGE>
purpose of fixing or hedging currency exchange rate risk with respect to any
currency exchanges; or (3) for the purpose of fixing or hedging commodity price
risk with respect to any commodity purchases; (k) obligations in respect of
performance and surety bonds and completion guarantees provided by the Company
or any Restricted Subsidiary in the ordinary course of business; (l)
Indebtedness of any Guarantor in respect of such Guarantor's Guarantee; (m)
Indebtedness or Disqualified Stock of the Company and any of its Restricted
Subsidiaries not otherwise permitted hereunder in an aggregate principal amount
or liquidation preference which, when aggregated with the principal amount and
liquidation preference of all other Indebtedness and Disqualified Stock then
outstanding and incurred pursuant to this clause (m), does not exceed $50.0
million at any one time outstanding; (n) (i) any guarantee by the Company or by
any Restricted Subsidiary that is a Guarantor of Indebtedness or other
obligations of the Company or any of the Company's Restricted Subsidiaries so
long as the incurrence of such Indebtedness incurred by such Restricted
Subsidiary or the Company, as the case may be, is permitted under the terms of
the Senior Subordinated Indenture and (ii) any Excluded Guarantee of a
Restricted Subsidiary; (o) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness which serves to refund, refinance or
restructure any Indebtedness incurred as permitted under the first paragraph of
this covenant, this clause (o) and clauses (b) and (c) above and (q) below, or
any Indebtedness issued to so refund, refinance or restructure such Indebtedness
including additional Indebtedness incurred to pay premiums and fees in
connection therewith (the "Refinancing Indebtedness") prior to its respective
maturity; provided, however, that such Refinancing Indebtedness (i) has a
Weighted Average Life to Maturity at the time such Refinancing Indebtedness is
incurred which is not less than the remaining Weighted Average Life to Maturity
of the Indebtedness being refunded or refinanced, (ii) to the extent such
Refinancing Indebtedness refinances Indebtedness subordinated or pari passu to
the Securities, such Refinancing Indebtedness is subordinated or pari passu to
the Securities at least to the same extent as the Indebtedness being refinanced
or refunded and (iii) shall not include (x) Indebtedness of a Restricted
Subsidiary that is not a Guarantor that refinances Indebtedness of the Company
or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary; and provided, further, that
subclauses (i) and (ii) of this clause (o) will not apply to any refunding or
refinancing of any Senior Indebtedness; (p) other Indebtedness in an amount not
greater than twice the amount of Permanent Qualified Equity Contributions after
the Issue Date at any one time outstanding; and (q) Indebtedness or Disqualified
Stock of Persons that are acquired by the Company or any of its Restricted
Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms
of this Indenture; provided that such Indebtedness or Disqualified Stock is not
acquired in contemplation of such acquisition or merger; and provided, further,
that after giving effect to such acquisition, either (i) the Company would be
permitted to incur at least $1.0 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first sentence of this
covenant or (ii) the Fixed Charge Coverage Ratio is greater than immediately
prior to such acquisition.
<PAGE>
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (a) through (q) above
or is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant.
SECTION 4.5 Limitation on Asset Sales.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the
Company or its Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value (as
determined in good faith by the Company) of the assets sold or otherwise
disposed of and (y) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of (a) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Securities) that are
assumed by the transferee of any such assets without recourse to the Company or
any of the Restricted Subsidiaries, (b) any notes or other obligations received
by the Company or such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received) within 180 days following the closing of such Asset Sale,
(c) any Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this clause (c) that is at that time outstanding, not to exceed 15%
of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), and (d) any assets received in exchange for assets
related to a Similar Business of comparable market value, in the good faith
determination of, the Board of Directors of the Company, shall be deemed to be
cash for purposes of this provision.
Within 365 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option, (i) to
permanently reduce Obligations under the New Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce
<PAGE>
Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Securities if the Securities are then redeemable
or, if the Securities may not be then redeemed, the Issuers shall make an Offer
to Purchase to all Holders to purchase at 100% of the principal amount thereof
the amount of Securities that would otherwise be redeemed) or Indebtedness of a
Restricted Subsidiary, (ii) to an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to make an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale. Pending the final application of any such Net Proceeds, the Company or
such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. Any Net Proceeds from the Asset Sale
that are not invested as provided and within the time period set forth in the
first sentence of this paragraph (it being understood that any portion of such
Net Proceeds used to make an offer to purchase Securities, as described in
clause (i) above, shall be deemed to have been invested whether or not such
offer is accepted) will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15.0 million, the
Issuers shall make an Offer to Purchase to all Holders of Securities to purchase
the maximum principal amount of Securities that is an integral multiple of
$1,000 that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth below. The Issuers will commence an
Offer to Purchase with respect to Excess Proceeds within ten Business Days after
the date that Excess Proceed exceeds $15.0 million. To the extent that the
aggregate amount of Securities tendered pursuant to such an Offer to Purchase is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate or partnership purposes. Upon completion of any such Offer
to Purchase, the amount of Excess Proceeds shall be reset at zero.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Securities pursuant to such an Offer to Purchase. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Issuers will comply with the applicable securities laws and
regulations and shall not be deemed to have breached their obligations described
in this Indenture by virtue thereof.
On or prior to the Purchase Date specified in the Offer to Purchase, the
Issuers shall (i) accept for payment all Securities validly tendered pursuant to
the Offer, (ii) deposit with the Paying Agent or, if an Issuer is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 2.04, money
sufficient to pay the Purchase Price of all Securities or
<PAGE>
portions thereof so accepted and (iii) deliver or cause to be delivered to the
Trustee for cancellation all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Issuers. The Paying Agent (or an Issuer, if so acting) shall promptly mail
or deliver to Holders of Securities so accepted, payment in an amount equal to
the Purchase Price for such Securities, and the Trustee shall promptly
authenticate and mail or deliver to each Holder of Securities a new Security or
Securities equal in principal amount to any unpurchased portion of the Security
surrendered as requested by the Holder. Any Security not accepted for payment
shall be promptly mailed or delivered by the Issuers to the Holder thereof. The
Issuers shall publicly announce the results of the Offer on or as soon as
practicable after the Purchase Date.
SECTION 4.6 Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than (A) dividends or distributions by the
Company payable in Equity Interests (other than Disqualified Stock) of the
Company or (B) dividends or distributions by a Restricted Subsidiary so long as,
in the case of any dividend or distribution payable on or in respect of any
class or series of securities issued by a Restricted Subsidiary other than a
Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of securities);
(ii) purchase or otherwise acquire or retire for value any Equity Interests of
the Company; (iii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value, in each case, prior to any scheduled
repayment or maturity, any Subordinated Indebtedness (other than (A) the
payment, redemption, repurchase, defeasance, acquisition or retirement of
Subordinated Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in any case due within one
year of the date of such payment, redemption, repurchase, defeasance,
acquisition or retirement, and (B) Indebtedness permitted under clauses (g) and
(i) of Section 4.04 of this Indenture); or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment: (a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (b) immediately after
giving effect to such transaction on a pro forma basis, the Company could incur
$1.00 of additional Indebtedness under the provisions of the first paragraph of
Section 4.04 of this Indenture; and (c) such Restricted Payment, together with
the aggregate amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the Issue Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the repurchase, retirement or
other acquisition of Retired Capital Stock pursuant to clause (a) thereof and
the payment of dividends on Retired
<PAGE>
Capital Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x) of the
next succeeding paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of (i) 50% of the
cumulative Consolidated Net Income of the Company for the period (taken as one
accounting period) from the first day after the Issue Date to the date of such
Restricted Payment (or, in the case such Consolidated Net Income for such period
is a deficit, minus 100% of such deficit), plus (ii) 100% of the aggregate net
proceeds, including cash and the fair market value of property other than cash
(as determined in good faith by the Company), received by the Company since the
Issue Date from the issue or sale of Equity Interests of the Company (including
Refunding Capital Stock (as defined below) but excluding Disqualified Stock),
including such Equity Interests issued upon conversion of Indebtedness or upon
exercise of warrants or options, plus (iii) 100% of the aggregate amount of
contributions to the capital of the Company since the Issue Date (other than
Excluded Contributions), plus (iv) 100% of the aggregate amount received in cash
and the fair market value of property other than cash (as determined in good
faith by the Company) received from (A) the sale or other disposition (other
than to the Company or a Restricted Subsidiary) of Restricted Investments made
by the Company and its Restricted Subsidiaries or (B) the sale (other than to
the Company or a Restricted Subsidiary) of the Capital Stock of an Unrestricted
Subsidiary, plus (v) in case any Unrestricted Subsidiary has been redesignated a
Restricted Subsidiary or has been merged, consolidated or amalgamated with or
into, transfers or conveys assets to, or is liquidated into, the Company or a
Restricted Subsidiary, the fair market value (as determined in good faith by the
Company) of such Investment in such Unrestricted Subsidiary at the time of such
redesignation, combination or transfer (or of the assets transferred or
conveyed, as applicable), after deducting any Indebtedness associated with the
Unrestricted Subsidiary so designated or combined or with the assets so
transferred or conveyed.
The foregoing provisions will not prohibit: (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) (a) the repurchase, retirement or other acquisition of any
Equity Interests (the "Retired Capital Stock") or Subordinated Indebtedness of
the Company in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of
the Company (other than any Disqualified Stock) or contributions to the common
equity capital of the Company (the "Refunding Capital Stock"), and (b) the
declaration and payment of dividends on the Retired Capital Stock out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of Refunding Capital Stock; (iii) the redemption, repurchase or
other acquisition or retirement of Subordinated Indebtedness of the Company made
by exchange for, or out of the proceeds of the substantially concurrent sale of,
new Indebtedness of the Company so long as (A) the principal amount of such new
Indebtedness does not exceed the principal amount of and accrued and unpaid
interest on the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired for value (plus the amount of any premium required to be
paid
<PAGE>
under the terms of the instrument governing the Subordinated Indebtedness being
so redeemed, repurchased, acquired or retired), (B) such Indebtedness is
subordinated to the Securities at least to the same extent as such Subordinated
Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired
for value, (C) such Indebtedness has a final scheduled maturity date equal to or
later than the final scheduled maturity date of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired and (D) such Indebtedness
has a Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired; (iv) the repurchase, retirement or
other acquisition for value (or a dividend or distribution to fund any such
repurchase, retirement or other acquisition) of Equity Interests of the Company,
Holdings or Investor LP held by any future, present or former employee, director
or consultant of the Company or any Subsidiary pursuant to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement; provided, however, that the aggregate amounts paid under this clause
(iv) does not exceed in any calendar year $5.0 million (with unused amounts in
any calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following proviso) of $10.0 million in any
calendar year); provided, further, that such amount in any calendar year may be
increased by an amount not to exceed (i) the cash proceeds from the sale of
Equity Interests of the Company (or of Holdings or Investor LP which are
contributed to the Company) to members of management, directors or consultants
of the Company and its Subsidiaries that occurs after the Issue Date (provided
that such proceeds have not been included with respect to determining whether a
previous Restricted Payment was permitted pursuant to the first paragraph of
this covenant) plus (ii) the cash proceeds of key man life insurance policies
received by the Company and its Restricted Subsidiaries after the Issue Date;
(v) the declaration and payment of dividends or distributions to holders of any
class or series of Disqualified Stock of the Company or any of its Restricted
Subsidiaries issued or incurred in accordance with Section 4.04 of this
Indenture; (vi) the declaration and payment of dividends or distributions to
holders of any class or series of Designated Preferred Stock; provided, however,
that for the most recently ended four full fiscal quarters for which internal
financial statements are available preceding the date of declaration of any such
dividend or distribution, after giving effect to such dividend or distribution
as a Fixed Charge on a pro forma basis, the Company and its Restricted
Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75 to
1.00; (vii) Investments in Unrestricted Subsidiaries having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (vii) that are at that time outstanding, not to exceed $15.0 million at
the time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value); (viii) repurchases of (or a dividend or distribution to fund the
repurchases of) Equity Interests of the Company, Holdings or Investor LP deemed
to occur upon exercise of stock options if such Equity Interests represent a
portion of the exercise price of such options; (ix) the payment of dividends on
the Company's Common Stock (or the payment to Holdings to fund the payment by
Holdings of
<PAGE>
dividends on Holdings' Common Stock) following the first public offering
of Common Stock of the Company or Holdings, as the case may be, after
the Issue Date, of up to 6% per annum of the net proceeds received by the
Company or contributed to the Company by Holdings, as the case may be, in such
public offering; (x) the repurchase, retirement or other acquisition for value
after the first anniversary of the Issue Date (or dividend or distribution to
fund the repurchase, retirement or other acquisition of) of Equity Interests of
Holdings, the Company or Investor LP in existence on the Issue Date and which
are not held by Blackstone or any of its Affiliates or the Management Group on
the Issue Date (including any Equity Interests issued in respect of such Equity
Interests as a result of a stock split, recapitalization, merger, combination,
consolidation or otherwise, but excluding any management equity plan or stock
option plan or similar agreement), provided that (A) the aggregate amounts paid
under this clause (x) shall not exceed (I) $15.0 million on or prior to the
second anniversary of the Issue Date or (II) $30.0 million at any time after the
second anniversary of the Issue Date and (B) after giving effect thereto, the
Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence
of Section 4.04 of this Indenture; (xi) Investments that are made with Excluded
Contributions; (xii) other Restricted Payments in an aggregate amount not to
exceed $15.0 million; (xiii) the payment of any dividend or distribution on
Equity Interests of the Company to the extent necessary to permit direct or
indirect beneficial owners of such Equity Interests to receive tax distributions
in an amount equal to the taxable income of the Company allocated to a partner
multiplied by the highest combined federal and state income tax rate (including,
to the extent applicable, alternative minimum tax) solely as a result of the
Company (and any intermediate entity through which such holder owns such Equity
Interests) being a partnership or similar pass-through entity for federal income
tax purposes ("Permitted Tax Distributions"); (xiv) the payment of dividends or
distributions to Holdings to fund cash interest payments on the Holdings Senior
Discount Notes commencing July 15, 2003 in accordance with the terms of the
Holdings Senior Discount Notes; (xv) Restricted Payments made on the Issue Date
contemplated by the Recapitalization Agreement; and (xvi) any dividend or
distribution to Holdings in respect of overhead expenses, legal, accounting,
Commission reporting and other professional fees and expenses of Holdings that
are directly attributable to the operations of the Company and its Restricted
Subsidiaries; provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (vii), (ix), (x), (xii) and
(xiv) (other than with respect to Defaults and Events of Default set forth in
clause (iii) or (vi) under Section 6.01), no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof; and
provided, further, that for purposes of determining the aggregate amount
expended for Restricted Payments in accordance with clause (c) of the
immediately preceding paragraph, only the amounts expended under clauses (i),
(ii) (with respect to the repurchase, retirement or other acquisition of Retired
Capital Stock pursuant to clause (a) thereof and the payment of dividends on
Retired Capital Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x)
shall be included.
<PAGE>
As of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the second to last sentence of the
definition of "Unrestricted Subsidiary." For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated will be deemed to be Restricted Payments in an
amount determined as set forth in the last sentence of the definition of
"Investments." Such designation will only be permitted if a Restricted Payment
in such amount would be permitted at such time (whether pursuant to the first
paragraph of this covenant or under clause (vii), (xi) or (xii)) and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
SECTION 4.7 Existence.
Subject to Article Five, the Company shall do or shall cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation, partnership or other entity. Nothing contained herein or in any
Securities or Holdings Guarantee shall require Holdings to preserve its
existence, and Holdings may be dissolved at any time (whether in connection with
a Holdings IPO Reorganization or otherwise).
SECTION 4.8 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (2) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, might by law become a material
liability, or Lien upon the property, of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate provision has been made.
SECTION 4.9 Notice of Defaults.
(a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
<PAGE>
(b) Upon becoming aware of any Default or Event of Default, the Company
shall promptly deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default.
SECTION 4.10 Maintenance of Properties and Insurance.
(a) Subject to Article Five, the Company shall cause all material
properties owned by or leased to it or any Restricted Subsidiary and used or
useful in the conduct of its business or the business of any Restricted
Subsidiary to be maintained and kept in normal condition, repair and working
order and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 4.10 shall prevent
the Company or any Restricted Subsidiary from discontinuing the use, operation
or maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or the Restricted Subsidiary concerned, or of an Officer (or other agent
employed by the Company or of any Restricted Subsidiary) of the Company or such
Restricted Subsidiary having managerial responsibility for any such property,
desirable in the conduct of the business of the Company or any Restricted
Subsidiary as, in the judgment of the Company, may be necessary.
(b) The Company shall maintain, and shall cause the Restricted Subsidiaries
to maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and
co-insurance provisions as, in the judgment of the Company, may be necessary.
SECTION 4.11 Compliance Certificate.
The Company shall deliver to the Trustee within 45 days after the end of
each of the first three fiscal quarters of the Company and within 90 days after
the close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Issuers has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Issuers that occurred during such fiscal
quarter or fiscal year. If they do know of such a Default or Event of Default,
the certificate shall describe all such Defaults or Events of Default, their
status and the action the Company is taking or proposes to take with respect
thereto. The first certificate to be delivered by the Company pursuant to this
Section 4.11 shall be for the period commencing February 2, 1998 and ending
March 31, 1998.
<PAGE>
SECTION 4.12 Reports to Holders.
The Issuers will deliver to the Trustee within 15 days after the filing of
the same with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the Issuers are
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Issuers may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise
report on an annual and quarterly basis on forms provided for such annual and
quarterly reporting pursuant to rules and regulations promulgated by the
Commission, the Issuers will file with the Commission (and provide the Trustee
and Holders with copies thereof, without cost to each Holder, within 15 days
after it files them with the Commission) (a) within 90 days after the end of
each fiscal year, annual reports on Form 10-K (or any successor or comparable
form) containing the information required to be contained therein (or required
in such successor or comparable form); (b) within 45 days after the end of each
of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or
any successor or comparable form); (c) promptly from time to time after the
occurrence of an event required to be therein reported, such other reports on
Form 8-K (or any successor or comparable form); and (d) any other information,
documents and other reports which the Issuers would be required to file with the
Commission if they were subject to Section 13 or 15(d) of the Exchange Act;
provided, however, that the Issuers shall not be so obligated to file such
reports with the Commission if the Commission does not permit such filing, in
which event the Issuers will make available such information to prospective
purchasers of Securities, in addition to providing such information to the
Trustee and the Holders, in each case within 15 days after the time the Issuers
would be required to file such information with the Commission, if they were
subject to Section 13 or 15(d) of the Exchange Act. The above reporting
requirements with respect to the Issuers may be satisfied through the filing and
provision of such reports, information and documents by the Holdings Issuers in
lieu of the Issuers. Notwithstanding the foregoing, such requirements shall be
deemed satisfied (x) prior to April 30, 1998, if the Holdings Issuers deliver to
the Trustee and the Holders of the Securities on or prior to such date copies of
the audited financial statements of the Holdings Issuers and (y) prior to May
31, 1998, by filing with the Commission and delivering to the Trustee and the
Holders of the Securities on or prior to such date a registration statement
under the Securities Act that contains the information that would be required in
a Form 10-K for the Holdings Issuers for the year ended December 31, 1997 and a
Form 10-Q for the Holdings Issuers for the quarter ended March 31, 1998. The
Issuers will also comply with the other provisions of TIA ss. 314(a).
SECTION 4.13 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers, Holdings and the Guarantors covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other
<PAGE>
law, which would prohibit or forgive the Issuers, Holdings or such Guarantor
from paying all or any portion of the principal of and/or interest, if any, on
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) the Issuers, Holdings
and each Guarantor hereby expressly waive all benefit or advantage of any such
law, and covenants that it shall not hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 4.14 Change of Control.
(a) Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall notify the
Holders of the Securities of such occurrence in the manner prescribed by this
Indenture and shall, within 30 days after the Change of Control Date, make an
Offer to Purchase all Securities then outstanding at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of Holders
of record on the relevant Interest Record Date to receive interest due on the
relevant Interest Payment Date). The Issuers' obligations may be satisfied if a
third party makes the Offer to Purchase in the manner, at the times and
otherwise in compliance with the requirements of this Indenture applicable to an
Offer to Purchase made by the Issuers and purchases all Securities validly
tendered and not withdrawn under such Offer to Purchase. Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Security tendered must be tendered in an integral multiple of $1,000
principal amount.
(b) Prior to the mailing of the notice referred to in clause (a) above, but
in any event within 30 days following any Change of Control, the Issuers
covenant to (i) repay in full and terminate all commitments under Indebtedness
under the New Credit Facility and all other Senior Indebtedness the terms of
which require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the New Credit Facility
and all other such Senior Indebtedness and to repay the Indebtedness owed to
each lender which has accepted such offer or (ii) obtain the requisite consents
under the New Credit Facility and all other Senior Indebtedness to permit the
repurchase of the Securities pursuant to the Offer to Purchase. The Issuers
shall first comply with the covenant in the immediately preceding sentence
before they shall be required to repurchase Securities pursuant to the Offer to
Purchase. The Issuers' failure to comply with the covenant described in the
second preceding sentence or in clause (a) above shall constitute an Event of
Default described in clause (iii) (and not in clause (ii)) of Section 6.01.
<PAGE>
(c) On or prior to the Purchase Date specified in the Offer to Purchase,
the Issuers shall (i) accept for payment all Securities or portions thereof
validly tendered pursuant to the Offer, (ii) deposit with the Paying Agent or,
if an Issuer is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.04, money sufficient to pay the Purchase Price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee for cancellation all Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof
accepted for payment by the Issuers. The Paying Agent (or an Issuer, if so
acting) shall promptly mail or deliver to Holders of Securities so accepted,
payment in an amount equal to the Purchase Price for such Securities, and the
Trustee shall promptly authenticate and mail or deliver to each Holder of
Securities a new Security or Securities equal in principal amount to any
unpurchased portion of the Security surrendered as requested by the Holder. Any
Security not accepted for payment shall be promptly mailed or delivered by the
Issuers to the Holder thereof. The Issuers shall publicly announce the results
of the Offer on or as soon as practicable after the Purchase Date.
(d) If the Issuers make an Offer to Purchase, the Issuers will comply with
all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable Federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Securities are listed, and
any violation of the provisions of this Indenture relating to such Offer to
Purchase occurring as a result of such compliance shall not be deemed a Default
or an Event of Default.
SECTION 4.15 Limitation on Other Senior Subordinated Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary that is
a Guarantor to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) that is subordinate in right of payment to any
Indebtedness of the Company or any Indebtedness of any Restricted Subsidiary
that is a Guarantor, as the case may be, unless such Indebtedness is either (a)
pari passu in right of payment with the Securities or such Guarantor's
Guarantee, as the case may be, or (b) subordinate in right of payment to the
Securities or such Guarantor's Guarantee, as the case may be, in the same manner
and at least to the same extent as the Securities are subordinate to Senior
Indebtedness or such Guarantor's Guarantee is subordinate to such Guarantor's
Senior Indebtedness, as the case may be.
The Company shall not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Guarantee of such Guarantor and expressly
rank subordinate in right of payment to any Guarantor Senior Indebtedness of
such Guarantor.
SECTION 4.16 Limitations on Dividend and Other Payment Restrictions Affecting
Restricted
<PAGE>
Subsidiaries.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary to: (a)(i) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries; (b) make loans or advances to the Company or
any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries;
except (in each case) for such encumbrances or restrictions existing under or by
reason of: (1) contractual encumbrances or restrictions in effect on the Issue
Date, including pursuant to the New Credit Facility and its related
documentation and the Senior Discount Indenture; (2) this Indenture and the
Securities; (3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in clause
(c) above on the property so acquired; (4) applicable law or any applicable
rule, regulation or order; (5) any agreement or other instrument of a Person
acquired by the Company or any Restricted Subsidiary in existence at the time of
such acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired; (6) contracts for the sale of assets, including, without limitation,
customary restrictions with respect to a Subsidiary pursuant to an agreement
that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness
otherwise permitted to be incurred pursuant to Sections 4.04 and 4.18 of this
Indenture that limit the right of the debtor to dispose of the assets securing
such Indebtedness; (8) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business; (9) other Indebtedness of Foreign Subsidiaries permitted to be
incurred subsequent to the Issue Date pursuant to the provisions of Section 4.04
of this Indenture; (10) customary provisions in joint venture agreements and
other similar agreements entered into in the ordinary course of business; (11)
customary provisions contained in leases and other agreements entered into in
the ordinary course of business; (12) any encumbrances or restrictions of the
type referred to in clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board of
Directors of the Company, no more restrictive with respect to such dividend and
other payment restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing; (13) any
encumbrances or restrictions that are no more restrictive
<PAGE>
than those contained in the New Credit Facility as in effect on the Issue Date;
or (14) which will not in the aggregate cause the Company Issuers not to have
the funds necessary to pay the principal of, premium, if any, or interest on the
Securities.
SECTION 4.17 [Intentionally Omitted]
SECTION 4.18 Limitation on Liens.
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
suffer to exist any Lien (other than a Permitted Lien) that secures any Pari
Passu Indebtedness or Subordinated Indebtedness on any asset or property of the
Company or such Restricted Subsidiary, or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Securities
are equally and ratably secured with the obligations so secured or until such
time as such obligations are no longer secured by a Lien.
(b) No Guarantor will directly or indirectly create, incur, assume or
suffer to exist any Lien (other than a Permitted Lien) that secures any Pari
Passu Indebtedness or Subordinated Indebtedness of such Guarantor on any asset
or property of such Guarantor or any income or profits therefrom, or assign or
convey any right to receive income therefrom, unless the Guarantee of such
Guarantor is equally and ratably secured with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
SECTION 4.19 Limitations on Guarantees of Indebtedness by Restricted
Subsidiaries.
(a) The Company will not permit any Restricted Subsidiary to guarantee the
payment of any Indebtedness of the Company or any Indebtedness of any other
Restricted Subsidiary unless such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
guarantee of payment of the Securities by such Restricted Subsidiary, except
that (A) if the Securities are subordinated in right of payment to such
Indebtedness, the Guarantee under the supplemental indenture shall be
subordinated to such Restricted Subsidiary's guarantee with respect to such
Indebtedness substantially to the same extent as the Securities are subordinated
to such Indebtedness under this Indenture and (B) if such Indebtedness is by its
express terms subordinated in right of payment to the Securities, any such
guarantee of such Restricted Subsidiary with respect to such Indebtedness shall
be subordinated in right of payment to such Restricted Subsidiary's Guarantee
with respect to the Securities substantially to the same extent as such
Indebtedness is subordinated to the Securities; provided that this paragraph (a)
shall not be applicable to any guarantee by any Restricted Subsidiary (x) that
(A) existed at the time such Person became a Restricted Subsidiary of the
Company and (B) was not incurred in connection with, or in contemplation of,
such Person
<PAGE>
becoming a Restricted Subsidiary of the Company or (y) that guarantees the
payment of Obligations of the Company or any Restricted Subsidiary under the New
Credit Facility or any other bank facility which is designated as Senior
Indebtedness and any refunding, refinancing or replacement thereof, in whole or
in part, provided that such refunding, refinancing or replacement thereof
constitutes Senior Indebtedness and is not incurred pursuant to a registered
offering of securities under the Securities Act or a private placement of
securities (including under Rule 144A) pursuant to an exemption from the
registration requirements of the Securities Act (other than securities issued
pursuant to any bank or similar credit facility (including the New Credit
Facility)), which private placement provides for registration rights under the
Securities Act (any guarantee excluded by operations of this clause (y) being an
"Excluded Guarantee").
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Guarantee by a Restricted Subsidiary of the Securities shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
ARTICLE V
MERGERS; SUCCESSORS
SECTION 5.1 Mergers, Sale of Assets, etc.
(a) The Company may not consolidate or merge with or into or wind up into
(whether or not the Company is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to any Person unless (i) the
Company is the surviving entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
is a corporation, partnership or limited liability company organized or existing
under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (the Company or such Person, as the case may
be, being herein called the "Successor Company"); (ii) the Successor Company (if
other than the Company) expressly assumes all the obligations of the Company
under this Indenture and the Securities pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default shall
have occurred and be continuing; (iv) immediately after giving pro forma effect
to such transaction, as if such transaction had occurred
<PAGE>
at the beginning of the applicable four-quarter period, either (A) the Successor
Company (if other than CapCo I) would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first sentence of Section 4.04 of this Indenture or (B) the Fixed
Charge Coverage Ratio for the Successor Company (if other than CapCo I) and its
Restricted Subsidiaries would be greater than such ratio for the Company and its
Restricted Subsidiaries immediately prior to such transaction; and (v) the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and
such supplemental indenture (if any) comply with this Indenture. Notwithstanding
the foregoing clauses (iii) and (iv), but subject to the foregoing clauses (i),
(ii) and (v), (a) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or to another
Restricted Subsidiary and (b) the Company may merge with or transfer all of its
properties and assets to an Affiliate (including, without limitation, CapCo I)
in connection with an IPO Reorganization so long as the amount of Indebtedness
of the Company and its Restricted Subsidiaries immediately thereafter does not
exceed the amount permitted under Section 4.04 (it being understood that after
such transfer of such property and assets in connection with an IPO
Reorganization, the Company may dissolve). The Successor Company will succeed
to, and be substituted for, the Company under this Indenture and the Securities.
(b) Each Guarantor, if any, shall not, and the Company will not permit a
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation, partnership or limited liability company organized
or existing under the laws of the United States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such Person, as the
case may be, being herein called the "Successor Guarantor"); (ii) the Successor
Guarantor (if other than such Guarantor) expressly assumes all the obligations
of such Guarantor under this Indenture and such Guarantor's Guarantee pursuant
to a supplemental indenture or other documents or instruments in form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default shall have occurred and be continuing; and (iv) the
Guarantor shall have delivered or caused to be delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture. The Successor Guarantor will succeed to, and be
substituted for, such Guarantor under this Indenture and such Guarantor's
Guarantee.
SECTION 5.2 Successor Substituted.
<PAGE>
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.01 in which the Company or a
Guarantor, as the case may be, is not the Successor Company or Successor
Guarantor, as the case may be, and the Successor Company or Successor Guarantor,
as the case may be, is to assume all the Obligations of the Company under the
Securities, this Indenture and the Registration Rights Agreement or of such
Guarantor under its Guarantee, this Indenture and the Registration Rights
Agreement, as the case may be, pursuant to a supplemental indenture, such
Successor Company or Successor Guarantor, as the case may be, 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, and the Company shall be discharged and
released from its Obligations under this Indenture and the Securities or such
Guarantor shall be discharged from its Obligations under this Indenture and its
Guarantee, as the case may be.
In the event of an IPO Reorganization, CapCo I shall succeed to, and be
substituted for, and may exercise every right and power of, the Company, and the
Company shall be discharged and released from its Obligations under this
Indenture and the Securities and may be dissolved, subject to CapCo I's
compliance with Section 5.01(a)(ii) above.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
Each of the following shall be an "Event of Default" for purposes of this
Indenture:
(i) the failure to pay interest on any Security when the same becomes
due and payable and the default continues for a period of 30 days (whether
or no such payment shall be prohibited by Article Eight of this Indenture);
(ii) the failure to pay the principal on any Security, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase any Security
tendered pursuant to an Offer to Purchase which has actually been made)
(whether or not such payment shall be prohibited by Article Eight of this
Indenture);
(ii) a default in the observance or performance of any other covenant
or agreement contained in this Indenture which default continues for a
period of 60 days after the Company receives written notice specifying the
default (and demanding that such
<PAGE>
default be remedied) from the Trustee or the Holders of at least 25% of
the outstanding principal amount of the Securities (except in the case of
a default with respect to Section 5.01 of this Indenture, which will
constitute an Event of Default with such notice requirement but without
such passage of time requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Significant Restricted
Subsidiary, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $20.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $20.0
million shall have been rendered against the Company or any Significant
Restricted Subsidiary and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor
upon such judgment or decree which is not promptly stayed;
(vi) any Guarantee by a Significant Restricted Subsidiary shall become
null or void or unenforceable (other than in accordance with the terms of
the Senior Subordinated Indenture) or any such Guarantor shall deny its
obligations under its Guarantee;
(vii) the Company or any Significant Restricted Subsidiary pursuant to
or within the meaning of any Bankruptcy Law: (a) admits in writing its
inability to pay its debts generally as they become due; (b) commences a
voluntary case or proceeding; (c) consents to the entry of an order for
relief against it in an involuntary case or proceeding; (d) consents or
acquiesces in the institution of a bankruptcy or insolvency proceeding
against it; (e) consents to the appointment of a Custodian of it or for all
or substantially all of its property; or (f) makes a general assignment for
the benefit of its creditors, or any of them takes any action to authorize
or effect any of the foregoing; or
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (a) is for relief against the Company or any
Significant Restricted Subsidiary in an involuntary case or proceeding; (b)
appoints a Custodian of the Company or any Significant Restricted
Subsidiary for all or substantially all of its property; or (c) orders the
liquidation of the Company or any Significant Restricted Subsidiary; and in
each case the order or decree remains unstayed and in effect for 60 days;
provided,
<PAGE>
however, that if the entry of such order or decree is appealed and
dismissed on appeal, then the Event of Default hereunder by reason of
the entry of such order or decree shall be deemed to have been cured.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under
any Bankruptcy Law.
SECTION 6.2 Acceleration.
If an Event of Default with respect to the Securities (other than an Event
of Default specified in clause (vii) or (viii) of Section 6.01 with respect to
the Company) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Securities by notice in
writing to the Company (and to the Trustee if given by the Holders) may declare
the unpaid principal of (and premium, if any) and accrued interest to the date
of acceleration on all outstanding Securities to be due and payable immediately
and, upon any such declaration, such principal amount (and premium, if any) and
accrued interest, notwithstanding anything contained in this Indenture or the
Securities to the contrary, shall become immediately due and payable; provided,
however, that so long as the New Credit Facility shall be in full force, if an
Event of Default shall have occurred and be continuing (other than an Event of
Default specified in clause (vii) or (viii) of Section 6.01 with respect to the
Company), the Securities shall not become due and payable until the earlier to
occur of (x) five Business Days following delivery of a written notice by the
Trustee of such acceleration of the Securities to the agent under the New Credit
Facility and (y) the acceleration (ipso facto or otherwise) of any Indebtedness
under the New Credit Facility.
If an Event of Default specified in clause (vii) or (viii) of Section 6.01
with respect to the Company occurs, all unpaid principal of (and premium, if
any) and accrued interest on all outstanding Securities shall ipso facto become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree of the
money due in respect of the Securities has been obtained, the Holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if all existing Events of Default (other than the nonpayment of
principal of and interest on the Securities which has become due solely by
virtue of such acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
<PAGE>
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of 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 Securityholder in exercising any right or
remedy maturing 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 remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.4 Waiver of Past Default.
Subject to Sections 2.9, 6.7 and 10.2, prior to the declaration of
acceleration of the Securities, the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities by written notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on any
Security as specified in clauses (i) and (ii) of Section 6.01 or a Default in
respect of any term or provision of this Indenture that may not be amended or
modified without the consent of each Holder affected as provided in Section
10.02. The Issuers shall deliver to the Trustee an Officers' Certificate stating
that the requisite percentage of Holders have consented to such waiver and
attaching copies of such consents. In case of any such waiver, the Issuers, the
Trustee and the Holders shall be restored to their former positions and rights
hereunder and under the Securities, respectively. This paragraph of this Section
6.04 shall be in lieu of ss. 316(a)(1)(B) of the TIA and such ss. 316(a)(1)(B)
of the TIA is hereby expressly excluded from this Indenture and the Securities,
as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 6.5 Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal amount of
the outstanding Securities may direct the time, method and place of conducting
any proceeding for
<PAGE>
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 another Securityholder, or that may involve the Trustee in
personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction. In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against any loss or expense caused by
taking such action or following such direction. This Section 6.05 shall be in
lieu of ss. 316(a)(1)(A) of the TIA, and such ss. 316(a)(1)(A) of the TIA is
hereby expressly excluded from this Indenture and the Securities, as permitted
by the TIA.
SECTION 6.6 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities unless:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of the
outstanding Securities make a written request to the Trustee to pursue a
remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and premium, if any or interest on a
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such
<PAGE>
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.
SECTION 6.8 Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified in
Section 6.01(i) or (ii) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Issuers
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest overdue on principal
and to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the
Securities 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.
SECTION 6.9 Trustee May File Proofs of Claim.
The Trustee may 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 Securityholders
allowed in any judicial proceedings relative to the Issuers (or any other
obligor upon the Securities), their respective creditors or their respective
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same, and any Custodian in any such judicial proceedings is hereby
authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder 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 Securityholder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money or property pursuant to this Article Six,
it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.7;
<PAGE>
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Issuers.
The Trustee, upon prior written notice to the Issuers, may fix a record
date and payment date for any payment to Securityholders pursuant to this
Section 6.10.
SECTION 6.11 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
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 and
expenses, 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 6.11 shall not apply to a suit by the Trustee, a suit by a Holder or
group of Holders of more than 10% in aggregate principal amount of the
outstanding Securities, or to any suit instituted by any Holder for the
enforcement or the payment of the principal or interest on any Securities on or
after the respective due dates expressed in the Security.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If a 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.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for the performance of such
duties as are specifically set forth herein; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein,
<PAGE>
upon certificates or opinions conforming to the requirements of this
Indenture; however, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall examine such certificates and opinions
to determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee shall not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or take any action at the request or direction of Holders if it shall
have reasonable grounds for believing that repayment of such funds is not
assured to it or it does not receive from such Holders an indemnity satisfactory
to it in its sole discretion against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine and
<PAGE>
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel, which shall conform to the
provisions of Section 13.5. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through attorneys and agents of its selection and
shall not be responsible for the misconduct or negligence of any agent or
attorney (other than an agent who is an employee of the Trustee) appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel of its selection and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Any request or direction of the Issuers mentioned herein shall be
sufficiently evidenced by an Officers' Certificate and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution.
(g) 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 Securityholders pursuant to this Indenture, unless such Securityholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
(h) 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, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, 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 Issuers, personally or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless the
Trustee shall
<PAGE>
have received written notice thereof at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture.
SECTION 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Issuers or their
respective Affiliates with the same rights it would have if it were not Trustee,
subject to Section 7.10 hereof. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Issuers in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults.
If a Default or an Event of Default occurs and is continuing and the
Trustee knows of such Defaults or Events of Default, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 30 days
after the occurrence thereof. Except in the case of a Default or an Event of
Default in payment of principal of or interest on any Security or a Default or
Event of Default in complying with Section 5.01, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of Securityholders.
This Section 7.05 shall be in lieu of the proviso to ss. 315(b) of the TIA and
such proviso to ss. 315(b) of the TIA is hereby expressly excluded from this
Indenture and the Securities, as permitted by the TIA.
SECTION 7.6 Reports by Trustee to Holders.
If required by TIA ss. 313(a), within 60 days after each May 15 beginning
with the May 15 following the date of this Indenture, the Trustee shall mail to
each Securityholder a report dated as of such May 15 that complies with TIA ss.
313(a). The Trustee also shall comply with TIA ss. 313(b), (c) and (d).
A copy of each such report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange, if any, on which the
Securities are listed. The Issuers shall promptly notify the Trustee in writing
if the Securities become listed on any
<PAGE>
stock exchange or of any delisting thereof.
SECTION 7.7 Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such compensation as
the Issuers and the Trustee shall from time to time agree in writing for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
(including fees, disbursements and expenses of its agents and counsel) incurred
or made by it in addition to the compensation for its services except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or bad faith. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel and any taxes or other expenses incurred by a trust created
pursuant to Section 9.1 hereof.
The Issuers shall indemnify the Trustee for, and hold it harmless against
any and all loss, damage, claims, liability or expense, including taxes (other
than franchise taxes imposed on the Trustee and taxes based upon, measured by or
determined by the income of the Trustee), arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent that such loss, damage, claim, liability or
expense is due to its own negligence or bad faith. The Trustee shall notify the
Issuers promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Issuers shall
not relieve the Issuers of their obligations hereunder. The Issuers shall defend
the claim and the Trustee shall cooperate in the defense (and may employ its own
counsel) at the Issuers' expense; provided, however, that the Issuers'
reimbursement obligation with respect to counsel employed by the Trustee will be
limited to the reasonable fees and expenses of such counsel.
The Issuers need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld. The Issuers need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee as a result of the violation of this Indenture by the Trustee.
To secure the Issuers' payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Securities against 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
or the Purchase Price or redemption price of any Securities to be purchased
pursuant to an Offer to Purchase or redeemed.
<PAGE>
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vii) or (viii) occurs, the expenses (including
the reasonable fees and expenses of its agents and counsel) and the compensation
for the services shall be preferred over the status of the Holders in a
proceeding under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Issuers' obligations under this
Section 7.07 and any claim arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Issuers' obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers in writing.
The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee and the Issuers in writing and
may appoint a successor Trustee with the Issuers' consent. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(c) a custodian or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the Securities may appoint a successor Trustee
to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. As promptly as practicable after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to the Lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have the rights, powers and duties of the Trustee under
this Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
<PAGE>
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition, at the expense of the Issuers, any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Issuers' obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation or
banking corporation, the resulting, surviving or transferee corporation or
banking corporation without any further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be eligible to act
as Trustee under TIA ss.ss. 310(a)(1) and 310(a)(2). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. If the Trustee has or shall acquire
any "conflicting interest" within the meaning of TIA ss. 310(b), the Trustee and
the Issuers shall comply with the provisions of TIA ss. 310(b); provided,
however, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Issuers are outstanding if
the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 7.10, the Trustee shall resign immediately in the
manner and with the effect hereinbefore specified in this Article Seven.
SECTION 7.11 Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
<PAGE>
ARTICLE VIII
SUBORDINATION OF SECURITIES
SECTION 8.1 Securities Subordinated to Senior Indebtedness.
Each Issuer covenants and agrees, and the Trustee and each Holder of the
Securities by his acceptance thereof likewise covenant and agree, that all
Securities shall be issued subject to the provisions of this Article Eight; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of and interest on the Securities by the Issuers shall, to the extent
and in the manner set forth in this Article Eight, be subordinated and junior in
right of payment to the prior payment in full in cash or Cash Equivalents of all
amounts payable under Senior Indebtedness of the Issuers.
SECTION 8.2 No Payment on Securities in Certain Circumstances.
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by acceleration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Senior Indebtedness, no payment of
any kind or character shall be made by or on behalf of either of the Issuers or
any other Person on either of their behalf with respect to any Obligations on
the Securities or to acquire any of the Securities for cash or property or
otherwise (except that holders of the Securities may receive payments from a
trust described under Article Nine so long as, on the date or dates the
respective amounts were paid into the trust, such payments were made with
respect to the Securities without violating the provisions of Article Eight or
Article Twelve of this Indenture (a "Defeasance Trust Payment")).
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness, permitting the holders of such Designated Senior Indebtedness then
outstanding to accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives written notice of the
event of default to the Trustee (a "Payment Blockage Notice"), then, unless and
until all events of default have been cured or waived or have ceased to exist or
the Trustee receives notice from the Representative for the respective issue of
Designated Senior Indebtedness terminating the Payment Blockage Period, during
the 180 days after the delivery of such Payment Blockage Notice (the "Payment
Blockage Period"), neither of the Issuers nor any other Person on either of
their behalf shall (x) make any payment of any kind or character with respect to
any Obligations on the Securities or (y) acquire any of the Securities for cash
or property or
<PAGE>
otherwise (except that holders of the Securities may receive Defeasance Trust
Payments).
Notwithstanding anything herein to the contrary, in no event will a Payment
Blockage Period extend beyond 180 days from the date the Payment Blockage Notice
is delivered and only one such Payment Blockage Period may be commenced within
any 360 consecutive days. No event of default which existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness shall be, or be made, the basis for commencement
of a second Payment Blockage Period by the Representative of such Designated
Senior Indebtedness whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Payment Blockage Period that, in either case, would give
rise to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).
SECTION 8.3 Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets of any of the Issuers of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors or marshaling of assets of either of the Issuers or in a
bankruptcy, reorganization, insolvency, receivership or other similar proceeding
relating to either of the Issuers or their respective property, whether
voluntary or involuntary, all Obligations due or to become due upon all Senior
Indebtedness shall first be paid in full in cash or Cash Equivalents, or such
payment duly provided for to the satisfaction of the holders of Senior
Indebtedness, before any payment or distribution of any kind or character is
made on account of any Obligations on the Securities, or for the acquisition of
any of the Securities for cash or property or otherwise (except that holders of
the Securities may receive Permitted Junior Securities or Defeasance Trust
Payments). Before any payment may be made by, or on behalf of, such Issuer of
the principal of, premium, if any, or interest on the Securities upon any such
dissolution or winding-up or total liquidation or reorganization, any payment or
distribution of assets or securities of such Issuer of any kind or character,
whether in cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities and excluding any Defeasance Trust Payment), to
which the Holders of the Securities or the Trustee on their behalf would be
entitled, but for the subordination provisions of this Indenture, shall be made
by such Issuer or by any receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, directly to the
holders of the Senior Indebtedness of such Issuer (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such holders)
or their representatives or to the trustee or trustees or agent or agents under
any agreement or indenture pursuant to which any of such Senior Indebtedness
<PAGE>
may have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision prohibiting
such payment or distribution, any payment or distribution of assets or
securities of an Issuer of any kind or character, whether in cash, property or
securities (excluding any payment or distribution of Permitted Junior Securities
and excluding any Defeasance Trust Payment), shall be received by the Trustee or
any Holder of Securities at a time when such payment or distribution is
prohibited by Section 8.03(a) and before all obligations in respect of Senior
Indebtedness of such Issuer are paid in full in cash or Cash Equivalents, such
payment or distribution shall be received and held in trust for the benefit of,
and shall be paid over or delivered to, the holders of Senior Indebtedness of
such Issuer (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their respective representatives,
or to the trustee or trustees or agent or agents under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of such Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full in
cash or Cash Equivalents after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company with or
into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 8.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 8.4 Subrogation.
Upon the payment in full in cash or Cash Equivalents of all Senior
Indebtedness of an Issuer, or provision for payment, the Holders of the
Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of an Issuer made on such Senior Indebtedness until the principal of
and interest on the Securities shall be paid in full in cash or Cash
Equivalents; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of an Issuer of any
cash, property or securities to which the Holders of the Securities or the
Trustee on their behalf would be entitled except for the provisions of this
Article Eight, and no payment over pursuant to the provisions of this Article
Eight to the holders of Senior Indebtedness of an Issuer by Holders of the
Securities or the Trustee on their behalf shall, as between an Issuer, its
<PAGE>
creditors other than holders of Senior Indebtedness of such Issuer, and the
Holders of the Securities, be deemed to be a payment by such Issuer to or on
account of the Senior Indebtedness of such Issuer. It is understood that the
provisions of this Article Eight are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of the Senior Indebtedness of the Issuers, on the other hand.
If any payment or distribution to which the Holders of the Securities would
otherwise have been entitled but for the provisions of this Article Eight shall
have been applied, pursuant to the provisions of this Article Eight, to the
payment of all amounts payable under Senior Indebtedness, then and in such case,
the Holders of the Securities shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders
of Senior Indebtedness in excess of the amount required to make payment in full
in cash of such Senior Indebtedness.
SECTION 8.5 Obligations of Issuers Unconditional.
Nothing contained in this Article Eight or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Issuers and the
Holders of the Securities, the obligation of the Issuers, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Issuers other than
the holders of the Senior Indebtedness of the Issuers, nor shall anything herein
or therein prevent the Holder of any Security or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Eight of
the holders of the Senior Indebtedness of the Issuers in respect of cash,
property or securities of an Issuer received upon the exercise of any such
remedy.
Without limiting the generality of the foregoing, nothing contained in this
Article Eight shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Senior Indebtedness of the
Issuers then due and payable shall first be paid in full in cash or Cash
Equivalents before the Holders of the Securities or the Trustee are entitled to
receive any direct or indirect payment from the Issuers of principal of or
interest on the Securities.
SECTION 8.6 Notice to Trustee.
The Issuers shall give prompt written notice to the Trustee of any fact
known to the Issuers which would prohibit the making of any payment to or by the
Trustee in respect of
<PAGE>
the Securities pursuant to the provisions of this Article Eight. The Trustee
shall not be charged with knowledge of the existence of any event of default
with respect to any Senior Indebtedness of an Issuer or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing at its Corporate Trust Office
to that effect signed by an Officer of the Company, or by a holder of Senior
Indebtedness or trustee or agent therefor; and prior to the receipt of any such
written notice, the Trustee shall, subject to Article Seven, be entitled to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section 8.06 at least two
Business Days prior to the date upon which by the terms of this Indenture any
moneys shall become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Security), then, regardless of
anything herein to the contrary, the Trustee shall have full power and authority
to receive any moneys from the Issuers and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date. Nothing
contained in this Section 8.06 shall limit the right of the holders of Senior
Indebtedness of the Issuers to recover payments as contemplated by Section 8.03.
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or itself to be a holder of any Senior
Indebtedness of the Issuers (or a trustee on behalf of, or other representative
of, such holder) to establish that such notice has been given by a holder of
such Senior Indebtedness or a trustee or representative on behalf of any such
holder.
In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of an Issuer to participate in any payment or distribution pursuant
to this Article Eight, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness of an Issuer held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article Eight, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 8.7 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities referred to in
this Article Eight, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Securities for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness of an
<PAGE>
Issuer and other indebtedness of an Issuer, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Eight.
SECTION 8.8 Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights set
forth in this Article Eight with respect to any Senior Indebtedness of an Issuer
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness of an Issuer, and
nothing in this Indenture shall deprive the Trustee or any Paying Agent of any
of its rights as such holder.
With respect to the holders of Senior Indebtedness of an Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Eight, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness of
an Issuer shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of an Issuer (except as provided in Section 8.03(b)). The Trustee
shall not be liable to any such holders if the Trustee shall in good faith
mistakenly pay over or distribute to Holders of Securities or to an Issuer or to
any other person cash, property or securities to which any holders of Senior
Indebtedness of an Issuer shall be entitled by virtue of this Article Eight or
otherwise.
SECTION 8.9 Subordination Rights Not Impaired by Acts or Omissions of the
Issuers or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness of an
Issuer to enforce subordination as provided herein shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of an Issuer
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by an Issuer with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The provisions of this Article Eight are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness of the
Issuers.
SECTION 8.10 Securityholders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder of Securities by his acceptance of such Securities authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eight, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, total liquidation or
reorganization of an Issuer (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or
<PAGE>
otherwise) tending towards liquidation of the business and assets of an Issuer,
the filing of a claim for the unpaid balance of its or his Securities in the
form required in those proceedings.
SECTION 8.11 This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on the
Securities by reason of any provision of this Article Eight shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 8.12 Trustee's Compensation Not Prejudiced.
Nothing in this Article Eight shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 8.13 No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 8.09, the holders of
Senior Indebtedness of an Issuer may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Eight or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness of an Issuer, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding or secured; (b)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing such Senior Indebtedness; (c) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (d) exercise or
refrain from exercising any rights against an Issuer and any other Person.
SECTION 8.14 Subordination Provisions Not Applicable to Money Held in Trust for
Securityholders.
All money and United States Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Article Nine shall be for the
sole benefit of the Holders and shall not be subject to this Article Eight.
ARTICLE IX
DISCHARGE OF INDENTURE
SECTION 9.1 Termination of Issuers' Obligations.
Subject to the provisions of Article Eight, the Issuers may terminate their
substantive obligations in respect of the Securities by delivering all
outstanding Securities to the Trustee for cancellation and paying all sums
payable by it on account of principal of and interest on all Securities or
otherwise. In addition to the foregoing, subject to the provisions of Article
Eight with respect to the creation of the defeasance trust provided for in the
following clause (i), the Issuers may, provided that no Default or Event of
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default or Event of Default specified in Section 6.01(vii) or
(viii), occurs at any time on or prior to the 123rd calendar day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until after such 123rd day)) and provided that no default under any
Senior Indebtedness would result therefrom, terminate their substantive
obligations in respect of Article Four (other than Sections 4.01, 4.02, 4.07,
4.09 and 4.11) and Article Five hereof and any Event of Default specified in
Section 6.01 (iii), (iv), (v) or (vi) by (i) depositing with the Trustee, under
the terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Securities, (ii) delivering to the Trustee either an Opinion of Counsel
or a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and termination of obligations,
(iii) delivering to the Trustee an Opinion of Counsel to the effect that the
Issuers' exercise of the option under this Section 9.01 will not result in any
of the Issuers, the Trustee or the trust created by the Issuers' deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and (iv) delivering to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating compliance with all conditions precedent
provided for herein. In addition, subject to the provisions of Article Eight
with respect to the creation of the defeasance trust provided for in the
following clause (i), the Issuers may, provided that no Default or Event of
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default or Event of Default specified in Section 6.01(vii) or
(viii), occurs at any time on or prior to the 123rd calendar day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until after such 123rd day)) and provided that no default under any
Senior Indebtedness would arise therefrom, terminate all of their substantive
obligations in respect of the Securities (including its obligations to pay the
principal of and interest on the Securities) by (i) depositing with the Trustee,
under the terms of an irrevocable trust agreement, money or United States
Government Obligations sufficient (without reinvestment) to pay all remaining
Indebtedness on the Securities, (ii) delivering to the Trustee either a ruling
directed to the Trustee from the Internal Revenue Service to the effect that the
Holders of the Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and termination of obligations
or an Opinion of Counsel addressed to the Trustee based upon such a ruling or
<PAGE>
based on a change in the applicable Federal tax law since the date of this
Indenture to such effect, (iii) delivering to the Trustee an Opinion of Counsel
to the effect that the exercise of the option under this Section 9.01 will not
result in any of the Issuers, the Trustee or the trust created by the deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act and (iv) delivering to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating compliance with all
conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Issuers' obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13 and 4.01 (but not
with respect to termination of substantive obligations pursuant to the third
sentence of the foregoing paragraph), 4.02, 7.07, 7.08, 9.03 and 9.04 shall
survive until the Securities are no longer outstanding. Thereafter the Issuers'
obligations in Sections 7.07, 9.03 and 9.04 shall survive.
After such delivery or irrevocable deposit and delivery of an Officers'
Certificate and Opinion of Counsel, the Trustee upon request shall acknowledge
in writing the discharge of the Issuers' obligations under the Securities and
this Indenture except for those surviving obligations specified above.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 9.01 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 outstanding Securities.
SECTION 9.2 Application of Trust Money.
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.
SECTION 9.3 Repayment to Issuers.
Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to the
Issuers upon written request any money held by it which exceeds the amount
required to make payments under this Indenture. The Trustee shall pay to the
Issuers upon written request any money held by it for the payment of principal
or interest that remains unclaimed for two years; provided, however, that the
Trustee before being required to make any payment may at the expense of the
Issuers cause to be published once in a newspaper of general circulation in The
City of New
<PAGE>
York or mail to each Holder entitled to such money notice that such money
remains unclaimed and that, after a date specified therein which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining shall be repaid to the Issuers. After
payment to the Issuers, Securityholders entitled to money must look to the
Issuers for payment as general creditors unless an applicable abandoned property
law designates another person and all liability of the Trustee or Paying Agent
with respect to such money shall thereupon cease.
SECTION 9.4 Reinstatement.
If the Trustee is unable to apply any money or United States Government
Obligations in accordance with Section 9.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Issuers'
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 9.01 until such
time as the Trustee is permitted to apply all such money or United States
Government Obligations in accordance with Section 9.01; provided, however, that
if the Issuers have made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or United States Government Obligations held by the
Trustee.
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Without Consent of Holders.
The Issuers, Holdings and each Guarantor, when authorized by a resolution
of their respective Boards of Directors, and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency; provided, however,
that such amendment or supplement does not adversely affect the rights of
any Holder;
(b) to effect the assumption by a successor Person of all obligations
of the Company under the Securities and this Indenture in connection with
any transaction complying with Article Five of this Indenture;
(c) to provide for uncertificated Securities in addition to or in
place of
<PAGE>
certificated Securities;
(d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit or
rights to the Holders;
(f) to make any other change that does not adversely affect the rights
of any Holder under this Indenture;
(g) to evidence the succession of another Person to any Guarantor and
the assumption by any such successor of the covenants of such Guarantor
herein and in the Guarantee in connection with any transaction complying
with Article Five of this Indenture;
(h) to add to the covenants of the Company, Holdings or a Guarantor
for the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company, Holdings or any Guarantor;
(i) to secure the Securities pursuant to the requirements of Section
4.18 or otherwise; or
(j) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee or to add a Guarantor, in each case pursuant to
the requirements of Section 4.19;
provided, however, that the Issuers delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.1.
SECTION 10.2 With Consent of Holders.
Subject to Section 6.07, the Issuers, Holdings and the Guarantors, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to Section 6.07, the Holders of a majority in
principal amount of the outstanding Securities may waive compliance by the
Issuers, Holdings or any Guarantor with any provision of this Indenture or the
Securities. However, without the consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may not:
(a) reduce the rate of or change or have the effect of changing the
tie for
<PAGE>
payment of interest, including defaulted interest, on any Security;
(b) reduce the principal of or change or have the effect of changing
the fixed maturity of any Security, or change the date on which any
Security may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(c) make any Security payable in money other than that stated in the
Security;
(d) amend, change or modify in any material respect the obligation of
the Issuers to make and consummate an Offer to Purchase in the event of a
Change of Control or with respect to any Asset Sale that has been
consummated or modify any of the provisions or definitions with respect
thereto;
(e) modify any provisions of Section 6.04 (other than to add sections
of this Indenture or the Securities subject thereto) or 6.07 or this
Section 10.02 (other than to add sections of this Indenture or the
Securities which may not be amended, supplemented or waived without the
consent of each Securityholder affected);
(f) reduce the percentage of the principal amount of outstanding
Securities necessary for amendment to or waiver of compliance with any
provision of this Indenture or the Securities or for waiver of any Default;
(g) waive a Default in the payment of the principal of or interest on
or redemption or purchase payment with respect to any Security (except a
rescission of acceleration of the Securities by the Holders as provided in
Section 6.02 and a waiver of the payment default that resulted from such
acceleration);
(h) modify the ranking or priority of the Securities, the Holdings
Guarantee or any Guarantee, or modify the definition of Senior
Indebtedness, or amend or modify any of the provisions of Article Eight or
Article Twelve in any manner adverse to the Holders; or
(i) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with this
Indenture.
It shall not be necessary for the consent of the Holders under this Section
10.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 10.02 becomes
<PAGE>
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 10.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 10.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of that
Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Security or portion of such
Security by notice to the Trustee or the Issuers received before the date on
which the Trustee receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (a)
through (i) of Section 10.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 10.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
<PAGE>
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Issuers or the Trustee
so determine, the Issuers in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 10.6 Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Ten is authorized or
permitted by this Indenture and that such amendment, supplement or waiver
constitutes the legal, valid and binding obligation of the Issuers, Holdings and
any Guarantors, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
ARTICLE XI
GUARANTEE
SECTION 11.1 Unconditional Guarantee.
Holdings and each Guarantor hereby unconditionally, jointly and severally,
guarantee to each Holder of a Security authenticated by the Trustee and to the
Trustee and its successors and assigns that: the principal of and interest on
the Securities will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise, and interest on
the overdue principal and interest on any overdue interest on the Securities and
all other obligations of the Issuers to the Holders or the Trustee hereunder or
under the Securities will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; subject, however, to the
limitations set forth in Section 11.03. Holdings and each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, the
recovery of any judgment against the Issuers, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of Holdings or a Guarantor. Holdings and each Guarantor
hereby waive diligence, presentment, demand of payment, filing of claims with a
court in the event of
<PAGE>
insolvency or bankruptcy of an Issuer, any right to require a proceeding first
against an Issuer, protest, notice and all demands whatsoever and covenants that
the Holdings Guarantee or the Guarantee, as the case may be, will not be
discharged except by complete performance of the obligations contained in the
Securities and this Indenture. If any Holder or the Trustee is required by any
court or otherwise to return to an Issuer, Holdings, any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
an Issuer, Holdings or any Guarantor, any amount paid by an Issuer, Holdings or
any Guarantor to the Trustee or such Holder, the Holdings Guarantee and each
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Holdings and each Guarantor further agree that, as between
each of Holdings or a Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purpose of the
Holdings Guarantee and each Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall become due and payable by Holdings and each Guarantor for the purpose of
the Holdings Guarantee and each Guarantee.
SECTION 11.2 Severability.
In case any provision of this Article Twelve 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 11.3 Limitation of Guarantor's Liability.
Holdings and each Guarantor, and by its acceptance hereof each Holder and
the Trustee, hereby confirm that it is the intention of all such parties that
the Holdings Guarantee and each Guarantee not constitute a fraudulent transfer
or conveyance for purposes of title 11 of the United States Code, as amended,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar U.S. Federal or state or other applicable law. To effectuate the
foregoing intention, the Holders, Holdings and each Guarantor hereby irrevocably
agree that the obligations of Holdings and each Guarantor under the Holdings
Guarantee and each Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of Holdings or
such Guarantor, as the case may be, and after giving effect to any collections
from or payments made by or on behalf of Holdings or any other Guarantor, as the
case may be, in respect of the obligations of Holdings or such other Guarantor,
as the case may be, pursuant to Section 11.04, result in the obligations of
Holdings or such Guarantor not constituting such a fraudulent transfer or
conveyance.
SECTION 11.4 Contribution.
<PAGE>
In order to provide for just and equitable contribution among Holdings and
the Guarantors, Holdings and the Guarantors agree, inter se, that in the event
any payment or distribution is made by Holdings or any Guarantor (a "Funding
Guarantor") under the Holdings Guarantee or a Guarantee, as the case may be,
such Funding Guarantor shall be entitled to a contribution from Holdings and all
other Guarantors in a pro rata amount, based on the net assets of Holdings and
each Guarantor (including the Funding Guarantor), determined in accordance with
GAAP, subject to Section 11.03, for all payments, damages and expenses incurred
by such Funding Guarantor in discharging the Issuers' obligations with respect
to the Securities or Holdings or any other Guarantor's obligations under the
Holdings Guarantee or a Guarantee, as the case may be.
SECTION 11.5 Execution of Guarantee.
To further evidence the Holdings Guarantee and each Guarantee to the
Holders, each of Holdings and the Guarantors hereby agree to execute a guarantee
to be endorsed on each Security ordered to be authenticated and delivered by the
Trustee. Holdings and each Guarantor hereby agree that its guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a guarantee. Each such guarantee shall be
signed on behalf of Holdings and each Guarantor by its Chairman of the Board,
its President or one of its Vice Presidents prior to the authentication of the
Security on which it is endorsed, and the delivery of such Security by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such guarantee on behalf of Holdings or such Guarantor. Such
signature upon the guarantee may be manual or facsimile signature of such
officer and may be imprinted or otherwise reproduced on the guarantee, and in
case such officer who shall have signed the guarantee shall cease to be such
officer before the Security on which such guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Issuers, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed the guarantee had not ceased to be such officer of
Holdings or such Guarantor.
SECTION 11.6 Subordination of Subrogation and Other Rights.
Holdings and each Guarantor hereby agree that any claim against an Issuer
that arises from the payment, performance or enforcement of such Guarantor's
obligations under the Holdings Guarantee or a Guarantee or this Indenture,
including, without limitation, any right of subrogation, shall be subject and
subordinate to, and no payment with respect to any such claim of Holdings or
such Guarantor shall be made before, the payment in full in cash of all
outstanding Securities in accordance with the provisions provided therefor in
this Indenture.
<PAGE>
ARTICLE XII
SUBORDINATION OF GUARANTEE
SECTION 12.1 Guarantee Obligations Subordinated to Senior Indebtedness.
Holdings and each Guarantor covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and agree,
that the Holdings Guarantee and each Guarantee shall be issued subject to the
provisions of this Article Twelve; and each person holding any Security, whether
upon original issue or upon transfer, assignment or exchange thereof, accepts
and agrees that all payments of the principal of and interest on the Securities
pursuant to the Holdings Guarantee and each Guarantee made by or on behalf of
Holdings or any Guarantor shall, to the extent and in the manner set forth in
this Article Twelve, be subordinated and junior in right of payment to the prior
payment in full in cash or Cash Equivalents of all amounts payable under Senior
Indebtedness of Holdings or such Guarantor.
SECTION 12.2 No Payment in Certain Circumstances; Payment Over of Proceeds upon
Dissolution, etc.
(a) Upon any payment or distribution of assets of Holdings or a Guarantor
of any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors or marshaling of assets of Holdings or a Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to Holdings or a Guarantor or their respective property,
whether voluntary or involuntary, all Obligations due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or Cash Equivalents, or
such payment duly provided for to the satisfaction of the holders of Senior
Indebtedness, before any payment or distribution of any kind or character is
made by or on behalf of Holdings or such Guarantor, as the case may be, on
account of any Obligations on the Holdings Guarantee or the Guarantee of such
Guarantor, as the case may be, or for the acquisition of any of the Securities
for cash or property or otherwise (except that holders of the Securities may
receive Permitted Junior Securities or Defeasance Trust Payments). Before any
payment may be made by, or on behalf of, Holdings or any Guarantor of the
principal of, premium, if any, or interest on the Securities upon any such
dissolution or winding-up or total liquidation or reorganization, any payment or
distribution of assets or securities of Holdings or such Guarantor, as the case
may be, of any kind or character, whether in cash, property or securities, to
which the Holders of the Securities or the Trustee on their behalf would be
entitled, but for the subordination provisions of this Indenture, shall be made
by Holdings or such Guarantor, as the case may be, or by any receiver, trustee
in bankruptcy, liquidation trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Indebtedness of Holdings or
such Guarantor, as the case may be, (pro rata
<PAGE>
to such holders on the basis of the respective amounts of such Senior
Indebtedness held by such holders) or their representatives or to the trustee or
trustees or agent or agents under any agreement or indenture pursuant to which
any of such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(b) In the event that, notwithstanding the foregoing provision prohibiting
such payment or distribution, any payment or distribution of assets or
securities of Holdings or any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or any Holder of
Securities at a time when such payment or distribution is prohibited by Section
12.02(a) and before all obligations in respect of the Senior Indebtedness of
Holdings or such Guarantor, as the case may be, are paid in full in cash or Cash
Equivalents, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of such
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of such Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the payment
of such Senior Indebtedness remaining unpaid until all such Senior Indebtedness
has been paid in full in cash or Cash Equivalents after giving effect to any
prior or concurrent payment, distribution or provision therefor to or for the
holders of such Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any Guarantor
with or into, another corporation or the liquidation or dissolution of any
Guarantor following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 12.02
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by acceleration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Senior Indebtedness, no payment of
any kind or character shall be made by or on behalf of Holdings or a Guarantor
or any other Person on its behalf with respect to any Obligations on the
Holdings Guarantee or the Guarantee of such Guarantor or to acquire any of the
Securities for cash or property or otherwise (except that holders of the
Securities may receive Defeasance Trust Payments).
<PAGE>
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness, permitting the holders of such Designated Senior Indebtedness then
outstanding to accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives a Payment Blockage
Notice to the Trustee, then, unless and until all events of default have been
cured or waived or have ceased to exist or the Trustee receives notice from the
Representative for the respective issue of Designated Senior Indebtedness
terminating the Payment Blockage Period, during the Payment Blockage Period,
neither Holdings nor a Guarantor, nor any other Person on either Holdings' or a
Guarantor's behalf, shall (x) make any payment of any kind or character with
respect to any Obligations on the Holdings Guarantee or the Guarantee of such
Guarantor or (y) acquire any of the Securities for cash or property or otherwise
(except that holders of the Securities may receive Defeasance Trust Payments).
Notwithstanding anything herein to the contrary, in no event will a Payment
Blockage Period extend beyond 180 days from the date the Payment Blockage Notice
is delivered and only one such Payment Blockage Period may be commenced within
any 360 consecutive days. No event of default which existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness shall be, or be made, the basis for commencement
of a second Payment Blockage Period by the Representative of such Designated
Senior Indebtedness whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Payment Blockage Period that, in either case, would give
rise to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).
SECTION 12.3 Subrogation.
Upon the payment in full in cash or Cash Equivalents of all Senior
Indebtedness of Holdings or a Guarantor, or provision for payment, the Holders
of the Securities shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of Holdings or such Guarantor, as the case may be, made on such
Senior Indebtedness until the principal of and interest on the Securities shall
be paid in full in cash or Cash Equivalents; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee on their behalf would be entitled except for the
provisions of this Article Twelve, and no payment over pursuant to the
provisions of this Article Twelve to the holders of such Senior Indebtedness by
Holders of the Securities or the
<PAGE>
Trustee on their behalf shall, as between Holdings or such Guarantor, its
creditors other than holders of such Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by Holdings or such Guarantor, as the case
may be, to or on account of such Senior Indebtedness. It is understood that the
provisions of this Article Twelve are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Indebtedness of Holdings or each Guarantor, as the
case may be, on the other hand.
If any payment or distribution to which the Holders of the Securities would
otherwise have been entitled but for the provisions of this Article Twelve shall
have been applied, pursuant to the provisions of this Article Twelve, to the
payment of all amounts payable under Senior Indebtedness of Holdings or a
Guarantor, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount required to make payment in full in cash of such Senior Indebtedness.
SECTION 12.4 Obligations of Guarantors Unconditional.
Subject to Sections 11.03 and 8.02, nothing contained in this Article
Twelve or elsewhere in this Indenture or in the Securities or the Holdings
Guarantee or the Guarantees is intended to or shall impair, as among Holdings
and each of the Guarantors and the Holders of the Securities, the obligation of
Holdings and each Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Holdings Guarantee or the Guarantee of such Guarantor, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of any Holdings or Guarantor other than the holders of Senior Indebtedness of
Holdings or such Guarantor, as the case may be, nor shall anything herein or
therein prevent the Holder of any Security or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Twelve of the
holders of Senior Indebtedness in respect of cash, property or securities of
Holdings or any Guarantor received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in this
Article Twelve shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Senior Indebtedness of
Holdings or any Guarantor then due and payable shall first be paid in full in
cash or Cash Equivalents before the Holders of the Securities or the Trustee are
entitled to receive any direct or indirect payment from Holdings or such
Guarantor, as the case may be, of principal of
<PAGE>
or interest on the Securities pursuant to the Holdings Guarantee or the
Guarantee, as the case may be.
SECTION 12.5 Notice to Trustee.
The Issuers shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities pursuant to the provisions of this Article
Twelve. The Trustee shall not be charged with knowledge of the existence of any
event of default with respect to any Senior Indebtedness of Holdings or a
Guarantor or of any other facts which would prohibit the making of any payment
to or by the Trustee unless and until the Trustee shall have received notice in
writing at its Corporate Trust Office to that effect signed by an Officer of an
Issuer, or by a holder of Senior Indebtedness of Holdings or a Guarantor or
trustee or agent therefor; and prior to the receipt of any such written notice,
the Trustee shall, subject to Article Seven, be entitled to assume that no such
facts exist. Nothing contained in this Section 12.05 shall limit the right of
the holders of Senior Indebtedness of Holdings or a Guarantor to recover
payments as contemplated by Section 12.03. The Trustee shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself or
itself to be a holder of any Senior Indebtedness of Holdings or a Guarantor (or
a trustee on behalf of, or other representative of, such holder) to establish
that such notice has been given by a holder of such Senior Indebtedness or a
trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of Holdings or a Guarantor to participate in any payment or
distribution pursuant to this Article Twelve, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Twelve, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 12.6 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities of Holdings or a
Guarantor referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities
<PAGE>
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Indebtedness of Holdings or of such
Guarantor and other indebtedness of Holdings or such Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve.
SECTION 12.7 Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights set
forth in this Article Twelve with respect to any Senior Indebtedness of Holdings
or a Guarantor which may at any time be held by them in their individual or any
other capacity to the same extent as any other holder of Senior Indebtedness of
Holdings or a Guarantor, and nothing in this Indenture shall deprive the Trustee
or any Paying Agent of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of Holdings or a
Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Twelve,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of Holdings or a Guarantor (except as provided in Section
12.02(b)). The Trustee shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Issuers or to any other person cash, property or securities to which
any holders of Guarantor Senior Indebtedness shall be entitled by virtue of this
Article Twelve or otherwise.
SECTION 12.8 Subordination Rights Not Impaired by Acts or Omissions of Holdings,
the Guarantors or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness of
Holdings or a Guarantor to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of Holdings or any Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by Holdings or any Guarantor
with the terms of this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with. The provisions of this
Article Twelve are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Indebtedness of Holdings or a Guarantor.
SECTION 12.9 Securityholders Authorize Trustee To Effectuate Subordination of
Guarantee.
Each Holder of Securities by his acceptance of such Securities authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate
<PAGE>
to effectuate the subordination provided in this Article Twelve, and appoints
the Trustee his attorney-in-fact for such purposes, including, in the event of
any dissolution, winding-up, total liquidation or reorganization of Holdings or
any Guarantor (whether in bankruptcy, insolvency, receivership, reorganization
or similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of Holdings or
such Guarantor, the filing of a claim for the unpaid balance of its or his
Securities in the form required in those proceedings.
SECTION 12.10 This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on the
Securities by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default.
SECTION 12.11 Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 12.12 No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 12.08, the holders of
Senior Indebtedness of Holdings or a Guarantor may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of such Senior Indebtedness, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness or any instrument evidencing the
same or any agreement under which such Senior Indebtedness is outstanding or
secured; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (c) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (d) exercise or refrain from exercising any rights against any Guarantor and
any other Person.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls.
<PAGE>
This Indenture is subject to the provisions of the TIA that are required to
be a part of this Indenture, and shall, to the extent applicable, be governed by
such provisions. If any provision of this Indenture modifies any TIA provision
that may be so modified, such TIA provision shall be deemed to apply to this
Indenture as so modified. If any provision of this Indenture excludes any TIA
provision that may be so excluded, such TIA provision shall be excluded from
this Indenture.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
SECTION 13.2 Notices.
Any notice or communication shall be sufficiently given if in writing and
delivered in person, by facsimile and confirmed by overnight courier, or mailed
by first-class mail addressed as follows:
if to Graham Packaging Company, GPC Capital Corp. I or Graham Packaging
Holdings Company:
1110 East Princess Street
York, Pennsylvania 17403
Attention: Chief Executive Officer
Facsimile: (717) 849-8541
Telephone: (717) 849-8500
with copies to:
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson, Senior Managing Director
Facsimile: (212) 754-8703
Telephone: (212) 935-2626 or (212) 836-8703
Simpson Thacher & Bartlett
<PAGE>
425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson S. Neely, Esq.
Facsimile: (212) 455-2502
Telephone: (212) 455-2000 or (212) 455-7063
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Facsimile: (212) 857-1625
Telephone: (212) 852-1673
Each party by notice to the others may designate additional or different
addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage prepaid, to a
Holder including any notice delivered in connection with TIA ss. 310(b), TIA ss.
313(c), TIA ss. 314(a) and TIA ss. 315(b), shall be mailed to him at his address
as set forth on the Security Register and shall be sufficiently given to him if
so mailed within the time prescribed. To the extent required by the TIA, any
notice or communication shall also be mailed to any Person described in TIA ss.
313(c).
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and any other person shall
have the protection of TIA ss. 312(c).
<PAGE>
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take or
refrain from taking any action under this Indenture after the date hereof, the
Issuers shall furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 13.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with; provided, however, that
with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 13.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
<PAGE>
SECTION 13.7 Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities, the Holdings Guarantee and each Guarantee without regard to
principles of conflicts of law.
SECTION 13.8 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of an Issuer,
Holdings or any Guarantor shall not have any liability for any obligations of an
Issuer, Holdings or any Guarantor under the Securities, the Holdings Guarantee,
any Guarantee or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. All obligations under this
Indenture, the Securities and the Holdings Guarantee shall be expressly
non-recourse to the partners of the Company (other than Holdings as expressly
provided herein) and the partners of Holdings in their capacities as such; the
partners (other than Holdings as expressly provided herein) shall not be liable
for any claim based on, in respect of or by reason of such obligations or their
creation or bear any costs or expenses in connection with this Indenture, the
issuance and sale of the Securities or any transactions contemplated hereby or
thereby, and each Securityholder by accepting a Security waives and releases any
such obligations and liability.
SECTION 13.9 Successors.
All agreements of a party to this Indenture contained in this Indenture
shall bind such party's successors. In the event of a transfer of all or
substantially all of the Company's assets and liabilities to CapCo I in
connection with an IPO Reorganization, CapCo I shall be deemed the successor to
the Company and the Company shall be discharged and released from all further
obligations under this Indenture and the Securities subject to CapCo I's
compliance with Section 5.01(a)(ii) above.
SECTION 13.10 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.11 Severability.
In case any provision in this Indenture, in the Securities or in the
Holdings Guarantee or a Guarantee 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, and a Holder shall have no claim
therefor against any party hereto.
<PAGE>
SECTION 13.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 13.13 Legal Holidays.
If a payment date is a not a Business Day at a place of payment, payment
may be made at that place on the next succeeding Business Day, and no interest
shall accrue for the intervening period.
[Signature Pages Follow]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
GRAHAM PACKAGING COMPANY
By: GPC OPCO GP LLC,
its General Partner
By: /s/ John E. Hamilton
-----------------------------------
Name: John E. Hamilton
Title: Vice President, Finance
and Administration,
Treasurer and Secretary
GRAHAM CAPITAL CORP. I
By: /s/ John E. Hamilton
-----------------------------------
Name: John E. Hamilton
Title: Vice President, Secretary
and Assistant Treasurer
GRAHAM PACKAGING HOLDINGS
COMPANY
By: BCP/Graham Holdings L.L.C.,
its General Partner
By: /s/ Frank Nico
-----------------------------------
Name: Frank Nico
Title: Assistant Treasurer and
Assistant Secretary
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By: /s/ Gerard F. Ganey
-----------------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
<PAGE>
EXHIBIT A-1
[FORM OF SERIES A FIXED RATE SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 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, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO AN ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
A-1-1
<PAGE>
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
8 3/4% Senior Subordinated Note
due 2008, Series A
CUSIP No.:[____]
No. [_________] $[_______]
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company",
which term includes any successor), and GPC CAPITAL CORP. I, a Delaware
corporation ("CapCo I", which term includes any successor, and, together with
the Company, the "Issuers"), for value received jointly and severally promise to
pay to [ ] or registered assigns, the principal sum of [ ] Dollars, on January
15, 2008.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
1998.
Interest Record Dates: January 1 and July 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING COMPANY
By: GPC Opco GP LLC,
its general partner
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
GPC CAPITAL CORP. I
By:
-----------------------------------
Name:
Title:
A-1-2
<PAGE>
By:
------------------------------------
Name:
Title:
Dated: [__________]
A-1-3
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 8 3/4% Senior Subordinated Notes due 2008, Series A,
described in the within-mentioned Indenture.
Dated: [__________]
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee
By:
-------------------------------------
Authorized Signatory
A-1-4
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
8 3/4% Senior Subordinated Note
due 2008, Series A
1. Interest.
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the
"Company"), and GPC CAPITAL CORP. I, a Delaware corporation ("Cap Co. I" and,
together with the Company, the "Issuers"), jointly and severally promise to pay
interest on the principal amount of this Security at the rate per annum shown
above. Cash interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from February 2,
1998. The Issuers will pay interest semi-annually in arrears on each Interest
Payment Date, commencing July 15, 1998. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
In addition, the Issuers shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee") will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent or
Registrar without notice to the Holders. The Issuers may, subject to certain
exceptions, act as Registrar.
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998
A-1-5
<PAGE>
(the "Indenture"), by and among the Issuers, Graham Packaging Holdings
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Issuers designated as their 8 3/4% Senior
Subordinated Notes due 2008, Series A, issued under the Indenture The aggregate
principal amount of Securities which may be issued under the Indenture is
limited (except as otherwise provided in the Indenture) to $325,000,000. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of
the Indenture (except as otherwise indicated in the Indenture) until such time
as the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding anything
to the contrary herein, the Securities are subject to all such terms, and
holders of Securities are referred to the Indenture and the TIA for a statement
of them. The Securities are unsecured obligations of the Issuers. The Securities
are subordinated in right of payment to all Senior Indebtedness of the Issuers
to the extent and in the manner provided in the Indenture. Each Holder of a
Security, by accepting a Security, agrees to such subordination, authorizes the
Trustee to give effect to such subordination and appoints the Trustee as
attorney-in-fact for such purpose. Nothing contained in the Indenture or in any
Securities or Holdings Guarantee shall require Holdings to preserve its
existence, and Holdings may be dissolved at any time (whether in connection with
a Holdings IPO Reorganization or otherwise). The Securities will rank pari passu
in right of payment with any future senior subordinated indebtedness of the
Issuers and will rank senior in right of payment to any other subordinated
obligations of the Issuers.
5. Optional Redemption.
The Fixed Rate Securities will be redeemable at the option of the Issuers,
in whole or in part, at any time on or after January 15, 2003, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date), if redeemed during the twelve-month
period beginning on January 15, of the years indicated below:
Redemption
Year Price
---- ----------
2003 104.375%
2004 102.917%
2005 101.458%
2006 and thereafter 100.000%
6. Optional Redemption upon Equity Offerings.
In addition, at any time and from time to time on or prior to January 15,
2001, the Issuers may, at their option, use the net cash proceeds of one or more
Equity Offerings by the Company (or by Holdings to the extent such proceeds are
contributed to the Company) to redeem up to 40% of the aggregate principal
amount of the Fixed Rate Securities originally issued at a redemption price in
cash equal to 108.750% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of redemption (subject to the right of
Holders of record
A-1-6
<PAGE>
on the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least 60% of the aggregate principal
amount of the Fixed Rate Securities originally issued must remain outstanding
immediately after giving effect to each such redemption (excluding any Fixed
Rate Securities held by an Issuer or any of its Affiliates). In order to effect
the foregoing redemption with the proceeds of any Equity Offering, the Issuers
shall make such redemption not more than 120 days after the consummation of any
such Equity Offering.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Issuers have deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the Interest Relevant Record Date
to receive interest due on the relevant Interest Payment Date) with the excess
proceeds of certain asset dispositions.
B-1-6
<PAGE>
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder shall register the transfer of
or exchange of Securities
A-1-7
<PAGE>
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Securities or portions thereof selected for
redemption, except the unredeemed portion of any security being redeemed in
part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Issuers at
their written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture
and the Securities, in each case upon satisfaction of certain conditions
specified in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must report quarterly to the Trustee on compliance with such
limitations.
A-1-8
<PAGE>
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
is not obligated to enforce the Indenture or the Securities unless it has
received indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of certain continuing Defaults or Events of Default if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers, Holdings or any Guarantor shall have any liability for any
obligation of the Issuers, Holdings or any Guarantor under the Securities, the
Holdings Guarantee, the Guarantee of such Guarantor or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities. All obligations under the Indenture, the Initial
Securities, the Private Exchange Securities, the Unrestricted Securities and the
Holdings Guarantee (which term includes Holdings' guarantee of the obligations
of the Issuers under the Indenture, the Initial Securities, the Private Exchange
Securities and the Unrestricted Securities) shall be expressly non-recourse to
the partners of Holdings in their capacities as such, and by purchasing the
Securities, each holder of Securities waives any such liability of any partner
of Holdings under the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities and the Holdings Guarantee. The partners
of Holdings shall not be liable for any claim based on, in respect of or by
reason of such obligations or their creation or bear any costs or expenses in
connection with the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities or the Holdings Guarantee or any
transaction contemplated thereby.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or
A-1-9
<PAGE>
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Issuers will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for an 8 3/4% Senior Subordinated Note due 2008, Series B, of the
Issuers which has been registered under the Securities Act, in like principal
amount and having terms identical in all material respects to the Initial Fixed
Rate Securities. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security, the Holdings Guarantee and any Guarantee without regard to principles
of conflicts of laws.
24. One Class of Securities.
The Fixed Rate Securities and the Floating Rate Securities are treated as
one class of securities under the Indenture.
A-1-10
<PAGE>
[FORM OF HOLDINGS GUARANTEE/GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
[Holdings] [The Guarantor] (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty being referred to herein as the
"[Holdings] Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Issuers to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of [Holdings] [the Guarantor] to the Holders of Securities
and to the Trustee pursuant to the [Holdings] Guarantee and the Indenture are
expressly set forth, and are expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture) of [Holdings] [such Guarantor], to the extent and in the manner
provided in Article Eleven and Article Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the [Holdings] Guarantee
therein made.
This Holdings Guarantee will rank pari passu in right of payment with any
future senior subordinated indebtedness of Holdings and will rank senior in
right of payment to any other future subordinated obligations of Holdings.
This [Holdings] Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
[Holdings] Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
Nothing contained in the Indenture or in any Securities or Holdings
Guarantee shall require Holdings to preserve its existence, and Holdings may be
dissolved at any time (whether in connection with a Holdings IPO Reorganization
or otherwise).
All obligations under [this Holdings Guarantee and under] the Indenture,
the Initial Securities, the Private Exchange Securities and the Unrestricted
Securities shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and by purchasing the Securities guaranteed hereby, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities, the
Unrestricted Securities or the Holdings Guarantee. The partners of Holdings
shall not be liable for any claim based on, in respect of or by reason of such
obligations or their creation or bear any costs or expenses in connection with
this Holdings Guarantee or the Indenture, the Initial securities, the Private
Exchange Securities or the Unrestricted Securities or any transaction
contemplated thereby. Nothing contained in the Indenture or in any Securities or
Holdings Guarantee shall require Holdings to preserve its existence, and
Holdings may be dissolved at any time (whether in connection with a Holdings IPO
Reorganization or otherwise).
This [Holdings] Guarantee shall be governed by and construed in accordance
<PAGE>
with the laws of the State of New York without regard to principles of conflicts
of law.
This [Holdings] Guarantee is subject to release upon the terms set forth in
the Indenture.
By:
----------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Issuers. The agent may substitute another to act for him.
Dated: Signed:
-------------- -------------------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated: Your Signature:
------------------- ----------------------------------
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT A-2
[FORM OF SERIES A FLOATING RATE SECURITY]
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 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, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO AN ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
A-2-1
<PAGE>
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES (FIRSTSSM1) due 2008
CUSIP No.:[___]
No. [_________] $[___]
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company",
which term includes any successor), and GPC CAPITAL CORP. I, a Delaware
corporation ("CapCo I", which term includes any successor, and, together with
the Company, the "Issuers"), for value received jointly and severally promise to
pay to [_______] or registered assigns, the principal sum of [_______] Dollars,
on January 15, 2008.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
1998.
Interest Record Dates: January 1 and July 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING COMPANY
By: GPC Opco GP LLC,
its general partner
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
GPC CAPITAL CORP. I
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
A-2-2
Name:
Title:
Dated: [___________]
(1) FIRSTS is a service mark of BT Alex. Brown Incorporated.
A-2-3
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Floating Interest Rate Subordinated Term Securities due
2008, Series A, described in the within-mentioned Indenture.
Dated: [___________]
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-------------------------------------
Authorized Signatory
A-2-4
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
Floating Interest Rate Subordinated Term Security
due 2008 Series A
1. Interest.
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company"),
and GPC CAPITAL CORP. I, a Delaware corporation ("Cap Co. I" and, together with
the Company, the "Issuers"), jointly and severally promise to pay interest on
the principal amount of this Security at the rate per annum, reset
semi-annually, equal to LIBOR (as defined below) plus 3.625%, as determined by
the Calculation Agent. Interest on this Security will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from February 2, 1998. The Issuers will pay interest semi-annually on each
January 15 and July 15 (each, an "Interest Payment Date"), commencing July 15,
1998, for the period commencing on and including an Interest Payment Date and
ending on and including the day immediately preceding the next succeeding
Interest Payment Date (an "Interest Period"), with the exception that the first
Interest Period shall commence on and include February 2, 1998 and end on and
include July 14, 1998, and at stated maturity.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest at the rate borne by this Security and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful.
"LIBOR," with respect to an Interest Period, shall be the rate (expressed
as a percentage per annum) for deposits in United States dollars for a six-month
period beginning on the second London Banking Day (as defined) after the
Determination Date (as defined) that appears on the Telerate Page 3750 ( (as
defined) as of 11:00 a.m., London time, on the Determination Date. If Telerate
Page 3750 does not include such a rate or is unavailable on a Determination
Date, LIBOR for the Interest Period shall be the arithmetic mean of the rates
(expressed as a percentage per annum) for deposits in a Representative Amount
(as defined) in United States dollars for a six-month period beginning on the
second London Banking Day after the Determination Date that appears on Reuters
Screen LIBO Page (as defined) as of 11:00 a.m., London time, on the
Determination Date. If Reuters Screen LIBO Page does not include two or more
rates or is unavailable on a Determination Date, the Calculation Agent will
request the principal London office of each of four major banks in the London
interbank market, as selected by the Calculation Agent, to provide such bank's
offered quotation (expressed as a percentage per annum), as of approximately
11:00 a.m., London time, on such Determination Date, to prime banks in the
London interbank market for deposits in a Representative Amount in United States
dollars for a six-month period beginning on the second London Banking Day after
the Determination Date. If at least two such offered quotations are so provided,
LIBOR for the Interest Period will be the arithmetic mean of such quotations. If
fewer than two such quotations are so provided, the Calculation Agent will
request each of three major banks in New York City, as selected by the
Calculation Agent, to provide such bank's rate (expressed as a percentage per
A-2-5
<PAGE>
annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a six-month period beginning on the second
London Banking Day after the Determination Date. If at least two such rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
rates. If fewer than two such rates are so provided, then LIBOR for the Interest
Period will be LIBOR in effect with respect to the immediately preceding
Interest Period.
"Determination Date," with respect to an Interest Period, will be the
second London Banking Day preceding the first day of the Interest Period.
"London Banking Day" is any day in which dealings in United States dollars
are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than U.S.
$1,000,000 for a single transaction in the relevant market at the relevant time.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
The Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service).
The amount of interest for each day that this Security is outstanding (the
"Daily Interest Amount") will be calculated by dividing the interest rate in
effect for such day by 360 and multiplying the result by the principal amount of
this Security. The amount of interest to be paid on this Security for each
Interest Period will be calculated by adding the Daily Interest Amounts for each
day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent being rounded upwards).
The interest rate on this Security will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application. Under current New York law, the maximum rate
of interest is 25% per annum on a simple interest basis. This limit may not
apply to Securities in which $2,500,000 or more has been invested.
The Calculation Agent will, upon the request of the Holder of any Floating
Rate Security, provide the interest rate then in effect with respect to this
Security. All calculations made by the Calculation Agent in the absence of
manifest error shall be conclusive for all purposes and binding on the Company
and the Holders of this Security.
A-2-6
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee") will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent or
Registrar without notice to the Holders. The Issuers may, subject to certain
exceptions, act as Registrar.
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998 (the "Indenture"), by and among the Issuers, Graham Packaging Holdings
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Issuers designated as their Floating
Interest Rate Subordinated Term Securities due 2008, Series A, issued under the
Indenture. The aggregate principal amount of Securities which may be issued
under the Indenture is limited (except as otherwise provided in the Indenture)
to $325,000,000. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are unsecured
obligations of the Issuers. The Securities are subordinated in right of payment
to all Senior Indebtedness of the Issuers to the extent and in the manner
provided in the Indenture. Each Holder of a Security, by accepting a Security,
agrees to such subordination, authorizes the Trustee to give effect to such
subordination and appoints the Trustee as attorney-in-fact for such purpose.
Nothing contained in the Indenture or in any Securities or Holdings Guarantee
shall require Holdings to preserve its existence, and Holdings may be dissolved
at any time (whether in connection with a Holdings IPO Reorganization or
otherwise). The Securities will rank pari passu in right of payment with any
future senior subordinated indebtedness of the Issuers and will rank senior in
right of payment to any other subordinated obligations of the Issuers.
5. Optional Redemption.
A-2-7
<PAGE>
The Floating Rate Securities will be redeemable, at the Issuers' option, in
whole at any time or in part from time to time, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on January 15 of the year set forth below, plus, in each case,
accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentages
---- -----------
1998 105.000%
1999 104.000%
2000 103.000%
2001 102.000%
2002 101.000%
2003 and thereafter 100.000%
6. [Intentionally Omitted].
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Issuers have deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the principal amount
thereof, plus
A-2-8
<PAGE>
accrued and unpaid interest thereon, if any, to the Purchase Date (subject to
the right of Holders of record on the Interest Relevant Record Date to receive
interest due on the relevant Interest Payment Date) with the excess proceeds of
certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder shall register the transfer of
or exchange of Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange of any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Issuers at
their written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
A-2-9
<PAGE>
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must report quarterly to the Trustee on compliance with such
limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
is not obligated to enforce the Indenture or the Securities unless it has
received indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of certain continuing Defaults or Events of Default if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers, Holdings or any Guarantor shall have any liability for any
obligation of the Issuers, Holdings or any Guarantor under the Securities, the
Holdings Guarantee, the Guarantee of such Guarantor or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities. All obligat ons under the Indenture, the Initial
Securities, the Private Exchange Securities, the Unrestricted Securities and the
Holdings Guarantee (which term includes Holdings' guarantee of the obligations
of the Issuers under the Indenture, the Initial Securities, the Private Exchange
Securities and the Unrestricted Securities) shall be expressly non-recourse to
the partners of Holdings in their capacities as such, and by purchasing the
Securities, each holder of Securities waives any such liability of any partner
of Holdings under the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities and the Holdings Guarantee. The partners
of Holdings shall not be liable for any claim based on, in respect of or by
reason of such obligations or their creation or bear any costs or expenses in
connection with the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities or the Holdings Guarantee or any
transaction contemplated thereby.
A-2-10
<PAGE>
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Issuers will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a Floating Interest Rate Subordinated Term Security due 2008,
Series B, of the Issuers which has been registered under the Securities Act, in
like principal amount and having terms identical in all material respects to the
Initial Floating Rate Securities. The Holders shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security, the Holdings Guarantee and any Guarantee without regard to principles
of conflicts of laws.
24. One Class of Securities.
The Fixed Rate Securities and the Floating Rate Securities are treated as
one class of securities under the Indenture.
A-2-11
<PAGE>
[FORM OF HOLDINGS GUARANTEE/GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
[Holdings] [The Guarantor] (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty being referred to herein as the
"[Holdings] Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Issuers to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of [Holdings] [the Guarantor] to the Holders of Securities
and to the Trustee pursuant to the [Holdings] Guarantee and the Indenture are
expressly set forth, and are expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture) of [Holdings] [such Guarantor], to the extent and in the manner
provided in Article Eleven and Article Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the [Holdings] Guarantee
therein made. This Holdings Guarantee will rank pari passu in right of payment
with any future senior subordinated indebtedness of Holdings and will rank
senior in right of payment to any other future subordinated obligations of
Holdings.
This [Holdings] Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
[Holdings] Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
Nothing contained in the Indenture or in any Securities or Holdings
Guarantee shall require Holdings to preserve its existence, and Holdings may be
dissolved at any time (whether in connection with a Holdings IPO Reorganization
or otherwise).
All obligations under [this Holdings Guarantee and under] the Indenture,
the Initial Securities, the Private Exchange Securities and the Unrestricted
Securities shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and by purchasing the Securities guaranteed hereby, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities, the
Unrestricted Securities or the Holdings Guarantee. The partners of Holdings
shall not be liable for any claim based on, in respect of or by reason of such
obligations or their creation or bear any costs or expenses in connection with
this Holdings Guarantee or the Indenture, the Initial Securities, the Private
Exchange Securities or the Unrestricted Securities or any transaction
contemplated thereby. Nothing contained in the Indenture or in any Securities or
Holdings Guarantee shall require Holdings to preserve its existence, and
Holdings may be dissolved at any time (whether in connection with a Holdings IPO
Reorganization or otherwise).
This [Holdings] Guarantee shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of law.
A-2-12
<PAGE>
This [Holdings] Guarantee is subject to release upon the terms set forth in
the Indenture.
[ ]
By:
-----------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Issuers. The agent may substitute another to act for him.
Dated: Signed:
-------------- -------------------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated: Your Signature:
------------------- ----------------------------------
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B-1
[FORM OF SERIES B FIXED RATE SECURITY]
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
8 3/4% Senior Subordinated Note
due 2008, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company",
which term includes any successor), and GPC CAPITAL CORP. I, a Delaware
corporation ("CapCo I", which term includes any successor and, together with the
Company, the "Issuers"), for value received jointly and severally promise to pay
to [ ] or registered assigns, the principal sum of [ ] Dollars, on January 15,
2008.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
1998.
Interest Record Dates: January 1 and July 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING COMPANY
By: GPC Opco GP LLC,
its general partner
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
B-1-1
<PAGE>
GPC CAPITAL CORP. I
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
Dated: [__________]
B-1-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 8 3/4% Senior Subordinated Notes due 2008, Series B,
described in the within-mentioned Indenture.
Dated: [__________]
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-----------------------------------
Authorized Signatory
B-1-3
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
8 3/4% Senior Subordinated Note
due 2008, Series B
1. Interest.
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company"),
and GPC CAPITAL CORP. I, a Delaware corporation ("Cap Co. I" and, together with
the Company, the "Issuers"), jointly and severally promise to pay interest on
the principal amount of this Security at the rate per annum shown above. Cash
interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from February 2, 1998.
The Issuers will pay interest semi-annually in arrears on each Interest Payment
Date, commencing January 15, 1998. Interest will be computed on the basis of a
360- day year of twelve 30-day months.
In addition, the Issuers shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee") will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent or
Registrar without notice to the Holders. The Issuers may, subject to certain
exceptions, act as Registrar.
B-1-4
<PAGE>
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998 (the "Indenture"), by and among the Issuers, Graham Packaging Holdings
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Issuers designated as their 8 3/4% Senior
Subordinated Notes due 2008, Series B, under the Indenture. The aggregate
principal amount of Securities which may be issued under the Indenture is
limited (except as provided in the Indenture) to $325,000,000. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.C.
ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture
(except as otherwise indicated in the Indenture) until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Securities are subject to all such terms, and holders of
Securities are referred to the Indenture and the TIA for a statement of them.
The Securities are unsecured obligations of the Issuers. The Securities are
subordinated in right of payment to all Senior Indebtedness of the Issuers to
the extent and in the manner provided in the Indenture. Each Holder of a
Security, by accepting a Security, agrees to such subordination, authorizes the
Trustee to give effect to such subordination and appoints the Trustee as
attorney-in-fact for such purpose. Nothing contained in the Indenture or in any
Securities or Holdings Guarantee shall require Holdings to preserve its
existence, and Holdings may be dissolved at any time (whether in connection with
a Holdings IPO Reorganization or otherwise). The Securities will rank pari passu
in right of payment with any future senior subordinated indebtedness of the
Issuers and will rank senior in right of payment to any other subordinated
obligations of the Issuers.
5. Optional Redemption.
The Fixed Rate Securities will be redeemable at the option of the Issuers,
in whole or in part, at any time on or after January 15, 2003, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the redemption date (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date), if redeemed during the twelve-month
period beginning on January 15, of the years indicated below:
Redemption
Year Price
---- -----------
2003 104.375%
2004 102.917%
2005 101.458%
2006 and thereafter 100.000%
6. Optional Redemption upon Equity Offerings.
In addition, at any time and from time to time on or prior to January 15,
2001, the Issuers may, at their option, use the net cash proceeds of one or more
Equity Offerings by the Company (or by Holdings to the extent such proceeds are
contributed to the Company) to redeem up to 40% of the aggregate principal
amount of the Fixed Rate Securities originally issued at a redemption price in
cash equal to 8 3/4% of the principal amount thereof, plus accrued and unpaid
B-1-5
<PAGE>
interest thereon, if any, to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least 60% of the
aggregate principal amount of the Fixed Rate Securities originally issued must
remain outstanding immediately after giving effect to each such redemption
(excluding any Fixed Rate Securities held by an Issuer or any of its
Affiliates). In order to effect the foregoing redemption with the proceeds of
any Equity Offering, the Issuers shall make such redemption not more than 120
days after the consummation of any such Equity Offering.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Issuers have deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest *due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the Interest Relevant Record Date
to receive interest due on the relevant Interest Payment Date) with the excess
proceeds of certain asset dispositions.
B-1-6
<PAGE>
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder shall register the transfer of
or exchange of Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange of any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Issuers at
their written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments
B-1-7
<PAGE>
by Restricted Subsidiaries to the Company, to consolidate, merge or sell all or
substantially all of its assets or to engage in transactions with affiliates or
certain other related persons. The limitations are subject to a number of
important qualifications and exceptions. The Issuers must report quarterly to
the Trustee on compliance with such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers, Holdings or any Guarantor shall have any liability for any
obligation of the Issuers, Holdings or any Guarantor under the Securities, the
Holdings Guarantee, the Guarantee of such Guarantor or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities. All obligations under the Indenture, the Initial
Securities, the Private Exchange Securities, the Unrestricted Securities and the
Holdings Guarantee (which term includes Holdings' guarantee of the obligations
of the Issuers under the Indenture, the Initial Securities, the Private Exchange
Securities and the Unrestricted Securities) shall be expressly non-recourse to
the partners of Holdings in their capacities as such, and by purchasing the
Securities, each holder of Securities waives any such liability of any partner
of Holdings under the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities and the Holdings Guarantee. The partners
of Holdings shall not be liable for any claim based on, in respect of or by
reason of such obligations or their creation or bear any costs or expenses in
connection with the Indenture, the Initial Securities, the Private Exchange
Securities, the Unrestricted Securities or the Holdings Guarantee or any
transaction contemplated thereby.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the
B-1-8
<PAGE>
certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security, the Holdings Guarantee and any Guarantee without regard to principles
of conflicts of laws.
23. One Class of Securities.
The Fixed Rate Securities and the Floating Rate Securities are treated as
one class of securities under the Indenture.
B-1-9
<PAGE>
[FORM OF HOLDINGS GUARANTEE/GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
[Holdings] [The Guarantor] (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty being referred to herein as the
"[Holdings] Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Issuers to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of [Holdings] [the Guarantor] to the Holders of Securities
and to the Trustee pursuant to the [Holdings] Guarantee and the Indenture are
expressly set forth, and are expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture) of [Holdings] [such Guarantor], to the extent and in the manner
provided in Article Eleven and Article Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the [Holdings] Guarantee
therein made. This Holdings Guarantee will rank pari passu in right of payment
with any future senior subordinated indebtedness of Holdings and will rank
senior in right of payment to any other future subordinated obligations of
Holdings.
This [Holdings] Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
[Holdings] Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
All obligations under [this Holdings Guarantee and under] the Indenture,
the Initial Securities, the Private Exchange Securities and the Unrestricted
Securities shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and by purchasing the Securities guaranteed hereby, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities, the
Unrestricted Securities or the Holdings Guarantee. The partners of Holdings
shall not be liable for any claim based on, in respect of or by reason of such
obligations or their creation or bear any costs or expenses in connection with
this Holdings Guarantee or the Indenture, the Initial Securities, the Private
Exchange Securities or the Unrestricted Securities or any transaction
contemplated thereby. Nothing contained in the Indenture or in any Securities or
Holdings Guarantee shall require Holdings to preserve its existence, and
Holdings may be dissolved at any time (whether in connection with a Holdings IPO
Reorganization or otherwise).
This [Holdings] Guarantee shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of law.
This [Holdings] Guarantee is subject to release upon the terms set forth in
<PAGE>
the Indenture. [ ]
By:
------------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Issuers. The agent may substitute another to act for him.
Dated: Signed:
-------------- -------------------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated: Your Signature:
------------------- ----------------------------------
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B-2
[FORM OF SERIES B FLOATING RATE SECURITY]
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES (FIRSTSSM1)
due 2008, Series B
CUSIP No.:[____]
No. [_________] $[____]
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company",
which term includes any successor), and GPC CAPITAL CORP. I, a Delaware
corporation ("CapCo I", which term includes any successor and, together with the
Company, the "Issuers"), for value received jointly and severally promise to pay
to [_________] or registered assigns, the principal sum of [_________] Dollars,
on January 15, 2008.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
1998.
Interest Record Dates: January 1 and July 1.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
- --------------
(1) FIRSTS is a service mark of BT Alex. Brown Incorporated
B-2-1
<PAGE>
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING COMPANY
By: GPC Opco GP LLC,
its general partner
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
GPC CAPITAL CORP. I
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: [__________]
B-2-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Floating Interest Rate Subordinated Term Securities due
2008, Series B, described in the within-mentioned Indenture.
Dated: [_________]
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
------------------------------------
Authorized Signatory
B-2-3
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING COMPANY
GPC CAPITAL CORP. I
Floating Interest Rate Subordinated Term Security
due January 15, 2008, Series B
1. Interest.
GRAHAM PACKAGING COMPANY, a Delaware limited partnership (the "Company"),
and GPC CAPITAL CORP. I, a Delaware corporation ("Cap Co. I" and, together with
the Company, the "Issuers"), jointly and severally promise to pay interest on
the principal amount of this Security at the rate per annum, reset
semi-annually, equal to LIBOR (as defined below) plus 3.625%, as determined by
the Calculation Agent. Interest on this Security will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from February 2, 1998. The Company will pay interest semi-annually on each
January 15 and July 15 (each, an "Interest Payment Date"), commencing July 15,
1998, for the period commencing on and including an Interest Payment Date and
ending on and including the day immediately preceding the next succeeding
Interest Payment Date (an "Interest Period"), with the exception that the first
Interest Period shall commence on and include February 2, 1998 and end on and
include July 14, 1998, and at stated maturity.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest at the rate borne by this Security and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful.
"LIBOR," with respect to an Interest Period, shall be the rate (expressed
as a percentage per annum) for deposits in United States dollars for a six-month
period beginning on the second London Banking Day (as defined) after the
Determination Date (as defined) that appears on Telerate Page 3750 (as defined)
as of 11:00 a.m., London time, on the Determination Date. If Telerate Page 3750
does not include such a rate or is unavailable on a Determination Date, LIBOR
for the Interest Period shall be the arithmetic mean of the rates (expressed as
a percentage per annum) for deposits in a Representative Amount (as defined) in
United States dollars for a six-month period beginning on the second London
Banking Day after the Determination Date that appears on Reuters Screen LIBO
Page (as defined) as of 11:00 a.m., London time, on the Determination Date. If
Reuters Screen LIBO Page does not include two or more rates or is unavailable on
a Determination Date, the Calculation Agent will request the principal London
office of each of four major banks in the London interbank market, as selected
by the Calculation Agent, to provide such bank's offered quotation (expressed as
a percentage per annum), as of approximately 11:00 a.m., London time, on such
Determination Date, to prime banks in the London interbank market for deposits
in a Representative Amount in United States dollars for a six-month period
beginning on the second London Banking Day after the Determination Date. If at
least two such offered quotations are so provided, LIBOR for the Interest Period
will be the arithmetic mean of such
B-2-4
<PAGE>
quotations. If fewer than two such quotations are so provided, the Calculation
Agent will request each of three major banks in New York City, as selected by
the Calculation Agent, to provide such bank's rate (expressed as a percentage
per annum), as of approximately 11:00 a.m., New York City time, on such
Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a six-month period beginning on the second
London Banking Day after the Determination Date. If at least two such rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
rates. If fewer than two such rates are so provided, then LIBOR for the Interest
Period will be LIBOR in effect with respect to the immediately preceding
Interest Period.
"Determination Date," with respect to an Interest Period, will be the
second London Banking Day preceding the first day of the Interest Period.
"London Banking Day" is any day in which dealings in United States dollars
are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than U.S.
$1,000,000 for a single transaction in the relevant market at the relevant time.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service).
The amount of interest for each day that this Security is outstanding (the
"Daily Interest Amount") will be calculated by dividing the interest rate in
effect for such day by 360 and multiplying the result by the principal amount of
this Security. The amount of interest to be paid on this Security for each
Interest period will be calculated by adding the Daily Interest Amounts for each
day in the Interest Period.
All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent being rounded upwards).
The interest rate on this Security will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application. Under current New York law, the maximum rate
of interest is 25% per annum on a simple interest basis. This limit may not
apply to Securities in which $2,500,000 or more has been invested.
The Calculation Agent will, upon the request of the Holder of any Floating
Rate Security, provide the interest rate then in effect with respect to this
Security. All
B-2-5
<PAGE>
calculations made by the Calculation Agent in the absence of manifest error
shall be conclusive for all purposes and binding on the Company and the
Holders of this Security.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee") will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent or
Registrar without notice to the Holders. The Issuers may, subject to certain
exceptions, act as Registrar.
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998 (the "Indenture"), by and among the Issuers, Graham Packaging Holdings
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Issuers designated as their Floating
Interest Rate Subordinated Term Securities due 2008, Series B, issued under the
Indenture. The aggregate principal amount of Securities which may be issued
under the Indenture is limited (except as otherwise provided in the Indenture)
to $325,000,000 The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are unsecured
obligations of the Issuers. The Securities are subordinated in right of payment
to all Senior Indebtedness of the Issuers to the extent and in the manner
provided in the Indenture. Each Holder of a Security, by accepting a Security,
agrees to such subordination, authorizes the Trustee to give effect to such
subordination and appoints the Trustee as attorney-in-fact for such purpose.
Nothing contained in the Indenture or in any Securities or Holdings Guarantee
shall require Holdings to preserve its existence, and Holdings may be dissolved
at any time (whether in connection with a Holdings IPO Reorganization or
otherwise). The Securities will rank pari passu in right of payment with
B-2-6
<PAGE>
any future senior subordinated indebtedness of the Issuers and will rank
senior in right of payment to any other subordinated obligations of the Issuers.
5. Optional Redemption.
The Floating Rate Securities will be redeemable, at the Issuers' option, in
whole at any time or in part from time to time, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on January 15 of the year set forth below, plus, in each case,
accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentage
---- ----------
1998 105.000%
1999 104.000%
2000 103.000%
2001 102.000%
2002 101.000%
2003 and thereafter 100.000%
6. [Intentionally Omitted]
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Issuers have deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
B-2-7
<PAGE>
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the Interest Relevant Record Date
to receive interest due on the relevant Interest Payment Date) with the excess
proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder shall register the transfer of
or exchange of Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange of any Securities or
portions thereof selected for redemption, except the unredeemed portion of any
security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Issuers at
their written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for
B-2-8
<PAGE>
uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must report quarterly to the Trustee on compliance with such
limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
is not obligated to enforce the Indenture or the Securities unless it has
received indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of certain continuing Defaults or Events of Default if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers, Holdings or any Guarantor shall have any liability for any
obligation of the Issuers, Holdings or any Guarantor under the Securities, the
Holdings Guarantee, the Guarantee of such Guarantor or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities. All obligations under the Indenture, the Initial
Securities, the Private Exchange Securities, the Unrestricted Securities and the
Holdings Guarantee (which term includes Holdings' guarantee of the obligations
of the Issuers under the Indenture the Initial Securities, the Private Exchange
Securities and the Unrestricted Securities) shall be expressly non-recourse to
the partners of Holdings in their capacities as such, and by
B-2-9
<PAGE>
purchasing the Securities, each holder of Securities waives any such liability
of any partner of Holdings under the Indenture, the Initial Securities, the
Private Exchange Securities, the Unrestricted Securities and the Holdings
Guarantee. The partners of Holdings shall not be liable for any claim based on,
in respect of or by reason of such obligations or their creation or bear any
costs or expenses in connection with the Indenture, the Initial Securities, the
Private Exchange Securities, the Unrestricted Securities or the Holdings
Guarantee or any transaction contemplated thereby.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security, the Holdings Guarantee and any Guarantee without regard to principles
of conflicts of laws.
23. One Class of Securities.
The Fixed Rate Securities and the Floating Rate Securities are treated as
one class of securities under the Indenture.
B-2-10
<PAGE>
[FORM OF HOLDINGS GUARANTEE/GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
[Holdings] [The Guarantor] (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally guarantees
on a senior subordinated basis (such guaranty being referred to herein as the
"[Holdings] Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Issuers to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of [Holdings] [the Guarantor] to the Holders of Securities
and to the Trustee pursuant to the [Holdings] Guarantee and the Indenture are
expressly set forth, and are expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness (as defined in
the Indenture) of [Holdings] [such Guarantor], to the extent and in the manner
provided in Article Eleven and Article Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the [Holdings] Guarantee
therein made.
This Holdings Guarantee will rank pari passu in right of payment with any
future senior subordinated indebtedness of Holdings and will rank senior in
right of payment to any other future subordinated obligations of Holdings.
This [Holdings] Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
[Holdings] Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
Nothing contained in the Indenture or in any Securities or Holdings
Guarantee all require Holdings to preserve its existence, and Holdings may be
dissolved at any time (whether in connection with a Holdings IPO Reorganization
or otherwise).
All obligations under [this Holdings Guarantee and under] the Indenture,
the Initial Securities, the Private Exchange Securities and the Unrestricted
Securities shall be expressly non-recourse to the partners of Holdings in their
capacities as such, and by purchasing the Securities guaranteed hereby, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities, the
Unrestricted Securities or the Holdings Guarantee. The partners of Holdings
shall not be liable for any claim based on, in respect of or by reason of such
obligations or their creation or bear any costs or expenses in connection with
this Holdings Guarantee or the Indenture, the Initial Securities, the Private
Exchange Securities or the Unrestricted Securities or any transaction
contemplated thereby. Nothing contained in the Indenture or in any Securities or
Holdings Guarantee shall require Holdings to preserve its existence, and
Holdings may be dissolved at any time (whether in connection with a Holdings
<PAGE>
IPO Reorganization or otherwise).
This [Holdings] Guarantee shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of law.
This [Holdings] Guarantee is subject to release upon the terms set forth in
the Indenture.
By:
-----------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Issuers. The agent may substitute another to act for him.
Dated: Signed:
-------------- -------------------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated: Your Signature:
------------------- ----------------------------------
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS 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 2.16 OF THE INDENTURE.
C-1
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 8 3/4% Senior Subordinated Notes due 2008
(the "Fixed Rate Securities") or Floating Interest
Rate Subordinated Term Securities due 2008
("Floating Rate Securities" and, together with
the Fixed Rate Securities, the "Securities") of
Graham Packaging Company and GPC Capital Corp. I
This Certificate relates to $_______ principal amount of [Fixed Rate
Securities] [Floating Rate Securities] held in the form of* ___ a beneficial
interest in a Global Security or* _______ Physical Securities by ______ (the
"Transferor").
The Transferor:*
has requested by written order that the Registrar deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Physical
Security or Physical Securities in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Security (or the portion thereof indicated above); or has requested the
Registrar by written order to exchange or register the transfer of a Physical
Security or Physical Securities.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "Act"), because*:
Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.16 of the Indenture).
Such Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Act), in reliance on Rule 144A.
Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
Such Security is being transferred in reliance on Rule 144 under the
D-1
<PAGE>
Act.
/ / Such Security is being transferred in reliance on and in compliance with
an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of Counsel to the effect that such transfer
does not require Registration under the Securities Act accompanies this
certification.]
--------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------
[Authorized Signatory]
Date: --------------
*Check applicable box.
D-2
<PAGE>
EXHIBIT E
Form of Transferee Letter of Representation
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Dear Sirs:
This certificate is delivered to request a transfer of $________ principal
amount of the [8 3/4% Senior Subordinated Notes due 2008 ] [Floating Interest
Rate Subordinated Term Securities due 2008] (the "Notes") of Graham Packaging
Company and GPC Capital Corp. I (the "Issuers"). Upon transfer, the Notes would
be registered in the name of the new beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal
amount of the Notes, and we are acquiring the Notes not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risk of our
investment in the Notes and we invest in or purchase securities similar to
the Notes in the normal course of our business. We and any accounts for
which we are acting are each able to bear the economic risk of our or its
investment.
2. We understand that the Notes have not been registered under the
Securities Act 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 Notes to offer,
sell or otherwise transfer such Notes prior to the date which is two years
after the later of the date of original issue and the last date on which an
Issuer or any affiliate of an Issuer was the owner of such Notes (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a)
to an Issuer, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) in a transaction complying
with the requirements of Rule 144A under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") that purchases
E-1
<PAGE>
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)
to an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes
of $250,000 or (e) 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 in compliance with any applicable
state securities laws. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Notes is proposed to be made pursuant to clause (d)
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 Issuer and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act and that it is acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act. Each purchaser
acknowledges that the Issuer and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination
Date of the Notes pursuant to clause (d) or (e) above to require the
delivery of an opinion of counsel, certificates and/or other information
satisfactory to the Issuer and the Trustee.
Dated: TRANSFEREE:
------------------------ -----------------------------
By:
-------------------------------------
E-2
<PAGE>
EXHIBIT 4.6
REGISTRATION RIGHTS AGREEMENT
Dated as of February 2, 1998
Among
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I,
as Issuers
and
THE GUARANTOR NAMED HEREIN
and
BT ALEX. BROWN INCORPORATED,
BANKERS TRUST INTERNATIONAL PLC
LAZARD FRERES & CO. LLC
and
SALOMON BROTHERS INC,
as Initial Purchasers
8 3/4% Senior Subordinated Notes Due 2008, Series A
and
Floating Interest Rate Subordinated
Term Securities Due 2008, Series A
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
February 2, 1998, among GRAHAM PACKAGING COMPANY, a Delaware limited partnership
(the "Operating Company"), and GPC CAPITAL CORP. I, a Delaware corporation, as
issuers (the "Company Issuers"), and GRAHAM PACKAGING HOLDINGS COMPANY, a
Pennsylvania limited partnership ("Holdings"), as guarantor (the "Guarantor,"
and together with the Company Issuers, the "Issuers"), and BT ALEX. BROWN
INCORPORATED, BANKERS TRUST INTERNATIONAL PLC, LAZARD FRERES & CO. LLC and
SALOMON BROTHERS INC, as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated as of January 23, 1998, among the Issuers and the Initial Purchasers (the
"Purchase Agreement"), which provides for, among other things, the sale by the
Issuers to the Initial Purchasers of $150,000,000 aggregate principal amount of
the Company Issuers' 8 3/4% Senior Subordinated Notes Due 2008, Series A (the
"Fixed Rate Notes"), unconditionally guaranteed on a senior subordinated basis
by the Guarantor (the "Holdings Fixed Rate Guarantee"), and the Company Issuers'
Floating Interest Rate Subordinated Term Securities Due 2008, Series A (the
"Floating Rate Notes" and, together with the Fixed Rate Notes, the "Notes"),
unconditionally guaranteed on a senior subordinated basis by the Guarantor (the
"Holdings Floating Rate Guarantee" and, together with the Holdings Fixed Rate
Guarantee, the "Holdings Guarantee"). The Fixed Rate Notes and the Holdings
Fixed Rate Guarantee are collectively referred to herein as the "Fixed Rate
Securities." The Floating Rate Notes and the Holdings Floating Rate Guarantee
are collectively referred to herein as the "Floating Rate Securities." The Fixed
Rate Securities and the Floating Rate Securities are collectively referred to
herein as 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, except as otherwise set forth herein, any subsequent holder or holders of
the Notes. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
<PAGE>
2
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4 hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Company Issuers: See the introductory paragraphs hereto.
Effectiveness Date: The 180th day after the Issue Date; provided,
however, that with respect to any Shelf Registration, the Effectiveness
Date shall be the 120th day after the Filing Date with respect thereto.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 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 hereof.
Exchange Offer: See Section 2 hereof.
<PAGE>
3
Exchange Offer Registration Statement: See Section 2 hereof.
Fixed Rate Notes: See introductory paragraphs hereto.
Fixed Rate Securities: See introductory paragraphs hereto.
Floating Rate Notes: See introductory paragraphs hereto.
Floating Rate Securities: See introductory paragraphs hereto.
Filing Date: (A) With respect to the Exchange Offer Registration
Statement, the 120th day after the Issue Date; and (B) with respect to a
Shelf Registration Statement, the 60th day after the delivery of a Shelf
Notice as required pursuant to Section 2(c) hereof.
Guarantee: Any Holdings Guarantee (as defined in the introductory
paragraphs) or any guarantee by Holdings on substantially identical terms
of any Exchange Notes or Private Exchange Notes.
Guarantor: See the introductory paragraphs hereto.
Holder: Any holder of a Registrable Note or Registrable Notes.
Holdings: See the introductory paragraphs hereto.
Holdings Fixed Rate Guarantee: See the introductory paragraphs hereto.
<PAGE>
4
Holdings Floating Rate Guarantee: See the introductory paragraphs
hereto.
Holdings Guarantee: See the introductory paragraphs hereto.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of February 2, 1998, by and among
the Issuers and United States Trust Company of New York, as Trustee,
pursuant to which the Securities are being issued, as the same may be
amended or supplemented from time to time in accordance with the terms
thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(m) hereof.
Issue Date: February 2, 1998, the date of original issuance of the
Notes.
Issuers: See the introductory paragraphs hereto.
NASD: See Section 5(r) hereof.
Notes: See the introductory paragraphs hereto.
Offering Memorandum: The final offering memorandum of the Issuers
dated January 23, 1998, as supplemented, in respect of the offering of the
Securities (and the 10 3/4%
<PAGE>
5
Senior Discount Notes Due 2009 of Holdings and GPC Capital Corp. II).
Operating Company: See the introductory paragraphs hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 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 and any term sheet
filed pursuant to Rule 434 under the Securities Act), 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 introductory paragraphs hereof.
Records: See Section 5(m) hereof.
<PAGE>
6
Registrable Notes: Each Note (and the related Guarantee) upon its
original issuance and at all times subsequent thereto, each Exchange Note
(and the related Guarantee) as to which Section 2(c)(iv) hereof is
applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note (and the related Guarantee) upon original
issuance thereof and at all times subsequent thereto, until (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable, the Exchange Offer
Registration Statement) covering such Security, Exchange Note or Private
Exchange Note (and the related Guarantee) has been declared effective by
the SEC and such Security, Exchange Note or such Private Exchange Note (and
the related Guarantee), as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Note has
been exchanged pursuant to the Exchange Offer for an Exchange Note or
Private Exchange Note (and, in each case, the related Guarantee) that may
be resold without restriction under state and federal securities laws,
(iii) such Security, Exchange Note or Private Exchange Note (and, in each
case, the related Guarantee), as the case may be, ceases to be outstanding
for purposes of the Indenture or (iv) such Security, Exchange Note or
Private Exchange Note (and, in each case, the related Guarantee), as the
case may be, may be resold without restriction pursuant to Rule 144 under
the Securities Act.
Registration Statement: Any registration statement of the Issuers that
covers any of the Notes, the Exchange Notes or the Private Exchange Notes
(and, in each case, the related Guarantee) filed with the SEC under the
Securities Act, 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 offers and
sales of securities made in compliance therewith resulting in offers and
sales by subsequent holders that are not affiliates of the
<PAGE>
7
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 introductory paragraphs hereto.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
Suspension Period: See Section 5(j) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and the trustee (if any)
under any indenture governing the Exchange Notes and Private Exchange Notes
(and, in each case, the related Guarantee).
<PAGE>
8
Underwritten registration or underwritten offering: A registration in
which securities of one or more of the Issuers are sold to an underwriter
for reoffering to the public.
2. Exchange Offer
(a) The Issuers shall use their reasonable best efforts to file with the
SEC, no later than the Filing Date applicable thereto, a Registration Statement
(the "Exchange Offer Registration Statement") on an appropriate registration
form with respect to a registered offer (the "Exchange Offer") to exchange any
and all of the Securities for a like aggregate principal amount of notes of the
Company Issuers, guaranteed by the Guarantor, that are identical in all material
respects to the Fixed Rate Securities or the Floating Rate Securities, as the
case may be, and shall have terms (including a Guarantee) substantially
identical to the terms of the Fixed Rate Securities or the Floating Rate
Securities, as the case may be (except that the Exchange Notes (as defined
below) shall not contain terms with respect to transfer restrictions and shall
contain no restrictive legend thereon (such notes to be exchanged for the Fixed
Rate Notes, the "Fixed Rate Exchange Notes, and such notes to be exchanged for
the Floating Rate Notes, the "Floating Rate Exchange Notes," and the Fixed Rate
Exchange Notes and the Floating Rate Exchange Notes, collectively, the "Exchange
Notes"), and which shall be 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 the TIA) and which, in either case, has been qualified
under the TIA. The Exchange Offer shall comply with all applicable tender offer
rules and regulations under the Exchange Act and other applicable law. The
Issuers shall use their reasonable best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date applicable thereto; (y) keep the Exchange Offer
open for not less than 20 business days (or longer if required by applicable
law) after the date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the later of (i) the 45th day
after the date on which the Exchange Offer Registration Statement was declared
effective by the SEC or (ii) the 210th day following the Issue Date. If, after
the Exchange Offer Registration Statement is initially declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is
interfered with by any stop order,
<PAGE>
9
injunction or other order or requirement of the SEC or any other governmental
agency or court, the Exchange Offer Registration Statement shall be deemed not
to have become effective for purposes of this Agreement.
Each Holder that participates in the Exchange Offer will be required, as a
condition to its participation in the Exchange Offer, to represent to the
Issuers in writing (which may be contained in the applicable letter of
transmittal) (i) that any Exchange Notes to be received by it will be acquired
in the ordinary course of its business, (ii) 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 of the Exchange
Notes in violation of the provisions of the Securities Act, (iii) that such
Holder is not an affiliate of any of the Issuers within the meaning of the
Securities Act, (iv) if such Holder is not a broker-dealer, that it is not
engaged in, and does not intend to engage in, the distribution of Exchange
Notes, and (v) if such Holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making or other trading activities, that it will deliver a prospectus
in connection with any resale of such Exchange Notes.
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 Notes that are Private Exchange Notes,
Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes
held by Participating Broker-Dealers (as defined), and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which Section
2(c)(iv) is applicable) pursuant to Section 3 hereof.
No securities other than the Exchange Notes (and the related Guarantees)
shall be included in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the
<PAGE>
10
Initial Purchasers, which shall contain a summary statement of the positions
taken or policies made by the Staff of the SEC 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 Notes 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 of the
SEC or such positions or policies represent the prevailing views of the Staff of
the SEC. Such "Plan of Distribution" section shall also expressly permit, to the
extent permitted by applicable policies and regulations of the SEC, the use of
the Prospectus by all Persons subject to the prospectus delivery requirements of
the Securities Act, including, to the extent permitted by applicable policies
and regulations of the SEC, all Participating Broker-Dealers, and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Notes in compliance with the Securities Act.
The Issuers shall use their reasonable 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 Notes covered thereby (the
"Applicable Period").
If, prior to consummation of the Exchange Offer, any Holder holds any
Securities acquired by it that have the status of an unsold allotment in an
initial distribution, or any Holder is not entitled to participate in the
Exchange Offer, the Company Issuers upon the request of any such Holder shall
simultaneously with the delivery of the Exchange Notes (and the related
Guarantees) in the Exchange Offer, issue and deliver to any such Holder, in
exchange (the "Private Exchange") for such Securities held by any such Holder, a
like principal amount of notes (such notes to be exchanged for the Fixed Rate
Notes, the "Fixed Rate Private Exchange Notes," such notes to be exchanged for
the Floating Rate Notes, the "Floating Rate Private Exchange Notes," and the
Fixed Rate Exchange Notes and Private Exchange Notes, collectively, the "Private
Exchange Notes") of the Company Issuers, guaranteed by the Guarantor, that are
identical in all material respects to the applicable Exchange Notes except for
the placement of a restrictive legend on such Private Exchange Notes. The
<PAGE>
11
Private Exchange Notes shall be issued pursuant to the same indenture as the
Exchange Notes and bear the same CUSIP number as the applicable Exchange Notes.
In connection with the Exchange Offer, the Issuers shall:
(i) mail, or cause to be mailed, to each Holder of record entitled to
participate in the Exchange Offer a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) use their reasonable best efforts to keep the Exchange Offer open
for not less than 20 business days after the date that notice of the
Exchange Offer is mailed to Holders (or longer if required by applicable
law);
(iii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, the City of New York;
(iv) 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; and
(v) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:
(1) accept for exchange all Securities validly tendered and not
validly withdrawn pursuant to the Exchange Offer and the Private Exchange,
if any;
<PAGE>
12
(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 Notes or Private Exchange Notes, as the case
may be (and, in each case, the related Guarantees), equal in principal
amount to the Securities of such Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall not be subject to any
conditions, other than that (i) the Exchange Offer or Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the Staff of the SEC, (ii) no action or proceeding shall have been instituted or
threatened in any court or by any governmental agency which might materially
impair the ability of the Issuers to proceed with the Exchange Offer or the
Private Exchange, and no material adverse development shall have occurred in any
existing action or proceeding with respect to the Issuers and (iii) all
governmental approvals shall have been obtained, which approvals the Issuers
deem necessary for the consummation of the Exchange Offer or Private Exchange.
The Exchange Notes (and the related Guarantees) and the Private Exchange
Notes (and the related Guarantees) shall be issued under (i) the Indenture or
(ii) an indenture identical in all material respects to the Indenture and which,
in either case, has been qualified under the TIA or is exempt from such
qualification and shall provide that the Exchange Notes shall not be subject to
the transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Securities shall vote and consent together on all matters as one class and
that none of the Exchange Notes, the Private Exchange Notes or the Securities
will have the right to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Issuers are not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated on or prior to
the later of (A) the 45th day after the date on which the Exchange Offer
<PAGE>
13
Registration Statement was declared effective by the SEC or (B) the 210th day
following the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Company Issuers within 10 days after the consummation of the
Exchange Offer, or (iv) in the case of any Holder that participates in the
Exchange Offer, such Holder does not receive Exchange Notes 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 any
of the respective Issuers within the meaning of the Securities Act), then in the
case of each of clauses (i) to and including (iv) of this sentence, the Company
Issuers shall promptly deliver to the Holders specified in clauses (iii) and
(iv) above and the Trustee written notice thereof (the "Shelf Notice") and shall
file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If at any time a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Issuers shall 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 Securities not exchanged in the
Exchange Offer, Private Exchange Notes (and the related Guarantees) and
Exchange Notes (and the related Guarantees) as to which Section 2(c)(iv) is
applicable (the "Initial Shelf Registration"). The Issuers shall use their
reasonable best efforts to file with the SEC the Initial Shelf Registration
on or before the Filing Date applicable thereto. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner
or manners designated by them in accordance with the terms of this
Agreement (including, without limitation, one or more underwritten
offerings). The Issuers shall not permit any securities other than the
Registrable Notes to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration (as defined below).
The Issuers shall use their reasonable best efforts to cause the Initial
Shelf Registration to be declared effective under
<PAGE>
14
the Securities Act on or prior to the Effectiveness Date applicable thereto and
to keep the Initial Shelf Registration continuously effective under the
Securities Act (except during a Suspension Period) until the date which is two
years after the Issue Date (the "Effectiveness Period"), or such shorter period
ending when (i) all Registrable Notes covered by the Initial Shelf Registration
have been sold in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Notes covered by and not sold under the Initial Shelf Registration
or an earlier Subsequent Shelf Registration has been declared effective under
the Securities Act; provided, however, that the Effectiveness Period in respect
of the Initial Shelf Registration shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery requirements of
Rule 174 under the Securities Act and as otherwise provided herein.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than because of a
Suspension Period or the sale of all of the securities registered
thereunder), the Issuers shall use their reasonable best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 30 days of such cessation of effectiveness
use their reasonable best efforts to amend the Initial Shelf Registration
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 Registrable Notes covered by and
not sold under the Initial Shelf Registration or an earlier Subsequent
Shelf Registration (each, a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Issuers shall use their
reasonable 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 subsequent Shelf Registration continuously
effective (except during any Suspension Period) for the remainder of the
Effectiveness Period. As used herein the term "Shelf Registration" means
the Initial Shelf Registration and any Subsequent Shelf Registration.
<PAGE>
15
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested
by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter
of such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the Holders 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 Company Issuers agree to pay, as
liquidated damages, additional interest on the Notes ("Additional Interest")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the applicable
Filing Date or (B) notwithstanding that the Issuers have consummated or
will consummate the Exchange Offer, the Issuers are required to file a
Shelf Registration and such Shelf Registration is not filed on or prior to
the Filing Date applicable thereto, then, commencing on the day after any
such Filing Date, Additional Interest shall accrue on the principal amount
of all of the Registrable Notes in the case of clause (A) above, and on the
principal amount of those Registrable Notes to which the Shelf Registration
relates, in the case of clause (B) above, and in each case, at a rate of
0.25% per annum for the first 90 days immediately following each such
Filing Date, and such Additional Interest rate shall increase by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) the Exchange Offer Registration Statement is not declared
effective by the SEC on or prior to the relevant Effectiveness Date, (B)
the Initial Shelf Registration is not declared effective by the SEC on or
prior to the relevant
<PAGE>
16
Effectiveness Date, or (C) notwithstanding that the Issuers have
consummated or will consummate the Exchange Offer, the Issuers are required
to file a Shelf Registration and such Shelf Registration is not declared
effective by the SEC on or prior to the Effectiveness Date applicable
thereto, then, commencing on the day after such Effectiveness Date,
Additional Interest shall accrue on the principal amount of all of the
Registrable Notes in the case of clause (A) above, and on the principal
amount of those Registrable Notes to which the Shelf Registration relates,
in the case of clauses (B) and (C) above, and in each case, at a rate of
0.25% per annum for the first 90 days immediately following the day after
such Effectiveness Date, and such Additional Interest rate shall increase
by an additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Securities validly tendered in accordance with the terms of the Exchange
Offer on or prior to the later of the 45th day after the date on which the
Exchange Offer Registration Statement relating thereto was declared
effective or the 210th day after the Issue Date or (B) if applicable, a
Shelf Registration has been declared effective and such Shelf Registration
ceases to be effective at any time during the Effectiveness Period (other
than as the result of a Suspension Period), then Additional Interest shall
accrue on the principal amount of all of the Registrable Notes in the case
of clause (A) above, and on the principal amount of those Registrable Notes
to which the Shelf Registration relates, in the case of clause (B) above,
and in each case, at a rate of 0.25% per annum for the first 90 days
commencing on the (x) 46th or the 211th, as the case may be, day after such
effective date, in the case of (A) above, or (y) the day such Shelf
Registration ceases to be effective in the case of (B) above (or, in the
event of a Suspension Period, on the earlier of the last day of such
Suspension Period or the 60th day after notice of such Suspension Period),
and such Additional Interest rate shall increase by an additional 0.25% per
annum at the beginning of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.00% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable
<PAGE>
17
Shelf Registration as required hereunder (in the case of clause (i) above of
this Section 4), (2) upon the effectiveness of the Exchange Offer Registration
Statement or the applicable Shelf Registration Statement as required hereunder
(in the case of clause (ii) of this Section 4), or (3) upon the exchange of the
applicable Exchange Notes (and the related Guarantees) for all Securities
tendered (in the case of clause (iii)(A) of this Section 4), or upon the
effectiveness of the applicable Shelf Registration Statement which had ceased to
remain effective (other than as a result of a Suspension Period) (in the case of
(iii)(B) of this Section 4), Additional Interest on the Notes in respect of
which such events relate as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
(b) The Company Issuers shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semiannually on each January 15 and July 15 (to the
holders of record on the January 1 and July 1 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 Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Issuers 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 each of the
Issuers shall:
<PAGE>
18
(a) Prepare and file with the SEC on or prior to the applicable Filing
Date, a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use its reasonable best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein; provided, however, that, if such filing is pursuant to
Section 3 hereof, 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 Notes included in such Registration
Statement, their counsel 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 days
prior to such filing, or such later date as is reasonable under the
circumstances). The Issuers shall not file any Shelf Registration or
Prospectus related thereto or any amendments or supplements thereto if the
Holders of a majority in aggregate principal amount of the Registrable
Notes included in such Shelf Registration, their counsel, or the managing
underwriters, if any, shall reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act and the Exchange Act
applicable to each of them 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
reasonable best efforts to keep a Registration Statement effective during
the Effectiveness Period or the Applicable Period, as the case may be,
relating thereto if any Issuer
<PAGE>
19
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking
to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes, as the case may be, during that period unless (i) such
action is required by applicable law or permitted by this Agreement, or
(ii) such action is taken for valid business reasons (not including
avoidance of the Issuers' obligations hereunder), including the acquisition
or divestiture of any business or assets.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period relating thereto from whom the
Company Issuers have received written notice that it will be a
Participating Broker-Dealer in the Exchange Offer, notify the selling
Holders of Registrable Notes, or each such Participating Broker-Dealer, as
the case may be, their counsel and the managing underwriters, if any (in
the case of clause (1) above), promptly (but in any event within two
business days), and confirm such notice in writing, (i) (in the case of
clause (1) above) 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 and
exhibits), (ii) of the issuance by the SEC 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) (in the case of clause (1) above) if at
any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated
<PAGE>
20
by Section 5(l) hereof cease to be true and correct in all material
respects, (iv) of the receipt by any Issuer of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes 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, the
existence of any condition 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 light of the circumstances under which they were
made, not misleading, and (vi) of the Issuers' determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, use its reasonable 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 Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer, for sale in any jurisdiction, and,
if any such order is issued, to use its reasonable best efforts to obtain
the withdrawal of any such order at the earliest possible moment.
<PAGE>
21
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any) or the
Holders of a majority in aggregate principal amount of the Registrable
Notes being sold in connection with an underwritten offering (i) as
promptly as practicable incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any) or such Holders or counsel for any of them reasonably
request to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after an Issuer has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, furnish to each selling Holder
of Registrable Notes and to each such Participating Broker-Dealer who so
requests and to their respective counsel, if any, 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 therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, deliver to each selling Holder
of Registrable Notes, or each such Participating Broker-Dealer, as the case
may be, their respective counsel, if any, and the underwriters, 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
<PAGE>
22
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 Notes 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 Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by
any Participating Broker- Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel, if any,
in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Notes 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 in writing;
provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their 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 Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that no Issuer shall
be required to (A) qualify generally to do business in any jurisdiction
where it is not then so qualified, (B) take any action that would subject
it to general service of process in any such jurisdiction where it
<PAGE>
23
is not then so subject or (C) subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction where itis not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of global certificates representing Registrable Notes to be
sold, which global 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 Notes to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or Holders may request.
(j) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, upon the occurrence of any
event contemplated by paragraph 5(c)(v) or 5(c)(vi) 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 Notes being sold
thereunder or to the purchasers of the Exchange Notes 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 light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the Issuers shall not
be required to amend or supplement a Registration Statement, any related
Prospectus or any document incorporated therein by reference, in the event
that, and for a period not to exceed an aggregate of 60 days in any
calendar year (a "Suspension Period") if, (i) an event occurs and is
continuing as a result of which the Shelf Registration would, in the
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24
Company Issuers' good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (ii) (a) the Company Issuers determine in
their good faith judgment that the disclosure of such event at such time
would have a material adverse effect on the business, operations or
prospects of the Company Issuers or (b) the disclosure otherwise relates to
a pending material business transaction that has not yet been publicly
disclosed.
(k) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
(l) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Registrable Notes in form and substance reasonably satisfactory to the
Issuers and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Issuers and the
subsidiaries of the Issuers (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 Securities, and
confirm the same in writing if and when requested in form and substance
reasonably satisfactory to the Issuers; (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 the underwriters covering the matters
customarily covered in opinions reasonably requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing
25
<PAGE>
underwriter or underwriters; (iii) use its reasonable best efforts
to obtain "cold comfort" letters and updates thereof in form, scope and
substance reasonably satisfactory to the managing underwriter or
underwriters from the independent public accountants of the Issuers (and,
if necessary, any other independent public accountants of the Issuers, any
subsidiary of the Issuers or of any business acquired by the Issuers 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 of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities
similar to the Registrable Notes and such other matters as reasonably
requested by the managing
underwriter or underwriters as permitted by the Statement on Auditing
Standards No. 72; provided that the representations, warranties, covenants,
legal opinions and comfort letters described in clauses (i), (ii) and (iii)
above shall be substantially similar to those set forth or described in the
Purchase Agreement, with such differences as shall be agreed upon by the
Issuers and the managing underwriter; and (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures no less favorable to the sellers and underwriters, if any, 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 Notes covered by such Registration Statement and the
managing underwriter or underwriters or agents, if any). The above shall be
done at each closing under such underwriting agreement, or as and to the
extent required thereunder.
(m) If a Shelf Registration is filed pursuant to Section 3 hereof,
make available for inspection by any selling Holder of such Registrable
Notes being sold, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and instruments of the Company Issuers and subsidiaries of the
Company Issuers (collectively, the "Records") as shall be reasonably
necessary to enable them
<PAGE>
26
to exercise any applicable due diligence responsibilities, and cause the
officers, directors and employees of the Company Issuers and any of their
respective subsidiaries to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement. Each
Inspector shall agree in writing that it will keep the Records confidential
and that it will not disclose any of the Records that any of the respective
Company Issuers determines, in good faith, to be confidential and notifies
the Inspectors in writing are confidential unless (i) the disclosure of
such Records is necessary to avoid or correct a material misstatement or
material 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, or (iii) the information in such Records has been
made generally available to the public; provided, however, that prior
notice shall be provided as soon as practicable to the Company Issuers of
the potential disclosure of any information by such Inspector pursuant to
clauses (i) or (ii) of this sentence to permit the Company Issuers to
obtain a protective order (or waive the provisions of this paragraph (m))
and that such Inspector shall take such actions as are reasonably necessary
to protect the confidentiality of such information (if practicable) to the
extent such action is otherwise not inconsistent with, an impairment of or
in derogation of the rights and interests of the Holder or any Inspector.
Each selling Holder of such Registrable Notes 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(m) and shall not be used by it as the basis for any
market transactions in those securities of the Issuers unless and until
such information is generally available to the public. Each selling Holder
of such Registrable Notes 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 Issuers and allow the Issuers to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at the Issuers' sole expense.
(n) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a)
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27
hereof, as the case may be, to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders of the Registrable Notes, to
effect such changes to such indenture as may be required for such indenture
to be so qualified in accordance with the terms of the TIA; and execute,
and use its reasonable 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.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders with regard to any
applicable Registration Statement, a consolidated earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 60 days after the end of any fiscal quarter (or 120 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 Notes 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 respective
Company Issuers after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(p) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the respective Company Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for the
benefit of all Holders of Registrable Notes participating in the Exchange
Offer or the Private Exchange, as the case may be, that the Exchange Notes
or Private Exchange Notes, as the case may be, the related Guarantees and
the related indenture constitute legal, valid and binding obligations of
the Issuers, enforceable against them in accordance with their respective
terms, subject to customary exceptions and qualifications.
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28
(q) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company Issuers
(or to such other Person as directed by the Company Issuers) in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
the Company Issuers shall mark, or cause to be marked, on such Registrable
Notes that such Registrable Notes are being canceled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; in no
event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(r) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(s) Use its reasonable best efforts to take all other steps reasonably
necessary to effect the registration of the Exchange Notes and/or
Registrable Notes covered by a Registration Statement contemplated hereby.
The Company Issuers may require each seller of Registrable Notes as to
which any registration is being effected to furnish to the Company Issuers such
information regarding such seller and the distribution of such Registrable Notes
as the Company Issuers may, from time to time, reasonably request. The Company
Issuers may exclude from such registration the Registrable Notes of any seller
so long as such seller fails to furnish such information within a reasonable
time after receiving such request. Each seller as to which any Shelf
Registration is being effected agrees to furnish promptly to the Company Issuers
all information required to be disclosed in order to make the information
previously furnished to the Company Issuers by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Company Issuers of the happening of any event of
the kind
<PAGE>
29
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof or upon
receipt of notice of a Suspension Period, such Holder will forthwith discontinue
disposition of such Registrable Notes covered by such Registration Statement or
Prospectus or Exchange Notes 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(j) hereof, or until it is advised in writing (the "Advice") by the
Company Issuers that the use of the applicable Prospectus may be resumed, and
has received copies of any amendments or supplements thereto. In the event that
the Company Issuers shall give any such notice, 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 Notes covered by such Registration Statement or Exchange Notes 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(j) hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers (other than any underwriting discounts or
commissions) shall be borne by the Company Issuers whether or not the Exchange
Offer Registration Statement or any Shelf Registration is filed or becomes
effective or the Exchange Offer is consummated, 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) reasonable 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 Notes or Exchange Notes and determination of the eligibility of
the Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) provided in Section 5(h) hereof, in the case
of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of
<PAGE>
30
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 Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes 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 respective Company Issuers and reasonable fees and disbursements
of one special counsel for all of the sellers of Registrable Notes in connection
with a Shelf Registration Statement (exclusive of any counsel retained pursuant
to Section 7 hereof) (it being understood that the Issuers shall not be
responsible for any fees and disbursements of counsel for Holders of Registrable
Notes in the Exchange Offer), (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(l)(iii) hereof (including,
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Company Issuers desire such insurance, (vii) fees and expenses
of all other Persons retained by the Issuer, (viii) internal expenses of the
Company Issuers (including, without limitation, all salaries and expenses of
officers and employees of the respective Company Issuers performing legal or
accounting duties), (ix) the expense of any annual audit, (x) any fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, and the obtaining of a rating of the
securities, in each case, if applicable, and (xi) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, indentures and any other documents necessary in order
to comply with this Agreement.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the
affiliates, officers, directors, representatives, employees and agents of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without limitation, the
reasonable legal fees and other
<PAGE>
31
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented
if the Company Issuers shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by, arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the case of
the Prospectus in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company Issuers in writing by such Participant
expressly for use therein; provided, that as to any preliminary Prospectus, this
indemnity agreement shall not inure to the benefit of any Participant or any
person controlling any Participant on account of any loss, claim, damage,
liability or action arising from any sale of Registrable Notes to any person by
the Participant if that Participant failed to send or give a copy of the
Prospectus (or the Prospectus as amended or supplemented) to such person at or
prior to the written confirmation of sale to such person and if the untrue
statement or omission giving rise to such loss, claim, damage, liability or
action was corrected in the Prospectus (as amended or supplemented), unless such
failure resulted from non-compliance by the Issuers with Section 5(g) of this
Agreement; and provided further, that no partner of Holdings in such partner's
capacity as such shall be liable for indemnification or contribution pursuant to
this Section 7 on account of any loss, claim, damage, judgment, liability or
expense (including, without limitation, any legal fees or other fee or expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented),
and by purchasing the Notes, each holder of Notes waives any such liability of
any partner of Holdings.
(b) Each Participant agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, their respective affiliates, officers, partners,
directors (or equivalent), representatives, employees and agents of each Issuer
and each
<PAGE>
32
Person who controls each Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent (but on a
several, and not joint, basis) as the foregoing indemnity from the Issuers to
each Participant, but only with reference to information relating to such
Participant furnished to the Company Issuers in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. The liability of any
Participant under this paragraph shall in no event exceed the proceeds received
by such Participant from sales of Registrable Notes or Exchange Notes giving
rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Persons against whom such indemnity may be sought (the "Indemnifying
Persons") in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may reasonably designate in such proceeding and shall pay
the fees and expenses actually incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Persons (i) will not relieve it from any liability under paragraph (a) or (b)
above unless and to the extent that the Indemnifying Person is materially
prejudiced by such failure to notify and (ii) will not, in any event, relieve
the Indemnifying Person from any obligations to any Indemnified Person otherwise
than under this Section 7. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both any Indemnifying Person and the Indemnified
Person or any affiliate thereof and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Persons shall not, in
connection with such proceeding or separate
<PAGE>
33
but substantially similar related proceeding in the same jurisdiction arising
out of the same general allegations, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed promptly as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and shall be reasonably acceptable to the Company Issuers, and any
such separate firm for the Issuers, their affiliates, officers, directors,
representatives, employees and agents and such control Persons of such Issuer
shall be designated in writing by such Issuer and shall be reasonably acceptable
to the Holders.
The Indemnifying Persons shall not be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
each of the Indemnifying Persons agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Persons (which consent shall not be unreasonably
withheld or delayed), effect any settlement or compromise of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party, or indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional written
release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.
(d) If the indemnification provided for in the first and second paragraphs
of this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable
<PAGE>
34
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Indemnifying Person or Persons on the one hand and the Indemnified Person or
Persons on the other from the offering of the Notes 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
Person or Persons on the one hand and the Indemnified Person or Persons on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers on the one hand or such
Participant or such other Indemnified Person, as the case may be, on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent
<PAGE>
35
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) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Issuer, its directors, officers, employees or agents or any person
controlling an Issuer, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuers covenant and agree that the Guarantor or the Operating Company
will file the reports required to be filed by the Issuers under the Securities
Act and the Exchange Act and the rules and regulations adopted by the SEC
thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act and, if at any time the Issuers are not
required to file such reports, the Guarantor or the Operating Company will, upon
the request of any Holder or beneficial owner of Registrable Notes, make
available such information necessary to permit sales pursuant to Rule 144A under
the Securities Act. Each of the Issuers further covenants and agrees, for so
long as any Registrable Notes remain outstanding that it will take such further
action as any Holder of Registrable Notes may reasonably request, all to the
extent required from time to time to make available to any Holder or beneficial
owner of Registrable Notes in connection with any sale thereof and any
prospective purchaser or such beneficial owner the information required in order
to permit resales of such Registrable Notes pursuant to Rule 144A under the
<PAGE>
36
Securities Act, 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) then in effect.
9. Underwritten Registrations
The Issuers shall not be required to assist in an underwritten offering
unless requested by the Holders of a majority in aggregate principal amount of
the then outstanding Registrable Notes.
If any of the Registrable Notes covered by any Shelf Registration 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 Notes
included in such offering and shall be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and the Issuers shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes 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 will not enter into any
agreement with respect to any
<PAGE>
37
of their securities which will grant to any Person piggy-back registration
rights with respect to any Registration Statement, unless by the terms of such
piggy-back registration rights, the registration of securities of such Person
pursuant to such Registration Statement will not result in any reduction in the
amount of any Registrable Notes that may be registered pursuant to such
Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Company Issuers and (II)(A) the Holders of not less than a
majority in aggregate principal amount of the then outstanding Registrable Notes
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 Notes held by all
Participating Broker-Dealers; provided, however, that Section 7 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 Notes or
Exchange Notes, as the case may be, disposed of pursuant to any Registration
Statement) affected by any such amendment, modification or supplement.
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 Notes 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 Notes may be
given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes being sold pursuant to such Registration Statement.
(d) Notices. All notices and other communications (including, without
limitation, any notices or other communications
<PAGE>
38
to the Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, including courier service, or facsimile:
(i) if to a Holder of the Registrable Notes 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
registrar under the Indenture.
(ii) if to the Issuers, at the address as follows:
c/o Graham Packaging Company
1110 East Princess Street
York, Pennsylvania 17403
Attention: John E. Hamilton, V.P., Finance &
Administration
Telephone No.: (717) 849-8521
Facsimile No.: (717) 849-8541
with copies to:
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson, Senior Managing
Director
Telephone No.: (212) 836-9844
Facsimile No.: (212) 754-8703
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
<PAGE>
39
Attention: Wilson S. Neely, Esq.
Telephone No.: (212) 455-7063
Facsimile No.: (212) 455-2502
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, including delivery by courier service; and when
receipt is acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
40
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company Issuers or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes 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 Holders 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.
<PAGE>
41
(m) Non-Recourse Obligations. The obligations under this Agreement, the
Notes, the Registration Statement, the Exchange Offer, the Exchange Notes, the
Private Exchange Notes, any Guarantee, any Initial Shelf Registration,
Subsequent Shelf Registration, the Purchase Agreement or the transactions
contemplated hereby and thereby shall be expressly non-recourse to the partners
of Holdings in their capacities as such, and the partners of Holdings shall not
incur any liabilities or bear any costs or expenses in connection with this
Agreement or the issuance and sale of the Notes, including but not limited to
any such costs and expenses as provided in Section 6 hereof or any liabilities
for indemnification or contribution as provided in Section 7 hereof, and by
purchasing the Notes, each holder of Notes waives any such obligation or
liability of any partner of Holdings and waives any requirement that any such
partner bear any such costs or expenses.
<PAGE>
42
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
The Company Issuers:
--------------------
GRAHAM PACKAGING COMPANY
By: GPC Opco GP LLC,
its general partner
By: /s/ John E. Hamilton
--------------------
Name: John E. Hamilton
Title: Vice President, Finance
and Administration, Treasurer &
Secretary
GPC CAPITAL CORP. I
By: /s/ John E. Hamilton
--------------------
Name: John E. Hamilton
Title: Vice President,
Secretary & Assistant Treasurer
The Guarantor:
--------------
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings L.L.C.,
its general partner
<PAGE>
43
By: /s/ Frank Nico
--------------
Name: Frank Nico
Title: Assistant Treasuruer &
Assistant Secretary
<PAGE>
44
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED
BANKERS TRUST INTERNATIONAL PLC
LAZARD FRRES & CO. LLC
SALOMON BROTHERS INC
as Initial Purchasers
By: BT ALEX. BROWN INCORPORATED
By: /s/ Julie Persily
-----------------
Name: Julie Persily
Title: Principal
<PAGE>
EXHIBIT 4.7
INDENTURE
Dated as of February 2, 1998
Among
GRAHAM PACKAGING HOLDINGS COMPANY
and
GPC CAPITAL CORP. II, as Issuers,,
and
THE BANK OF NEW YORK, as Trustee
---------------
$169,000,000 Principal Amount at Maturity
10-3/4% Senior Discount Notes due 2009, Series A
10-3/4% Senior Discount Notes due 2009, Series B
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE.................... 1
SECTION 1.1 Definitions ................................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act ........... 22
SECTION 1.03. Rules of Construction ....................................... 23
ARTICLE II
THE SECURITIES .......................... 23
SECTION 2.1 Form and Dating .............................................. 23
SECTION 2.2 Execution and Authentication ................................. 23
SECTION 2.3 Registrar and Paying Agent ................................... 24
SECTION 2.4 Agent To Hold Assets in Trust ................................ 25
SECTION 2.5 Lists ........................................................ 25
SECTION 2.6 Transfer and Exchange ........................................ 25
SECTION 2.7 Securities ................................................... 26
SECTION 2.8 Securities ................................................... 26
SECTION 2.9 Securities .................................................... 26
SECTION 2.10 Securities .................................................. 27
SECTION 2.11 Cancellation ................................................ 27
SECTION 2.12 Defaulted Interest .......................................... 27
SECTION 2.13 CUSIP Number ................................................ 28
SECTION 2.14 Deposit of Moneys ........................................... 28
SECTION 2.15 Book-Entry Provisions for Global Securities ................. 28
SECTION 2.16 Registration of Transfers and Exchanges ..................... 29
ARTICLE III
REDEMPTION .............................. 33
SECTION 3.1 Notices to Trustee ........................................... 33
SECTION 3.2 Selection of Securities To Be Redeemed ....................... 34
SECTION 3.3 Notice of Redemption ......................................... 34
SECTION 3.4 Effect of Notice of Redemption ............................... 35
SECTION 3.5 Deposit of Redemption Price ................................... 35
SECTION 3.6 Securities Redeemed in Part ................................... 35
ARTICLE IV
COVENANTS .............................. 35
E-i
<PAGE>
SECTION 4.1 Payment of Securities ......................................... 35
SECTION 4.2 Maintenance of Office or Agency ............................... 36
SECTION 4.3 Limitations on Transactions with Affiliates ................... 36
SECTION 4.4 Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock ....................................... 37
SECTION 4.5 Limitation on Asset Sales ..................................... 40
SECTION 4.6 Limitation on Restricted Payments ............................. 41
SECTION 4.7 Existence ..................................................... 45
SECTION 4.8 Payment of Taxes and Other Claims ............................. 45
SECTION 4.9 Notice of Defaults ............................................ 45
SECTION 4.10 Maintenance of Properties and Insurance ...................... 45
SECTION 4.11 Compliance Certificate ....................................... 46
SECTION 4.12 Reports to Holders ........................................... 46
SECTION 4.13 Waiver of Stay, Extension or Usury Laws ...................... 47
SECTION 4.14 Change of Control ............................................ 47
SECTION 4.15 [Intentionally Omitted] ..................................... 49
SECTION 4.16 Limitations on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries ........................ 49
SECTION 4.17 [Intentionally Omitted] ...................................... 50
SECTION 4.18 Limitation on Liens .......................................... 50
SECTION 4.19 Limitations on Guarantees of Indebtedness by
Restricted Subsidiaries .................................. 50
SECTION 4.20 Calculation of Original Issue Discount ....................... 51
ARTICLE V
MERGERS; SUCCESSORS ...................... 51
SECTION 5.1 Mergers, Sale of Assets, etc .................................. 51
SECTION 5.2 Successor Substituted ......................................... 52
ARTICLE VI
DEFAULT AND REMEDIES ..................... 53
SECTION 6.1 Events of Default ............................................. 53
SECTION 6.2 Acceleration .................................................. 54
SECTION 6.3 Other Remedies ................................................ 55
SECTION 6.4 Waiver of Past Default ........................................ 55
SECTION 6.5 Control by Majority ........................................... 56
SECTION 6.6 Limitation on Suits ........................................... 56
SECTION 6.7 Rights of Holders To Receive Payment .......................... 57
SECTION 6.8 Collection Suit by Trustee .................................... 57
SECTION 6.09. Trustee May File Proofs of Claim ............................ 57
SECTION 6.9 Priorities .................................................... 58
SECTION 6.10 Undertaking for Costs ........................................ 58
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Page
----
ARTICLE VII
TRUSTEE .............................. 58
SECTION 7.1 Duties of Trustee ........................................... 58
SECTION 7.2 Rights of Trustee ........................................... 59
SECTION 7.3 Individual Rights of Trustee ................................ 60
SECTION 7.4 Trustee's Disclaimer ........................................ 61
SECTION 7.5 Notice of Defaults .......................................... 61
SECTION 7.6 Reports by Trustee to Holders ............................... 61
SECTION 7.7 Compensation and Indemnity .................................. 61
SECTION 7.8 Replacement of Trustee ...................................... 62
SECTION 7.9 Successor Trustee by Merger, etc ............................ 63
SECTION 7.10 Eligibility; Disqualification .............................. 63
SECTION 7.11 Preferential Collection of Claims Against Issuers .......... 64
ARTICLE VIII
[INTENTIONALLY OMITTED] ................ 64
ARTICLE IX
DISCHARGE OF INDENTURE ................ 64
SECTION 9.1 Termination of Issuers' Obligations ......................... 64
SECTION 9.2 Application of Trust Money .................................. 65
SECTION 9.3 Repayment to Issuers ........................................ 66
SECTION 9.4 Reinstatement ............................................... 66
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS ...... 66
SECTION 10.1 Without Consent of Holders ................................. 66
SECTION 10.2 With Consent of Holders .................................... 67
SECTION 10.3 Compliance with Trust Indenture Act ........................ 69
SECTION 10.4 Revocation and Effect of Consents .......................... 69
SECTION 10.5 Notation on or Exchange of Securities ...................... 69
SECTION 10.6 Trustee To Sign Amendments, etc ............................ 69
ARTICLE XI
GUARANTEE ............................. 70
SECTION 11.1 Unconditional Guarantee .................................... 70
SECTION 11.2 Severability ............................................... 71
SECTION 11.3 Limitation of Guarantor's Liability ........................ 71
SECTION 11.4 Contribution ............................................... 71
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----
SECTION 11.5 Execution of Guarantee ..................................... 71
SECTION 11.6 Subordination of Subrogation and Other Rights ............. 72
ARTICLE XII
[INTENTIONALLY OMITTED] ................ 72
ARTICLE XIII
MISCELLANEOUS ......................... 72
SECTION 13.1 Trust Indenture Act Controls ............................... 72
SECTION 13.2 Notices ................................................... 72
SECTION 13.3 Communications by Holders with Other Holders .............. 74
SECTION 13.4 Certificate and Opinion as to Conditions Precedent ........ 74
SECTION 13.5 Statements Required in Certificate or Opinion .............. 74
SECTION 13.6 Rules by Trustee, Paying Agent, Registrar ................. 74
SECTION 13.7 Governing Law ............................................. 75
SECTION 13.8 No Recourse Against Others ................................ 75
SECTION 13.9 Successors ................................................ 75
SECTION 13.10 Counterpart Originals ..................................... 75
SECTION 13.11 Severability .............................................. 75
SECTION 13.12 No Adverse Interpretation of Other Agreements ............. 75
SECTION 13.13 Legal Holidays ........................................... 76
-iv-
<PAGE>
INDENTURE dated as of February 2, 1998, among GRAHAM PACKAGING HOLDINGS
COMPANY, a Pennsylvania limited partnership (the "Company"), GPC CAPITAL CORP.
II, a Delaware corporation ("CapCo II"), as Issuers, and THE BANK OF NEW YORK, a
New York banking corporation, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Accreted Value" means as of any date prior to January 15, 2003, an amount
per $1,000 principal amount at maturity of the Securities that is equal to the
sum of (a) $595.34 and (b) the portion of the excess of the principal amount at
maturity of each Security over $595.34 which shall have been amortized through
such date, such amount to be so amortized on a daily basis and compounded
semi-annually on each January 15 and July 15 at the rate of 10 3/4% per annum
from the Issue Date through the date of determination computed on the basis of a
360-day year of twelve 30-day months.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Additional Interest" has the meaning provided in the Registration Rights
Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. 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, shall mean
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.
"Affiliate Transaction" see Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary thereof (each referred to in
<PAGE>
2
this definition as a "disposition") or (ii) the issuance or sale of Equity
Interests of any Restricted Subsidiary (whether in a single transaction or a
series of related transactions), in each case, other than: (a) a disposition of
Cash Equivalents or Investment Grade Securities or obsolete or worn out
equipment in the ordinary course of business; (b) the disposition of all or
substantially all of the assets of the Company in a manner permitted pursuant to
Section 5.01 of this Indenture or any disposition that constitutes a Change of
Control pursuant to this Indenture; (c) any Restricted Payment that is permitted
to be made, and is made, under Section 4.06 of this Indenture; (d) any
disposition of assets with an aggregate fair market value of less than $2.0
million; (e) any disposition of property or assets by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Restricted
Subsidiary or by the Company to CapCo II in connection with an IPO
Reorganization; (f) any exchange of like property pursuant to Section 1031 of
the Internal Revenue Code of 1986, as amended, for use in a Similar Business or
by the Company to CapCo II in connection with an IPO Reorganization; (g) any
financing transaction with respect to property built or acquired by the Company
or any of its Restricted Subsidiaries after the Issue Date including, without
limitation, sale-leasebacks and asset securitizations; (h) foreclosures on
assets; (i) any sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary; and (j) an issuance of Equity Interests by CapCo
II in connection with an IPO Reorganization.
"Bankruptcy Law" see Section 6.01.
"Blackstone" means Blackstone Capital Partners III Merchant Banking Fund
L.P. and its Affiliates.
"Board of Directors" means, as to any Person, the board of directors of
such Person (or, if such Person is a partnership, the board of directors or
other governing body of the general partner (or, if there is more than one
general partner, the general partner or general partners of such Person which
may take the applicable action pursuant to the partnership agreement of such
Person) of such Person) or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
or the general partner, in the case of a limited partnership, or member, in the
case of a limited liability company, of such Person (or, if such Person is a
partnership, one of its general partners) to have been duly adopted by the Board
of Directors of such Person or the general partner, in the case of a limited
partnership, or member, in the case of a limited liability company, of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means a day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open.
"CapCo II" means the Person named as "CapCo II" in the first paragraph of
this Indenture and its successors; provided that any such successor shall be a
corporation organized and existing under the laws of the United States or any
state thereof.
<PAGE>
3
"Capitalized Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership of limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) U. S. dollars (and foreign currency exchanged
into U.S. dollars within 180 days), (ii) securities issued or directly and fully
guaranteed or insured by the U.S. Government or any agency or instrumentality
thereof, (iii) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having capital and surplus in
excess of $500.0 million, (iv) repurchase obligations for underlying securities
of the types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in
each case maturing within one year after the date of acquisition, (vi)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(v) above, (vii) readily marketable direct obligations
issued by any state of the United States of America or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody's or S&P and (viii) Indebtedness or preferred stock issued by Persons with
a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to a Person other than the Permitted Holders and their Related
Parties, except insofar as such transaction or transactions relate to an IPO
Reorganization in accordance with Article Five hereof; or (ii) the Company
becomes aware (by way of a report or any other filing pursuant to Section 13(d)
of the Exchange Act, proxy, vote, written notice or otherwise) of the
acquisition by any Person or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision), including any
group acting for the purpose of acquiring, holding or disposing of securities
(within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the
Permitted Holders and their Related Parties, in a single transaction or in a
related series of transactions, by way of merger, consolidation or other
business combination or purchase, of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of
the total voting power of the Voting Stock of the Company.
"Change of Control Date" see Section 4.14.
<PAGE>
4
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of, such Person's common equity, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common equity.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor and shall include, in any event, CapCo II following any IPO
Reorganization.
"Company Issuers" means Graham Packaging Company and GPC Capital Corp.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based on income or profits of such Person, or Permitted Tax Distributions
made by such Person, for such period deducted in computing Consolidated Net
Income, plus (b) Consolidated Interest Expense of such Person for such period to
the extent the same was deducted in calculating such Consolidated Net Income,
plus (c) Consolidated Depreciation and Amortization Expense of such Person for
such period to the extent such depreciation and amortization expense was
deducted in computing Consolidated Net Income, plus (d) any fees, expenses or
charges related to any Equity Offering, Permitted Investment, acquisition or
recapitalization or Indebtedness permitted to be incurred by this Indenture
(whether or not successful) and fees, expenses or charges related to the
transactions contemplated by the Recapitalization Agreement (including fees to
Blackstone), plus (e) the amount of any non-recurring charges (including any
one-time costs incurred in connection with acquisitions after the Issue Date)
deducted in such period in computing Consolidated Net Income, plus (f) without
duplication, any other non-cash charges reducing Consolidated Net Income for
such period (excluding any such charge which requires an accrual of a cash
reserve for anticipated cash charges for any future period), plus (g) the amount
of any minority interest expense deducted in calculating Consolidated Net
Income, plus (h) special charges and unusual items during any period ending on
or prior to the second anniversary of the Issue Date not to exceed $15.0 million
in the aggregate, plus (i) the amount of management, consulting monitoring and
advisory fees paid to Blackstone and its Affiliates during such period not to
exceed $1.0 million during any four quarter period, less, without duplication
(j) non-cash items increasing Consolidated Net Income of such Person for such
period (excluding any items which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges in any prior period).
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of: (a) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, the interest
<PAGE>
5
component of Capitalized Lease Obligations and net payments and receipts (if
any) pursuant to Hedging Obligations to the extent included in Consolidated
Interest Expense and excluding amortization of deferred financing fees) and (b)
consolidated capitalized interest of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued; provided, however, that Consolidated
Interest Expense of the Company shall not include the interest with respect to
the Securities until January 15, 2003.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis; provided, however, that (i) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto) shall be excluded, (ii) any increase in the cost of sales or other
incremental expenses resulting from purchase accounting in relation to any
acquisition, net of taxes, shall be excluded, (iii) the Net Income for such
period shall not include the cumulative effect of a change in accounting
principles during such period, (iv) any net after-tax income (loss) from
discontinued operations and any net after-tax gains or losses on disposal of
discontinued operations shall be excluded, (v) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to asset dispositions
other than in the ordinary course of business (as determined in good faith by
the Company) shall be excluded, (vi) the Net Income for such period of any
Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period, (vii) the Net Income of
any Person acquired in a pooling of interests transaction shall not be included
for any period prior to the date of such acquisition, (viii) the Net Income for
such period of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule, or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, unless
such restriction with respect to the payment of dividends or similar
distributions has been legally waived; provided that such Net Income shall not
be so excluded in calculating Consolidated Net Income (a) as a component of
Consolidated EBITDA for purposes of calculating the Fixed Charge Coverage Ratio
in determining whether (I) a Restricted Subsidiary can incur additional
Indebtedness or issue Disqualified Stock or (II) the Company can incur $1.00 of
Indebtedness for purposes of (A) clause (b) of the first paragraph or clauses
(vi) and (x) of the second paragraph of Section 4.06 of this Indenture, (B)
clause (iv) of Section 5.01 of this Indenture or (C) the definition of
"Unrestricted Subsidiary" or (b) for purposes of clause (c) of the first
paragraph of Section 4.06 of this Indenture in determining whether a Restricted
Investment can be made (including the designation of a Subsidiary as an
Unrestricted Subsidiary) and (ix) the Net Income for such period of the Company
and its Restricted Subsidiaries shall be decreased by the amount of Permitted
Tax Distributions during such period.
"Contingent Obligations" means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute
<PAGE>
6
Indebtedness ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (A) for the purchase or payment of any
such primary obligation or (B) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, or (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
against loss in respect thereof.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 or such other address as the Trustee may give
notice to the Company.
"Custodian" see Section 6.01.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Defeasance Trust Payment" see Section 8.01.
"Depository" means, with respect to the Securities issued in the form of
one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Noncash Consideration" means the fair market value of noncash
consideration received by the Company or any of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, less the amount of cash or Cash Equivalents received in
connection with a subsequent sale of such Designated Noncash Consideration.
"Designated Preferred Stock" means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate, on the issuance date thereof, the cash proceeds of which
are excluded from the calculation set forth in clause (c) of Section 4.06 of
this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which, by its terms (or by the terms of any security into which
it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the maturity date of the
Securities; provided, however, that if such Capital Stock is issued to any
employee or to any plan for the benefit of employees of the Company or any of
its Subsidiaries or by any such plan to such employees, such Capital Stock shall
not constitute Disqualified Stock solely because it may
<PAGE>
7
be required to be repurchased by the Company or such Subsidiary in order to
satisfy applicable statutory or regulatory obligations or as a result of such
employee's death or disability.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of common stock or
preferred stock of the Company (other than Disqualified Stock), other than (i)
public offerings with respect to the Common Stock registered on Form S-8 and
(ii) any such public or private sale the proceeds of which have been designated
by the Company as an Excluded Contribution or Permanent Qualified Equity
Contributions.
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Securities" means the 10 3/4% Senior Discount Notes due 2009,
Series B, to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement."
Excluded Contributions" means the net cash proceeds received by the Company
after the Issue Date from (a) contributions to its common equity capital and (b)
the sale (other than to a Subsidiary or to any management equity plan or stock
option plan or any other management or employee benefit plan or agreement of the
Company or any of its Subsidiaries) of Capital Stock (other than Disqualified
Stock) of the Company, in each case designated as Excluded Contributions
pursuant to an Officers' Certificate, the cash proceeds of which are excluded
from the calculation set forth in paragraph (c) of Section 4.06 of this
Indenture."
Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"Final Maturity Date" means January 15, 2009.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of Consolidated EBITDA of such Person for such period to the
Fixed Charges of such Person for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average daily balance of
such Indebtedness during the applicable period) or issues or redeems preferred
stock
<PAGE>
8
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. With respect to any Calculation
Date that occurs on or after January 15, 2003 and prior to January 15, 2004, the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to the
interest expense of the Company with respect to the Securities. For purposes of
making the computation referred to above, Investments, acquisitions,
dispositions, mergers, consolidations and discontinued operations (as determined
in accordance with GAAP) that have been made by the Company or any of its
Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, discontinued operations, mergers and
consolidations (and the reduction of any associated fixed charge obligations and
the change in Consolidated EBITDA resulting therefrom) had occurred on the first
day of the four-quarter reference period. If since the beginning of such period
any Person (that subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Investment, acquisition, disposition, discontinued
operation, merger or consolidation that would have required adjustment pursuant
to this definition, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect thereto for such period as if such Investment,
acquisition, disposition, discontinued operation, merger or consolidation had
occurred at the beginning of the applicable four-quarter period. For purposes of
this definition, whenever pro forma effect is to be given to a transaction, the
pro forma calculations shall be made as determined in good faith by a
responsible financial or accounting officer of the Company. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest on such Indebtedness shall be calculated as if the rate in effect on
the Calculation Date had been the applicable rate for the entire period (taking
into account any Hedging Obligations applicable to such Indebtedness). Interest
on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by a responsible financial or accounting officer of the
Company to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP. For purposes of making the computation referred to
above, interest on any Indebtedness under a revolving credit facility computed
on a pro forma basis shall be computed based upon the average daily balance of
such Indebtedness during the applicable period. Interest on Indebtedness that
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rate, shall be
deemed to have been based upon the rate actually chosen, or, if none, then based
upon such optional rate chosen as the Company may designate. Any such pro forma
calculation may include adjustments in the reasonable determination of the
Company as set forth in an Officers' Certificate, to (i) reflect operating
expense reductions reasonably expected to result from any acquisition or merger
or (ii) eliminate the effect of any extraordinary accounting event with respect
to any acquired Person on Consolidated Net Income.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period and (b) the
product of (x) all cash
<PAGE>
9
dividend payments (excluding items eliminated in consolidation) on any series of
Disqualified Stock of such Person or its Restricted Subsidiaries and (y) (A) if
such Person is not a taxable entity for U.S. federal income tax purposes, one,
or (B) if such Person is an entity taxable for U.S. federal income tax purposes,
a fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local tax rate
of such Person, expressed as a decimal.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof.
"Funding Guarantor" see Section 11.04.
"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 have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date. For the purposes of this
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary.
"Global Securities" means one or more IAI Global Securities, Reg. S Global
Securities and 144A Global Securities.
"Government Securities" means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
<PAGE>
10
"Guarantee" means any guarantee of the obligations of the Issuers under
this Indenture and the Securities by any Restricted Subsidiary in accordance
with the provisions of this Indenture. When used as a verb, "Guarantee" shall
have a corresponding meaning.
"Guarantor" means any Restricted Subsidiary that incurs a Guarantee;
provided that upon the release and discharge of such Restricted Subsidiary from
its Guarantee in accordance with this Indenture, such Restricted Subsidiary
shall cease to be a Guarantor.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates or commodity prices.
"Holder" means the registered holder of any Security.
"IAI Global Security" means a permanent global security in registered form
representing the aggregate principal amount at maturity of Securities sold to
Institutional Accredited Investors.
"IPO Reorganization" means the transfer of all or substantially all of the
Company's assets (including, without limitation, all partnership or other equity
interests in the Operating Company and Opco GP) and liabilities to CapCo II, and
the dissolution, liquidation or winding up of the Company in connection with or
in contemplation of an initial public offering of the shares of common stock of
CapCo II).
"Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent, (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not otherwise included, any obligation by such Person to
be liable for, or to pay, as obligor, guarantor or otherwise, the Indebtedness
of another Person (other than by endorsement of negotiable instruments for
collection in the ordinary course of business) and (c) to the extent not
otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is assumed by such
Person); provided, however, that Contingent Obligations incurred in the ordinary
course of business shall be deemed not to constitute Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
<PAGE>
11
"Independent Financial Advisor" means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith determination of the
Company, qualified to perform the task for which it has been engaged.
"Initial Securities" means the 10 3/4% Senior Discount Notes due 2009,
Series A, of the Issuers.
"Initial Purchasers" means BT Alex. Brown Incorporated, Lazard Freres & Co.
LLC and Salomon Brothers Inc.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"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" means, with respect to the Securities, the sum of any cash
interest and any Additional Interest on the Securities.
"Interest Payment Date" means each semiannual interest payment date on
January 15 and July 15 of each year, commencing July 15, 2003.
"Interest Record Date" for the interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the January 1 or
July 1 (whether or not a Business Day), as the case may be, immediately
preceding such Interest Payment Date."
Investment Grade Securities" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances between and among the
respective Company Issuers and their respective Subsidiaries, and (iii)
investments in any fund that invests exclusively in investments of the type
described in clauses (i) and (ii) which fund may also hold immaterial amounts of
cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests
<PAGE>
12
or other securities issued by any other Person and investments that are required
by GAAP to be classified on the balance sheet (excluding the footnotes thereto)
of such Person in the same manner as the other investments included in this
definition to the extent such transactions involve the transfer of cash or other
property. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.06 of this Indenture, (i)
"Investments" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of a Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Company.
"Investor LP" means BMP/Graham Holdings Corporation, a Delaware
corporation.
"Issue Date" means the closing date for the sale and original issuance of
Securities under this Indenture.
"Issuers" means the Company and CapCo II.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
"Management Group" means the group consisting of the executive officers of
the Company.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
"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, any
<PAGE>
13
cash received upon the sale or other disposition of any Designated Noncash
Consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale and the sale or disposition of such Designated Noncash
Consideration (including, without limitation, legal, accounting and investment
banking fees, and brokerage and sales commissions), and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements related thereto), amounts required to be applied to the repayment
of principal, premium (if any) and interest on Indebtedness required (other than
required by clause (i) of the second paragraph of Section 4.05 of this
Indenture) to be paid as a result of such transaction and any deduction of
appropriate amounts to be provided by the Company as a reserve in accordance
with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction.
"New Credit Facility" means that certain credit facility among Bankers
Trust Company, the Company and certain of its Subsidiaries and affiliates and
the lenders from time to time party thereto, together with any related
documents, instruments and agreements executed in connection therewith
(including, without limitation, any guaranty agreements and security documents),
in each case as such credit facility and related documents, instruments and
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
additional obligors or guarantors thereunder) all or any portion of the
Indebtedness under such credit facility or any successor or replacement credit
facility and whether by the same or any other agent, lender or group of lenders.
"Obligations" means all obligations for principal, interest, penalties,
fees, indemnifications, reimbursements (including, without limitation,
reimbursement obligations with respect to letters of credit and banker's
acceptances), damages and other liabilities payable under the documentation
governing any Indebtedness; provided that Obligations with respect to the
Securities shall not include fees or indemnifications in favor of the Trustee
and other third parties other than the holders of the Securities.
"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Issuers by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Securities on the date of the
Offer offering to purchase up to the principal amount at maturity of Securities
specified in such Offer at the purchase price specified in such Offer (as
determined pursuant to this Indenture). Unless otherwise required by applicable
law, the Offer shall specify an expiration date (the "Expiration Date") of the
Offer to Purchase, which shall be not less than 30 days nor more than 60 days
after the date of such Offer, and a settlement date (the "Purchase Date") for
purchase of Securities to occur no later than three Business Days after the
Expiration Date. The Issuers shall notify the Trustee at least five Business
Days (or such
<PAGE>
14
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Issuers' obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Issuers or, at the Issuers' request, by the Trustee in
the name and at the expense of the Issuers. The Offer shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Offer to Purchase. The Offer shall also state: (1) the Section
of this Indenture pursuant to which the Offer to Purchase is being made; (2) the
Expiration Date and the Purchase Date; (3) the aggregate principal amount at
maturity of the outstanding Securities offered to be purchased by the Issuers
pursuant to the Offer to Purchase (including, if less than 100%, the manner by
which such amount has been determined pursuant to the Section of this Indenture
requiring the Offer to Purchase) (the "Purchase Amount"); (4) the purchase price
to be paid by the Issuers for each $1,000 aggregate principal amount at maturity
of Securities accepted for payment (as specified pursuant to this Indenture)
(the "Purchase Price"); (5) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that any portion of a
Security tendered must be tendered in an integral multiple of $1,000 principal
amount at maturity; (6) the place or places where Securities are to be
surrendered for tender pursuant to the Offer to Purchase; (7) that Accreted
Value or interest on any Security not tendered or tendered but not purchased by
the Issuers pursuant to the Offer to Purchase will continue to accrete or
accrue, as the case may be; (8) that on the Purchase Date the Purchase Price
will become due and payable upon each Security being accepted for payment
pursuant to the Offer to Purchase and that Accreted Value thereof or interest
thereon shall cease to accrete or accrue, as the case may be, on and after the
Purchase Date; (9) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender such
Security at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Security being, if the Issuers or the
Trustee so require, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuers and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing); (10) that
Holders will be entitled to withdraw all or any portion of Securities tendered
if the Issuers (or the Paying Agent) receives, not later than the close of
business on the fifth Business Day next preceding the Expiration Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount at maturity of the Security the Holder tendered, the
certificate number of the Security the Holder tendered and a statement that such
Holder is withdrawing all or a portion of his tender; (11) that (a) if
Securities in an aggregate principal amount less than or equal to the Purchase
Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase,
the Issuers shall purchase all such Securities and (b) if Securities with an
Accreted Value on the Purchase Date in excess of the Purchase Amount are
tendered and not withdrawn pursuant to the Offer to Purchase, the Issuers shall
purchase Securities having an aggregate Accreted Value on the Purchase Date
equal to the Purchase Amount in accordance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed or, if not so listed, on a pro rata basis, by lot or by such other method
as the Trustee shall deem fair and appropriate (with such adjustments as may be
deemed appropriate so that only Securities in denominations of $1,000 principal
amount at maturity or integral multiples thereof shall be purchased); and (12)
that in the case of any Holder whose Security is purchased only in part, the
Issuers 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 an aggregate
principal amount at maturity equal to and in exchange
<PAGE>
15
for the unpurchased portion of the Security so tendered.An Offer to Purchase
shall be governed by and effected in accordance with the provisions above
pertaining to any Offer.
"Officer" of any Person means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President (whether or
not such title is preceded or followed by one or more words or phrases), the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of such Person.
"Officers' Certificate" of any Person means a certificate signed on behalf
of such Person or the general partner, in the case of a limited partnership, or
member, in the case of a limited liability company, of such Person by the
Chairman of the Board, the President, any Executive Vice President, Senior Vice
President or Vice President (whether or not such title is preceded or followed
by one or more words or phrases) and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary of such Person, that meets the
requirements set forth in Sections 13.04 and 13.05 of this Indenture.
"144A Global Security" means a permanent global security in registered form
representing the aggregate principal amount at maturity of Securities sold in
reliance on Rule 144A.
"Opco GP" means GPC Opco GP LLC, a Delaware limited liability company, and
its successors.
"Operating Company" means Graham Packaging Company, a Delaware limited
partnership and its successors.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Issuers or the Trustee.
"Pari Passu Indebtedness" means with respect to the Securities or a
Guarantee, Indebtedness which ranks pari passu in right of payment with the
Securities or such Guarantee, as the case may be.
"Participant" has the meaning set forth in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Permanent Qualified Equity Contributions" means net cash proceeds to the
Company in form of contributions to the common equity capital of the Company or
from the sale (other than to a Subsidiary of the Company or to any management
equity plan or stock option plan or any other management or employee benefit
plan of the Company or any of its Subsidiaries) of Capital Stock (other than
Disqualified Stock) of the Company, in each case designated as Permanent
Qualified Equity Contributions pursuant to an Officers' Certificate, the
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16
cash proceeds of which are excluded from the calculation set forth in paragraph
(c) of Section 4.06 of this Indenture.
"Permitted Holders" means Blackstone and any of its Affiliates.
"Permitted Investments" means (a) any Investment in the Company or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary in a Person that is a Similar Business if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary or (ii) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d)
any Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to
Section 4.05 of this Indenture or any other disposition of assets not
constituting an Asset Sale; (e) any Investment existing on the Issue Date; (f)
advances to employees not in excess of $10.0 million outstanding at any one
time, in the aggregate; (g) any Investment acquired by the Company or any of its
Restricted Subsidiaries (i) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or recapitalization
of the issuer of such other Investment or accounts receivable or (ii) as a
result of a foreclosure by the Company or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect
to any secured Investment in default; (h) Hedging Obligations permitted under
clause (j) of Section 4.04 of this Indenture; (i) loans and advances to
officers, directors and employees for business-related travel expenses, moving
expenses and other similar expenses, in each case incurred in the ordinary
course of business; (j) any Investment in a Similar Business (other than an
Investment in an Unrestricted Subsidiary) having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (j) that
are at that time outstanding, not to exceed 10% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value); (k)
Investments the payment for which consists of Equity Interests of the Company
(other than Disqualified Stock); provided, however, that such Equity Interests
will not increase the amount available for Restricted Payments under clause (c)
of Section 4.06 of this Indenture; (l) additional Investments having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (l) that are at that time outstanding, not to exceed
$10.0 million (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value); (m) any
transaction to the extent it constitutes an Investment that is permitted by and
made in accordance with the provisions of clauses (iii) and (xi) of the second
paragraph of Section 4.03 of this Indenture; (n) any Investment by Restricted
Subsidiaries in other Restricted Subsidiaries; (o) Investments consisting of the
licensing or contribution of intellectual property pursuant to joint marketing
arrangements with other Persons; and (p) Investments consisting of purchases and
acquisitions of inventory, supplies, materials and equipment or licenses or
leases of intellectual property, in any case, in the ordinary course of
business.
"Permitted Liens" means the following types of Liens:
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17
(i) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(ii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or asset
which is not leased property subject to such Capitalized Lease Obligation;
(iii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Restricted
Subsidiary other than the property and assets so acquired and (B) the Lien
securing such Indebtedness shall be created within 180 days of such
acquisition;
(iv) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(v) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(vi) Liens securing Indebtedness under Hedging Obligations;
(vii) Liens securing Acquired Indebtedness incurred in accordance with
Section 4.04 of this Indenture; provided that (A) such Liens secured such
Acquired Indebtedness at the time of and prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary thereof and
were not granted in connection with, or in anticipation of, the incurrence
of such Acquired Indebtedness by the Company or a Restricted Subsidiary
thereof and (B) such Liens do not extend to or cover any property or assets
of the Company or any of the Restricted Subsidiaries other than the
property or assets that secured the Acquired Indebtedness prior to the time
such Indebtedness became Acquired Indebtedness of the Company or such
Restricted Subsidiary and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by the Company or such Restricted Subsidiary;
(viii) Liens securing obligations under the New Credit Facility;
(ix) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good
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18
faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made in respect thereof;
(x) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business, consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money); and
(xi) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements, including
rights of offset and setoff.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Securities" means one or more certificated Securities in
registered form.
"principal" of a debt security means the principal of the security, plus,
when appropriate, the premium, if any, on the security.
"Private Exchange Notes" has the meaning provided in the Registration
Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.
"Purchase Agreement" means the Purchase Agreement dated as of January 23,
1998 by and among the Issuers, the Company Issuers and the Initial Purchasers.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Institutional Buyer" or "QIB" means a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act.
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19
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Redemption and Purchase, dated as of December 18, 1997 by and
among the Company, BMP/Graham Holdings Corporation and the other parties
thereto.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"redemption price," when used with respect to any Security to be redeemed,
means the price fixed for such redemption pursuant to this Indenture as set
forth in the form of Security annexed hereto as Exhibit A.
"Reg. S Global Security" means a global security in registered form
representing the aggregate principal amount at maturity of Securities sold
pursuant to Regulation S under the Securities Act.
"Registrar" see Section 2.03.
"Registration" means a registered exchange offer for the Securities by the
Issuers or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of February 2, 1998 by and among the Issuers and the Initial
Purchasers.
"Related Parties" means any Person controlled by a Permitted Holder,
including any partnership of which a Permitted Holder or any of its Affiliates
is the general partner.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" see Section 4.06.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under the
Securities Act; provided, however, that the Trustee shall be entitled to request
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act."S&P" means Standard
and Poor's Ratings Group.
"SEC" or "Commission" means the Securities and Exchange Commission.
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20
"Securities" means, collectively, the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Subordinated Indenture" means the Indenture dated as of February 2,
1998 among the Company Issuers and United States Trust Company of New York, as
trustee.
"Senior Subordinated Notes" means the $225,000,000 aggregate principal
amount of Senior Subordinated Notes due 2008 of the Company Issuers issued on
the Issue Date.
"Significant Restricted Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" of the Company as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
"Similar Business" means a business the majority of whose revenues are
derived from the manufacture, marketing or sale of containers or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.
"Subordinated Indebtedness" means with respect to the Securities or a
Guarantee, any Indebtedness of the Company or a Guarantor, as the case may be,
which is by its terms subordinated in right of payment to the Securities or the
Guarantee of such Guarantor, as the case may be.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except as
provided in Section 10.03) until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA.
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21
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department (or
any successor group of the Trustee) including any vice president, assistant vice
president, assistant secretary, assistant treasurer or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"United States Government Obligations" means direct non-callable
obligations of the United States for the payment of which the full faith and
credit of the United States is pledged.
"Unrestricted Securities" means one or more Securities that do not and are
not required to bear the Private Placement Legend in the form set forth in
Exhibit A hereto, including, without limitation, the Exchange Securities and any
Securities registered under the Securities Act pursuant to and in accordance
with the Registration Rights Agreement.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or
owns, or holds any Lien on any property of, the Company or any Subsidiary
thereof (other than any Subsidiary of the Subsidiary to be so designated),
provided that each Subsidiary to be so designated and its Subsidiaries have not
at the time of designation, and do not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that, immediately after giving effect to such designation, (i) the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test described Section 4.04 of this Indenture or
(ii) the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries would be greater than such ratio for the Company and its Restricted
Subsidiaries immediately prior to such designation, in each case on a pro forma
basis taking into account such designation. Any such designation by the Board of
Directors of the Company shall be notified by the Company to the Trustee by
promptly filing with the Trustee a copy of the
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22
board resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:"Commission" means
the SEC."indenture securities" means the Securities and the
Guarantees."indenture security holder" means a Securityholder."indenture to be
qualified" means this Indenture."indenture trustee" or "institutional trustee"
means the Trustee."obligor" on the indenture securities means the Company, a
Guarantor or any other obligor on the Securities.All other TIA terms used in
this Indenture that are defined by the TIA, defined by TIA reference to another
statute or defined by SEC rule and not otherwise defined herein have the
meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in effect
from time to time, and any other reference in this Indenture to "generally
accepted accounting principles" refers to GAAP;(3)"or" is not
exclusive;(4)words in the singular include the plural, and words in the
plural include the singular;(5)provisions apply to successive events and
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23
transactions; and(6)"herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
The Initial Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication thereof shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Issuers shall approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its issuance and
shall show the date of its authentication. Global Securities shall bear the
legend set forth in Exhibit C hereto. The aggregate principal amount at maturity
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 Depository,
as hereinafter provided.
SECTION 2.2 Execution and Authentication.
Two Officers, including no more than one signing solely as Assistant
Secretary, shall sign, or one Officer (other than as an Assistant Secretary)
shall sign and the Secretary or an Assistant Secretary (each of whom shall, in
each case, have been duly authorized by all requisite corporate actions) shall
attest to such Officer's signature, the Securities for each of the Issuers by
manual or facsimile signature.If an Officer whose signature is on a Security was
an Officer at the time of such execution but no longer holds that office at the
time the Trustee authenticates the Security, the Security shall be valid
nevertheless. A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.The Trustee shall authenticate (i) Initial Securities for
original issue in an aggregate principal amount at maturity not to exceed
$169,000,000, (ii) Private Exchange Notes from time to time only in exchange for
a like principal amount at maturity of Initial Securities and (iii) Unrestricted
Securities from time to time in exchange for (A) a like principal amount at
maturity of Initial Securities or (B) a like principal amount at maturity of
Private Exchange Notes, in each case upon a written order of each of the Issuers
in the form of an Officers' Certificate. Each such written order shall specify
the amount of Securities to be authenticated and the date on which the
Securities are to be authenticated, whether the Securities are to be Initial
Securities, Private Exchange Securities or Unrestricted Securities and whether
the Securities are to be issued as Physical Securities or Global Securities and
such other information as the Trustee may reasonably request. The aggregate
principal amount at maturity of Securities outstanding at any time may not
exceed $169,000,000, except as provided in Sections 2.07 and
2.08.Notwithstanding the foregoing, all Securities issued under this Indenture
shall vote and
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24
consent together on all matters (as to which any of such Securities may vote or
consent) as one class and no series of Securities will have the right to vote or
consent as a separate class on any matter.The Trustee may appoint an
authenticating agent reasonably acceptable to the Issuers to authenticate
Securities. Unless otherwise provided in the appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent shall have the same rights as an Agent to
deal with the Issuers and Affiliates of the Issuers.The Securities shall be
issuable only in registered form without coupons in denominations of $1,000
principal amount at maturity and any integral multiple thereof.
SECTION 2.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where (a) Securities may be presented or surrendered for
registration of transfer or for exchange (the "Registrar"), (b) Securities may
be presented or surrendered for payment (the "Paying Agent") and (c) notices and
demands in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Issuers, upon notice to the Trustee, may appoint one or more
co-Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. Except as provided herein, the Company or
any Guarantor may act as Paying Agent, Registrar or co-Registrar. The Issuers
shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Issuers shall notify the Trustee of the name and address of any such Agent. If
the Issuers fail to maintain a Registrar or Paying Agent, or fail to give the
foregoing notice, the Trustee shall act as such and shall be entitled to
appropriate compensation in accordance with Section 7.07.The Issuers initially
appoint the Trustee as Registrar and Paying Agent until such time as the Trustee
has resigned or a successor has been appointed.
SECTION 2.4 Agent To Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee to agree
in writing that each Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all assets held by the Paying Agent for the payment of Accreted
Value or principal of, or interest on, the Securities, and shall notify the
Trustee of any Default by the Issuers in making any such payment. The Issuers at
any time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuers to the
Paying Agent (if other than an Issuer), the Paying Agent shall have no further
liability for such assets. If an Issuer, any Guarantor or any of their
respective Affiliates acts as Paying Agent, it shall, on or before each due date
of the Accreted Value or principal of or interest on the Securities, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the Accreted Value or principal or interest so becoming due
until such sums
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25
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
SECTION 2.5 Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the
Trustee before each Interest Record Date and at such other times as the Trustee
may request in writing a list as of such date and in such form as the Trustee
may reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.6 Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount at maturity of Securities of other authorized denominations of
the same series, the Registrar or co-Registrar shall register the transfer or
make the exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Issuers and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Issuers shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Issuers may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.05,
4.14, or 10.05). The Registrar or co- Registrar shall not be required to
register the transfer or exchange of any Security (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three
hereof, except the unredeemed portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided herein, the
Issuers, the Trustee and any Agent shall treat the person in whose name the
Security is registered as the owner thereof for all purposes whether or not the
Security shall be overdue, and neither the Issuers, the Trustee nor any Agent
shall be affected by notice to the contrary. Any Holder of a beneficial interest
in a Global Security shall, by acceptance of such beneficial interest in a
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Depository (or its agent), and that ownership of a beneficial interest in a
Global Security shall be required to be reflected in a book entry.
SECTION 2.7 Securities.
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If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Issuers shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements for replacement of Securities are met.
Such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Issuers and the Trustee, to protect the Issuers, the
Trustee and any Agent from any loss which any of them may suffer if a Security
is replaced The Issuers may charge such Holder for its reasonable out-of-pocket
expenses in replacing a Security, including reasonable fees and expenses of
counsel.Every replacement Security is an additional obligation of the Issuers.
SECTION 2.8 Securities
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because an
Issuer or any of its Affiliates holds the Security.If a Security is replaced
pursuant to Section 2.07 (other than a mutilated Security surrendered for
replacement), it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona fide purchaser.
A mutilated Security ceases to be outstanding upon surrender of such Security
and replacement thereof pursuant to Section 2.07.If on a Redemption Date,
Purchase Date or the Final Maturity Date the Paying Agent holds money sufficient
to pay all of the Accreted Value or principal and interest due on the Securities
payable on that date, and is not prohibited from paying such money to the
Holders pursuant to the terms of this Indenture, then on and after that date
such Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.9 Securities.
In determining whether the Holders of the required principal amount at
maturity of Securities have concurred in any direction, waiver or consent,
Securities owned by an Issuer, a Guarantor or any of their respective Affiliates
shall be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities that a Trust Officer of the Trustee actually knows are so owned
shall be disregarded. The Issuers shall notify the Trustee, in writing, when an
Issuer, a Guarantor or any of their respective Affiliates repurchases or
otherwise acquires Securities and of the aggregate principal amount at maturity
of such Securities so repurchased or otherwise acquired.
SECTION 2.10 Securities.
Until definitive Securities are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Securities upon receipt of a
written order of the Issuers in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Issuers consider
appropriate for temporary Securities. Without
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unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate
upon receipt of a written order of the Issuers pursuant to Section 2.02
definitive Securities in exchange for temporary Securities.
SECTION 2.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Issuers,
deliver cancelled Securities to the Issuers. Subject to Section 2.07, the
Issuers may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If an Issuer or any Guarantor shall
acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest.
The Issuers shall pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Securities. The Issuers shall,
to the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) at the rate of interest then borne by
the Securities.If the Issuers default in a payment of interest on the
Securities, they shall pay the defaulted interest, plus (to the extent lawful)
any interest payable on the defaulted interest to the Persons who are Holders on
a subsequent special record date, which date shall be the fifteenth day
preceding the date fixed by the Issuers for the payment of defaulted interest or
the next succeeding Business Day if such date is not a Business Day. At least 15
days before the subsequent special record date, the Issuers shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(i) shall be paid to Holders as of the Interest
Record Date for the Interest Payment Date for which interest has not been paid.
SECTION 2.13 CUSIP Number.
The Issuers in issuing the Securities will use a "CUSIP" number and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided , however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Issuers shall
promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14 Deposit of Moneys.
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Prior to 10:00 a.m. New York City time on each Interest Payment Date,
Redemption Date, Purchase Date and the Final Maturity Date, the Issuers shall
deposit with the Paying Agent in immediately available funds money sufficient to
make cash payments, if any, due on such Interest Payment Date, Redemption Date,
Purchase Date or Final Maturity Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Redemption Date, Purchase Date or Final Maturity Date, as the case
may be.
SECTION 2.15 Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Participants") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Security, and the Depository may be treated by the Issuers, the Trustee and any
agent of the Issuers or the Trustee as the absolute owner of the Global Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and
Participants, the operation of customary practices governing the exercise of the
rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Securities may be transferred or
exchanged for Physical Securities in accordance with the rules and procedures of
the Depository and the provisions of Section 2.16; provided, however, that
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in Global Securities if (i) the Depository
notifies the Issuers that it is unwilling or unable to continue as Depository
for any Global Security and a successor Depository is not appointed by the
Issuers within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request from the Depository
to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety to
beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global
Securities shall be deemed to be surrendered to the Trustee for cancellation,
and the Issuers shall execute, and the Trustee shall upon written instructions
from the Issuers authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in the Global
Securities, an equal aggregate principal amount at maturity of Physical
Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to paragraph (b) of this
Section 2.15 shall, except as otherwise provided by Section 2.16, bear the
Private Placement Legend.
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(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities.
SECTION 2.16 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical Securities
are presented to the Registrar or co-Registrar with a request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal principal
amount at maturity of Physical Securities of other authorized
denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the Physical
Securities presented or surrendered for Registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical Securities
shall be accompanied, in the sole discretion of the Issuers, by the
following additional information and documents, as applicable:
((A) if such Physical Security is being delivered to the
Registrar or co- Registrar by a Holder for Registration in the name of
such Holder, without transfer, a certification from such Holder to
that effect (substantially in the form of Exhibit D hereto); or
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to that
effect (substantially in the form of Exhibit D hereto) and a
transferee letter of representation substantially in the form of
Exhibit E hereto and, at the option of the Issuers, an Opinion of
Counsel reasonably satisfactory to the Issuers to the effect that such
transfer is in compliance with the Securities Act; or
(D) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to that
effect (substantially in the form of Exhibit D hereto) and, at the
option of the Issuers, an Opinion of Counsel reasonably
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30
satisfactory to the Issuers to the effect that such transfer is in
compliance with the Securities Act; or
(E) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the Securities
Act, a certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Issuers, an Opinion of
Counsel reasonably acceptable to the Issuers to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of a
Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
(A) certification, substantially in the form of Exhibit D hereto, that
such Physical Security is being transferred (I) to a QIB or (II) to an
Accredited Investor and, with respect to (II), at the option of the
Issuers, an Opinion of Counsel reasonably acceptable to the Issuers to
the effect that such transfer is in compliance with the Securities
Act; and
(B) written instructions directing the Registrar or co-Registrar to make,
or to direct the Depository to make, an endorsement on the applicable
Global Security to reflect an increase in the aggregate amount of the
Securities represented by the Global Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the principal amount at maturity of Securities represented by the
applicable Global Security to be increased accordingly. If no Global Security is
then outstanding, the Issuers shall, unless either of the events in the proviso
to Section 2.15(b) have occurred and are continuing, issue and the Trustee
shall, upon written instructions from the Issuers in accordance with Section
2.02, authenticate such a Global Security in the appropriate principal amount at
maturity.
(c) Transfer and Exchange of Global Securities. The transfer and exchange
of Global Securities or beneficial interests therein shall be effected through
the Depository in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor. Upon
receipt by the Registrar or Co- Registrar of written instructions, or such other
instruction as is customary for the Depository, from the Depository or its
nominee, requesting the Registration of transfer of an interest in a Global
Security to another type of Global Security, together with the applicable Global
Securities (or, if the applicable type of Global Security required to represent
the interest as requested to be transferred is not then
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31
outstanding, only the Global Security representing the interest being
transferred), the Registrar or Co-Registrar shall cancel such Global Securities
(or Global Security) and the Issuers shall issue and the Trustee shall, upon
written instructions from the Issuers in accordance with Section 2.02,
authenticate new Global Securities of the types so cancelled (or the type so
cancelled and applicable type required to represent the interest as requested to
be transferred) reflecting the applicable increase and decrease of the principal
amount at maturity of Securities represented by such types of Global Securities,
giving effect to such transfer. If the applicable type of Global Security
required to represent the interest as requested to be transferred is not
outstanding at the time of such request, the Issuers shall issue and the Trustee
shall, upon written instructions from the Issuers in accordance with Section
2.02, authenticate a new Global Security of such type in principal amount at
maturity equal to the principal amount at maturity of the interest requested to
be transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a Physical
Security.
(i) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical Security;
provided, however, that prior to the Registration, a transferee that is a
QIB or Institutional Accredited Investor may not exchange a beneficial
interest in Global Security for a Physical Security. Upon receipt by the
Registrar or co-Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or its
nominee on behalf of any Person (subject to the previous sentence) having a
beneficial interest in a Global Security and upon receipt by the Trustee of
a written order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest containing registration instructions and, in the case
of any such transfer or exchange of a beneficial interest in Securities the
offer and sale of which have not been registered under the Securities Act,
the following additional information and documents:
(A) if such beneficial interest is being transferred in reliance on Rule
144 under the Securities Act, delivery of a certification to that
effect (substantially in the form of Exhibit D hereto) and, at the
option of the Issuers, an Opinion of Counsel reasonably satisfactory
to the Issuers to the effect that such transfer is in compliance with
the Securities Act; or
(B) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the Securities
Act, a certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Issuers, an Opinion of
Counsel reasonably satisfactory to the Issuers to the effect that such
transfer is in compliance with the Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository and
the Registrar or co- Registrar, the aggregate principal amount at maturity
of the applicable Global Security to be reduced
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and, following such reduction, the Issuers will execute and, upon receipt
of an authentication order in the form of an Officers' Certificate in
accordance with Section 2.02, the Trustee will authenticate and deliver to
the transferee a Physical Security in the appropriate principal amount at
maturity.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Registrar or co-Registrar in writing. The Registrar or
co-Registrar shall deliver such Physical Securities to the Persons in whose
names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or replacement of
Securities not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar or co- Registrar shall deliver only
Securities that bear the Private Placement Legend unless, and the Trustee is
hereby authorized to deliver Securities without the Private Placement Legend if,
(i) there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Issuers and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act; (ii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act (including pursuant to a Registration); or (iii) the date of such
transfer, exchange or replacement is two years after the later of (x) the Issue
Date and (y) the last date that an Issuer or any affiliate (as defined in Rule
144 under the Securities Act) of an Issuer was the owner of such Securities (or
any predecessor thereto).
(g) General. 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 will transfer such Security only as provided
in this Indenture.
Each Holder of a Security agrees to indemnify the Issuers and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable
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law with respect to any transfer of any interest in any Security (including any
transfers between or among Participants or beneficial owners of interest in any
Global Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.15 or this Section 2.16. The
Issuers shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE III
REDEMPTION
SECTION 3.1 Notices to Trustee.
If the Issuers want to redeem Securities pursuant to paragraph 5 or 6 of
the Securities at the applicable redemption price set forth thereon, they shall
notify the Trustee in writing of the Redemption Date and the principal amount at
maturity of Securities to be redeemed. The Issuers shall give such notice to the
Trustee at least 60 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.2 Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not so listed, on a pro rata basis, by lot or
in such other manner as the Trustee shall deem fair and appropriate.
The Trustee may select for redemption portions of the principal amount at
maturity of Securities that have denominations equal to or larger than $1,000
principal amount at maturity. Securities and portions of them the Trustee so
selects shall be in amounts of $1,000 principal amount at maturity or integral
multiples thereof. Provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption.
SECTION 3.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Issuers shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address.
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34
Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) redemption price;
(3) the name and address of the Paying Agent to which the Securities
are to be surrendered for redemption;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) that, unless the Issuers default in making the redemption payment,
Accreted Value or interest on Securities called for redemption ceases to
accrete or accrue, as the case may be, on and after the Redemption Date and
the only remaining right of the Holders is to receive payment of the
redemption price upon surrender to the Paying Agent; and
(6) if any Security is being redeemed in part, the portion of the
principal amount at maturity of such Security to be redeemed and that,
after the Redemption Date, upon surrender of such Security, a new Security
or Securities in principal amount at maturity equal to the unredeemed
portion thereof will be issued.
At the Issuers' request, the Trustee shall give the notice of redemption on
behalf of the Issuers, in the Issuers' name and at the Issuers' expense.
SECTION 3.4 Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price, plus accrued interest thereon, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date.
SECTION 3.5 Deposit of Redemption Price.
At least one Business Day before the Redemption Date, the Issuers shall
deposit with the Paying Agent (or if an Issuer is Paying Agent, shall, on or
before the Redemption Date, segregate and hold in trust) money sufficient to pay
the redemption price of and accrued interest, if any, on all Securities to be
redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Issuers to the Trustee
for cancellation.If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Issuers to deposit with the
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35
Paying Agent money sufficient to pay the redemption price thereof, the principal
and accrued and unpaid interest, if any, thereon shall, until paid or duly
provided for, bear interest as provided in Sections 2.12 and 4.01 with respect
to any payment default.
SECTION 3.6 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate and deliver at the expense of the Issuers to the Holder a new
Security equal in principal amount at maturity to the unredeemed portion of the
Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities.
The Company shall pay the Accreted Value or principal of and interest on
the Securities in the manner provided in the Securities and the Registration
Rights Agreement. An installment of Accreted Value or principal or interest
shall be considered paid on the date due if the Trustee or Paying Agent (other
than an Issuer, a Guarantor or any of their respective Affiliates) holds on that
date money designated for and sufficient to pay the installment in full and is
not prohibited from paying such money to the Holders of the Securities pursuant
to the terms of this Indenture.The Issuers shall pay cash interest on overdue
principal at the same rate per annum borne by the Securities. The Issuers shall
pay cash interest on overdue installments of interest at the same rate per annum
borne by the Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.2 Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.03. The Issuers shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Issuers shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13. The
Issuers hereby initially designate the Trustee at its address set forth in
Section 13.02 as their office or agency in The Borough of Manhattan, The City of
New York, for such purposes.
SECTION 4.3 Limitations on Transactions with Affiliates.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the
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36
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
involving aggregate consideration in excess of $5.0 million, unless (a) such
Affiliate Transaction is on terms that are not materially less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million, the Company delivers to the Trustee a
resolution adopted by the majority of the Board of Directors of the Company,
approving such Affiliate Transaction and set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by Section 4.06 of this Indenture; (iii) the
payment of annual management, consulting, monitoring and advisory fees and
related expenses to Blackstone, Graham Packaging Corporation and their
respective Affiliates; (iv) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary; (v) payments by the
Company or any of its Restricted Subsidiaries to Blackstone and its Affiliates
made for any financial advisory, financing, underwriting or placement services
or in respect of other investment banking activities, including, without
limitation, in connection with acquisitions or divestitures, which payments are
approved by the majority of the Board of Directors of the Company, in good
faith; (vi) transactions in which the Company or any of its Restricted
Subsidiaries, as the case may be, delivers to the Trustee a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (a) of the preceding paragraph; (vii) payments or
loans to employees or consultants which are approved by a majority of the Board
of Directors of the Company in good faith; (viii) any agreement as in effect as
of the Issue Date or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders of the Securities in any material respect) or any
transaction contemplated thereby; (ix) the existence of, or the performance by
the Company or any Restricted Subsidiary of its obligations under the terms of,
the Recapitalization Agreement, or any agreement contemplated thereunder
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Issue Date and any similar agreements
which it may enter into thereafter; provided, however, that the existence of or
the performance by the Company or any Restricted Subsidiary of obligations under
any future amendment to any such existing agreement or under any similar
agreement entered into after the Issue Date shall only be permitted by this
clause (ix) to the extent that the terms of any such amendment or new agreement
are not otherwise disadvantageous to the Holders of the Securities in any
material respect; (x) the payment of all fees, expenses, bonuses and awards
related to the transactions contemplated by the Recapitalization Agreement,
including fees to Blackstone; and (xi) transactions with customers, clients,
suppliers, or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of this
Indenture which are fair to the Company and its Restricted Subsidiaries, in the
reasonable determination of the majority of the Board of Directors of the
Company, or are on terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party.
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SECTION 4.4 Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur" and collectively, an "incurrence") any
Indebtedness (including Acquired Indebtedness) or issue any shares of
Disqualified Stock; provided, however, that the Company and any Restricted
Subsidiary may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's and the Restricted Subsidiaries' most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 1.75 to 1.00 (determined
on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of such four-quarter period).
The foregoing limitations will not apply to: (a) the incurrence by the
Company or its Restricted Subsidiaries of Indebtedness under the New Credit
Facility and the issuance and creation of letters of credit and banker's
acceptances thereunder (with letters of credit and banker's acceptances being
deemed to have a principal amount equal to the face amount thereof) up to an
aggregate principal amount of $650 million outstanding at any one time; (b) the
incurrence by the Issuers of Indebtedness represented by the Securities; (c)
Indebtedness of the Company and its Restricted Subsidiaries existing on the
Issue Date (other than Indebtedness described in clauses (a) and (b)), including
the Senior Subordinated Notes and the Company's guarantee thereof (and any
future guarantees thereof); (d) Indebtedness (including Capitalized Lease
Obligations) incurred by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness then outstanding
and incurred pursuant to this clause (d) and including all Refinancing
Indebtedness (as defined below) incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (d), does not exceed 15% of
Total Assets at the time of the respective incurrence; (e) Indebtedness incurred
by the Company or any of its Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit issued in the ordinary course of
business, including, without limitation, letters of credit in respect of
workers' compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers' compensation
claims; (f) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
(g) Indebtedness of the Company to a Restricted Subsidiary; provided that any
such Indebtedness shall be subordinated in right of payment to the Securities;
provided, further, that any subsequent issuance or transfer of any Capital Stock
or any other event which
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results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of any such Indebtedness (except to the Company
or another Restricted Subsidiary) shall be deemed, in each case, to be an
incurrence of such Indebtedness; (h) shares of preferred stock of a Restricted
Subsidiary issued to the Company or another Restricted Subsidiary; provided that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such shares of preferred
stock (except to the Company or another Restricted Subsidiary) shall be deemed,
in each case, to be an issuance of such shares of preferred stock; (i)
Indebtedness of a Restricted Subsidiary to the Company or another Restricted
Subsidiary; provided that any subsequent transfer of any such Indebtedness
(except to the Company or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness; (j) Hedging Obligations
that are incurred in the ordinary course of business (1) for the purpose of
fixing or hedging interest rate risk with respect to any Indebtedness that is
permitted by the terms of this Indenture to be outstanding; (2) for the purpose
of fixing or hedging currency exchange rate risk with respect to any currency
exchanges; or (3) for the purpose of fixing or hedging commodity price risk with
respect to any commodity purchases; (k) obligations in respect of performance
and surety bonds and completion guarantees provided by the Company or any
Restricted Subsidiary in the ordinary course of business; (l) Indebtedness of
any Guarantor in respect of such Guarantor's Guarantee; (m) Indebtedness or
Disqualified Stock of the Company and any of its Restricted Subsidiaries not
otherwise permitted hereunder in an aggregate principal amount or liquidation
preference which, when aggregated with the principal amount and liquidation
preference of all other Indebtedness and Disqualified Stock then outstanding and
incurred pursuant to this clause (m), does not exceed $75.0 million at any one
time outstanding; (n) (i) any guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness or other obligations of any of the Company's
Restricted Subsidiaries and any guarantee by a Restricted Subsidiary that is a
Guarantor of Indebtedness of the Company so long as the incurrence of such
Indebtedness incurred by such Restricted Subsidiary or the Company, as the case
may be, is permitted under the terms of this Indenture and (ii) any Excluded
Guarantee of a Restricted Subsidiary; (o) the incurrence by the Company or any
of its Restricted Subsidiaries of Indebtedness which serves to refund, refinance
or restructure any Indebtedness incurred as permitted under the first paragraph
of this covenant, this clause (o) and clauses (b) and (c) above and (q) below,
or any Indebtedness issued to so refund, refinance or restructure such
Indebtedness, including additional Indebtedness incurred to pay premiums and
fees in connection therewith (the "Refinancing Indebtedness") prior to its
respective maturity; provided, however, that such Refinancing Indebtedness (i)
has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining Weighted Average
Life to Maturity of the Indebtedness being refunded or refinanced, (ii) to the
extent such Refinancing Indebtedness refinances Indebtedness subordinated or
pari passu to the Securities, such Refinancing Indebtedness is subordinated or
pari passu to the Securities at least to the same extent as the Indebtedness
being refinanced or refunded and (iii) shall not include (x) Indebtedness of a
Restricted Subsidiary that is not a Guarantor that refinances Indebtedness of
the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary; and provided, further,
that subclauses (i) and (ii) of this clause (o) will not apply to any refunding
or refinancing of any Indebtedness of a Restricted Subsidiary; (p) other
Indebtedness in an amount not greater than twice the amount of Permanent
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39
Qualified Equity Contributions after the Issue Date at any one time outstanding;
and (q) Indebtedness or Disqualified Stock of Persons that are acquired by the
Company or any of its Restricted Subsidiaries or merged into a Restricted
Subsidiary in accordance with the terms of this Indenture; provided that such
Indebtedness or Disqualified Stock is not acquired in contemplation of such
acquisition or merger; and provided, further, that after giving effect to such
acquisition, either (i) the Company would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first sentence of this covenant or (ii) the Fixed Charge Coverage
Ratio is greater than immediately prior to such acquisition.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (a) through (q) above
or is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this covenant
SECTION 4.5 Limitation on Asset Sales.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the
Company or its Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value (as
determined in good faith by the Company) of the assets sold or otherwise
disposed of and (y) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of (a) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Securities) that are
assumed by the transferee of any such assets without recourse to the Company or
any of the Restricted Subsidiaries, (b) any notes or other obligations received
by the Company or such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received) within 180 days following the closing of such Asset Sale,
(c) any Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this clause (c) that is at that time outstanding, not to exceed 15%
of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), and (d) any assets received in exchange for assets
related to a Similar Business of comparable market value, in the good faith
determination of, the Board of Directors of the Company, shall be deemed to be
cash for purposes of this provision.
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Within 365 days after Holdings' or any Restricted Subsidiary's receipt of
the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option, (i) to
permanently reduce Obligations under the New Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Indebtedness
of a Restricted Subsidiary or Pari Passu Indebtedness (provided that if the
Company shall so reduce Obligations under Pari Passu Indebtedness, it will
equally and ratably reduce Obligations under the Securities if the Securities
are then redeemable or, if the Securities may not be then redeemed, the Issuers
shall make an Offer to Purchase to all Holders to purchase at 100% of the
Accreted Value thereof the amount of Securities that would otherwise be
redeemed), (ii) to an investment in any one or more businesses, capital
expenditures or acquisitions of other assets in each case, used or useful in a
Similar Business and/or (iii) to make an investment in properties or assets that
replace the properties and assets that are the subject of such Asset Sale.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. Any Net Proceeds from the Asset Sale
that are not invested as provided and within the time period set forth in the
first sentence of this paragraph (it being understood that any portion of such
Net Proceeds used to make an offer to purchase Securities, as described in
clause (i) above, shall be deemed to have been invested whether or not such
offer is accepted) will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuers shall
make an Offer to Purchase to all Holders of Securities to purchase the maximum
principal amount at maturity of Securities that is an integral multiple of
$1,000 that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the Accreted Value thereof on, plus accrued
and unpaid interest, if any, to, the date fixed for the closing of such offer,
in accordance with the procedures set forth below. The Issuers will commence an
Offer to Purchase with respect to Excess Proceeds within ten Business Days after
the date that Excess Proceeds exceed $15.0 million. To the extent that the
aggregate Accreted Value of Securities tendered pursuant to such an Offer to
Purchase is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate or partnership purposes. Upon completion
of any such Offer to Purchase, the amount of Excess Proceeds shall be reset at
zero.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Securities pursuant to such an Offer to Purchase. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Issuers will comply with the applicable securities laws and
regulations and shall not be deemed to have breached their obligations described
in this Indenture by virtue thereof.
On or prior to the Purchase Date specified in the Offer to Purchase, the
Issuers shall (i) accept for payment all Securities validly tendered pursuant to
the Offer, (ii) deposit with the Paying Agent or, if an Issuer is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 2.04, money
sufficient to pay the Purchase Price of all Securities or portions thereof so
accepted and (iii) deliver or cause to be delivered to the Trustee for
cancellation all
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41
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Issuers. The Paying
Agent (or an Issuer, if so acting) shall promptly mail or deliver to Holders of
Securities so accepted, payment in an amount equal to the Purchase Price for
such Securities, and the Trustee shall promptly authenticate and mail or deliver
to each Holder of Securities a new Security or Securities equal in principal
amount at maturity to any unpurchased portion of the Security surrendered as
requested by the Holder. Any Security not accepted for payment shall be promptly
mailed or delivered by the Issuers to the Holder thereof. The Issuers shall
publicly announce the results of the Offer on or as soon as practicable after
the Purchase Date.
SECTION 4.6 Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than (A) dividends or distributions by the
Company payable in Equity Interests (other than Disqualified Stock) of the
Company or (B) dividends or distributions by a Restricted Subsidiary so long as,
in the case of any dividend or distribution payable on or in respect of any
class or series of securities issued by a Restricted Subsidiary other than a
Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of securities);
(ii) purchase or otherwise acquire or retire for value any Equity Interests of
the Company; (iii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value, in each case, prior to any scheduled
repayment or maturity, any Subordinated Indebtedness (other than (A) the
payment, redemption, repurchase, defeasance, acquisition or retirement of
Subordinated Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in any case due within one
year of the date of such payment, redemption, repurchase, defeasance,
acquisition or retirement, and (B) Indebtedness permitted under clauses (g) and
(i) of Section 4.04 of this Indenture); or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment: (a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (b) immediately after
giving effect to such transaction on a pro forma basis, the Company could incur
$1.00 of additional Indebtedness under the provisions of the first paragraph of
Section 4.04 of this Indenture; and (c) such Restricted Payment, together with
the aggregate amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the Issue Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the repurchase, retirement or
other acquisition of Retired Capital Stock pursuant to clause (a) thereof and
the payment of dividends on Retired Capital Stock pursuant to clause (b)
thereof), (v), (vi), (ix) and (x) of the next succeeding paragraph, but
excluding all other Restricted Payments permitted by the next succeeding
paragraph), is less than the sum of (i) 50% of the cumulative Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
first day after the Issue Date to the date of such Restricted Payment (or, in
the case such Consolidated Net Income for such period is a deficit, minus 100%
of such deficit), plus (ii) 100% of the aggregate net proceeds, including cash
and the fair market value of
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property other than cash (as determined in good faith by the Company), received
by the Company since the Issue Date from the issue or sale of Equity Interests
of the Company (including Refunding Capital Stock (as defined below) but
excluding Disqualified Stock), including such Equity Interests issued upon
conversion of Indebtedness or upon exercise of warrants or options, plus (iii)
100% of the aggregate amount of contributions to the capital of the Company
since the Issue Date (other than Excluded Contributions), plus (iv) 100% of the
aggregate amount received in cash and the fair market value of property other
than cash (as determined in good faith by the Company) received from (A) the
sale or other disposition (other than to the Company or a Restricted Subsidiary)
of Restricted Investments made by the Company and its Restricted Subsidiaries or
(B) the sale (other than to the Company or a Restricted Subsidiary) of the
Capital Stock of an Unrestricted Subsidiary, plus (v) in case any Unrestricted
Subsidiary has been redesignated a Restricted Subsidiary or has been merged,
consolidated or amalgamated with or into, transfers or conveys assets to, or is
liquidated into, the Company or a Restricted Subsidiary, the fair market value
(as determined in good faith by the Company) of such Investment in such
Unrestricted Subsidiary at the time of such redesignation, combination or
transfer (or of the assets transferred or conveyed, as applicable), after
deducting any Indebtedness associated with the Unrestricted Subsidiary so
designated or combined or with the assets so transferred or conveyed.The
foregoing provisions will not prohibit: (i) the payment of any dividend or
distribution within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) (a) the repurchase, retirement or other acquisition of any
Equity Interests (the "Retired Capital Stock") or Subordinated Indebtedness of
the Company in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of
the Company (other than any Disqualified Stock) or contributions to the common
equity capital of the Company (the "Refunding Capital Stock"), and (b) the
declaration and payment of dividends on the Retired Capital Stock out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of Refunding Capital Stock; (iii) the redemption, repurchase or
other acquisition or retirement of Subordinated Indebtedness of the Company made
by exchange for, or out of the proceeds of the substantially concurrent sale of,
new Indebtedness of the Company so long as (A) the principal amount of such new
Indebtedness does not exceed the principal amount of and accrued and unpaid
interest on the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired for value (plus the amount of any premium required to be
paid under the terms of the instrument governing the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired), (B) such Indebtedness is
subordinated to the Securities at least to the same extent as such Subordinated
Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired
for value, (C) such Indebtedness has a final scheduled maturity date equal to or
later than the final scheduled maturity date of the Subordinated Indebtedness
being so redeemed, repurchased, acquired or retired and (D) such Indebtedness
has a Weighted Average Life to Maturity equal to or greater than the remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired; (iv) the repurchase, retirement or
other acquisition for value (or a dividend or distribution to fund any such
repurchase, retirement or other acquisition) of Equity Interests of the Company
or Investor LP held by any future, present or former employee, director or
consultant of the Company or any Subsidiary of the Company pursuant to any
management equity plan or stock option plan or any other management or employee
benefit plan or agreement; provided, however,
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43
that the aggregate amount paid under this clause (iv) does not exceed in any
calendar year $5.0 million (with unused amounts in any calendar year being
carried over to succeeding calendar years subject to a maximum (without giving
effect to the following proviso) of $10.0 million in any calendar year);
provided, further, that such amount in any calendar year may be increased by an
amount not to exceed (i) the cash proceeds from the sale of Equity Interests of
the Company (or of Investor LP which are contributed to the Company) to members
of management, directors or consultants of the Company and its Subsidiaries that
occurs after the Issue Date (provided that such proceeds have not been included
with respect to determining whether a previous Restricted Payment was permitted
pursuant to the first paragraph of this covenant) plus (ii) the cash proceeds of
key man life insurance policies received by the Company and its Restricted
Subsidiaries after the Issue Date; (v) the declaration and payment of dividends
or distributions to holders of any class or series of Disqualified Stock of the
Company or any of its Restricted Subsidiaries issued or incurred in accordance
with Section 4.04 of this Indenture; (vi) the declaration and payment of
dividends to holders of any class or series of Designated Preferred Stock;
provided, however, that for the most recently ended four full fiscal quarters
for which internal financial statements are available preceding the date of
declaration of any such dividend or distribution, after giving effect to such
dividend or distribution as Fixed Charge on a pro forma basis, the Company and
its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at
least 1.75 to 1.00; (vii) Investments in Unrestricted Subsidiaries having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (vii) that are at that time outstanding, not to exceed
$15.0 million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value); (viii) repurchases of (or a dividend or
distribution to fund repurchases of) Equity Interests of the Company or Investor
LP deemed to occur upon exercise of stock options if such Equity Interests
represent a portion of the exercise price of such options; (ix) the payment of
dividends on the Company's Common Stock following the first public offering of
Common Stock of the Company after the Issue Date of up to 6% per annum of the
net proceeds received by the Company in such public offering; (x) the
repurchase, retirement or other acquisition for value after the first
anniversary of the Issue Date (or a dividend or distribution to fund the
repurchase, retirement or other acquisition of) of Equity Interests of the
Company or Investor LP in existence on the Issue Date and which are not held by
Blackstone or any of its Affiliates or the Management Group on the Issue Date
(including any Equity Interests issued in respect of such Equity Interests as a
result of a stock split, recapitalization, merger, combination, consolidation or
otherwise, but excluding any management equity plan or stock option plan or
similar agreement), provided that (A) the aggregate amounts paid under this
clause (x) shall not exceed (I) $15.0 million on or prior to the second
anniversary of the Issue Date or (II) $30.0 million at any time after the second
anniversary of the Issue Date and (B) after giving effect thereto, the Company
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first sentence of
Section 4.04 of this Indenture; (xi) Investments that are made with Excluded
Contributions; (xii) other Restricted Payments in an aggregate amount not to
exceed $15.0 million; (xiii) the payment of any dividend or distribution on
Equity Interests of the Company to the extent necessary to permit direct or
indirect beneficial owners of such Equity Interests to receive tax distributions
in an amount equal to the taxable income of the Company allocated to a partner
multiplied by the highest combined federal and
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44
state income tax rate (including, to the extent applicable, alternative minimum
tax) solely as a result of the Company (and any intermediate entity through
which such holder owns such Equity Interests) being a partnership or similar
pass-through entity for federal income tax purposes ("Permitted Tax
Distributions"); and (xiv) Restricted Payments made on the Issue Date
contemplated by the Recapitalization Agreement; provided, however, that at the
time of, and after giving effect to, any Restricted Payment permitted under
clauses (vii), (ix), (x) and (xii), no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
provided, further, that for purposes of determining the aggregate amount
expended for Restricted Payments in accordance with clause (c) of the
immediately preceding paragraph, only the amounts expended under clauses (i),
(ii) (with respect to the repurchase, retirement or other acquisition of Retired
Capital Stock pursuant to clause (a) thereof and the payment of dividends on
Retired Capital Stock pursuant to clause (b) thereof), (v), (vi), (ix) and (x)
shall be included.
As of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the second to last sentence of the
definition of "Unrestricted Subsidiary." For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated will be deemed to be Restricted Payments in an
amount determined as set forth in the last sentence of the definition of
"Investments." Such designation will only be permitted if a Restricted Payment
in such amount would be permitted at such time (whether pursuant to the first
paragraph of this covenant or under clause (vii), (xi) or (xii)) and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
SECTION 4.7 Existence.
Subject to Article Five, the Company shall do or shall cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation, partnership or other entity.
SECTION 4.8 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (2) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, might by law become a material
liability, or Lien upon the property, of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate provision has been made.
SECTION 4.9 Notice of Defaults.
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(a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
(b) Upon becoming aware of any Default or Event of Default, the Company
shall promptly deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default.
SECTION 4.10 Maintenance of Properties and Insurance.
(a) Subject to Article Five, the Company shall cause all material
properties owned by or leased to it or any Restricted Subsidiary and used or
useful in the conduct of its business or the business of any Restricted
Subsidiary to be maintained and kept in normal condition, repair and working
order and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 4.10 shall prevent
the Company or any Restricted Subsidiary from discontinuing the use, operation
or maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or the Restricted Subsidiary concerned, or of an Officer (or other agent
employed by the Company or of any Restricted Subsidiary) of the Company or such
Restricted Subsidiary having managerial responsibility for any such property,
desirable in the conduct of the business of the Company or any Restricted
Subsidiary, as in the judgment of the Company may be necessary.(b) The Company
shall maintain, and shall cause the Restricted Subsidiaries to maintain,
insurance with responsible carriers against such risks and in such amounts, and
with such deductibles, retentions, self-insured amounts and co-insurance
provisions as in the judgment of the Company may be necessary.
SECTION 4.11 Compliance Certificate.
The Company shall deliver to the Trustee within 45 days after the end of
each of the first three fiscal quarters of the Company and within 90 days after
the close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Issuers has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Issuers that occurred during such fiscal
quarter or fiscal year. If they do know of such a Default or Event of Default,
the certificate shall describe all such Defaults or Events of Default, their
status and the action the Company is taking or proposes to take with respect
thereto. The first certificate to be delivered by the Company pursuant to this
Section 4.11 shall be for the period commencing February 2, 1998 and ending
March 31, 1998.
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SECTION 4.12 Reports to Holders.
The Issuers will deliver to the Trustee within 15 days after the filing of
the same with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the Issuers are
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Issuers may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise
report on an annual and quarterly basis on forms provided for such annual and
quarterly reporting pursuant to rules and regulations promulgated by the
Commission, the Issuers will file with the Commission (and provide the Trustee
and the Holders with copies thereof, without cost to each Holder, within 15 days
after it files them with the Commission), (a) within 90 days after the end of
each fiscal year, annual reports on Form 10-K (or any successor or comparable
form) containing the information required to be contained therein (or required
in such successor or comparable form); (b) within 45 days after the end of each
of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or
any successor or comparable form); (c) promptly from time to time after the
occurrence of an event required to be therein reported, such other reports on
Form 8-K (or any successor or comparable form); and (d) any other information,
documents and other reports which the Issuers would be required to file with the
Commission if they were subject to Section 13 or 15(d) of the Exchange Act;
provided, however, that the Issuers shall not be so obligated to file such
reports with the Commission if the Commission does not permit such filing, in
which event the Issuers will make available such information to prospective
purchasers of Securities, in addition to providing such information to the
Trustee and the Holders, in each case within 15 days after the time the Issuers
would be required to file such information with the Commission, if they were
subject to Sections 13 or 15(d) of the Exchange Act. Notwithstanding the
foregoing, such requirements shall be deemed satisfied (x) prior to April 30,
1998, if the Issuers deliver to the Trustee and the Holders of the Securities on
or prior to such date copies of the audited financial statements of the Issuers
and (y) prior to May 31, 1998, by filing with the Commission and delivering to
the Trustee and the Holders of the Securities on or prior to such date a
registration statement under the Securities Act that contains the information
that would be required in a Form 10-K for the Issuers for the year ended
December 31, 1997 and a Form 10-Q for the Issuers for the quarter ended March
31, 1998. The Issuers will also comply with the other provisions of TIA Section
314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.13 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers and the Guarantors covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law, which would prohibit or forgive the
Issuers or such Guarantor from paying all or any portion of
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47
the Accreted Value or principal of and/or interest, if any, on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Issuers and each Guarantor hereby
expressly waive all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 4.14 Change of Control.
(a) Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall notify the
Holders of the Securities of such occurrence in the manner prescribed by this
Indenture and shall, within 30 days after the Change of Control Date, make an
Offer to Purchase all Securities then outstanding at a purchase price in cash
equal to 101% of the Accreted Value thereof, plus accrued and unpaid interest
thereon, if any, to the Purchase Date (subject to the right of Holders of record
on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date). The Issuers' obligations may be satisfied if a third
party makes the Offer to Purchase in the manner, at the times and otherwise in
compliance with the requirements of this Indenture applicable to an Offer to
Purchase made by the Issuers and purchases all Securities validly tendered and
not withdrawn under such Offer to Purchase. Each Holder shall be entitled to
tender all or any portion of the Securities owned by such Holder pursuant to the
Offer to Purchase, subject to the requirement that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal amount at
maturity.
(b) Prior to the mailing of the notice referred to in clause (a) above, but
in any event within 30 days following any Change of Control, the Issuers
covenant to (i) repay in full and terminate all commitments under Indebtedness
under the New Credit Facility and all other Indebtedness of the Company's
Restricted Subsidiaries the terms of which require repayment upon a Change of
Control or offer to repay in full and terminate all commitments under all
Indebtedness under the New Credit Facility and all other such Indebtedness of
the Company's Restricted Subsidiaries and to repay the Indebtedness owed to each
lender which has accepted such offer or (ii) obtain the requisite consents under
the New Credit Facility and all other Indebtedness of the Company's Restricted
Subsidiaries to permit the repurchase of the Securities pursuant to the Offer to
Purchase. The Issuers shall first comply with the covenant in the immediately
preceding sentence before they shall be required to repurchase Securities
pursuant to the Offer to Purchase. The Issuers' failure to comply with the
covenant described in the second preceding sentence or in clause (a) above shall
constitute an Event of Default described in clause (iii) (and not in clause
(ii)) of Section 6.01.
(c) On or prior to the Purchase Date specified in the Offer to Purchase,
the Issuers shall (i) accept for payment all Securities or portions thereof
validly tendered pursuant to the Offer, (ii) deposit with the Paying Agent or,
if an Issuer is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.04, money sufficient to pay the Purchase Price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to
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48
the Trustee for cancellation all Securities so accepted together with an
Officers' Certificate stating the Securities or portions thereof accepted for
payment by the Issuers. The Paying Agent (or an Issuer, if so acting) shall
promptly mail or deliver to Holders of Securities so accepted, payment in an
amount equal to the Purchase Price for such Securities, and the Trustee shall
promptly authenticate and mail or deliver to each Holder of Securities a new
Security or Securities equal in principal amount at maturity to any unpurchased
portion of the Security surrendered as requested by the Holder. Any Security not
accepted for payment shall be promptly mailed or delivered by the Issuers to the
Holder thereof. The Issuers shall publicly announce the results of the Offer on
or as soon as practicable after the Purchase Date.
(d) If the Issuers make an Offer to Purchase, the Issuers will comply with
all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Securities are listed, and
any violation of the provisions of this Indenture relating to such Offer to
Purchase occurring as a result of such compliance shall not be deemed a Default
or an Event of Default.
SECTION 4.15 [Intentionally Omitted]
SECTION 4.16 Limitations on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary to: (a) (i) pay dividends or make
any other distributions to the Company or any of its Restricted Subsidiaries (1)
on its Capital Stock or (2) with respect to any other interest or participation
in, or measured by, its profits, or (ii) pay any Indebtedness owed to the
Company or any of its Restricted Subsidiaries; (b) make loans or advances to the
Company or any of its Restricted Subsidiaries; or (c) sell, lease or transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries; except (in each case) for such encumbrances or restrictions
existing under or by reason of: (1) contractual encumbrances or restrictions in
effect on the Issue Date, including pursuant to the New Credit Facility and its
related documentation and the Senior Subordinated Indenture; (2) this Indenture
and the Securities; (3) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired; (4) applicable law or any
applicable rule, regulation or order; (5) any agreement or other instrument of a
Person acquired by the Company or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation thereof), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired; (6) contracts for the sale of assets, including, without
limitation, customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary; (7) secured
Indebtedness otherwise permitted to be incurred pursuant to
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49
Sections 4.04 and 4.18 of this Indenture that limit the right of the debtor to
dispose of the assets securing such Indebtedness; (8) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business; (9) other Indebtedness of Foreign Subsidiaries
permitted to be incurred subsequent to the Issue Date pursuant to Section 4.04
of this Indenture; (10) customary provisions in joint venture agreements and
other similar agreements entered into in the ordinary course of business; (11)
customary provisions contained in leases and other agreements entered into in
the ordinary course of business; (12) any encumbrances or restrictions of the
type referred to in clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board of
Directors of the Company, no more restrictive with respect to such dividend and
other payment restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing; (13) any
encumbrances or restrictions that are no more restrictive than those contained
in the New Credit Facility as in effect on the Issue Date; or (14) which will
not in the aggregate cause the Company not to have the funds necessary to pay
the principal of, premium, if any, or interest on the Securities.
SECTION 4.17 [Intentionally Omitted]
SECTION 4.18 Limitation on Liens.
(a) The Company will not directly or indirectly create, incur, assume or
suffer to exist any Lien (other than a Permitted Lien) that secures any
Indebtedness of the Company on any asset or property of the Company, or any
income or profits therefrom, or assign or convey any right to receive income
therefrom, unless the Securities are equally and ratably secured with the
obligations so secured or until such time as such obligations are no longer
secured by a Lien.(b) No Guarantor will directly or indirectly create, incur,
assume or suffer to exist any Lien (other than a Permitted Lien) that secures
any guarantee of Indebtedness of the Company by such Guarantor on any asset or
property of such Guarantor or any income or profits therefrom, or assign or
convey any right to receive income therefrom, unless the Guarantee of such
Guarantor is equally and ratably secured with the obligations so secured or
until such time as such guarantee is no longer secured by a Lien.
SECTION 4.19 Limitations on Guarantees of Indebtedness by Restricted
Subsidiaries.
(a) The Company will not permit any Restricted Subsidiary to guarantee the
payment of any Indebtedness of the Company unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a guarantee of payment of the Securities by such Restricted
Subsidiary, except that if such Indebtedness is by its express terms
subordinated in right of payment to the Securities, any such guarantee of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated in
right of payment
<PAGE>
50
to such Restricted Subsidiary's Guarantee with respect to the Securities
substantially to the same extent as such Indebtedness is subordinated to the
Securities; provided that this paragraph (a) shall not be applicable to any
guarantee by any Restricted Subsidiary (x) that (A) existed at the time such
Person became a Restricted Subsidiary of the Company and (B) was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary of the Company or (y) that guarantees the payment of Obligations of
the Company under the New Credit Facility or any other bank facility which is
Pari Passu Indebtedness of the Company and any refunding, refinancing or
replacement thereof, in whole or in part, provided that such refunding,
refinancing or replacement thereof constitutes Pari Passu Indebtedness of the
Company and is not incurred pursuant to a registered offering of securities
under the Securities Act or a private placement of securities (including under
Rule 144A) pursuant to an exemption from the registration requirements of the
Securities Act (other than Securities issued pursuant to a bank or similar
credit facility (including the New Credit Facility)), which private placement
provides for registration rights under the Securities Act (any guarantee
excluded by operations of this clause (y) being an "Excluded Guarantee").
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Guarantee by a Restricted Subsidiary of the Securities shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer to any person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or a result of payment under such Guarantee.
SECTION 4.20 Calculation of Original Issue Discount.
The Issuers shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.
ARTICLE V
MERGERS; SUCCESSORS
SECTION 5.1 Mergers, Sale of Assets, etc.
(a) The Company may not consolidate or merge with or into or wind up into
(whether or not the Company is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to any Person unless (i) the
Company is the surviving entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
is a corporation, partnership or limited liability company organized or existing
under the laws of the
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51
United States, any state thereof, the District of Columbia, or any territory
thereof (the Company or such Person, as the case may be, being herein called the
"Successor Company"); (ii) the Successor Company (if other than the Company)
expressly assumes all the obligations of the Company under this Indenture and
the Securities pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default shall have occurred and be
continuing; (iv) immediately after giving pro forma effect to such transaction,
as if such transaction had occurred at the beginning of the applicable
four-quarter period, either (A) the Successor Company (if other than CapCo II)
would be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first sentence of
Section 4.04 of this Indenture or (B) the Fixed Charge Coverage Ratio for the
Successor Company (if other than CapCo II) and its Restricted Subsidiaries would
be greater than such ratio for the Company and its Restricted Subsidiaries
immediately prior to such transaction; and (v) the Company shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture. Notwithstanding the foregoing clauses (iii) and
(iv), but subject to the foregoing clauses (i), (ii) and (v), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or to another Restricted Subsidiary and (b)
the Company may merge with or transfer all of its properties and assets to an
Affiliate (including, without limitation, CapCo II) in connection with an IPO
Reorganization so long as the amount of Indebtedness of the Company and its
Restricted Subsidiaries immediately thereafter does not exceed the amount
permitted under Section 4.04 (it being understood that after such transfer of
such property and assets in connection with an IPO Reorganization, the Company
may dissolve). The Successor Company will succeed to, and be substituted for,
the Company under this Indenture and the Securities.
(b) Each Guarantor, if any, shall not, and the Company will not permit a
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation, partnership or limited liability company organized
or existing under the laws of the United States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such Person, as the
case may be, being herein called the "Successor Guarantor"); (ii) the Successor
Guarantor (if other than such Guarantor) expressly assumes all the obligations
of such Guarantor under this Indenture and such Guarantor's Guarantee pursuant
to a supplemental indenture or other documents or instruments in form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default shall have occurred and be continuing; and (iv) the
Guarantor shall have delivered or caused to be delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture. The Successor Guarantor will succeed to, and be
substituted for, such Guarantor under this Indenture and such Guarantor's
Guarantee.
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52
SECTION 5.2 Successor Substituted.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.01 in which the Company or a
Guarantor, as the case may be, is not the Successor Company or Successor
Guarantor, as the case may be, and the Successor Company or Successor Guarantor,
as the case may be, is to assume all the Obligations of the Company under the
Securities, this Indenture and the Registration Rights Agreement or of such
Guarantor under its Guarantee, this Indenture and the Registration Rights
Agreement, as the case may be, pursuant to a supplemental indenture, such
Successor Company or Successor Guarantor, as the case may be, 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, and the Company shall be discharged and
released from its Obligations under this Indenture and the Securities or such
Guarantor shall be discharged from its Obligations under this Indenture and its
Guarantee, as the case may be.
In the event of an IPO Reorganization, CapCo II shall succeed to, and be
substituted for, and may exercise every right and power of the Company, and the
Company shall be discharged and released from its Obligations under this
Indenture and the Securities and may be dissolved, subject to CapCo II's
compliance with Section 5.01(a)(ii) above.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
Each of the following shall be an "Event of Default" for purposes of this
Indenture:
(i) the failure to pay interest on any Security when the same becomes
due and payable and the default continues for a period of 30 days;
(ii) the failure to pay the Accreted Value of or the principal on any
Security, when the same becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment to
purchase any Security tendered pursuant to an Offer to Purchase which has
actually been made);
(iii) a default in the observance or performance of any other covenant
or agreement contained in this Indenture which default continues for a
period of 60 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
the Holders of at least 25% of the outstanding principal amount at maturity
of the Securities (except in the case of a default with respect to Section
5.01 of this Indenture, which will constitute an Event of Default with such
notice requirement but without such passage of time requirement);
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53
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Significant Restricted
Subsidiary, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $20.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $20.0
million shall have been rendered against the Company or any Significant
Restricted Subsidiary and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor
upon such judgment or decree which is not promptly stayed;
(vi) any Guarantee by a Significant Restricted Subsidiary shall become
null or void or unenforceable (other than in accordance with the terms of
the Senior Subordinated Indenture) or any such Guarantor shall deny its
obligations under its Guarantee;
(vii) the Company or any Significant Restricted Subsidiary pursuant to
or within the meaning of any Bankruptcy Law: (a) admits in writing its
inability to pay its debts generally as they become due; (b) commences a
voluntary case or proceeding; (c) consents to the entry of an order for
relief against it in an involuntary case or proceeding; (d) consents or
acquiesces in the institution of a bankruptcy or insolvency proceeding
against it; (e) consents to the appointment of a Custodian of it or for all
or substantially all of its property; or (f) makes a general assignment for
the benefit of its creditors, or any of them takes any action to authorize
or effect any of the foregoing; or
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (a) is for relief against the Company or any
Significant Restricted Subsidiary in an involuntary case or proceeding; (b)
appoints a Custodian of the Company or any Significant Restricted
Subsidiary for all or substantially all of its property; or (c) orders the
liquidation of the Company or any Significant Restricted Subsidiary; and in
each case the order or decree remains unstayed and in effect for 60 days;
provided, however, that if the entry of such order or decree is appealed
and dismissed on appeal, then the Event of Default hereunder by reason of
the entry of such order or decree shall be deemed to have been cured.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal,
state or foreign law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under
any Bankruptcy Law.
SECTION 6.2 Acceleration.
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54
If an Event of Default with respect to the Securities (other than an Event
of Default specified in clause (vii) or (viii) of Section 6.01 with respect to
the Company) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount at maturity of the outstanding Securities by
notice in writing to the Company (and to the Trustee if given by the Holders)
may declare the unpaid Accreted Value or principal of (and premium, if any) and
accrued interest, if any, to the date of acceleration on all outstanding
Securities to be due and payable immediately and, upon any such declaration,
such Accreted Value or principal (and premium, if any) and accrued interest, if
any, notwithstanding anything contained in this Indenture or the Securities to
the contrary, shall become immediately due and payable; provided, however, that
so long as the New Credit Facility shall be in full force, if an Event of
Default shall have occurred and be continuing (other than an Event of Default
specified in clause (vii) or (viii) of Section 6.01 with respect to the
Company), the Securities shall not become due and payable until the earlier to
occur of (x) five Business Days following delivery of a written notice by the
Trustee of such acceleration of the Securities to the agent under the New Credit
Facility and (y) the acceleration (ipso facto or otherwise) of any Indebtedness
under the New Credit Facility.
If an Event of Default specified in clause (vii) or (viii) of Section 6.01
with respect to the Company occurs, all unpaid Accreted Value or principal of
(and premium, if any) and accrued interest, if any, on all outstanding
Securities shall ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree of the
money due in respect of the Securities has been obtained, the Holders of not
less than a majority in aggregate principal amount at maturity of the Securities
then outstanding by written notice to the Trustee may rescind an acceleration
and its consequences if all existing Events of Default (other than the
nonpayment of Accreted Value or principal of and interest, if any, on the
Securities which has become due solely by virtue of such acceleration) have been
cured or waived and if the rescission would not conflict with any judgment or
decree. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
Accreted Value or principal of 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 Securityholder in exercising any right or remedy
maturing 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 remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
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55
SECTION 6.4 Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 10.02, prior to the declaration of
acceleration of the Securities, the Holders of not less than a majority in
aggregate principal amount at maturity of the outstanding Securities by written
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of Accreted Value or principal of
or interest on any Security as specified in clauses (i) and (ii) of Section 6.01
or a Default in respect of any term or provision of this Indenture that may not
be amended or modified without the consent of each Holder affected as provided
in Section 10.02. The Issuers shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. In case of any such waiver,
the Issuers, the Trustee and the Holders shall be restored to their former
positions and rights hereunder and under the Securities, respectively. This
paragraph of this Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the
TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Securities, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 6.5 Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal amount at
maturity of the outstanding Securities 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 another Securityholder, or
that may involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. In the event the Trustee takes any action or
follows any direction pursuant to this Indenture, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This Section
6.05 shall be in lieu of Section 316(a)(1)(A) of the TIA, and such Section
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Securities, as permitted by the TIA.
SECTION 6.6 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities unless:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
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56
(ii) the Holders of at least 25% in aggregate principal amount at
maturity of the outstanding Securities make a written request to the
Trustee to pursue a remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount at maturity of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request. A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
such other Securityholder.
SECTION 6.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of Accreted Value or principal of and premium, if any
or interest on a Security, on or after the respective due dates expressed in the
Security, 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.
SECTION 6.8 Collection Suit by Trustee.
If an Event of Default in payment of Accreted Value or principal or
interest specified in Section 6.01(i) or (ii) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Issuers or any other obligor on the Securities for the whole amount
of Accreted Value or principal and accrued interest remaining unpaid, together
with interest overdue on Accreted Value or principal and to the extent that
payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate per annum borne by the Securities 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.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may 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 Securityholders
allowed in any judicial proceedings relative to the Issuers (or any other
obligor upon the Securities), their respective creditors or their respective
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same, and any Custodian in any such judicial proceedings is hereby
authorized by each Securityholder to make such payments to the Trustee
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and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
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 Securityholder in any such proceeding.
SECTION 6.9 Priorities.
If the Trustee collects any money or property pursuant to this Article Six,
it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities for
Accreted Value or principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for Accreted Value or principal and interest, respectively; and
Third: to the Issuers. The Trustee, upon prior written notice to the
Issuers, may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
SECTION 6.10 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
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 and
expenses, 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 6.11 shall not apply to a suit by the Trustee, a suit by a Holder or
group of Holders of more than 10% in aggregate principal amount at maturity of
the outstanding Securities, or to any suit instituted by any Holder for the
enforcement or the payment of the Accreted Value or principal or interest on any
Securities on or after the respective due dates expressed in the Security.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
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(a) If a 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.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for the performance of
such duties as are specifically set forth herein; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions conforming to the requirements of this Indenture; however, in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(3) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(4) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(5) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction
of Holders if it shall have reasonable grounds for believing that repayment
of such funds is not assured to it or it does not receive from such Holders
an indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuers. Money
held in trust by the Trustee need not be segregated from other funds except
to the extent required by law.
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SECTION 7.2 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely conclusively on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel, which shall conform to the
provisions of Section 13.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through attorneys and agents of its selection and
shall not be responsible for the misconduct or negligence of any agent or
attorney (other than an agent who is an employee of the Trustee) appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel of its selection and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Any request or direction of the Issuers mentioned herein shall be
sufficiently evidenced by an Issuer Request or an Issuer Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution.
(g) 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 Securityholders pursuant to this Indenture, unless such Securityholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
(h) 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, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, 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 Issuers, personally or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless the
Trustee shall have
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received written notice thereof at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Issuers or their
respective Affiliates with the same rights it would have if it were not Trustee,
subject to Section 7.10 hereof. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Issuers in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults.
If a Default or an Event of Default occurs and is continuing and the
Trustee knows of such Defaults or Events of Default, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 90 days
after the occurrence thereof. Except in the case of a Default or an Event of
Default in payment of Accreted Value or principal of or interest on any Security
or a Default or Event of Default in complying with Section 5.01, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interest of
Securityholders. This Section 7.05 shall be in lieu of the proviso to Section
315(b) of the TIA and such proviso to Section 315(b) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by the
TIA.
SECTION 7.6 Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a report dated as of such May 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b),
(c) and (d).A copy of each such report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange, if any, on
which the Securities are listed.The Issuers shall promptly notify the Trustee in
writing if the Securities become listed on any stock exchange or of any
delisting thereof.
SECTION 7.7 Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such compensation as
the Issuers and the Trustee shall from time to time agree in writing for its
services. The Trustee's
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compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuers shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses, disbursements, expenses and advances
(including fees, disbursements and expenses of its agents and counsel) incurred
or made by it in addition to the compensation for its services except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or bad faith. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel and any taxes or other expenses incurred by a trust created
pursuant to Section 9.01 hereof.
The Issuers shall indemnify the Trustee for, and hold it harmless against
any and all loss, damage, claims, liability or expense, including taxes (other
than franchise taxes imposed on the Trustee and taxes based upon, measured by or
determined by the income of the Trustee), arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent that such loss, damage, claim, liability or
expense is due to its own negligence or bad faith. The Trustee shall notify the
Issuers promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Issuers shall
not relieve the Issuers of their obligations hereunder. The Issuers shall defend
the claim and the Trustee shall cooperate in the defense (and may employ its own
counsel) at the Issuers' expense; provided, however, that the Issuers'
reimbursement obligation with respect to counsel employed by the Trustee will be
limited to the reasonable fees and expenses of such counsel.
The Issuers need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld.
To secure the Issuers' payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Securities against 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
or the Purchase Price or redemption price of any Securities to be purchased
pursuant to an Offer to Purchase or redeemed.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vii) or (viii) occurs, the expenses (including
the reasonable fees and expenses of its agents and counsel) and the compensation
for the services shall be preferred over the status of the Holders in a
proceeding under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Issuers' obligations under this
Section 7.07 and any claim arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Issuers' obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers in writing.
The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee
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by so notifying the Trustee and the Issuers in writing and may appoint a
successor Trustee with the Issuers' consent. The Issuers may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under any Bankruptcy
Law;
(c) a custodian or other public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount at maturity of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. As promptly as practicable after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to the Lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have the rights, powers and duties of the Trustee under
this Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 10% in principal amount at maturity of the outstanding
Securities may petition, at the expense of the Issuers, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Issuers' obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation or
banking corporation, the resulting, surviving or transferee corporation or
banking corporation without any further act shall be the successor Trustee.
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SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be eligible to act
as Trustee under TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. If the Trustee has or shall acquire
any "conflicting interest" within the meaning of TIA Section 310(b), the Trustee
and the Issuers shall comply with the provisions of TIA Section 310(b);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article Seven.
SECTION 7.11 Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VIII
[INTENTIONALLY OMITTED]
ARTICLE IX
DISCHARGE OF INDENTURE
SECTION 9.1 Termination of Issuers' Obligations.
The Issuers may terminate their substantive obligations in respect of the
Securities by delivering all outstanding Securities to the Trustee for
cancellation and paying all sums payable by it on account of principal of and
interest on all Securities or otherwise. In addition to the foregoing, subject
to the provisions of Article Eight with respect to the creation of the
defeasance trust provided for in the following clause (i), the Issuers may,
provided that no Default or Event of Default has occurred and is continuing or
would arise therefrom (or, with respect to a Default or Event of Default
specified in Section 6.01(vii) or (viii), occurs at any time on or prior to the
123rd calendar day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 123rd day)), terminate
their substantive obligations in respect of Article Four (other than Sections
4.01, 4.02, 4.07, 4.09 and 4.11) and Article Five hereof and any Event of
Default specified in Section 6.01 (iii), (iv), (v) or (vi) by (i) depositing
with the Trustee, under the terms of an irrevocable trust agreement, money or
United States Government Obligations sufficient (without reinvestment) to pay
all remaining Indebtedness on the Securities, (ii) delivering to the Trustee
either an Opinion of Counsel or a
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ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations, (iii)
delivering to the Trustee an Opinion of Counsel to the effect that the Issuers'
exercise of the option under this Section 9.01 will not result in any of the
Issuers, the Trustee or the trust created by the Issuers' deposit of funds
pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and (iv) delivering to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating compliance with all conditions precedent
provided for herein. In addition, the Issuers may, provided that no Default or
Event of Default has occurred and is continuing or would arise therefrom (or,
with respect to a Default or Event of Default specified in Section 6.01(vii) or
(viii), occurs at any time on or prior to the 123rd calendar day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until after such 123rd day)), terminate all of their substantive
obligations in respect of the Securities (including its obligations to pay the
principal of and interest on the Securities) by (i) depositing with the Trustee,
under the terms of an irrevocable trust agreement, money or United States
Government Obligations sufficient (without reinvestment) to pay all remaining
Indebtedness on the Securities, (ii) delivering to the Trustee either a ruling
directed to the Trustee from the Internal Revenue Service to the effect that the
Holders of the Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and termination of obligations
or an Opinion of Counsel addressed to the Trustee based upon such a ruling or
based on a change in the applicable Federal tax law since the date of this
Indenture to such effect, (iii) delivering to the Trustee an Opinion of Counsel
to the effect that the exercise of the option under this Section 9.01 will not
result in any of the Issuers, the Trustee or the trust created by the deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act and (iv) delivering to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating compliance with all
conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Issuers' obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13 and 4.01 (but not
with respect to termination of substantive obligations pursuant to the third
sentence of the foregoing paragraph), 4.02, 7.07, 7.08, 9.03 and 9.04 shall
survive until the Securities are no longer outstanding. Thereafter the Issuers'
obligations in Sections 7.07, 9.03 and 9.04 shall survive.
After such delivery or irrevocable deposit and delivery of an Officers'
Certificate and Opinion of Counsel, the Trustee upon request shall acknowledge
in writing the discharge of the Issuers' obligations under the Securities and
this Indenture except for those surviving obligations specified above.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 9.01 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 outstanding Securities.
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SECTION 9.2 Application of Trust Money.
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.
SECTION 9.3 Repayment to Issuers.
Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to the
Issuers upon written request any excess money held by it at any time. The
Trustee shall pay to the Issuers upon written request any money held by it for
the payment of principal or interest that remains unclaimed for two years;
provided, however, that the Trustee before being required to make any payment
may at the expense of the Issuers cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining shall
be repaid to the Issuers. After payment to the Issuers, Securityholders entitled
to money must look to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another person and all liability of
the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 9.4 Reinstatement.
If the Trustee is unable to apply any money or United States Government
Obligations in accordance with Section 9.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Issuers'
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 9.01 until such
time as the Trustee is permitted to apply all such money or United States
Government Obligations in accordance with Section 9.01; provided, however, that
if the Issuers have made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or United States Government Obligations held by the
Trustee.
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Without Consent of Holders.
The Issuers and each Guarantor, when authorized by a resolution of their
respective Boards of Directors, and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any Securityholder:
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(a) to cure any ambiguity, defect or inconsistency; provided, however,
that such amendment or supplement does not adversely affect the rights of
any Holder;
(b) to evidence the succession of another Person to the Company and/or
to effect the assumption by a successor Person of all obligations of the
Company under the Securities and this Indenture in connection with any
transaction (including, without limitation, an IPO Reorganization)
complying with Article Five of this Indenture;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit or
rights to the Holders;
(f) to make any other change that does not adversely affect the rights
of any Holder under this Indenture;
(g) to evidence the succession of another Person to any Guarantor and
the assumption by any such successor of the covenants of such Guarantor
herein and in the Guarantee in connection with any transaction complying
with Article Five of this Indenture;
(h) to add to the covenants of the Company or a Guarantor for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company or any Guarantor;
(i) to secure the Securities pursuant to the requirements of Section
4.18 or otherwise; or
(j) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee or to add a Guarantor, in each case pursuant to
the requirements of Section 4.19;
provided, however, that the Issuers delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.01.
SECTION 10.2 With Consent of Holders.
Subject to Section 6.07, the Issuers and the Guarantors, when authorized by
a resolution of their respective Boards of Directors, and the Trustee may amend
or supplement this Indenture or the Securities with the written consent of the
Holders of at least a majority in principal amount at maturity of the
outstanding Securities. Subject to Section 6.07, the Holders
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of a majority in principal amount at maturity of the outstanding Securities may
waive compliance by the Issuers or any Guarantor with any provision of this
Indenture or the Securities. However, without the consent of each Securityholder
affected, an amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may not:
(a) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any
Security, or change or have the effect of changing the definition of
Accreted Value;
(b) reduce the principal of or change or have the effect of changing
the fixed maturity of any Security, or change the date on which any
Security may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(c) make any Security payable in money other than that stated in the
Security;
(d) amend, change or modify in any material respect the obligation of
the Issuers to make and consummate an Offer to Purchase in the event of a
Change of Control or with respect to any Asset Sale that has been
consummated or modify any of the provisions or definitions with respect
thereto;
(e) modify any provisions of Section 6.04 (other than to add sections
of this Indenture or the Securities subject thereto) or 6.07 or this
Section 10.02 (other than to add sections of this Indenture or the
Securities which may not be amended, supplemented or waived without the
consent of each Securityholder affected);
(f) reduce the percentage of the principal amount at maturity of
outstanding Securities necessary for amendment to or waiver of compliance
with any provision of this Indenture or the Securities or for waiver of any
Default;
(g) waive a Default in the payment of the Accreted Value or principal
of or interest on or redemption or purchase payment with respect to any
Security (except a rescission of acceleration of the Securities by the
Holders as provided in Section 6.02 and a waiver of the payment default
that resulted from such acceleration);
(h) modify the ranking or priority of the Securities or any Guarantee
in any manner adverse to the Holders; or
(i) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with this
Indenture.
It shall not be necessary for the consent of the Holders under this Section
10.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section 10.02 becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 10.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 10.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of that
Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Security or portion of such
Security by notice to the Trustee or the Issuers received before the date on
which the Trustee receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (a)
through (i) of Section 10.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 10.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Issuers or the Trustee
so determine, the Issuers in exchange for the Security
<PAGE>
69
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or issue a new Security
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 10.6 Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Ten is authorized or
permitted by this Indenture and that such amendment, supplement or waiver
constitutes the legal, valid and binding obligation of the Issuers and any
Guarantors, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
ARTICLE XI
GUARANTEE
SECTION 11.1 Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and severally, guarantees to
each Holder of a Security authenticated by the Trustee and to the Trustee and
its successors and assigns that: the principal of and interest on the Securities
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise, and interest on the overdue
principal and interest on any overdue interest on the Securities and all other
obligations of the Issuers to the Holders or the Trustee hereunder or under the
Securities will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; subject, however, to the limitations set forth in
Section 11.03. Each Guarantor hereby agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Issuers,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of an Issuer, any
right to require a proceeding first against an Issuer, protest, notice and all
demands whatsoever and covenants that the Guarantee will not be discharged
except by complete performance of the obligations contained in the Securities
and this Indenture. If any Holder or the Trustee is required by any court or
otherwise to return to an Issuer, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to an Issuer or any
Guarantor, any amount paid by an Issuer or any Guarantor to the Trustee or such
Holder, each Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x)
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70
the maturity of the obligations guaranteed hereby may be accelerated as provided
in Article Six for the purpose of each Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article Six, such obligations (whether or not due and
payable) shall become due and payable by each Guarantor for the purpose of the
Holdings Guarantee and each Guarantee.
SECTION 11.2 Severability.
In case any provision of this Article Eleven 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 11.3 Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the Trustee,
hereby confirm that it is the intention of all such parties that each Guarantee
not constitute a fraudulent transfer or conveyance for purposes of title 11 of
the United States Code, as amended, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar U.S. federal or state or other
applicable law. To effectuate the foregoing intention, the Holders and each
Guarantor hereby irrevocably agree that the obligations of each Guarantor under
each Guarantee shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor pursuant
to Section 11.04, result in the obligations such Guarantor not constituting such
a fraudulent transfer or conveyance.
SECTION 11.4 Contribution.
In order to provide for just and equitable contribution among Guarantors,
the Guarantors agree, inter se, that in the event any payment or distribution is
made by any Guarantor (a "Funding Guarantor") under a Guarantee, such Funding
Guarantor shall be entitled to a contribution from all other Guarantors in a pro
rata amount, based on the net assets of each Guarantor (including the Funding
Guarantor), determined in accordance with GAAP, subject to Section 11.03, for
all payments, damages and expenses incurred by such Funding Guarantor in
discharging the Issuers' obligations with respect to the Securities or any other
Guarantor's obligations under a Guarantee.
SECTION 11.5 Execution of Guarantee.
To further evidence each Guarantee to the Holders, each of the Guarantors
hereby agrees to execute a guarantee to be endorsed on each Security ordered to
be authenticated and delivered by the Trustee. Each Guarantor hereby agrees that
its guarantee set forth in Section 11.01 shall remain in full force and effect
notwithstanding any failure to endorse on each
<PAGE>
71
Security a guarantee. Each such guarantee shall be signed on behalf of each
Guarantor by its Chairman of the Board, its President or one of its Vice
Presidents prior to the authentication of the Security on which it is endorsed,
and the delivery of such Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of such guarantee on behalf of
such Guarantor. Such signature upon the guarantee may be manual or facsimile
signature of such officer and may be imprinted or otherwise reproduced on the
guarantee, and in case such officer who shall have signed the guarantee shall
cease to be such officer before the Security on which such guarantee is endorsed
shall have been authenticated and delivered by the Trustee or disposed of by the
Issuers, such Security nevertheless may be authenticated and delivered or
disposed of as though the Person who signed the guarantee had not ceased to be
such officer of such Guarantor.
SECTION 11.6 Subordination of Subrogation and Other Rights.
Each Guarantor hereby agrees that any claim against an Issuer that arises
from the payment, performance or enforcement of such Guarantor's obligations
under a Guarantee or this Indenture, including, without limitation, any right of
subrogation, shall be subject and subordinate to, and no payment with respect to
any such claim of such Guarantor shall be made before, the payment in full in
cash of all outstanding Securities in accordance with the provisions provided
therefor in this Indenture.
ARTICLE XII
[INTENTIONALLY OMITTED]
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are required to
be a part of this Indenture, and shall, to the extent applicable, be governed by
such provisions. If any provision of this Indenture modifies any TIA provision
that may be so modified, such TIA provision shall be deemed to apply to this
Indenture as so modified. If any provision of this Indenture excludes any TIA
provision that may be so excluded, such TIA provision shall be excluded from
this Indenture.The provisions of TIA Sections 310 through 317 that impose duties
on any Person (including the provisions automatically deemed included unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 13.2 Notices.
<PAGE>
72
Any notice or communication shall be sufficiently given if in writing and
delivered in person, by facsimile and confirmed by overnight courier, or mailed
by first-class mail addressed as follows:
<PAGE>
73
if to GCP Capital Corp. II or Graham Packaging Holdings Company:
1110 East Princess Street
York, Pennsylvania 17403
Attention: Chief Executive Officer
Facsimile: (717) 849-8541
Telephone: (717) 849-8500
with a copy to:
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson,
Senior Managing Director
Facsimile: (212) 754-8703
Telephone: (212) 935-2626 or
(212) 836-8703
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson S. Neely, Esq.
Facsimile: (212) 455-2502
Telephone: (212) 455-2000 or
(212) 455-7063
if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Facsimile: (212) 815-5915
Telephone: (212) 815-4359
Each party by notice to the others may designate additional or different
addresses for subsequent notices or communications.Any notice or communication
mailed, first-class, postage prepaid, to a Holder including any notice delivered
in connection with TIA Section 310(b), TIA Section 313(c), TIA Section 314(a)
and TIA Section 315(b), shall be mailed to him at his address as set forth on
the Security Register and shall be sufficiently given to him if so mailed within
the time
<PAGE>
74
prescribed. To the extent required by the TIA, any notice or communication shall
also be mailed to any Person described in TIA Section 313(c).
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take or
refrain from taking any action under this Indenture after the date hereof, the
Issuers shall furnish to the Trustee at the request of the Trustee:(1) an
Officers' Certificate in form and substance satisfactory to the Trustee stating
that, in the opinion of the signers, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with;
and(2) an Opinion of Counsel in form and substance satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent have
been complied with.
SECTION 13.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:(1) a statement that the
person making such certificate or opinion has read such covenant or
condition;(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;(3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and(4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.
SECTION 13.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
<PAGE>
75
SECTION 13.7 Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and each Guarantee without regard to principles of conflicts of law.
SECTION 13.8 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of an Issuer or any
Guarantor shall not have any liability for any obligations of an Issuer or any
Guarantor under the Securities, any Guarantee or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
All obligations under this Indenture and the Securities shall be expressly
non-recourse to the partners of the Company in their capacities as such; the
partners shall not be liable for any claim based on, in respect of or by reason
of such obligations or their creation or bear any costs or expenses in
connection with this Indenture, the issuance and sale of the Securities or any
transactions contemplated hereby or thereby, and each Securityholder by
accepting a Security waives and releases any such obligations and liability.
SECTION 13.9 Successors.
All agreements of a party to this Indenture contained in this Indenture
shall bind such party's successors. In the event of a transfer of all or
substantially all of the Company's assets and liabilities to CapCo II in
connection with an IPO Reorganization, CapCo II shall be deemed the successor to
the Company and the Company shall be discharged and released from all further
obligations under this Indenture and the Securities, subject to CapCo II's
compliance with Section 5.01(a)(ii).
SECTION 13.10 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.11 Severability.
In case any provision in this Indenture, in the Securities or in a
Guarantee 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, and a Holder shall have no claim therefor against any party
hereto.
SECTION 13.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
<PAGE>
76
SECTION 13.13 Legal Holidays.
If a payment date is a not a Business Day at a place of payment, payment
may be made at that place on the next succeeding Business Day, and no interest
shall accrue for the intervening period.
[Signature Pages Follow]
<PAGE>
77
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings L.L.C.,
its general partner
By: /s/ Frank Nico
-------------------------------
Name: Frank Nico
Title: Assistant Treasurer and
Assistant Secretary
GPC CAPITAL CORP. II
By: /s/ John E. Hamilton
-------------------------------
Name: John E. Hamilton
Title: Vice President, Secretary and
Assistant Treasurer
THE BANK OF NEW YORK, as Trustee
By: /s/ Lucille Firrincieli
-------------------------------
Name: Lucille Firrincieli
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH AN ISSUER OR ANY AFFILIATE OF AN ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO AN
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 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, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO AN ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE>
THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT
FOR PURPOSES OF SECTION 1271 et seq. OF THE INTERNAL
REVENUE CODE. FOR EACH $1,000 PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY, THE ISSUE PRICE IS $595.34.
THE ISSUE DATE OF THIS SECURITY IS FEBRUARY 2, 1998 AND
THE YIELD TO MATURITY IS 10 3/4%.
GRAHAM PACKAGING HOLDINGS COMPANY
GPC CAPITAL CORP. II
10 3/4% Senior Discount Note
due 2009, Series A
CUSIP No.:[ ]
No. [ ] $[ ]
GRAHAM PACKAGING HOLDINGS COMPANY, a Pennsylvania limited partnership (the
"Company", which term includes any successor), and GPC CAPITAL CORP. II, a
Delaware corporation ("CapCo II", which term includes any successor, and,
together with the Company, the "Issuers"), for value received jointly and
severally promise to pay to [ ] or registered assigns, the principal sum of [ ]
Dollars, on January 15, 2009.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
2003.
Interest Record Dates: January 1 and July 1
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings L.L.C.,
its general partner
By: _____________________________
Name:
Title:
A-2
<PAGE>
By:______________________________
Name:
Title:
GPC CAPITAL CORP. II
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Dated: [ ]
A-3
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/4% Senior Discount Notes due 2009, Series A,
described in the within-mentioned Indenture.
Dated: [ ]
THE BANK OF NEW YORK,
as Trustee
By: _____________________________
Authorized Signatory
A-4
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING HOLDINGS COMPANY
GPC CAPITAL CORP. II
10 3/4% Senior Discount Note
due 2009, Series A
1. Interest.
GRAHAM PACKAGING HOLDINGS COMPANY, a Pennsylvania limited partnership (the
"Company," which term shall include any successor), and GPC CAPITAL CORP. II, a
Delaware corporation ("Cap Co. II" and, together with the Company, the
"Issuers"), jointly and severally promise to pay cash interest on each Interest
Payment Date on the principal amount at maturity of this Security at the rate
per annum shown above. The principal amount at maturity of this Security will
not bear or accrue interest until January 15, 2003. Cash interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from January 15, 2003. The Issuers will pay
interest semi-annually in arrears on each Interest Payment Date, commencing July
15, 2003. Interest will be computed on the basis of a 360-day year of twelve
30-day months.In addition, the Issuers shall pay interest on overdue Accreted
Value or principal and on overdue installments of interest (without regard to
any applicable grace periods) to the extent lawful from time to time on demand,
in each case at the rate borne by the Securities.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect Accreted Value or principal payments. The Issuers shall
pay Accreted Value or principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Issuers may pay Accreted Value or principal
and interest by wire transfer of Federal funds (provided that the Paying Agent
shall have received wire instructions on or prior to the relevant Interest
Record Date), or interest by check payable in such U.S. Legal Tender. The
Issuers may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.
A-5
<PAGE>
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as Paying Agent
and Registrar. The Issuers may change any Paying Agent or Registrar without
notice to the Holders. The Issuers may, subject to certain exceptions, act as
Registrar.
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998 (the "Indenture"), by and among the Issuers and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. This Security is one of a duly authorized issue of Securities of the
Issuers designated as their 10 3/4% Senior Discount Notes due 2009, Series A,
limited (except as otherwise provided in the Indenture) in aggregate principal
amount at maturity to $169,000,000 which may be issued under the Indenture. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date
of the Indenture (except as otherwise indicated in the Indenture) until such
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general unsecured obligations of the
Issuers.
5. Optional Redemption.
The Securities will be redeemable at the option of the Issuers, in whole or in
part, at any time on or after January 15, 2003, at the redemption prices
(expressed as a percentage of principal amount at maturity) set forth below,
plus accrued and unpaid interest thereon, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the twelve- month period beginning on January 15, of the years indicated below:
Redemption
Year Price
------------------- -----------
2003 105.375%
2004 103.583%
2005 101.792%
2006 and thereafter 100.000%
6. Optional Redemption upon Equity Offerings.
In addition, at any time and from time to time on or prior to January 15,
2001, the Issuers may, at their option, use the net cash proceeds of one or more
Equity Offerings by the Company to redeem up to 40% of the aggregate principal
amount at maturity of the Securities issued at a redemption price in cash equal
to 110.750% of the Accreted Value thereof on the date of redemption; provided,
however, that at least 60% of the aggregate principal amount at maturity of the
Securities originally issued must remain outstanding
A-6
<PAGE>
immediately after giving effect to each such redemption (excluding any
Securities held by an Issuer or any of its Affiliates). In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Issuers shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount at maturity.
Securities and portions of them the Trustee so selects shall be in amounts of
$1,000 principal amount at maturity or integral multiples thereof.If any
Security is to be redeemed in part only, the notice of redemption that relates
to such Security shall state the portion of the principal amount at maturity
thereof to be redeemed. A new Security in a principal amount at maturity equal
to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, Accreted Value or interest will cease to accrete or accrue, as the case
may be, on Securities or portions thereof called for redemption so long as the
Issuers have deposited with the Paying Agent for the Securities funds in
satisfaction of the redemption price pursuant to the Indenture and the Paying
Agent is not prohibited from paying such funds to the Holders pursuant to the
terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the Accreted Value
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the relevant Interest Record Date
to receive interest due on the relevant Interest Payment Date).
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the Accreted Value
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the Interest Relevant Record Date
to receive interest due on the relevant Interest Payment Date) with the excess
proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
A-7
<PAGE>
The Securities are in registered form, without coupons, in denominations of
$1,000 principal amount at maturity and integral multiples of $1,000 principal
amount at maturity. A Holder shall register the transfer of or exchange of
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Securities or portions thereof
selected for redemption, except the unredeemed portion of any security being
redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of Accreted Value or principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Issuers at their written request. After that, all liability of the
Trustee and such Paying Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount at maturity of the Securities then
outstanding, and any existing Default or Event of Default or compliance with any
provision may be waived with the consent of the Holders of a majority in
aggregate principal amount at maturity of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture and the Securities to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
A-8
<PAGE>
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must report quarterly to the Trustee on compliance with such
limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount at maturity of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount at maturity of the Securities then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of certain continuing Defaults or
Events of Default if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers or any Guarantor shall have any liability for any obligation of the
Issuers or any Guarantor under the Securities, the Guarantee of such Guarantor
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities. All obligations under the
Indenture, the Initial Securities, the Private Exchange Securities and the
Unrestricted Securities shall be expressly non-recourse to the partners of
Holdings in their capacities as such, and by purchasing the Securities, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities and the
Unrestricted Securities. The partners of Holdings shall not be liable for any
A-9
<PAGE>
claim based on, in respect of or by reason of such obligations or their creation
or bear any costs or expenses in connection with the Indenture, the Initial
Securities, the Private Exchange Securities or the Unrestricted Securities or
any transaction contemplated thereby.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Issuers will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a 10 3/4% Senior Subordinated Note due 2009, Series B, of the
Issuers which have been registered under the Securities Act, in like principal
amount at maturity and having terms identical in all material respects to the
Initial Securities. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this Security
and any Guarantee without regard to principles of conflicts of laws.
A-10
<PAGE>
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security upon
which this notation is endorsed) hereby unconditionally guarantees on a senior
subordinated basis (such guaranty being referred to herein as the "Guarantee")
the due and punctual payment of the Accreted Value or principal of, premium, if
any, and interest on the Securities, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue Accreted
Value or principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Issuers to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article Eleven of the Indenture, and reference is hereby made to such
Indenture for the precise terms of the Guarantee therein made.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of
law.This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:______________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Issuers. The agent may
substitute another to act for him.
Dated:______________________ Signed:_______________________
(Signed exactly as name appearson the
other side of this Security)
Signature Guarantee: ___________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:__________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee: ________________________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
[FORM OF SERIES B SECURITY]
THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT
FOR PURPOSES OF SECTION 1271 et seq. OF THE INTERNAL
REVENUE CODE. FOR EACH $1,000 PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY, THE ISSUE PRICE IS $595.34.
THE ISSUE DATE OF THIS SECURITY IS FEBRUARY 2, 1998
AND THE YIELD TO MATURITY IS 10 3/4%.
GRAHAM PACKAGING HOLDINGS COMPANY
GPC CAPITAL CORP. II
10 3/4% Senior Discount Note
due 2009, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
GRAHAM PACKAGING HOLDINGS COMPANY, a Pennsylvania limited partnership (the
"Company", which term includes any successor), and GPC CAPITAL CORP. II, a
Delaware corporation ("CapCo II", which term includes any successor and,
together with the Company, the "Issuers"), for value received jointly and
severally promise to pay to [ ] or registered assigns, the principal sum of [ ]
Dollars, on January 15, 2009.
Interest Payment Dates: January 15 and July 15, commencing on July 15,
2003.
Interest Record Dates: January 1 and July 1Reference is made to the further
provisions of this Security contained herein, which will for all purposes have
the same effect as if set forth at this place.
IN WITNESS WHEREOF, each Issuer has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings L.L.C.,
its general partner
By:______________________________
Name:
Title:
By:______________________________
B-1
<PAGE>
Name:
Title:
GPC CAPITAL CORP. II
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
GPC CAPITAL CORP. II
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Dated: [ ]
B-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/4 Senior Discount Notes due 2009, Series B,
described in the within-mentioned Indenture.
Dated: [ ]
THE BANK OF NEW YORK,
as Trustee
By:____________________________
Authorized Signatory
B-3
<PAGE>
(REVERSE OF SECURITY)
GRAHAM PACKAGING HOLDINGS COMPANY
GPC CAPITAL CORP. II
10 3/4% Senior Discount Note
due 2009, Series B
1. Interest.
GRAHAM PACKAGING HOLDINGS COMPANY, a Pennsylvania limited partnership (the
"Company," which term shall include any successor), and GPC CAPITAL CORP. I, a
Delaware corporation ("Cap Co. II" and, together with the Company, the
"Issuers"), jointly and severally promise to pay cash interest on each Interest
Payment Date on the principal amount at maturity of this Security at the rate
per annum shown above. The principal amount at maturity of this Security will
not bear or accrue interest until January 15, 2003. Cash interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from January 15, 2003. The Issuers will pay
interest semi-annually in arrears on each Interest Payment Date, commencing July
15, 2003. Interest will be computed on the basis of a 360-day year of twelve
30-day months.In addition, the Issuers shall pay interest on overdue Accreted
Value or principal and on overdue installments of interest (without regard to
any applicable grace periods) to the extent lawful from time to time on demand,
in each case at the rate borne by the Securities.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are cancelled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect Accreted Value or principal payments. The Issuers shall
pay Accreted Value or principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Issuers may pay Accreted Value or principal
and interest by wire transfer of Federal funds (provided that the Paying Agent
shall have received wire instructions on or prior to the relevant Interest
Record Date), or interest by check payable in such U.S. Legal Tender. The
Issuers may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as Paying Agent
and Registrar. The Issuers may change any Paying Agent or Registrar without
notice to the Holders. The Issuers may, subject to certain exceptions, act as
Registrar.
B-4
<PAGE>
4. Indenture and Guarantees.
The Issuers issued the Securities under an Indenture, dated as of February
2, 1998 (the "Indenture"), by and among the Issuers and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. This Security is one of a duly authorized issue of Securities of the
Issuers designated as their 10 3/4% Senior Discount Notes due 2009, Series B,
limited (except as otherwise provided in the Indenture) in aggregate principal
amount at maturity to $169,000,000, which may be issued under the Indenture. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date
of the Indenture (except as otherwise indicated in the Indenture) until such
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general unsecured obligations of the
Issuers.
5. Optional Redemption.
The Securities will be redeemable at the option of the Issuers, in whole or
in part, at any time on or after January 15, 2003, at the redemption prices
(expressed as a percentage of principal amount at maturity) set forth below,
plus accrued and unpaid interest thereon, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the twelve-month period beginning on January 15, of the years indicated below:
Redemption
Year Price
---- -----------
2003 105.375%
2004 103.583%
2005 101.792%
2006 and thereafter 100.000%
6. Optional Redemption upon Equity Offerings.
In addition, at any time and from time to time on or prior to January 15,
2001, the Issuers may, at their option, use the net cash proceeds of one or more
Equity Offerings by the Company to redeem up to 40% of the aggregate principal
amount at maturity of the Securities issued at a redemption price in cash equal
to 110.750% of the Accreted Value thereof on the date of redemption; provided,
however, that at least 60% of the aggregate principal amount at maturity of the
Securities originally issued must remain outstanding immediately after giving
effect to each such redemption (excluding any Securities held by an Issuer or
any of its Affiliates). In order to effect the foregoing redemption with the
proceeds of any Equity Offering, the Issuers shall make such redemption not more
than 120 days after the consummation of any such Equity Offering.
B-5
<PAGE>
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at its registered address. The Trustee may select for redemption
portions of the principal amount of Securities that have denominations equal to
or larger than $1,000 principal amount at maturity. Securities and portions of
them the Trustee so selects shall be in amounts of $1,000 principal amount at
maturity or integral multiples thereof.If any Security is to be redeemed in part
only, the notice of redemption that relates to such Security shall state the
portion of the principal amount at maturity thereof to be redeemed. A new
Security in a principal amount at maturity equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Security. On and after the Redemption Date, Accreted Value or
interest will cease to accrete or accrue, as the case may be, on Securities or
portions thereof called for redemption so long as the Issuers have deposited
with the Paying Agent for the Securities funds in satisfaction of the redemption
price pursuant to the Indenture and the Paying Agent is not prohibited from
paying such funds to the Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Issuers shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the Accreted Value
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the relevant Interest Record Date
to receive interest due on the relevant Interest Payment Date).
9. Limitation on Disposition of Assets.
The Issuers are, subject to certain conditions, obligated to make an Offer
to Purchase Securities at a purchase price equal to 100% of the Accreted Value
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date
(subject to the right of Holders of record on the Interest Relevant Record Date
to receive interest due on the relevant Interest Payment Date) with the excess
proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations of
$1,000 principal amount at maturity and integral multiples of $1,000 principal
amount at maturity. A Holder shall register the transfer of or exchange of
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Securities or portions thereof
selected for redemption, except the unredeemed portion of any security being
redeemed in part.
B-6
<PAGE>
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it for
all purposes.
12. Unclaimed Funds.
If funds for the payment of Accreted Value or principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Issuers at their written request. After that, all liability of the
Trustee and such Paying Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Issuers may be discharged from their obligations under the Indenture
and the Securities, except for certain provisions thereof, and may be discharged
from obligations to comply with certain covenants contained in the Indenture and
the Securities, in each case upon satisfaction of certain conditions specified
in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount at maturity of the Securities then
outstanding, and any existing Default or Event of Default or compliance with any
provision may be waived with the consent of the Holders of a majority in
aggregate principal amount at maturity of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture and the Securities to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets or
to engage in transactions with affiliates or certain other related persons. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must report quarterly to the Trustee on compliance with such
limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount at maturity of Securities then
outstanding may declare
B-7
<PAGE>
all the Securities to be due and payable immediately in the manner and with the
effect provided in the Indenture. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee is
not obligated to enforce the Indenture or the Securities unless it has received
indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount at maturity of the Securities then outstanding to direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of certain continuing Defaults or Events of Default if it
determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Issuers or any Guarantor shall have any liability for any obligation of the
Issuers, Holdings or any Guarantor under the Securities, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities. All obligations under
the Indenture, the Initial Securities, the Private Exchange Securities and the
Unrestricted Securities shall be expressly non-recourse to the partners of
Holdings in their capacities as such, and by purchasing the Securities, each
holder of Securities waives any such liability of any partner of Holdings under
the Indenture, the Initial Securities, the Private Exchange Securities and the
Unrestricted Securities. The partners of Holdings shall not be liable for any
claim based on, in respect of or by reason of such obligations or their creation
or bear any costs or expenses in connection with the Indenture, the Initial
Securities, the Private Exchange Securities or the Unrestricted Securities or
any transaction contemplated thereby.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
B-8
<PAGE>
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers have caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this Security
and any Guarantee without regard to principles of conflicts of laws.
B-9
<PAGE>
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security upon
which this notation is endorsed) hereby unconditionally guarantees on a senior
subordinated basis (such guaranty being referred to herein as the "Guarantee")
the due and punctual payment of the principal of, premium, if any, and interest
on the Securities, whether at maturity, by acceleration or otherwise, the due
and punctual payment of interest on the overdue principal, premium and interest
on the Securities, and the due and punctual performance of all other obligations
of the Issuers to the Holders or the Trustee, all in accordance with the terms
set forth in Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture, and reference is hereby made to such Indenture
for the precise terms of the Guarantee therein made.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of
law.This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:_________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Issuers. The agent may
substitute another to act for him.
Dated:__________________ Signed: ________________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee: ________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:Section 4.05 [ ] Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Issuers pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:___________________________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS 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 2.16 OF THE INDENTURE.
C-1
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 10 3/4% Senior Discount Notes due 2009
(the "Securities") of Graham Packaging Holdings
Company and GPC Capital Corp. II
This Certificate relates to $_______ principal amount at maturity of
Securities held in the form of* ___ a beneficial interest in a Global Security
or* _______ Physical Securities by ______ (the "Transferor").
The Transferor:*
|_| has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
|_| has requested the Registrar by written order to exchange or register
the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "Act"), because*:
|_| Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
|_| Such Security is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Act), in reliance on Rule 144A.
|_| Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
|_| Such Security is being transferred in reliance on Rule 144 under the
Act.
|_| Such Security is being transferred in reliance on and in compliance
with an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of
D-1
<PAGE>
Counsel to the effect that such transfer does not require Registration under the
Securities Act accompanies this certification.]
_________________________________
[INSERT NAME OF TRANSFEROR]
By: _____________________________
[Authorized Signatory]
Date:_____________
*Check applicable box.
D-2
<PAGE>
EXHIBIT E
Form of Transferee Letter of Representation
The Bank of New York
One Wall Street
New York, New York 10015
Attention: Corporate Trust Administration
Dear Sirs:
This certificate is delivered to request a transfer of $________ principal
amount of the 10 3/4% Senior Discount Notes due 2009 (the "Notes") of Graham
Packaging Holdings Company and GPC Capital Corp. II (the "Issuers"). Upon
transfer, the Notes would be registered in the name of the new beneficial owner
as follows:
Name:____________________________
Address:_________________________
TaxpayerID Number:_______________
The undersigned represents and warrants to you that:1. We are an
institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act of 1933 (the "Securities Act")) purchasing for our
own account or for the account of such an institutional "accredited investor" at
least $250,000 principal amount at maturity of the Notes, and we are acquiring
the Notes not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risk of our investment in the Notes and we invest in or purchase
securities similar to the Notes in the normal course of our business. We and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.
2. We understand that the Notes have not been registered under the
Securities Act 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 Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years after the later of the date of
original issue and the last date on which an Issuer or any affiliate of an
Issuer was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to an Issuer, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of 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) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000 or
E-1
<PAGE>
(e) 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 in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (d) 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 Issuer and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Issuer and
the Trustee reserve the right prior to any offer, sale or other transfer prior
to the Resale Restriction Termination Date of the Notes pursuant to clause (d)
or (e) above to require the delivery of an opinion of counsel, certificates
and/or other information satisfactory to the Issuer and the Trustee.
Dated: __________________________ TRANSFEREE: _____________________
By:
E-2
<PAGE>
Counsel to the effect that such transfer does not require Registration under the
Securities Act accompanies this certification.
[INSERT NAME OF TRANSFEROR]
By:
--------------------------
[Authorized Signatory]
Date:
---------------------------
* check applicable box.
<PAGE>
EXHIBIT 4.10
REGISTRATION RIGHTS AGREEMENT
Dated as of February 2, 1998
Among
GRAHAM PACKAGING HOLDINGS COMPANY
and
GPC CAPITAL CORP. II,
as Issuers
and
BT ALEX. BROWN INCORPORATED,
BANKERS TRUST INTERNATIONAL PLC,
LAZARD FRERES & CO. LLC
and
SALOMON BROTHERS INC,
as Initial Purchasers
10 3/4% Senior Discount Notes Due 2009, Series A
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
February 2, 1998, among GRAHAM PACKAGING HOLDINGS COMPANY, a Pennsylvania
limited partnership ("Holdings"), and GPC CAPITAL-CORP. II, a Delaware
corporation, as issuers (the "Issuers"), and BT ALEX. BROWN INCORPORATED,
BANKERS TRUST INTERNATIONAL PLC, LAZARD FRERES & CO. LLC and SALOMON BROTHERS
INC, as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated as of February 2, 1998, among the Issuers and the Initial Purchasers (the
"Purchase Agreement"), which provides for, among other things, the sale by the
Issuers to the Initial Purchasers of $169,000,000 aggregate principal amount at
maturity of the Issuers' 10 3/4% Senior Discount Notes Due 2009, Series A (the
"Notes"). 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, except as
otherwise set forth herein, any subsequent holder or holders of the Notes. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Notes 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 hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Accreted Value: As of any date prior to January 15, 2003, an amount per
$1,000 principal amount at maturity of the Notes that is equal to the sum of (a)
the initial offering price of each Note and (b) the portion of the excess of the
principal amount at maturity of each Note over
<PAGE>
2
such initial offering price which shall have been amortized through such date,
such amount to be so amortized on a daily basis and compounded semi-annually on
each January 15 and July 15 at the rate of 10 3/4% per annum from the Issue Date
through the date of determination computed on the basis of a 360-day year of
twelve 30-day months.
Effectiveness Date: The 180th day after the Issue Date; provided, however,
that with respect to any Shelf
Registration, the Effectiveness Date shall be the 120th day after the
Filing Date with respect thereto.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 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 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Offer Registration Statement: See Section 2 hereof.
Filing Date: (A) With respect to the Exchange Offer Registration Statement,
the 120th day after the Issue Date; and (B) with respect to a Shelf Registration
Statement, the 60th day after the delivery of a Shelf Notice as required
pursuant to Section 2(c) hereof.
Holder: Any holder of a Registrable Note or Registrable Notes.
Holdings: See the introductory paragraphs hereto.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of February 2, 1998, by and among the
Issuers and The Bank of New York, as Trustee, pursuant to which the Notes are
being issued, as
<PAGE>
3
the same may be amended or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(m) hereof.
Issue Date: February 2, 1998, the date of original issuance of the Notes.
Issuers: See the introductory paragraphs hereto.
NASD: See Section 5(r) hereof.
Notes: See the introductory paragraphs hereto.
Offering Memorandum: The final offering memorandum of the Issuers dated
January 23, 1998, as supplemented, in respect of the offering of the Notes (and
the 8 3/4% Senior Subordinated Notes Due 2008 of the Operating Company and GPC
Capital Corp. I, unconditionally guaranteed on a senior subordinated basis by
Holdings).
Operating Company: See Section 8 hereof.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, limited liability
company, joint stock company, trust, unincorporated association, union, business
association, firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 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
<PAGE>
4
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act and any term sheet filed pursuant
to Rule 434 under the Securities Act), 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 introductory paragraphs hereof.
Records: See Section 5(m) hereof.
Registrable Notes: Each Note upon its original issuance and at all times
subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof is
applicable upon original issuance and at all times subsequent thereto and each
Private Exchange Note upon original issuance thereof and at all times subsequent
thereto, until (i) a Registration Statement (other than, with respect to any
Exchange Note as to which Section 2(c)(iv) hereof is applicable, the Exchange
Offer Registration Statement) covering such Note, Exchange Note or Private
Exchange Note has been declared effective by the SEC and such Note, Exchange
Note or such Private Exchange Note, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Note has been
exchanged pursuant to the Exchange Offer for an Exchange Note or Private
Exchange Note that may be resold without restriction under state and federal
securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the
case may be, ceases to be outstanding for purposes of the Indenture or (iv) such
Note, Exchange Note or Private Exchange Note, as the case may be, may be resold
without restriction pursuant to Rule 144 under the Securities Act.
Registration Statement: Any registration statement of the Issuers that
covers any of the Notes, the Exchange Notes or the Private Exchange Notes filed
with the SEC under the Securities Act, 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.
<PAGE>
5
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 offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of the 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 Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
Suspension Period: See Section 5(j) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and the trustee (if any) under any
indenture governing the Exchange Notes and Private Exchange Notes.
Underwritten registration or underwritten offering: A registration in which
securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
<PAGE>
6
(a) The Issuers shall use their reasonable best efforts to file with the
SEC, no later than the Filing Date applicable thereto, a Registration Statement
(the "Exchange Offer Registration Statement") on an appropriate registration
form with respect to a registered offer (the "Exchange Offer") to exchange any
and all of the Notes for a like aggregate principal amount of notes of the
Issuers that are identical in all material respects to the Notes, and shall have
terms substantially identical to the terms of the Notes except that the Exchange
Notes (as defined below) shall not contain terms with respect to transfer
restrictions and shall contain no restrictive legend thereon (the "Exchange
Notes"), and which shall be 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 the TIA) and which, in either case, has been qualified
under the TIA. The Exchange Offer shall comply with all applicable tender offer
rules and regulations under the Exchange Act and other applicable law. The
Issuers shall use their reasonable best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date applicable thereto; (y) keep the Exchange Offer
open for not less than 20 business days (or longer if required by applicable
law) after the date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the later of (i) the 45th day
after the date on which the Exchange Offer Registration Statement was declared
effective by the SEC or (ii) the 210th day following the Issue Date. If, after
the Exchange Offer Registration Statement is initially declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, the Exchange Offer
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement.
Each Holder that participates in the Exchange Offer will be required, as a
condition to its participation in the Exchange Offer, to represent to the
Issuers in writing (which may be contained in the applicable letter of
transmittal) (i) that any Exchange Notes to be received by it will be acquired
in the ordinary course of its business, (ii) 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
<PAGE>
7
the distribution of the Exchange Notes in violation of the provisions of the
Securities Act, (iii) that such Holder is not an affiliate of the Issuers within
the meaning of the Securities Act, (iv) if such Holder is not a broker-dealer,
that it is not engaged in, and does not intend to engage in, the distribution of
Exchange Notes, and (v) if such Holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities, that it will deliver a
prospectus in connection with any resale of such Exchange Notes.
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 Notes that are Private Exchange Notes,
Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes
held by Participating Broker-Dealers (as defined), and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which Section
2(c)(iv) is applicable) pursuant to Section 3 hereof.
No securities other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement 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 SEC 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
Notes 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 of the SEC or such positions or policies represent the
prevailing views of the Staff of the SEC. Such "Plan of Distribution" section
shall also expressly permit, to the extent permitted by applicable policies and
regulations of the SEC, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the extent
permitted by applicable policies and regulations of the SEC, all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.
<PAGE>
8
The Issuers shall use their reasonable 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 Notes covered thereby (the
"Applicable Period").
If, prior to consummation of the Exchange Offer, any Holder holds any Notes
acquired by it that have, or that are reasonably likely to be determined to
have, the status of an unsold allotment in an initial distribution, or any
Holder is not entitled to participate in the Exchange Offer, the Issuers upon
the request of any such Holder shall simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to any such Holder, in
exchange (the "Private Exchange") for such Notes held by any such Holder, a like
principal amount of notes (the "Private Exchange Notes") of the Issuers that are
identical in all material respects to the Exchange Notes except for the
placement of a restrictive legend on such Private Exchange Notes. The Private
Exchange Notes shall be issued pursuant to the same indenture as the Exchange
Notes and bear the same CUSIP number as the Exchange Notes.
In connection with the Exchange Offer, the Issuers shall:
(i) mail, or cause to be mailed, to each Holder of record entitled to
participate in the Exchange Offer a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) use their reasonable best efforts to keep the Exchange Offer open
for not less than 20 business days after the date that notice of the
Exchange Offer is mailed to Holders (or longer if required by applicable
law);
(iii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, the City of New York;
(iv) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the
<PAGE>
9
last business day on which the Exchange Offer shall remain open; and
(v) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:
(1) accept for exchange all Notes validly tendered and not validly
withdrawn pursuant to the Exchange Offer and the Private Exchange, if any;
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Offer and the Private Exchange shall not be subject to any
conditions, other than that (i) the Exchange Offer or Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the Staff of the SEC, (ii) no action or proceeding shall have been instituted or
threatened in any court or by any governmental agency which might materially
impair the ability of the Issuers to proceed with the Exchange Offer or the
Private Exchange, and no material adverse development shall have occurred in any
existing action or proceeding with respect to the Issuers and (iii) all
governmental approvals shall have been obtained, which approvals the Issuers
deem necessary for the consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued under (i)
the Indenture or (ii) an indenture identical in all material respects to the
Indenture and which, in either case, has been qualified under the TIA or is
exempt from such qualification and shall provide that the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture. The
Indenture or such indenture shall provide that the Exchange Notes, the Private
Exchange Notes and the Notes shall vote and consent together on all matters as
one class and that none of the Exchange Notes, the Private Exchange Notes or
<PAGE>
10
the Notes will have the right to vote or consent as a separate class on any
matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Issuers are not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated on or prior to
the later of (A) the 45th day after the date on which the Exchange Offer
Registration Statement was declared effective by the SEC or (B) the 210th day
following the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Issuers within 10 days after the consummation of the Exchange
Offer, or (iv) in the case of any Holder that participates in the Exchange
Offer, such Holder does not receive Exchange Notes 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 any of
the respective Issuers within the meaning of the Securities Act), then in the
case of each of clauses (i) to and including (iv) of this sentence, the Issuers
shall promptly deliver to the Holders specified in clauses (iii) and (iv) above
and the Trustee written notice thereof (the "Shelf Notice") and shall file a
Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If at any time a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Issuers shall 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 Notes not exchanged in the
Exchange Offer, Private Exchange Notes and Exchange Notes as to which
Section 2(c)(iv) is applicable (the "Initial Shelf Registration"). The
Issuers shall use their reasonable best efforts to file with the SEC the
Initial Shelf Registration on or before the Filing Date applicable thereto.
The Initial Shelf Registration shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by them in accordance with the
terms of this Agreement (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other
than the Registrable Notes to be included in the
<PAGE>
11
Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below).
The Issuers shall use their reasonable best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act on or prior
to the Effectiveness Date applicable thereto and to keep the Initial Shelf
Registration continuously effective under the Securities Act (except during a
Suspension Period) until the date which is two years after the Issue Date (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration covering all of the Registrable Notes covered by and not sold
under the Initial Shelf Registration or an earlier Subsequent Shelf Registration
has been declared effective under the Securities Act; provided, however, that
the Effectiveness Period in respect of the Initial Shelf Registration shall be
extended to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 under the Securities Act and as
otherwise provided herein.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than because of a
Suspension Period or the sale of all of the securities registered
thereunder), the Issuers shall use their reasonable best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 30 days of such cessation of effectiveness
use their reasonable best efforts to amend the Initial Shelf Registration
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 Registrable Notes covered by and
not sold under the Initial Shelf Registration or an earlier Subsequent
Shelf Registration (each, a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Issuers shall use their
reasonable 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 subsequent Shelf Registration continuously
effective (except during any
<PAGE>
12
Suspension Period) for the remainder of the Effectiveness Period. As used
herein the term "Shelf Registration" means the Initial Shelf Registration
and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested
by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter
of such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the Holders 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 agree to pay, as
liquidated damages, additional interest on the Notes ("Additional Interest")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the applicable
Filing Date or (B) notwithstanding that the Issuers have consummated or
will consummate the Exchange Offer, the Issuers are required to file a
Shelf Registration and such Shelf Registration is not filed on or prior to
the Filing Date applicable thereto, then, commencing on the day after any
such Filing Date, Additional Interest shall accrue on the Accreted Value of
all of the Registrable Notes in the case of clause (A) above, and on the
Accreted Value of those Registrable Notes to which the Shelf Registration
relates, in the case of clause (B) above, and in each case, at a rate of
0.25% per annum for the first 90 days immediately following each such
Filing Date, and such Additional Interest rate shall increase by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
<PAGE>
13
(ii) if (A) the Exchange Offer Registration Statement is not declared
effective by the SEC on or prior to the relevant Effectiveness Date, (B)
the Initial Shelf Registration is not declared effective by the SEC on or
prior to the relevant Effectiveness Date, or (C) notwithstanding that the
Issuers have consummated or will consummate the Exchange Offer, the Issuers
are required to file a Shelf Registration and such Shelf Registration is
not declared effective by the SEC on or prior to the Effectiveness Date
applicable thereto, then, commencing on the day after such Effectiveness
Date, Additional Interest shall accrue on the Accreted Value of all of the
Registrable Notes in the case of clause (A) above, and on the Accreted
Value of those Registrable Notes to which the Shelf Registration relates,
in the case of clauses (B) and (C) above, and in each case, at a rate of
0.25% per annum for the first 90 days immediately following the day after
such Effectiveness Date, and such Additional Interest rate shall increase
by an additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the later of the 45th day after the date on which the
Exchange Offer Registration Statement relating thereto was declared
effective or the 210th day after the Issue date or (B) if applicable, a
Shelf Registration has been declared effective and such Shelf Registration
ceases to be effective at any time during the Effectiveness Period (other
than as the result of a Suspension Period), then Additional Interest shall
accrue on the Accreted Value of all of the Registrable Notes in the case of
clause (A) above, and on the Accreted Value of those Registrable Notes to
which the Shelf Registration relates, in the case of clause (B) above, and
in each case, at a rate of 0.25% per annum for the first 90 days commencing
on the (x) 46th or the 211th, as the case may be, day after such effective
date, in the case of (A) above, or (y) the day such Shelf Registration
ceases to be effective in the case of (B) above (or, in the event of a
Suspension Period, on the earlier of the last day of such Suspension Period
or the 60th day after notice of such Suspension Period), and such
Additional Interest rate shall increase by an additional 0.25% per annum at
the beginning of each such subsequent 90-day period;
<PAGE>
14
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.00% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case
of clause (i) above of this Section 4), (2) upon the effectiveness of the
Exchange Offer Registration Statement or the applicable Shelf Registration
Statement as required hereunder (in the case of clause (ii) of this Section 4),
or (3) upon the exchange of the applicable Exchange Notes for all Notes tendered
(in the case of clause (iii)(A) of this Section 4), or upon the effectiveness of
the applicable Shelf Registration Statement which had ceased to remain effective
(other than as a result of a Suspension Period) (in the case of (iii)(B) of this
Section 4), Additional Interest on the Notes in respect of which such events
relate as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within three business days after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semiannually on each January 15 and July 15 (to the holders of
record on the January 1 and July 1 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 average Accreted Value of the
Registrable Notes during the applicable period, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360- day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Issuers 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
<PAGE>
15
with any Registration Statement filed by the Issuers hereunder each of the
Issuers shall:
(a) Prepare and file with the SEC on or prior to the applicable Filing
Date, a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use its reasonable 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 the 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 Notes during the Applicable Period relating thereto,
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 Notes included in such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their counsel 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 days prior to such filing, or such later date as is
reasonable under the circumstances). The Issuers shall not file any Shelf
Registration Statement or Prospectus related thereto or any amendments or
supplements thereto if the Holders of a majority in aggregate principal
amount of the Registrable Notes included in such Shelf Registration
Statement, their counsel, or the managing underwriters, if any, shall
reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424 (or
any
<PAGE>
16
similar provisions then in force) promulgated under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act
applicable to each of them 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
reasonable best efforts to keep a Registration Statement effective during
the Effectiveness Period or the Applicable Period, as the case may be,
relating thereto if any Issuer voluntarily takes any action that would
result in selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being able
to sell such Registrable Notes or such Exchange Notes, as the case may be,
during that period unless (i) such action is required by applicable law or
permitted by this Agreement, or (ii) such action is taken for valid
business reasons (not including avoidance of the Issuers' obligations
hereunder), including the acquisition or divestiture of any business or
assets.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period relating thereto from whom the
Issuers have received written notice that it will be a Participating
Broker-Dealer in the Exchange Offer, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any (in the case of
clause (1) above), promptly (but in any event within two business days),
and confirm such notice in writing, (i) (in the case of clause (1) above)
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
<PAGE>
17
or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC 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) (in the case of clause (1) above) if at
any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(l) hereof cease to be
true and correct in all material respects, (iv) of the receipt by any
Issuer of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement
or any of the Registrable Notes or the Exchange Notes 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, the existence of any condition 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 light of
the circumstances under which they were made, not misleading, and (vi) of
the Issuers' determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement
filed pursuant to
<PAGE>
18
Section 2 hereof is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable 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 Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is
issued, to use its reasonable best efforts to obtain the withdrawal of any
such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any) or the
Holders of a majority in aggregate principal amount of the Registrable
Notes being sold in connection with an underwritten offering, (i) as
promptly as practicable incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any) or such Holders or counsel for any of them reasonably
request to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after an Issuer has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, furnish to each selling Holder
of Registrable Notes and to each such Participating Broker-Dealer who so
requests and to their respective counsel, if any, and each managing
underwriter, if any, at the sole expense of the Issuers, one conformed copy
of the Registration Statement or Registration
<PAGE>
19
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, deliver to each selling Holder
of Registrable Notes, or each such Participating Broker-Dealer, as the case
may be, their respective counsel, if any, and the underwriters, 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 Notes 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 Notes
covered by, or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable best efforts to register or qualify,
and to cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter
or underwriters, if any, and their respective counsel, if any, in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the
<PAGE>
20
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters reasonably request in writing;
provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their 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 Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that no Issuer shall
be required to (A) qualify generally to do business in any jurisdiction
where it is not then so qualified, (B) take any action that would subject
it to general service of process in any such jurisdiction where it is not
then so subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of global certificates representing Registrable Notes to be
sold, which global 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 Notes to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or Holders may request.
(j) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the 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 Notes during the Applicable Period, upon
<PAGE>
21
the occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi)
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 Notes
being sold thereunder or to the purchasers of the Exchange Notes 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 light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, the Issuers shall
not be required to amend or supplement a Registration Statement, any
related Prospectus or any document incorporated therein by reference, in
the event that, and for a period not to exceed an aggregate of 60 days in
any calendar year (a "Suspension Period") if, (i) an event occurs and is
continuing as a result of which the Shelf Registration would, in the
Issuers' good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii) (a) the Issuers determine in their good
faith judgment that the disclosure of such event at such time would have a
material adverse effect on the business, operations or prospects of the
Issuers or (b) the disclosure otherwise relates to a pending material
business transaction that has not yet been publicly disclosed.
(k) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
<PAGE>
22
(l) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Registrable Notes in form and substance reasonably satisfactory to the
Issuers and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Issuers and the
subsidiaries of the Issuers (including any acquired business, properties or
entity, if applicable) and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters
in underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested in form and substance
reasonably satisfactory to the Issuers; (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 the underwriters covering the matters
customarily covered in opinions reasonably requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriter or underwriters; (iii) use its reasonable best efforts
to obtain "cold comfort" letters and updates thereof in form, scope and
substance reasonably satisfactory to the managing underwriter or
underwriters from the independent public accountants of the Issuers (and,
if necessary, any other independent public accountants of the Issuers, any
subsidiary of the Issuers or of any business acquired by the Issuers 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 of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities
similar to the Registrable Notes and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; provided that the representations,
warranties, covenants, legal opinions and
<PAGE>
23
comfort letters described in clauses (i), (ii) and (iii) above shall be
substantially similar to those set forth or described in the Purchase
Agreement, with such differences as shall be agreed upon by the Issuers and
the managing underwriter; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable to the sellers and underwriters, if any, 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 Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents, if any). The above shall be done at
each closing under such underwriting agreement, or as and to the extent
required thereunder.
(m) If a Shelf Registration is filed pursuant to Section 3 hereof,
make available for inspection by any selling Holder of such Registrable
Notes being sold, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and instruments of the Issuers and subsidiaries of the Issuers
(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 Issuers and any of their
respective subsidiaries to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement. Each
Inspector shall agree in writing that it will keep the Records confidential
and that it will not disclose any of the Records that any of the respective
Issuers determines, in good faith, to be confidential and notifies the
Inspectors in writing are confidential unless (i) the disclosure of such
Records is necessary to avoid or correct a material misstatement or
material 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, or (iii) the information in such Records has been
made generally available to the public; provided, however, that
<PAGE>
24
prior notice shall be provided as soon as practicable to the Issuers of the
potential disclosure of any information by such Inspector pursuant to
clauses (i) or (ii) of this sentence to permit the Issuers to obtain a
protective order (or waive the provisions of this paragraph (m)) and that
such Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to the
extent such action is otherwise not inconsistent with, an impairment of or
in derogation of the rights and interests of the Holder or any Inspector.
Each selling Holder of such Registrable Notes 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(m) and shall not be used by it as the basis for any
market transactions in those securities of the Issuers unless and until
such information is generally available to the public. Each selling Holder
of such Registrable Notes 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 Issuers and allow the Issuers to undertake appropriate action to
prevent disclosure of the Records deemed confidential at the Issuers' sole
expense.
(n) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, 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 first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the
Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with
the terms of the TIA; and execute, and use its reasonable 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.
<PAGE>
25
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders with regard to any
applicable Registration Statement, a consolidated earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 60 days after the end of any fiscal quarter (or 120 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 Notes 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 respective
Issuers after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(p) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the respective Issuers, in a form customary
for underwritten transactions, addressed to the Trustee for the benefit of
all Holders of Registrable Notes participating in the Exchange Offer or the
Private Exchange, as the case may be, that the Exchange Notes or Private
Exchange Notes, as the case may be, the related Guarantees and the related
indenture constitute legal, valid and binding obligations of the Issuers,
enforceable against them in accordance with their respective terms, subject
to customary exceptions and qualifications.
(q) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to
such other Person as directed by the Issuers) in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be, the Issuers shall
mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being canceled in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
<PAGE>
26
(r) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(s) Use its reasonable best efforts to take all other steps reasonably
necessary to effect the registration of the Exchange Notes and/or
Registrable Notes covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which any
registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller so long as such seller
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Issuers of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof or upon
receipt of notice of a Suspension Period, such Holder will forthwith discontinue
disposition of such Registrable Notes covered by such Registration Statement or
Prospectus or Exchange Notes 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(j) hereof, or until it is advised in writing (the
"Advice") by the Issuers that the use of the applicable Prospectus may be
resumed, and has received copies
<PAGE>
27
of any amendments or supplements thereto. In the event that the Issuers shall
give any such notice, 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 Notes covered
by such Registration Statement or Exchange Notes 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(j)
hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers (other than any underwriting discounts or
commissions) shall be borne by the Issuers whether or not the Exchange Offer
Registration Statement or any Shelf Registration is filed or becomes effective
or the Exchange Offer is consummated, 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) reasonable 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 Notes or Exchange Notes and determination of the eligibility of
the Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes 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 Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes 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
<PAGE>
28
disbursements of counsel for the respective Issuers and reasonable fees and
disbursements of one special counsel for all of the sellers of Registrable Notes
in connection with a Shelf Registration Statement (exclusive of any counsel
retained pursuant to Section 7 hereof) (it being understood that the Issuers
shall not be responsible for any fees and disbursements of counsel for Holders
of Registrable Notes in the Exchange Offer), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(l)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) Securities
Act liability insurance, if the Issuers desire such insurance, (vii) fees and
expenses of all other Persons retained by the Issuer, (viii) internal expenses
of the Issuers (including, without limitation, all salaries and expenses of
officers and employees of the respective Issuers performing legal or accounting
duties), (ix) the expense of any annual audit, (x) any fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange, and the obtaining of a rating of the securities, in
each case, if applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, indentures and any other documents necessary in order to comply with
this Agreement.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the
affiliates, officers, directors, representatives, employees and agents of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact
<PAGE>
29
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 any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the case of the Prospectus in light of the circumstances under which
they were made, not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Issuers in writing by such
Participant expressly for use therein; provided, that as to any preliminary
Prospectus, this indemnity agreement shall not inure to the benefit of any
Participant or any person controlling any Participant on account of any loss,
claim, damage, liability or action arising from any sale of Registrable Notes to
any person by the Participant if that Participant failed to send or give a copy
of the Prospectus (or the Prospectus as amended or supplemented) to such person
at or prior to the written confirmation of sale to such person and if the untrue
statement or omission giving rise to such loss, claim, damage, liability or
action was corrected in the Prospectus (as amended or supplemented), unless such
failure resulted from non-compliance by the Issuers with Section 5(g) of this
Agreement; and provided further, that no partner of Holdings in such partner's
capacity as such shall be liable for indemnification or contribution pursuant to
this Section 7 on account of any loss, claim, damage, judgment, liability or
expense (including, without limitation, any legal fees or other fee or expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented),
and by purchasing the Notes, each holder of Notes waives any such liability of
any partner of Holdings.
(b) Each Participant agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, their respective affiliates, officers, partners,
directors (or equivalent), representatives, employees and agents of each Issuer
and each Person who controls each Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange
<PAGE>
30
Act to the same extent (but on a several, and not joint, basis) as the foregoing
indemnity from the Issuers to each Participant, but only with reference to
information relating to such Participant furnished to the Issuers in writing by
such Participant expressly for use in any Registration Statement or Prospectus,
any amendment or supplement thereto, or any preliminary prospectus. The
liability of any Participant under this paragraph shall in no event exceed the
proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Persons against whom such indemnity may be sought (the "Indemnifying
Persons") in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may reasonably designate in such proceeding and shall pay
the fees and expenses actually incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Persons (i) will not relieve it from any liability under paragraph (a) or (b)
above unless and to the extent that the Indemnifying Person is materially
prejudiced by such failure to notify and (ii) will not, in any event, relieve
the Indemnifying Person from any obligations to any Indemnified Person otherwise
than under this Section 7. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both any Indemnifying Person and the Indemnified
Person or any affiliate thereof and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Persons shall not, in
connection with such proceeding or separate but substantially similar
<PAGE>
31
related proceeding in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed promptly as they are incurred. Any
such separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes and Exchange Notes sold by all such Participants and shall
be reasonably acceptable to the Issuers, and any such separate firm for the
Issuers, their affiliates, officers, directors, representatives, employees and
agents and such control Persons of such Issuer shall be designated in writing by
such Issuer and shall be reasonably acceptable to the Holders.
The Indemnifying Persons shall not be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
each of the Indemnifying Persons agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Persons (which consent shall not be unreasonably
withheld or delayed), effect any settlement or compromise of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party, or indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional written
release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.
(d) If the indemnification provided for in the first and second paragraphs
of this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities
<PAGE>
32
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Notes 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 Person or Persons on the one hand and the Indemnified Person or
Persons on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers on the one hand or
such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as
<PAGE>
33
the case may be, exceeds the amount of any damages that such Participant has
otherwise been required to pay or has paid by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Issuer, its directors, officers, employees or agents or any person
controlling an Issuer, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuers covenant and agree that Holdings will file the reports required
to be filed by the Issuers under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act and,
if at any time the Issuers are not required to file such reports, Holdings will,
upon the request of any Holder or beneficial owner of Registrable Notes, make
available such information necessary to permit sales pursuant to Rule 144A under
<PAGE>
34
the Securities Act. Each of the Issuers further covenants and agrees, for so
long as any Registrable Notes remain outstanding that it will take such further
action as any Holder of Registrable Notes may reasonably request, all to the
extent required from time to time to make available to any Holder or beneficial
owner of Registrable Notes in connection with any sale thereof and any
prospective purchaser or such beneficial owner the information required in order
to permit resales of such Registrable Notes pursuant to Rule 144A under the
Securities Act, 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) then in effect.
9. Underwritten Registrations
The Issuers shall not be required to assist in an underwritten offering
unless requested by the Holders of a majority in aggregate principal amount of
the then outstanding Registrable Notes.
If any of the Registrable Notes covered by any Shelf Registration 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 Notes
included in such offering and shall be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes 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.
<PAGE>
35
10. Miscellaneous
(a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and the Issuers shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes 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 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 any Registration Statement,
unless by the terms of such piggy-back registration rights, the registration of
securities of such Person pursuant to such Registration Statement will not
result in any reduction in the amount of any Registrable Notes that may be
registered pursuant to such Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Issuers and (II)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes 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 Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each
<PAGE>
36
Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. 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 Notes 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 Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.
(d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, including courier
service, or facsimile:
(i) if to a Holder of the Registrable Notes 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
registrar under the Indenture.
(ii) if to the Issuers, at the address as follows:
c/o Graham Packaging Holdings Company
1110 East Princess Street
York, Pennsylvania 17403
Attention: John E. Hamilton, V.P., Finance &
Administration
Telephone No.: (717) 849-8521
<PAGE>
37
Facsimile No.: (717) 849-8541
with copies to:
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Howard A. Lipson, Senior Managing
Director
Telephone No.: (212) 836-9844
Facsimile No.: (212) 754-8703
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Wilson S. Neely, Esq.
Telephone No.: (212) 455-7063
Facsimile No.: (212) 455-2502
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, including delivery by courier service; 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
<PAGE>
38
giving the same to the Trustee at the address and in the manner specified in the
Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable 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
<PAGE>
39
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes 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 Holders 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) Non-Recourse Obligations. The obligations under this Agreement, the
Notes, the Registration Statement, the Exchange Offer, the Exchange Notes, the
Private Exchange Notes, any Guarantee, any Initial Shelf Registration,
Subsequent Shelf Registration, the Purchase Agreement or the transactions
contemplated hereby and thereby shall be expressly non-recourse to the partners
of Holdings in their capacities as such, and the
<PAGE>
40
partners of Holdings shall not incur any liabilities or bear any costs or
expenses in connection with this Agreement or the issuance and sale of the
Notes, including but not limited to any such costs and expenses as provided in
Section 6 hereof or any liabilities for indemnification or contribution as
provided in Section 7 hereof, and by purchasing the Notes, each holder of Notes
waives any such obligation or liability of any partner of Holdings and waives
any requirement that any such partner bear any such costs or expenses.
<PAGE>
41
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
The Issuers:
GRAHAM PACKAGING HOLDINGS COMPANY
By: BCP/Graham Holdings L.L.C.,
its general partner
By: /s/ Frank Nico
----------------------------
Name: Frank Nico
Title: Assistant Treasurer &
Assistant Secretary
GPC CAPITAL CORP. II
By: /s/ John E. Hamilton
------------------------------
Name: John E. Hamilton
Title: Vice President,
Secretary & Assistant Treasurer
<PAGE>
42
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BT ALEX. BROWN INCORPORATED
BANKERS TRUST INTERNATIONAL PLC
LAZARD FRRES & CO. LLC
SALOMON BROTHERS INC
as Initial Purchasers
By: BT ALEX. BROWN INCORPORATED
By: /s/ Julie Persily
-------------------------------
Name: Julie Persily
Title: Principal
<PAGE>
Exhibit 12
Schedule of
Earnings to Fixed Charges
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
Earnings were calculated as
follows:
<S> <C> <C> <C> <C> <C>
Income before taxes,
minority interest and
extraordinary items 5.7 27.5 20.2 21.2 11.0
Add: Fixed charges 24.2 15.7 20.1 18.4 17.2
---- ---- ---- ---- ----
Earnings 29.9 43.2 40.3 39.6 28.2
---- ---- ---- ---- ----
Fixed Charges were calculated as
follows:
Interest expense, net 21.1 12.5 16.2 14.5 13.4
Capitalized interest 0.7 0.7 0.9 0.9 0.6
Portion of rental attributable to
interest 2.4 2.5 3.0 3.0 3.2
---- ---- ---- ---- ----
Fixed charges 24.2 15.7 20.1 18.4 17.2
---- ---- ---- ---- ----
Ratio of earnings to fixed charges 1.24 2.76 2.00 2.15 1.64
Deficiency
<CAPTION>
For the Year Ended For the Three Months Ended
December 1997, Pro Forma For the Three Months Ended March 29, 1998, Pro Forma
-------------------------- --------------------------- ---------------------------
Operating March 30, March 29, Operating
Holdings Company 1997 1998 Holdings Company
----------- -------------- ----------- ----------- ----------- ---------
Earnings were calculated as
follows:
<S> <C> <C> <C> <C> <C> <C>
Income before taxes,
minority interest and
extraordinary items (47.4) (35.9) 4.4 (22.3) (3.8) (0.7)
Add: Fixed charges 74.9 63.9 4.2 12.8 19.0 15.9
---- ---- --- ---- ---- ----
Earnings 27.5 27.5 8.6 (9.5) 15.2 15.2
---- ---- --- ---- ---- ----
Fixed Charges were calculated as
follows:
Interest expense, net 71.1 59.6 3.3 11.9 18.1 15.0
Capitalized interest 0.6 0.6 0.1 0.1 0.1 0.1
Portion of rental attributable to
interest 3.2 3.2 0.8 0.8 0.8 0.8
---- ---- --- ---- ---- ----
Fixed charges 74.9 63.4 4.2 12.8 19.0 15.9
---- ---- --- ---- ---- ----
Ratio of earnings to fixed charges -- -- 2.05 -- -- --
Deficiency (48.0) (36.5) (22.4) (3.9) (0.8)
</TABLE>
<PAGE>
EXHIBIT 16.1
May 26, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the 'Change in Independent Accountants' section on Page 174 of Form
S-4 dated May 26, 1998 of Graham Packaging Company, GPC Capital Corp. I, Graham
Packaging Holdings Company and GPC Capital Corp. II and are in agreement with
the statements contained therein.
/S/ ERNST & YOUNG LLP
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the references to our firm under the captions 'Summary Historical
and Pro Forma Financial Data,' 'Selected Historical Financial Data,' and
'Experts' and to the use of our report dated March 23, 1998 (except for the
matters discussed in the last paragraph of Notes 13 and 17, as to which the date
is April 24, 1998) with respect to the combined financial statements and
schedule of Graham Packaging Group included in the Registration Statement (Form
S-4, No. 333- ) and related Prospectus of Graham Packaging Company, GPC
Capital Corp. I, Graham Packaging Holdings Company and GPC Capital Corp. II,
dated May 26, 1998.
/S/ ERNST & YOUNG LLP
Harrisburg, Pennsylvania
May 22, 1998
<PAGE>
EXHIBIT 25.1
UNITED STATES
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) _______
=====================
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its
charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street
New York, New York 10036-1532
(Address of principal (Zip Code)
executive offices)
None
(Name, address and telephone number of agent for service)
========================
GRAHAM PACKAGING COMPANY
(Exact name of obligor as specified in its charter)
PENNSYLVANIA 23-2786688
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization)Identification No.)
-----------------------------------------------
GPC Capital Corp. I
(Exact name of obligor as specified in its charter)
Delaware 23-2952403
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
As to both obligors:
1110 East Princess Street
York, Pennsylvania 32819
(Address of principal executive offices) (Zip Code)
<PAGE>
2
8 3/4% Senior Subordinated Notes due 2008, Series A
Floating Interest Rate Subordinated Term Securities due 2008, Series A
(Title of the indenture securities)
<PAGE>
3
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The obligor is currently not in default under any of its outstanding securities
for which United States Trust Company of New York is Trustee. Accordingly,
responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1
are not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State
of New York Banking Department to transact business as a
Trust Company, is incorporated by reference to Exhibit T-1.1
to Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
4
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of May 11, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 11th of
May 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
Gerard F. Ganey
Senior Vice President
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
December 19, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
-----------------------------
By: /s/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
($ IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
-----------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
Total Assets $ 3,159,978
===========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
-----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
-----------
Total Liabilities $2,987,921
-----------
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
-----------
Total Stockholder's Equity 172,057
Total Liabilities and -----------
Stockholder's Equity $3,159,978
===========
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory
authority and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
<PAGE>
============================================================================
EXHIBIT 25.2
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
Graham Packaging Holdings Company
(Exact name of obligor as specified in its charter)
Pennsylvania 23-2553000
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
GPC Capital Corp. II
(Exact name of obligor as specified in its charter)
Delaware 23-2952404
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1110 East Princess Street
York, Pennsylvania 17403
(Address of principal executive offices) (Zip code)
---------------------------
10-3/4% Senior Discount Notes Due 2009
(Title of the indenture securities)
============================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street
New York New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(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.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and
17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 13th day of May, 1998.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
------------------------
Name: Walter N. Gitlin
Title: Vice President
<PAGE>
EXHIBIT 7
---------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, NY 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
December 31, 1997, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions of the
Federal Reserve Act.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Dollar Amounts
in Thousands
- ------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin......................................... $ 5,742,986
Interest-bearing balances.................................................................. 1,342,769
Securities:
Held-to-maturity securities................................................................ 1,099,736
Available-for-sale securities.............................................................. 3,882,686
Federal funds sold and Securities purchased under agreements to resell...................... 2,568,530
Loans and lease financing receivables:
Loans and leases net of unearned income..........................................35,019,608
LESS: Allowance for loan and lease losses...........................................627,350
LESS: Allocated transfer risk reserve.....................................................0
Loans and leases, net of unearned income, allowance, and reserve........................... 34,292,258
Assets held in trading accounts............................................................. 2,521,451
Premises and fixed assets (including capitalized leases).................................... 659,209
Other real estate owned..................................................................... 11,992
Investments in unconsolidated subsidiaries and associated companies......................... 226,263
Customers liability to this bank on acceptances outstanding................................. 1,187,449
Intangible assets........................................................................... 781,684
Other assets................................................................................ 1,736,574
Total assets................................................................................ $56,153,587
LIABILITIES
Deposits:
in domestic offices........................................................................ $27,031,262
Noninterest-bearing..............................................................11,899,507
Interest-bearing.................................................................15,131,855
In foreign offices. Edge and Agreement subsidiaries, and IBFs.............................. 13,794,449
Noninterest-bearing.................................................................590,999
Interest-bearing.................................................................13,203,450
Federal funds purchased and Securities sold under agreements to repurchase.................. 2,338,881
Demand notes issued to the U.S. Treasury.................................................... 173,851
Trading liabilities......................................................................... 1,695,216
Other borrowed money:
With remaining maturity of one year or less................................................ 1,905,330
With remaining maturity of more than one year through three years.......................... 0
With remaining maturity of more than three years........................................... 25,664
Bank's liability on acceptances executed and outstanding.................................... 1,195,923
Subordinated notes and debentures........................................................... 1,012,940
Other liabilities........................................................................... 2,018,960
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Dollar Amounts
in Thousands
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Total liabilities........................................................................... 51,192,576
EQUITY CAPITAL
Common stock................................................................................ 1,135,284
Surplus..................................................................................... 731,319
Undivided profits and capital reserves...................................................... 3,093,726
Net unrealized holding gains (losses) on available-for-sale securities...................... 36,866
Cumulative foreign currency translation adjustments......................................... (36,184)
----------
Total equity capital........................................................................ 4,961,011
Total liabilities and equity capital........................................................ $56,153,587
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi \
Alan R. Griffin } Director
J. Carter Bacot /
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 1061506
<NAME> GRAHAM PACKAGING COMPANY
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-END> DEC-31-1997 MAR-29-1998
<CASH> 7,218 4,197
<SECURITIES> 0 0
<RECEIVABLES> 70,930 82,442
<ALLOWANCES> 1,635 1,730
<INVENTORY> 32,236 30,182
<CURRENT-ASSETS> 117,947 123,520
<PP&E> 587,910 598,496
<DEPRECIATION> 327,614 336,564
<TOTAL-ASSETS> 385,491 423,763
<CURRENT-LIABILITIES> 113,132 115,737
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 337 (436,289)
<TOTAL-LIABILITY-AND-EQUITY> 385,491 423,763
<SALES> 521,707 134,418
<TOTAL-REVENUES> 521,707 134,418
<CGS> 437,301 109,841
<TOTAL-COSTS> 437,301 109,841
<OTHER-EXPENSES> 58,653 34,977
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 14,940 11,939
<INCOME-PRETAX> 10,813 (22,339)
<INCOME-TAX> 600 8
<INCOME-CONTINUING> 10,213 (22,347)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 675
<CHANGES> 0 0
<NET-INCOME> 10,213 (23,022)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
for
8 3/4% Senior Subordinated Notes
Due 2008
of
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON _______, 1998,UNLESS THE OFFER IS EXTENDED
- --------------------------------------------------------------------------------
United States Trust Company of New York
(the "Exchange Agent")
<TABLE>
<S> <C> <C>
By Overnight Courier: By Hand: By Registered or Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway, Lower Level P.O. Box 844
New York, New York 10003 Attn: Corporate Trust Services Attn: Corporate Trust Services
Attn: Corporate Trust Services New York, New York 10006 Cooper Station
New York, New York 10276-0844
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only):
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an address other than as set forth above
or transmission of instructions via a facsimile number other than the ones
listed above will not constitute a valid delivery. The instructions accompanying
this Letter of Transmittal should be read carefully before this Letter of
Transmittal is completed.
The undersigned acknowledges receipt of the Prospectus dated
__________, 1998 (the "Prospectus") of Graham Packaging Company (the "Operating
Company") and GPC Capital Corp. I (together with the Operating Company, the
"Company Issuers"), Graham Packaging Holdings Company ("Holdings") and the other
issuers named therein, and this Letter of Transmittal (the "Letter of
Transmittal"), which together describe the Company Issuers' offer (the "Exchange
Offer") to exchange $1,000 in principal amount of their new 8 3/4% Senior
Discount Notes Due 2008, Series B (the "Exchange Notes"), for each $1,000 in
principal amount of outstanding 8 3/4% Senior Discount Notes Due 2008, Series A
(the "Old Notes"). The terms of the Exchange Notes are identical in all material
respects (including principal amount, interest rate and maturity) to the terms
of the Old Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the Exchange Notes are freely transferable by holders thereof
(except as provided herein or in the Prospectus) and are not subject to any
covenant regarding registration under the Securities Act of 1933, as amended
(the "Securities Act"). The Old Notes are unconditionally guaranteed (the "Old
Holdings Guarantees") by Holdings on a senior subordinated basis, and the
Exchange Notes will be unconditionally guaranteed (the "Holdings Guarantees") by
Holdings on a senior subordinated basis. Upon the terms and subject to the
conditions set forth in the Prospectus and this Letter of Transmittal, Holdings
offers to issue the Holdings Guarantees with respect to all Exchange Notes
issued in the Exchange Offer in exchange for the outstanding Old Holdings
Guarantees of the Old Notes for which such Exchange Notes are issued in
exchange. Throughout this Letter of Transmittal, unless the context otherwise
requires and whether so expressed or not, references to the "Exchange Offer"
<PAGE>
2
include Holdings' offer to exchange the Holdings Guarantees for the Old Holdings
Guarantees, references to the "Company Issuers" include Holdings as issuer of
the Holdings Guarantees and the Old Holdings Guarantees, references to the
"Exchange Notes" include the related Holdings Guarantees and references to the
"Old Notes" include the related Old Holdings Guarantees. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on _____________, 1998, unless
the Company Issuers, in their reasonable judgement, extend the Exchange Offer,
in which case the term shall mean the latest date and time to which the Exchange
Offer is extended. Capitalized terms used but not defined herein have the
meanings given to them in the Prospectus.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates.
If the space indicated in inadequate, the Certificate or Registration Numbers
and Principal Amounts should be listed on a separately signed schedule affixed
hereto.
<TABLE>
<CAPTION>
=======================================================================================================================
DESCRIPTION OF OLD NOTES TENDERED HEREBY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Certificate or Aggregate Principal Principal Amount
Registered Owner(s) Registration Numbers* Amount Represented by Tendered**
(Please fill in) Old Notes
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry Holders.
**Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by such Old Notes. All tenders
must be in integral multiples of $1,000.
================================================================================
This Letter of Transmittal is to be used if (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith, (ii) tender of Old Notes is to be made by book-entry transfer to an
account maintained by the Exchange Agent at The Depository Trust Company
("DTC"), pursuant to the procedures set forth in "The Senior Subordinated
Exchange Offers--Prcedures for Tendering Senior Subordinated Old Notes" in the
Prospectus or (iii) tender of the Old Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Senior Subordinated Exchange Offers--Procedures for Tendering Senior
Subordinated Old Notes." See Instruction 2. Delivery of documents to a
book-entry transfer facility does not constitute delivery to the Exchange Agent.
This Letter of Transmittal must be completed, signed and delivered even if
tender instructions are being transmitted through the Book-Entry Transfer
Facility Automated Tender Offer Program ("ATOP").
As used in this Letter of Transmittal, the term "Holder" with respect
to the Exchange Offer means any person in whose name Old Notes are registered on
the books of the Company Issuers or, with respect to interests in the Global
Notes held by DTC, any DTC participant listed in an official DTC proxy. The
undersigned has completed, executed and delivered
<PAGE>
3
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Exchange Offer. Holders who wish to tender their Old
Notes must complete this letter in its entirety.
Holders of Old Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
Exchange Offer must transmit their acceptances to DTC, which will verify the
acceptance and execute a book-entry delivery to the Exchange Agent's account at
DTC. DTC will then send an Agent's Message to the Exchange Agent for its
acceptance. Each DTC participant transmitting an acceptance of the Exchange
Offer through the ATOP Procedures will be deemed to have agreed to be bound by
the terms of this Letter of Transmittal. Nevertheless, in order for such
acceptance to constitute a valid tender of the DTC participant's Old Notes, such
participant must complete and sign a Letter of Transmittal and deliver it to the
Exchange Agent before the Expiration Date.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _________________________________________
Account Number ________________________________________________________
Transaction Code Number _______________________________________________
Holders whose Old Notes are not immediately available or who cannot
deliver their Old Notes and all other documents required hereby to the Exchange
Agent on or prior to the Expiration Date must tender their Old Notes according
to the guaranteed delivery procedure set forth in the Prospectus under the
caption "The Senior Subordinated Exchange Offer--Procedures for Tendering Senior
Subordinated Old Notes." See Instruction 2.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) __________________________________________
Name of Eligible Institution that Guaranteed Delivery _________________
-----------------------------------------------------------------------
If delivery by book-entry transfer:
Account Number ___________________________________________________
Transaction Code Number __________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name __________________________________________________________________
Address _______________________________________________________________
<PAGE>
4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company Issuers the principal amount of the
Old Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of such Old Notes tendered hereby, the undersigned hereby exchanges,
assigns and transfers to, or upon the order of, the Company Issuers all right,
title and interest in and to such Old Notes as are being tendered hereby,
including all rights to accrued and unpaid interest thereon as of the Expiration
Date. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that said Exchange Agent acts as the agent of the Company Issuers
in connection with the Exchange Offer) to cause the Old Notes to be assigned,
transferred and exchanged. The undersigned represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Old Notes
and to acquire Exchange Notes issuable upon the exchange of such tendered Old
Notes, and that when the same are accepted for exchange, the Company Issuers
will acquire good and unencumbered title to the tendered Old Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim.
The undersigned represents to the Company Issuers that (i) the Exchange
Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, and (ii) neither the undersigned nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. If the undersigned or the person
receiving the Exchange Notes covered hereby is a broker-dealer that is receiving
the Exchange Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
the undersigned acknowledges that it or such other person will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. The undersigned and any
such other person acknowledge that, if they are participating in the Exchange
Offer for the purpose of distributing the Exchange Notes, (i) they cannot rely
on the position of the staff of the Securities and Exchange Commission
enunciated in Exxon Capital Holdings Corporation (April 13, 1988), Morgan
Stanley & Co., Inc.(June 5, 1991) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company Issuers. If the undersigned or the person receiving the Exchange
Notes covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company Issuers, the undersigned represents to the
Company Issuers that the undersigned understands and acknowledges that such
Exchange Notes may not be offered for resale, resold or otherwise transferred by
the undersigned or such other person without registration under the Securities
Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company
Issuers to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes or transfer ownership of such Old Notes on the
account books maintained by a book-entry transfer facility. The undersigned
further agrees that acceptance of any tendered Old Notes by the Issuer and the
issuance of Exchange Notes in exchange therefor shall constitute performance in
full by the Company Issuers of their obligations under the Registration Rights
Agreement and that the Company Issuers shall have no further obligation or
liabilities thereunder for the registration of the Old Notes or the Exchange
Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Senior Subordinated Exchange Offers--Certain
Conditions to the Senior Subordinated Exchange Offers." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company Issuers), as more particularly set forth in the
Prospectus, the Company Issuers may not be required to exchange any of the Old
Notes tendered hereby and, in such event, the Old Notes not exchanged will be
returned to the undersigned at the address shown below the signature of the
undersigned.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Old Notes may be withdrawn
at any time prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Old
<PAGE>
5
Notes, and any Old Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal or to the person(s) signing this Letter of Transmittal at
an address different than the address shown on this Letter of Transmittal, the
appropriate boxes of this Letter of Transmittal should be completed. If Old
Notes are surrendered by Holder(s) that have completed either the box entitled
"Special Registration Instructions" or the box entitled "Special Delivery
Instructions" in this Letter of Transmittal, signature(s) on this Letter of
Transmittal must be guaranteed by an Eligible Institution (defined in
Instruction 2).
<PAGE>
6
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the Exchange
Notes are to be issued in the name of someone
other than the undersigned.
Name: ________________________________
Address: _____________________________
Book-Entry Transfer Facility Account:
--------------------------------------
Employee Identification or Social Security
Number: _________________________________
(Please print or type.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the
Exchange Notes are to be sent to someone other
than the undersigned, or to the undersigned at an
address other than that shown under "Description
of Notes Tendered Hereby."
Name __________________________
Address _______________________
-------------------------------
-------------------------------
(Please print or type.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTERED HOLDER(S) OF NOTES OR DTC PARTICIPANT(S)
SIGN HERE (In addition, complete Substitute Form W-9 below.)
X ______________________________________________________________________________
X ______________________________________________________________________________
(Signature(s) of Registered Holder(s) or DTC Participant(s))
Must be signed by registered holder(s) or DTC participant(s) exactly as
name(s) appear(s) on the Notes or on a security position listing as the owner of
the Notes or by person(s) authorized to become registered holder(s) by properly
completed bond powers transmitted herewith. If signature is by attorney-in-fact,
trustee, executor, administrator, guardian, officer of a corporation or other
person acting in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title): ________________________________________________
Address (including zip code): __________________________________________________
- --------------------------------------------------------------------------------
Area Code and Telephone Number: ________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
Dated: _____________
SIGNATURE GUARANTEE (If Required
-- See Instruction 5)
Authorized Signature: __________________________________________________________
(Signature of Representative of Signature Guarantor)
Name and Title: ________________________________________________________________
Name of Plan: __________________________________________________________________
Area Code and Telephone Number: ________________________________________________
(Please print or type.)
Dated: ____________________
- --------------------------------------------------------------------------------
<PAGE>
7
PAYOR'S NAME [Trustee] or [Company Issuers]
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer identification
number on the following Substitute Form W-9 and certify therein that you are not
subject to backup withholding.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND
Form W-9 CERTIFY BY SIGNING AND
DATING BELOW.
Part 2 -- Check the box if you are not
________________________________
subject to backup withholding under the Social Security Number
provisions of Section 3406(A)(1)(C) of
the Internal Revenue Code because (1)
you are exempt from backup withholding, OR _____________________________
Department of the Treasury (2) you have not been notified that you Employer Identification Number
Internal Revenue Service are subject to backup withholding as a
result of failure to report all interest
or dividends or (3) the Internal
Revenue Service has notified you that
you are not longer subject to backup
withholding. ( )
-----------------------------------------------------------------------------------
Payor's Request for Taxpayer Certification: Under penalties of
Identification Number (TIN) perjury, I certify that the information Part 3 --
provided on this form is true, Awaiting TIN
correct and complete.
Signature: _____________________
Date: __________________________
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer or (b)
I intend to mail or deliver such an application in the near future. I understand
that if I do not provide a taxpayer identification number within 60 days, 31% of
all reportable payments made to me thereafter will be withheld until I provide a
number.
SIGNATURE __________________________________________________ DATE______________
- --------------------------------------------------------------------------------
<PAGE>
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates.
All physically delivered Old Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at a book-entry transfer facility of
Old Notes tendered by book-entry transfer, as well as a properly completed and
duly executed copy of this Letter of Transmittal or facsimile thereof, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). The method of delivery of this
Letter of Transmittal, the Old Notes and any other required documents is at the
election and risk of the Holder, and except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
If such delivery is by mail, it is suggested that registered mail with return
receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
Delivery to an address other than as set forth herein, or instructions
via a facsimile number other than the ones set forth herein, will not constitute
a valid delivery.
2. Guaranteed Delivery Procedures.
Holders who wish to tender their Old Notes, but whose Old Notes are not
immediately available and thus cannot deliver their Old Notes, the
Letter of Transmittal or any other required documents to the Exchange
Agent (or comply with the procedures for book-entry transfer) prior to
the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17 Ad-15 under the
Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the Holder,
the registration number(s) of such Old Notes and the principal
amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the Old Notes
(or a confirmation of book-entry transfer of such Old Notes into
the Exchange Agent's account at DTC) and any other documents
required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Old Notes in proper
form for transfer (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account at DTC) and all
other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery
will be sent to Holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above. Any Holder who wishes to tender
Old Notes pursuant to the guaranteed delivery procedures described above must
ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
relating to such Old Notes prior to the Expiration Date. Failure to complete the
guaranteed delivery procedures outlined above will not, of itself, affect the
validity or effect a revocation of any Letter of Transmittal form properly
completed and executed by a Holder who attempted to use the guaranteed delivery
procedures.
3. Beneficial Owner Instructions.
<PAGE>
9
Only a Holder of Old Notes (i.e., a person in whose name Old Notes
are registered on the books of the registrar or, with respect to
interests in the Global Notes held by DTC, a DTC participant listed in
an official DTC proxy), or the legal representative or attorney-in-fact
of a Holder, may execute and deliver this Letter of Transmittal. Any
beneficial owner of Old Notes who wishes to accept the Exchange Offer
must arrange promptly for the appropriate Holder to execute and deliver
this Letter of Transmittal on his or her behalf through the execution
and delivery to the appropriate Holder of the Instructions to
Registered Holder and/or DTC Participant from Beneficial Owner form
accompanying this Letter of Transmittal.
4. Partial Tenders; Withdrawals.
If less than the entire principal amount of Old Notes evidenced by
a submitted certificate is tendered, the tendering Holder should fill
in the principal amount tendered in the column entitled "Principal
Amount Tendered" of the box entitled "Description of Old Notes Tendered
Hereby." A newly issued Note for the principal amount of Old Notes
submitted but not tendered will be sent to such Holder as soon as
practicable after the Expiration Date. All Old Notes delivered to the
Exchange Agent will be deemed to have been tendered in full unless
otherwise indicated.
Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date, after which tenders of Old
Notes are irrevocable. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by
the Exchange Agent. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including
the registration number(s) and principal amount of such Old Notes, or,
in the case of Old Notes transferred by book-entry transfer, the name
and number of the account at DTC to be credited), (iii) be signed by
the Holder in the same manner as the original signature on this Letter
of Transmittal (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee
with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the
name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be
determined by the Company Issuers, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed
not to have been validly tendered for purposes of the Exchange Offer
and no Exchange Notes will be issued with respect thereto unless the
Old Notes so withdrawn are validly retendered. Any Old Notes which have
been tendered but which are not accepted for exchange will be returned
to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of
Exchange Offer.
5. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered
Holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this
Letter of Transmittal is signed by a participant in DTC, the signature
must correspond with the name as it appears on the security position
listing as the owner of the Old Notes.
If any of the Old Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of
Transmittal.
If a number of Old Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of Old Notes.
Signatures of this Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by an Eligible
Institution unless the Old Notes tendered hereby are tendered (i) by a
registered Holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible
Institution.
If this Letter of Transmittal is signed by the registered Holder
or Holders of Old Notes (which term, for the purposes described herein,
shall include a participant in DTC whose name appears on a security
listing as the owner of the Old Notes) listed and tendered hereby, no
endorsements of the tendered Old Notes or separate written instruments
of transfer or exchange are required. In any other case, the registered
Holder (or acting Holder) must either properly endorse the Old Notes or
transmit properly completed bond powers with this Letter of Transmittal
<PAGE>
10
(in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Old Notes, and, with respect to a
participant in DTC whose name appears on such security position
listing), with the signature on the Old Notes or bond power guaranteed
by an Eligible Institution (except where the Old Notes are tendered for
the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are 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, unless
waived by the Company Issuers, proper evidence satisfactory to the
Company Issuers of their authority so to act must be submitted.
6. Special Registration and Delivery Instructions.
Tendering Holders should indicate, in the applicable box, the name
and address (or account at DTC) in which the Exchange Notes or
substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued (or deposited), if different from the
names and addresses or accounts of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named
must also be indicated and the tendering Holder should complete the
applicable box.
If no instructions are given, the Exchange Notes (and any Old
Notes not tendered or not accepted) will be issued in the name of and
sent to the acting Holder of the Old Notes or deposited at such
Holder's account at DTC.
7. Transfer Taxes.
The Company Issuers shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to them or their
order pursuant to the Exchange Offer. If a transfer tax is imposed for
any other reason other than the transfer and exchange of Old Notes to
the Company Issuers, or their order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the registered
Holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith, the amount of such transfer taxes will be
collected from the tendering Holder by the Exchange Agent.
Except as provided in this Instruction, it will not be necessary
for transfer stamps to be affixed to the Old Notes listed in the Letter
of Transmittal.
8. Waiver of Conditions.
The Company Issuers reserve the right, in their reasonable
judgment, to waive, in whole or in part, any of the conditions to the
Exchange Offer set forth in the Prospectus.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any Holder whose Old Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated
above for further instructions.
10. Request for Assistance or Additional Copies.
Questions relating to the procedure for tendering as well as
requests for additional copies of the Prospectus and this Letter of
Transmittal, may be directed to the Exchange Agent at the address and
telephone number(s) set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may
be directed to _______________Avenue, Suite ___________________ 48304,
telephone: _______________.
11. Validity and Form.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance of tendered Old Notes and withdrawal of
tendered Old Notes will be determined by the Company Issuers in their
sole discretion, which determination will be final and binding. The
Company Issuers reserve the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company Issuers'
acceptance of which would, in the opinion of counsel for the Company
Issuers, be unlawful. The Company Issuers also reserve the right, in
their reasonable
<PAGE>
11
judgment, to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company Issuers' interpretation of the
terms and conditions of the Exchange Offer (including the instructions
in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection
with tenders of Old Notes must be cured within such time as the Company
Issuers shall determine. Although the Company Issuers intend to notify
Holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company Issuers, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such
defects or irregularities with respect to tenders of Old Notes, neither
the Company Issuers, the Exchange Agent nor any other person shall
incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the
defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder as soon as
practicable following the Expiration Date.
<PAGE>
12
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Old Notes is required
to provide the Exchange Agent with such Holder's correct TIN on Substitute Form
W-9 above. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. 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, payments
that are made to such Holder may be subject to backup withholding.
Certain Holders (including among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-8, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be
obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any amounts otherwise payable to the Holder. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a Holder,
the Holder is required to notify the Exchange Agent of his or her correct TIN by
completing the form herein certifying that the TIN provided on Substitute Form
W-9 is correct ( or that such Holder is awaiting a TIN) and that (i) such Holder
is exempt, (ii) such Holder has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of failure
to report all interest or dividends or (iii) the Internal Revenue Service has
notified such Holder that he or she is no longer subject to backup withholding.
What Number to Give the Exchange Agent
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Old
Notes. If Old Notes are in more than one name or are not in the name of the
actual Holder, consult the instructions on Internal Revenue Service form W-9,
which may be obtained from the Exchange Agent, for additional guidance on which
number to report.
Certificate of Awaiting Taxpayer Identification Number
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN on Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: This Letter of Transmittal or a facsimile thereof (together
with Old Notes or confirmation of book-entry transfer and all other required
documents) or a Notice of Guaranteed Delivery must be received by the Exchange
Agent on or prior to the Expiration Date.
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
8 3/4% Senior Subordinated Notes
Due 2008, Series A
in Exchange for New
8 3/4% Senior Subordinated Notes Due 2008, Series B
of
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I
This form or one substantially equivalent hereto must be used to
accept the Exchange Offer of Graham Packaging Company and GPC Capital Corp. I
(the "Company Issuers") to exchange their new 8 3/4% Senior Subordinated Notes
Due 2008, Series B, and the related guarantees, for a like principal amount of
their outstanding 8 3/4% Senior Subordinated Notes Due 2008, Series A of the
Company Issuers, and the related guarantees (collectively, the "Old Notes"),
made pursuant to the Prospectus (as defined below), if certificates for the
Old Notes are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York
time, on the Expiration Date of the Exchange Offer. Such form may be delivered
or transmitted by telegram, telex, facsimile transmission, mail or hand
delivery to United States Trust Company of New York (the "Exchange Agent"), as
set forth below. In addition, in order to utilize the guaranteed delivery
procedure to tender Old Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal (or facsimile thereof) must also be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. Capitalized terms not defined herein are defined in the
Letter of Transmittal.
United States Trust Company of New York, Exchange Agent
<TABLE>
<CAPTION>
By Overnight Courier: By Hand: By Registered or Certified
Mail:
<S> <C> <C>
United States Trust Company of New York United States Trust Company of New York United States Trust Company of
770 Broadway, 13th Floor 111 Broadway New York
New York, New York 10003 Lower Level P.O. Box 844
Attn: Corporate Trust Services Attn: Corporate Trust Services Attn: Corporate Trust Services
New York, New York 10006 Cooper Station
New York, New York 10276-0844
By Facsimile Transmission
(For Eligible Institutions Only): Confirm by Telephone
(212) 420-6152 1-800-548-6565
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company Issuers the principal amount of Old Notes set forth below pursuant to
the guaranteed delivery procedure described in "The Senior Subordinated
Exchange Offers--Procedures for Tendering Senior Subordinated Old Notes"
section of the Prospectus dated __________, 1998 of Graham Packaging Company,
GPC Capital Corp. I, Graham Packaging Holdings Company (which has
unconditionally guaranteed the Old Notes and the Exchange Notes on a senior
subordinated basis) (the "Prospectus"), and the other issuers named therein,
receipt of which is hereby acknowledged.
Principal Amount of Old Notes Tendered.*
$
------------------------------------
Certificate No(s). (if available):
- --------------------------------------
Total Principal Amount Represented by Certificate(s):
- --------------------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
3
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and every obligation of
the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X_______________________________________ ______________________________________
X_______________________________________ ______________________________________
Signature(s) of Owner(s)
or Authorized Signatory
Area Code and Telephone Number:__________________________________
Must be signed by the holder(s) of Old Notes as their name(s) appear on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If the signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
if Old Notes will be delivered by book-entry transfer to The Depository Trust
Company, provide account number.
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Account Number:
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
4
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, 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 Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Old Notes being tendered hereby or confirmation
of book-entry transfer of such Old Notes into the Exchange Agent's account at
The Depository Trust company, in proper form for transfer, together with any
other documents required by the Letter of Transmittal, within three New York
Stock Exchange trading days after the Expiration Date.
Name of Firm _______________________________________________
Address ____________________________________________________
Area Code & Telephone No. __________________________________
Authorized Signature _______________________________________
Name _______________________________________________________
(Please Type or Print)
Title ______________________________________________________
Date _______________________________________________________
NOTE: DO NOT SEND CERTIFICATES REPRESENTING Old Notes WITH THIS FORM.
CERTIFICATES REPRESENTING Old Notes SHOULD BE SENT ONLY WITH A COPY OF
THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
5
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 Number Card
(for individuals), 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 backup withholding on ALL payment
include the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an
individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign
government, or an agency or instrumentality thereof.
o An international organization or any agency, or instrumentality
thereof.
o A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1).
o An entity registered at all times under the Investment Company Act
of 1940.
o A foreign central bank issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not
paid in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note:
You may be subject to backup withholding if the 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.
o Payments of tax-exempt interest (including exempt-interest
dividends under section 852).
o Payments described in section 6049(b)(S) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o 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 PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. 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 most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the number whether or not
recipients are required to file tax returns. Beginning January 1, 1984, Payers
must generally withhold 20% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. 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 payer, 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
under-payment 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
<PAGE>
6
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.3
LETTER OF TRANSMITTAL
for
Floating Interest Rate Term Securities Due 2008 (FIRSTS(SM)*)
of
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ______________, 1998, UNLESS THE OFFER IS EXTENDED
United States Trust Company of New York
(the "Exchange Agent")
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By Overnight Courier: By Hand: By Registered or Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway, Lower Level P.O. Box 844
New York, New York 10003 Attn: Corporate Trust Services Attn: Corporate Trust Services
Attn: Corporate Trust Services New York, New York 10006 Cooper Station
New York, New York 10276-0844
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only):
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an address other than as set
forth above or transmission of instructions via a facsimile number other
than the ones listed above will not constitute a valid delivery. The
instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
The undersigned acknowledges receipt of the Prospectus dated
__________, 1998 (the "Prospectus") of Graham Packaging Company (the
"Operating Company") and GPC Capital Corp. I (together with the Operating
Company, the "Company Issuers"), Graham Packaging Holdings Company
("Holdings") and the other issuers named therein, and this Letter of
Transmittal (the "Letter of Transmittal"), which together describe the
Company Issuers' offer (the "Exchange Offer") to exchange $1,000 in
principal amount of their new Floating Interest Rate Term Securities Due
2008, Series B (FIRSTS(SM)*) (the "Exchange Notes"), for each $1,000 in
principal amount of outstanding Floating Interest Rate Term Securities
Due 2008, Series A (FIRSTS(SM)*) (the "Old Notes"). The terms of the
Exchange Notes are identical in all material respects (including
principal amount, interest rate and maturity) to the terms of the Old
Notes for which they may be exchanged pursuant to the Exchange Offer,
except that the Exchange Notes are freely transferable by holders thereof
(except as provided herein or in the Prospectus) and are not subject to
any covenant regarding registration under the Securities Act of 1933, as
amended (the "Securities Act"). The Old Notes are unconditionally
guaranteed (the "Old Holdings Guarantees") by Holdings on a senior
subordinated basis, and the Exchange Notes will be unconditionally
guaranteed (the "Holdings Guarantees") by Holdings on a senior
subordinated basis. Upon the terms and subject to the conditions set
forth in the Prospectus and this Letter of Transmittal, Holdings offers
to issue the Holdings Guarantees with respect to all Exchange Notes
issued in the Exchange Offer in exchange for the outstanding Old Holdings
Guarantees of the Old Notes for which
- -----------------------
* FIRSTS is a service mark of BT Alex. Brown Incorporated.
<PAGE>
2
such Exchange Notes are issued in exchange. Throughout this Letter of
Transmittal, unless the context otherwise requires and whether so
expressed or not, references to the "Exchange Offer" include Holdings'
offer to exchange the Holdings Guarantees for the Old Holdings
Guarantees, references to the "Company Issuers" include Holdings as
issuer of the Holdings Guarantees and the Old Holdings Guarantees,
references to the "Exchange Notes" include the related Holdings
Guarantees and references to the "Old Notes" include the related Old
Holdings Guarantees. The term "Expiration Date" shall mean 5:00 p.m., New
York City time, on _________________, 1998, unless the Company Issuers,
in their reasonable judgment, extend the Exchange Offer, in which case
the term shall mean the latest date and time to which the Exchange Offer
is extended. Capitalized terms used but not defined herein have the
meanings given to them in the Prospectus.
The undersigned has checked the appropriate boxes below and
signed this Letter of Transmittal to indicate the action the undersigned
desires to take with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal
relates. If the space indicated in inadequate, the Certificate or
Registration Numbers and Principal Amounts should be listed on a
separately signed schedule affixed hereto.
DESCRIPTION OF OLD NOTES TENDERED HEREBY
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Name(s) and Address(es) of Certificate or Aggregate Principal Principal Amount
Registered Owner(s) Registration Numbers* Amount Represented by Tendered**
(Please fill in) Old Notes
Total
</TABLE>
* Need not be completed by book-entry Holders.
**Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by such Old Notes. All
tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used if (i) certificates
representing Old Notes are to be physically delivered to the Exchange
Agent herewith, (ii) tender of Old Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository
Trust Company ("DTC"), pursuant to the procedures set forth in "The
Senior Subordinated Exchange Offers--Prcedures for Tendering Senior
Subordinated Old Notes" in the Prospectus or (iii) tender of the Old
Notes is to be made according to the guaranteed delivery procedures
described in the Prospectus under the caption "The Senior Subordinated
Exchange Offers--Procedures for Tendering Senior Subordinated Old Notes."
See Instruction 2. Delivery of documents to a book-entry transfer
facility does not constitute delivery to the Exchange Agent. This Letter
of Transmittal must be completed, signed and delivered even if tender
instructions are being transmitted through the Book-Entry Transfer
Facility Automated Tender Offer Program ("ATOP").
As used in this Letter of Transmittal, the term "Holder" with
respect to the Exchange Offer means any person in whose name Old Notes
are registered on the books of the Company Issuers or, with respect to
interests in the Global Notes held by DTC, any DTC participant listed in
an official DTC proxy. The undersigned has completed, executed and
delivered
<PAGE>
3
this Letter of Transmittal to indicate the action the undersigned desires
to take with respect to the Exchange Offer. Holders who wish to tender
their Old Notes must complete this letter in its entirety.
Holders of Old Notes that are tendering by book-entry transfer
to the Exchange Agent's account at DTC can execute the tender through
ATOP, for which the transaction will be eligible. DTC participants that
are accepting the Exchange Offer must transmit their acceptances to DTC,
which will verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to
the Exchange Agent for its acceptance. Each DTC participant transmitting
an acceptance of the Exchange Offer through the ATOP Procedures will be
deemed to have agreed to be bound by the terms of this Letter of
Transmittal. Nevertheless, in order for such acceptance to constitute a
valid tender of the DTC participant's Old Notes, such participant must
complete and sign a Letter of Transmittal and deliver it to the Exchange
Agent before the Expiration Date.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution ___________________________________________
Account Number _________________________________________________________
Transaction Code Number _________________________________________________
Holders whose Old Notes are not immediately available or who
cannot deliver their Old Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date must tender their
Old Notes according to the guaranteed delivery procedure set forth in the
Prospectus under the caption "The Senior Subordinated Exchange
Offer--Procedures for Tendering Senior Subordinated Old Notes." See
Instruction 2.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) _____________________________________________
Name of Eligible Institution that Guaranteed Delivery _____________________
___________________________________________________________________________
If delivery by book-entry transfer:
Account Number ___________________________________________________
Transaction Code Number ___________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THE
THERETO:
Name __________________________________________________________________
Address _______________________________________________________________
<PAGE>
4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company Issuers the
principal amount of the Old Notes indicated above. Subject to, and
effective upon, the acceptance for exchange of such Old Notes tendered
hereby, the undersigned hereby exchanges, assigns and transfers to, or
upon the order of, the Company Issuers all right, title and interest in
and to such Old Notes as are being tendered hereby, including all rights
to accrued and unpaid interest thereon as of the Expiration Date. The
undersigned hereby irrevocably constitutes and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said Exchange Agent acts as the agent of the
Company Issuers in connection with the Exchange Offer) to cause the Old
Notes to be assigned, transferred and exchanged. The undersigned
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire Exchange Notes
issuable upon the exchange of such tendered Old Notes, and that when the
same are accepted for exchange, the Company Issuers will acquire good and
unencumbered title to the tendered Old Notes, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any
adverse claim.
The undersigned represents to the Company Issuers that (i) the
Exchange Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such Exchange
Notes, whether or not such person is the undersigned, and (ii) neither
the undersigned nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes. If the undersigned or the person receiving the Exchange
Notes covered hereby is a broker-dealer that is receiving the Exchange
Notes for its own account in exchange for Old Notes that were acquired as
a result of market-making activities or other trading activities, the
undersigned acknowledges that it or such other person will deliver a
prospectus meeting the requirements of the Securities Act in connection
with any resale of such Exchange Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. The
undersigned and any such other person acknowledge that, if they are
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes, (i) they cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in Exxon Capital Holdings
Corporation (April 13, 1988), Morgan Stanley & Co., Inc.(June 5, 1991) or
similar no-action letters and, in the absence of an exemption therefrom,
must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with the resale transaction and (ii)
failure to comply with such requirements in such instance could result in
the undersigned or any such other person incurring liability under the
Securities Act for which such persons are not indemnified by the Company
Issuers. If the undersigned or the person receiving the Exchange Notes
covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company Issuers, the undersigned represents to the
Company Issuers that the undersigned understands and acknowledges that
such Exchange Notes may not be offered for resale, resold or otherwise
transferred by the undersigned or such other person without registration
under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent
or the Company Issuers to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Old Notes or transfer
ownership of such Old Notes on the account books maintained by a
book-entry transfer facility. The undersigned further agrees that
acceptance of any tendered Old Notes by the Issuer and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full
by the Company Issuers of their obligations under the Registration Rights
Agreement and that the Company Issuers shall have no further obligation
or liabilities thereunder for the registration of the Old Notes or the
Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in
the Prospectus under the caption "The Senior Subordinated Exchange
Offers--Certain Conditions to the Senior Subordinated Exchange Offers."
The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company Issuers), as more
particularly set forth in the Prospectus, the Company Issuers may not be
required to exchange any of the Old Notes tendered hereby and, in such
event, the Old Notes not exchanged will be returned to the undersigned at
the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and every obligation
of the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Tendered Old
Notes may be withdrawn at any time prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery
Instructions" in this Letter of Transmittal, certificates for all
Exchange Notes delivered in exchange for tendered Old
<PAGE>
5
Notes, and any Old Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned.
If an Exchange Note is to be issued to a person other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address different than the address shown on
this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If Old Notes are surrendered by
Holder(s) that have completed either the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery
Instructions" in this Letter of Transmittal, signature(s) on this Letter
of Transmittal must be guaranteed by an Eligible Institution (defined in
Instruction 2).
<PAGE>
6
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the Exchange
Notes are to be issued in the name of someone
other than the undersigned.
Name: ________________________________
Address: _____________________________
Book-Entry Transfer Facility Account:
_________________________________________
Employee Identification or Social Security
Number: _________________________________
(Please print or type.)
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the
Exchange Notes are to be sent to someone other
than the undersigned, or to the undersigned at an
address other than that shown under "Description
of Notes Tendered Hereby."
Name __________________________
Address _______________________
_______________________________
_______________________________
(Please print or type.)
REGISTERED HOLDER(S) OF NOTES OR DTC PARTICIPANT(S) SIGN HERE
(In addition, complete Substitute Form W-9 below.)
X ____________________________________________________________________________
X______________________________________________________________________________
(Signature(s) of Registered Holder(s) or DTC Participant(s))
Must be signed by registered holder(s) or DTC participant(s)
exactly as name(s) appear(s) on the Notes or on a security position
listing as the owner of the Notes or by person(s) authorized to become
registered holder(s) by properly completed bond powers transmitted
herewith. If signature is by attorney-in-fact, trustee, executor,
administrator, guardian, officer of a corporation or other person acting
in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title): ______________________________________________
Address (including zip code): ________________________________________________
______________________________________________________________________________
Area Code and Telephone Number: ______________________________________________
Taxpayer Identification or Social Security No.: _______________________________
Dated: _____________
SIGNATURE GUARANTEE
(If Required -- See Instruction 5)
Authorized Signature: ________________________________________________________
(Signature of Representative of Signature Guarantor)
Name and Title: ______________________________________________________________
Name of Plan: ________________________________________________________________
Area Code and Telephone Number: ______________________________________________
(Please print or type.)
Dated: ____________________
<PAGE>
7 PAYOR'S NAME [Trustee] or [Company Issuers]
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer identification
number on the following Substitute Form W-9 and certify therein that you are
not subject to backup withholding.
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SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND DATING BELOW.
Form W-9
Part 2 -- Check the box if you are not subject to backup _________________________________________
withholding under the provisions of Section 3406(A)(1)(C) of Social Security Number
Department of the Internal Revenue Code because (1) you are exempt from
the Treasury backup withholding, (2) you have not been notified that you
Internal Revenue are subject to backup withholding as a result of failure to OR ______________________________________
Service report all interest or dividends or (3) the Internal Revenue Employer Identification Number
Service has notified you that you are not longer subject to
backup withholding. ( )
Payor's Request Certification: Under penalties of perjury, I certify that
for Taxpayer the information provided on this form is true, correct and Part 3--
Identification complete Awaiting TIN / /
Number (TIN)
Signature: _____________________
Date: _________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a) I have
mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social
Security Administration Officer or (b) I intend to mail or deliver such
an application in the near future. I understand that if I do not provide
a taxpayer identification number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number.
SIGNATURE _____________________________________________ DATE________________
<PAGE>
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates.
All physically delivered Old Notes or confirmation of any
book-entry transfer to the Exchange Agent's account at a book-entry
transfer facility of Old Notes tendered by book-entry transfer, as well
as a properly completed and duly executed copy of this Letter of
Transmittal or facsimile thereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at any
of its addresses set forth herein on or prior to the Expiration Date (as
defined in the Prospectus). The method of delivery of this Letter of
Transmittal, the Old Notes and any other required documents is at the
election and risk of the Holder, and except as otherwise provided below,
the delivery will be deemed made only when actually received by the
Exchange Agent. If such delivery is by mail, it is suggested that
registered mail with return receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering Holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive
notice of the acceptance of the Old Notes for exchange.
Delivery to an address other than as set forth herein, or
instructions via a facsimile number other than the ones set forth herein,
will not constitute a valid delivery.
2. Guaranteed Delivery Procedures.
Holders who wish to tender their Old Notes, but whose Old Notes
are not immediately available and thus cannot deliver their Old
Notes, the Letter of Transmittal or any other required documents
to the Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date, may effect a
tender if:
(a) the tender is made through a member firm of a registered
national securities exchange or of the National Association
of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United
States or an "eligible guarantor institution" within the
meaning of Rule 17 Ad-15 under the Exchange Act (an
"Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the Holder,
the Registration number(s) of such Old Notes and the principal
amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the Old Notes
(or a confirmation of book-entry transfer of such Old Notes into
the Exchange Agent's account at DTC) and any other documents
required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal
(or facsimile thereof), as well as all tendered Old Notes
in proper form for transfer (or a confirmation of
book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC) and all other documents required by
the Letter of Transmittal, are received by the Exchange
Agent within three New York Stock Exchange trading days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Old Notes
according to the guaranteed delivery procedures set forth above. Any
Holder who wishes to tender Old Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery relating to such Old Notes prior to the
Expiration Date. Failure to complete the guaranteed delivery procedures
outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery
procedures.
3. Beneficial Owner Instructions.
<PAGE>
9
Only a Holder of Old Notes (i.e., a person in whose name
Old Notes are registered on the books of the registrar or, with
respect to interests in the Global Notes held by DTC, a DTC
participant listed in an official DTC proxy), or the legal
representative or attorney-in-fact of a Holder, may execute and
deliver this Letter of Transmittal. Any beneficial owner of Old
Notes who wishes to accept the Exchange Offer must arrange
promptly for the appropriate Holder to execute and deliver this
Letter of Transmittal on his or her behalf through the execution
and delivery to the appropriate Holder of the Instructions to
Registered Holder and/or DTC Participant from Beneficial Owner
form accompanying this Letter of Transmittal.
4. Partial Tenders; Withdrawals.
If less than the entire principal amount of Old Notes
evidenced by a submitted certificate is tendered, the tendering
Holder should fill in the principal amount tendered in the
column entitled "Principal Amount Tendered" of the box entitled
"Description of Old Notes Tendered Hereby." A newly issued Note
for the principal amount of Old Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the
Expiration Date. All Old Notes delivered to the Exchange Agent
will be deemed to have been tendered in full unless otherwise
indicated.
Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date, after which
tenders of Old Notes are irrevocable. To be effective, a
written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any
such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn
(including the registration number(s) and principal amount of
such Old Notes, or, in the case of Old Notes transferred by
book-entry transfer, the name and number of the account at DTC
to be credited), (iii) be signed by the Holder in the same
manner as the original signature on this Letter of Transmittal
(including any required signature guarantees) or be accompanied
by documents of transfer sufficient to have the Trustee with
respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv)
specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the
Company Issuers, whose determination shall be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer
and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes
which have been tendered but which are not accepted for exchange
will be returned to the Holder thereof without cost to such
Holder as soon as practicable after withdrawal, rejection of
tender or termination of Exchange Offer.
5. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered
Holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the
certificates without alteration or enlargement or any change
whatsoever. If this Letter of Transmittal is signed by a
participant in DTC, the signature must correspond with the name
as it appears on the security position listing as the owner of
the Old Notes.
If any of the Old Notes tendered hereby are owned of record
by two or more joint owners, all such owners must sign this
Letter of Transmittal.
If a number of Old Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal as there are
different registrations of Old Notes.
Signatures of this Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by an
Eligible Institution unless the Old Notes tendered hereby are
tendered (i) by a registered Holder who has not completed the
box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered
Holder or Holders of Old Notes (which term, for the purposes
described herein, shall include a participant in DTC whose name
appears on a security listing as the owner of the Old Notes)
listed and tendered hereby, no endorsements of the tendered Old
Notes or separate written instruments of transfer or exchange
are required. In any other case, the registered Holder (or
acting Holder) must either properly endorse the Old Notes or
transmit properly completed bond powers with this Letter of
Transmittal
<PAGE>
10
(in either case, executed exactly as the name(s) of the
registered Holder(s) appear(s) on the Old Notes, and, with
respect to a participant in DTC whose name appears on such
security position listing), with the signature on the Old Notes
or bond power guaranteed by an Eligible Institution (except
where the Old Notes are tendered for the account of an Eligible
Institution).
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are 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, unless waived by the Company
Issuers, proper evidence satisfactory to the Company Issuers of
their authority so to act must be submitted.
6. Special Registration and Delivery Instructions.
Tendering Holders should indicate, in the applicable box,
the name and address (or account at DTC) in which the Exchange
Notes or substitute Old Notes for principal amounts not tendered
or not accepted for exchange are to be issued (or deposited), if
different from the names and addresses or accounts of the person
signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social
security number of the person named must also be indicated and
the tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any
Old Notes not tendered or not accepted) will be issued in the
name of and sent to the acting Holder of the Old Notes or
deposited at such Holder's account at DTC.
7. Transfer Taxes.
The Company Issuers shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to them or
their order pursuant to the Exchange Offer. If a transfer tax is
imposed for any other reason other than the transfer and
exchange of Old Notes to the Company Issuers, or their order
pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be
collected from the tendering Holder by the Exchange Agent.
Except as provided in this Instruction, it will not be
necessary for transfer stamps to be affixed to the Old Notes
listed in the Letter of Transmittal.
8. Waiver of Conditions.
The Company Issuers reserve the right, in their reasonable
judgment, to waive, in whole or in part, any of the conditions
to the Exchange Offer set forth in the Prospectus.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any Holder whose Old Notes have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the
address indicated above for further instructions.
10. Request for Assistance or Additional Copies.
Questions relating to the procedure for tendering as well
as requests for additional copies of the Prospectus and this
Letter of Transmittal, may be directed to the Exchange Agent at
the address and telephone number(s) set forth above. In
addition, all questions relating to the Exchange Offer, as well
as requests for assistance or additional copies of the
Prospectus and this Letter of Transmittal, may be directed to
_______________Avenue, Suite ___________________ 48304,
telephone: _______________.
11. Validity and Form.
All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered Old Notes
and withdrawal of tendered Old Notes will be determined by the
Company Issuers in their sole discretion, which determination
will be final and binding. The Company Issuers reserve the
absolute right to reject any and all Old Notes not properly
tendered or any Old Notes the Company Issuers' acceptance of
which would, in the opinion of counsel for the Company Issuers,
be unlawful. The Company Issuers also reserve the right, in
their reasonable
<PAGE>
11
judgment, to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company Issuers'
interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of Old Notes must
be cured within such time as the Company Issuers shall
determine. Although the Company Issuers intend to notify Holders
of defects or irregularities with respect to tenders of Old
Notes, neither the Company Issuers, the Exchange Agent nor any
other person shall incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have
been made until such defects or irregularities with respect to
tenders of Old Notes, neither the Company Issuers, the Exchange
Agent nor any other person shall incur any liability for failure
to give such notification. Tenders of Old Notes will not be
deemed to have been made until such defects or irregularities
have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering Holder as
soon as practicable following the Expiration Date.
<PAGE>
12
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Old Notes is
required to provide the Exchange Agent with such Holder's correct TIN on
Substitute Form W-9 above. If such Holder is an individual, the TIN is
the Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not
been issued a TIN and has applied for a number or intends to apply for a
number in the near future. 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, payments that are made to such
Holder may be subject to backup withholding.
Certain Holders (including among others, all domestic
corporations and certain foreign individuals and foreign entities) are
not subject to these backup withholding and reporting requirements. Such
a Holder, who satisfies one or more of the conditions set forth in Part 2
of the Substitute Form W-9 should execute the certification following
such Part 2. In order for a foreign Holder to qualify as an exempt
recipient, that Holder must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8, signed under penalties of
perjury, attesting to that Holder's exempt status.
Such forms can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any amounts otherwise payable to the Holder. Backup
withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of
tax withheld. If withholding results in an overpayment of taxes, a refund
may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a
Holder, the Holder is required to notify the Exchange Agent of his or her
correct TIN by completing the form herein certifying that the TIN
provided on Substitute Form W-9 is correct ( or that such Holder is
awaiting a TIN) and that (i) such Holder is exempt, (ii) such Holder has
not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified
such Holder that he or she is no longer subject to backup withholding.
What Number to Give the Exchange Agent
Each Holder is required to give the Exchange Agent the social
security number or employer identification number of the record Holder(s)
of the Old Notes. If Old Notes are in more than one name or are not in
the name of the actual Holder, consult the instructions on Internal
Revenue Service form W-9, which may be obtained from the Exchange Agent,
for additional guidance on which number to report.
Certificate of Awaiting Taxpayer Identification Number
If the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future,
write "Applied For" in the space for the TIN on Substitute Form W-9, sign
and date the form and the Certificate of Awaiting Taxpayer Identification
Number and return them to the Exchange Agent. If such certificate is
completed and the Exchange Agent is not provided with the TIN within 60
days, the Exchange Agent will withhold 31% of all payments made
thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: This Letter of Transmittal or a facsimile thereof
(together with Old Notes or confirmation of book-entry transfer and all
other required documents) or a Notice of Guaranteed Delivery must be
received by the Exchange Agent on or prior to the Expiration Date.
<PAGE>
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
Floating Interest Rate Subordinated Term Securities
Due 2008, Series A (FIRSTS(SM*))
in Exchange for New
Floating Interest Rate Subordinated Term Securities
Due 2008, Series B (FIRSTS(SM*))
of
GRAHAM PACKAGING COMPANY
and
GPC CAPITAL CORP. I
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Graham Packaging Company and GPC Capital Corp. I (the
"Company Issuers") to exchange their new Floating Interest Rate Subordinated
Term Securities Due 2008, Series B (FIRSTS(SM*)), and the related guarantees for
a like principal amount of their outstanding Floating Interest Rate Subordinated
Term Securities Due 2008, Series A (FIRSTS(SM*)), and the related guarantees
(collectively, the "Old Notes"), made pursuant to the Prospectus (as defined
below), if certificates for the Old Notes are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Exchange Agent prior to
5:00 p.m., New York time, on the Expiration Date of the Exchange Offer. Such
form may be delivered or transmitted by telegram, telex, facsimile transmission,
mail or hand delivery to United States Trust Company of New York (the "Exchange
Agent"), as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile thereof) must
also be received by the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date. Capitalized terms not defined herein are defined in the
Letter of Transmittal.
United States Trust Company of New York, Exchange Agent
<TABLE>
<S> <C> <C>
By Overnight Courier: By Hand: By Registered or Certified
Mail:
United States Trust Company of New United States Trust Company of New York United States Trust Company of
York 111 Broadway New York
770 Broadway, 13th Floor Lower Level P.O. Box 844
New York, New York 10003 Attn: Corporate Trust Services Attn: Corporate Trust Services
Attn: Corporate Trust Services New York, New York 10006 Cooper Station
New York, New York 10276-
By Facsimile Transmission 0844
(For Eligible Institutions Only):
(212) 420-6152 Confirm by Telephone
1-800-548-6565
</TABLE>
- -----------------
*FIRSTS is a service mark of BT Alex. Brown Incorporated.
<PAGE>
2
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company Issuers the principal amount of Old Notes set forth below pursuant to
the guaranteed delivery procedure described in "The Senior Subordinated Exchange
Offers--Procedures for Tendering Senior Subordinated Old Notes" section of the
Prospectus dated __________, 1998 of Graham Packaging Company, GPC Capital Corp.
I, Graham Packaging Holdings Company (which has unconditionally guaranteed the
Old Notes and the Exchange Notes on a senior subordinated basis) (the
"Prospectus"), and the other issuers named therein, receipt of which is hereby
acknowledged.
Principal Amount of Old Notes Tendered.*
$________________________________________
Certificate No(s). (if available):
_________________________________________
Total Principal Amount Represented by Certificate(s):
_________________________________________
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
3
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X_______________________________________ ______________________________________
X_______________________________________ ______________________________________
Signature(s) of Owner(s)
or Authorized Signatory
Area Code and Telephone Number:__________________________________
Must be signed by the holder(s) of Old Notes as their name(s) appear on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If the signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. if Old Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
Name(s): _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Capacity: ______________________________________________________________________
________________________________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
Account Number:_________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
4
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, 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 Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Old Notes being tendered hereby or confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust company, in proper form for transfer, together with any other
documents required by the Letter of Transmittal, within three New York Stock
Exchange trading days after the Expiration Date.
Name of Firm _______________________________________________
Address ____________________________________________________
Area Code & Telephone No. __________________________________
Authorized Signature _______________________________________
Name _______________________________________________________
(Please Type or Print)
Title ______________________________________________________
Date _______________________________________________________
NOTE: DO NOT SEND CERTIFICATES REPRESENTING Old Notes WITH THIS FORM.
CERTIFICATES REPRESENTING Old Notes SHOULD BE SENT ONLY WITH A COPY OF
THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
5
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 Number Card
(for individuals), 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 backup withholding on ALL payment
include the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an
individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign
government, or an agency or instrumentality thereof.
o An international organization or any agency, or instrumentality
thereof.
o A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1).
o An entity registered at all times under the Investment Company Act
of 1940.
o A foreign central bank issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not
paid in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note:
You may be subject to backup withholding if the 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.
o Payments of tax-exempt interest (including exempt-interest
dividends under section 852).
o Payments described in section 6049(b)(S) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o 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 PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. 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 most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the number whether or not recipients are required
to file tax returns. Beginning January 1, 1984, Payers must generally withhold
20% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. 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 payer, 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
under-payment 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.
<PAGE>
EXHIBIT 99.5
LETTER OF TRANSMITTAL
for
10 3/4% Senior Discount Notes
Due 2009
of
GRAHAM PACKAGING HOLDINGS COMPANY
and
GPC CAPITAL CORP. II
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _________, 1998 (THE "EXPIRATION DATE") UNLESS EXTENDED BY GRAHAM
PACKAGING HOLDINGS COMPANY AND GPC CAPITAL CORP. II. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 PM. ON THE EXPIRATION DATE.
The Exchange Agent For The Exchange Offer Is:
The Bank Of New York
<TABLE>
<S> <C> <C>
By Hand Or Overnight Delivery: Facsimile Transmissions: By Registered Or Certified Mail:
(Eligible Institutions Only)
The Bank of New York (212) 815-6339 The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window To Confirm by Telephone New York, New York 10286
Ground Level or for Information Call: Attention: Enrique Lopez,
Attention: Enrique Lopez, Reorganization Section,
Reorganization Section (212) 816-2742
</TABLE>
Delivery of this Letter of Transmittal to an address other than as
set forth above or transmission of this letter of transmittal via facsimile to
a number other than as set forth above does not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus dated
__________, 1998 (the "Prospectus") of Graham Packaging Holdings Company
("Holdings") and GPC Capital Corp. II (together with Holdings, the "Holdings
Issuers"), and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Holdings Issuers' offer (the "Exchange Offer") to
exchange $1,000 in principal amount at maturityof their new 10 3/4% Senior
Discount Notes Due 2009, Series B (the "Exchange Notes"), for each $1,000 in
principal amount of outstanding 10 3/4% Senior Discount Notes Due 2009, Series
A (the "Old Notes"). The terms of the Exchange Notes are identical in all
material respects (including principal amount, interest rate and maturity) to
the terms of the Old Notes for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes are freely transferable by
holders thereof (except as provided herein or in the Prospectus) and are not
subject to any covenant regarding registration under the Securities Act of
1933, as amended (the "Securities Act").
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the
same meaning given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of
Old Notes (as defined below) either if Old Notes are to be forwarded herewith
or if tenders of Old Notes are to be made by book-entry transfer to an account
maintained by The Bank of New York (the "Exchange Agent") at The Depository
Trust Company (the "Book Entry Transfer Facility" or "DTC") pursuant to the
procedures set forth in "The Senior Discount Exchange Offer--Procedures for
Tendering Senior Discount Old Notes" in the Prospectus.
Holders of Old Notes whose certificates (the "Certificates")
for such Old Notes are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date (as defined in the Prospectus) or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Old Notes according to the guaranteed delivery procedures set forth in
"The Senior Discount Exchange Offer--Procedures for Tendering Senior Discount
Old Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
The undersigned has completed the appropriate boxes below
and signed this Letter of Transmittal to indicate the action the undersigned
desires to take with respect to the Exchange Offer.
-2-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Description of Old Notes 1 2 3
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal
Aggregate Amount of
Name(s) and Address(es) of Registered Holder(s): Certificate Principal Amount Old Notes
(Please fill in, if blank) Number(s)* of Old Notes Tendered**
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry
holders.
** Old Notes may be tendered in whole or in part in denominations of
$200,000 and integral multiples of $1,000 in excess hereof, provided
that if any Old Notes are tendered for exchange in part, the
untendered principal amount hereof must be $200,000 or any integral
multiple of $1,000 in excess thereof. See instruction 4. Unless
otherwise indicated in the column, a holder will be deemed to have
tendered all Old Notes represented by the Old Notes indicated in
Column 2. See Instruction 4.
- --------------------------------------------------------------------------------
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / 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 AND ENCLOSE A PHOTOCOPY OF THE NOTICES OF GUARANTEED
DELIVERY 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 of Registered Holder(s)
----------------------------------------
Window Ticket Number (if any)
---------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------
Name of Institution which Guaranteed Delivery
-----------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
-3-
<PAGE>
Name of Tendering Institution
---------------------------------------
Account Number
-------------------------------------------------------
Transaction Code Number
----------------------------------------------
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD
NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER SET FORTH ABOVE.
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
-------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Ladies and Gentlemen:
Subject to and effective upon the acceptance for exchange of all [or
any portion] of the Old Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Holdings Issuers all right, title and interest in and to such Old
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Holdings Issuers in connection with the Exchange Offer) with respect to the
tendered Old Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) subject only
to the right of withdrawal described in the Prospectus, to (i) deliver
Certificates for Old Notes to the Holdings Issuers together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Holdings Issuers, upon receipt by the Exchange Agent, as the undersigned's
agent, of the Exchange Notes to be issued in exchange for such Old Notes, (ii)
present Certificates for such Old Notes for transfer, and to transfer the Old
Notes on the books of the Holdings Issuers, and (iii) receive for the account
of the Holdings Issuers all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms and
conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED
HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER
THE OLD NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE HOLDINGS ISSUERS WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED
TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND
ENCUMBRANCES, AND THAT THE OLD NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE HOLDINGS ISSUERS OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE,
ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ITS OBLIGATIONS UNDER THE SENIOR DISCOUNT REGISTRATION RIGHTS
AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The undersigned further agrees that acceptance of any and all validly
tendered Old Notes by the Holdings Issuers and the issuance of Exchange Notes
in exchange therefor shall constitute performance in full by the Holdings
Issuers of their obligations under the Senior Discount Registration Rights
Agreement (as defined in the
-4-
<PAGE>
Prospectus) and that the Holdings Issuers shall have no further obligations or
liabilities thereunder except as provided in the first paragraph of Section 2
of said agreement.
The name(s) and addressees) of the registered holder(s) of
the Old Notes tendered hereby should be printed above, if they are not already
set forth above, as they appear on the Certificates representing such Old
Notes. The Certificate number(s) and the Old Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes above.
If any tendered Old Notes are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Old Notes will be returned (or, in the case of Old
Notes tendered by book-entry transfer, such Old Notes will be credited to an
account maintained at DTC), without expense to the tendering holder, promptly
following the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes
pursuant to any one of the procedures described in "The Senior Discount
Exchange Offer--Procedures for Tendering Senior Discount Old Notes" in the
Prospectus and in the instruction, attached hereto will, upon the Holdings
Issuers' acceptance for exchange of such tendered Old Notes, constitute a
binding agreement between the undersigned, the Holdings Issuers upon the terms
and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, and
the Holdings Issuers may not be required to accept for exchange any of the Old
Notes tendered hereby.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, the undersigned hereby directs that the
Exchange Notes be issued in the name(s) of the undersigned or, in the case of
a book-entry transfer of Old Notes, that such Exchange Notes be credited to
the account indicated above maintained at DTC. If applicable, substitute
Certificates representing Old Notes not exchanged or not accepted for exchange
will be issued to the undersigned or, in the case of a book-entry transfer of
Old Notes, will be credited to the account indicated above maintained at DTC.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please deliver Exchange Notes to the undersigned at the address shown below
the undersigned's signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE HOLDINGS ISSUERS, (II) ANY EXCHANGE
NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY
COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE
EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE
UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE
NOTES. BY TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING
THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD NOTES WHICH IS A BROKER DEALER
REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND
EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH OLD NOTES HELD BY THE
BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD NOTES WERE ACQUIRED
BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE
SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE NOTES (PROVIDED
THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER
SHILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF
THE SECURITIES ACT).
-5-
<PAGE>
AND THE HOLDINGS ISSUERS HAVE AGREED THAT, SUBJECT TO THE
PROVISIONS OF THE SENIOR DISCOUNT REGISTRATION RIGHTS AGREEMENT, THE
PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE
USED BY A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH
RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR OLD NOTES, WHERE SUCH OLD
NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS
A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD
ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN
LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL
SUCH EXCHANGE NOTES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER.
IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT
AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER"), BY TENDERING SUCH OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE HOLDINGS ISSUERS OF
THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY
STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN
ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTACTED OR
INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS
SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING
BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES PURSUANT TO THE
PROSPECTUS UNTIL THE HOLDINGS ISSUERS HAVE AMENDED OR SUPPLEMENTED THE
PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER
OR THE HOLDINGS ISSUERS HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES
MAY BE RESUMED, AS THE CASE MAY BE. IF THE HOLDINGS ISSUERS GIVES SUCH NOTICE
TO SUSPEND THE SALE OF THE EXCHANGE NOTES, THEY SHALL EXTEND THE 90-DAY PERIOD
REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO
USE THE PROSPECTUS IN CONNECTION WITH THE RESALE OF EXCHANGE NOTES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF
SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE EXCHANGE NOTES OR TO AND INCLUDING THE DATE ON WHICH THE
HOLDINGS ISSUERS HAS GIVEN NOTICE THAT THE SALE OF EXCHANGE NOTES MAY BE
RESUMED, AS THE CASE MAY BE.
Holders of Old Notes whose Old Notes are accepted for
exchange will not receive accrued interest or accretions to Accreted Value (as
defined in the Prospectus) on such Old Notes for any period, and the
undersigned waives the right to receive any interest or accretions to Accreted
Value for any period on such Old Notes. Interest on the Exchange Notes will
commence to accrue on January 15, 2003 and the first Interest Payment Date
shall be July 15, 2003.
The undersigned will, upon request, execute and deliver any
additional documents deemed by the Holdings Issuers to be necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees
in bankruptcy, legal representatives, successors and assigns of the
undersigned. Except as stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION
OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD NOTES AS SET FORTH IN SUCH BOX.
-6-
<PAGE>
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE __)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) exactly as name(s)
appear(s) on Certificate(s) for the Old Notes hereby tendered or on the
register of holders maintained by the Holdings Issuers, or by any person(s)
authorized to become the registered holder(s) by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Holdings Issuers or the Trustee
for the Old Notes to comply with the restrictions on transfer applicable to
the Old Notes). If signature is by an attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting
in a fiduciary capacity or representative capacity, please set forth the
signer's full title. See Instruction 5.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
-7-
<PAGE>
(SIGNATURE(S) OF HOLDER(S))
Date: , 199
------------- -
Name(s)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
--------------------------------------------------------
Address
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------
- -----------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
- -----------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date: , 199
--------- -
Name of Firm
-----------------------------------------------------------------
Capacity (full title)
-----------------------------------------------
(PLEASE PRINT)
Address
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------
-8-
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or Old Notes not tendered are to be
issued in the name of someone other than the registered holder of the Old
Notes whose name(s) appear(s) above.
Issue
/ / Old Notes not tendered to:
/ / Exchange Notes, to:
Name(s)
Address
(INCLUDE ZIP CODE)
Area Code and
Telephone Number
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Notes or Old Notes not tendered are to be
sent to someone other than the registered holder of the Old Notes whose
name(s) appear(s) above, or such registered holder(s) at an address other than
that shown above.
Mail
/ / Old Notes not tendered to:
/ / Exchange Notes, to:
Name(s)
Address
(INCLUDE CODE)
Area Code and
Telephone Number
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
INSTRUCTIONS
-9-
<PAGE>
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Senior
Discount Exchange Offer--Procedures for Tendering Senior Discount Old Notes" in
the Prospectus. Certificates, or timely confirmation of a book-entry transfer of
such Old Notes into the Exchange Agent's account at DTC, as well as this Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at its address set
forth herein on or prior to the Expiration Date. Old Notes may be tendered in
whole or in part in the principal amount of $200,000 and integral multiples of
$1,000 in excess thereof, provided that, if any Old Notes are tendered for
exchange in part, the untendered principal amount thereof must be $200,000 or
any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Notes and (i) whose Old Notes
are not immediately available or (ii) who cannot deliver their Old Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent
on or prior to the Expiration Date or (iii) who cannot complete the procedures
for delivery by book-entry transfer on a timely basis, may tender their Old
Notes by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth in "The
Senior Discount Exchange Offer--Procedures for Tendering Senior Discount Old
Notes" in the Prospectus. Pursuant to such procedures: (i) such tender must be
made by or through an Eligible Institution (as defined below); (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form made available by the Company, must be received by the Exchange Agent
on or prior to the Expiration Date; and (iii) the Certificates (or a
book-entry confirmation (as defined in the Prospectus)) representing all
tendered Old Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within [five]
New York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer--Procedures for Tendering Senior Discount Old Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Notes to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or prior to the Expiration Date. As used herein and in the prospectus,
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as "an eligible guarantor institution," including (as
such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (v) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE
TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
The Holdings Issuers will not accept any alternative, conditional or
contingent tenders. Each tendering holder, by execution of a Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
-10-
<PAGE>
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this
document, shall include any participant in DTC
whose name appears on the register of holders
maintained by the Holdings Issuers as the owner of
the Old Notes) of Old Notes tendered herewith,
unless such holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" above, or
(ii) such Old Notes are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Old Notes and any other required information should be
listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will
be accepted only in the principal amount of $200,000 and integral multiples of
$1,000 in excess thereof, provided that if any Old Notes are tendered for
exchange in part, the untendered principal amount thereof must be $200,000 or
any integral multiple of $1,000 in excess thereof. If less than all the Old
Notes evidenced by any Certificate submitted are to be tendered, fill in the
principal amount of Old Notes which are to be tendered in the box entitled
"Principal amount of Old Notes Tendered (if less than all)." In such case, new
Certificate(s) for the remainder of the Old Notes that were evidenced by your
old Certificate(s) will only be sent to the holder of the Old Note, promptly
after the Expiration Date. All Old Notes represented by Certificates delivered
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in
the Prospectus on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Notes to
be withdrawn, the aggregate principal amount of Old Notes to be withdrawn, and
(if Certificates for Old Notes have been tendered) the name of the registered
holder of the Old Notes as set forth on the Certificate for the Old Notes, if
different from that of the person who tendered such Old Notes. If Certificates
for the Old Notes have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Certificates for the Old
Notes, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Notes to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Notes tendered for the account of an Eligible Institution.
If Old Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in the Prospectus under "The Senior Discount Exchange
Offer--Procedures for Tendering Senior Discount Old Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Old Notes, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of Old
Notes may not be rescinded. Old Notes properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Senior Discount Exchange
Offer--Procedures for Tendering Senior Discount Old Notes."
All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Holdings
Issuers, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Holdings Issuers, any affiliates or
assigns of the Holdings Issuers, the Exchange Agent
-11-
<PAGE>
or any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Old Notes which have been tendered (but
which are withdrawn will be returned to the holder thereof without cost to
such holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the Old
Notes tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names(s) on
several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
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 must submit proper
evidence satisfactory to the Holdings Issuers, in their sole discretion, of
each such person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s)
of the Old Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes
are to be issued in the name of a person other than the registered holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information
as the Holdings Issuers or the Trustee for the Old Notes may require in
accordance with the restrictions on transfer applicable to the Old Notes.
Signatures on such Certificates on bond powers must be guaranteed by an
Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are
to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be
completed. Certificates for Old Notes not exchanged will be returned by mail
or, if tendered by book-entry transfer, by crediting the account indicated
above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Holdings Issuers will determine, in their sole
discretion, all questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of Old
Notes, which determination shall be final and binding on all parties. The
Holdings Issuers reserve the absolute right to reject any and all tenders
determined by either of them not to be in proper form or the acceptance of
which, or exchange for which, may, in the view of counsel to the Holdings
Issuers, be unlawful. The Holdings Issuers also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Senior Discount Exchange
Offer--Certain Conditions to the Senior Discount Exchange Offer" or any
conditions or irregularity in any tender of Old Notes of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders. The Holdings Issuers' interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) will be final and binding. No tender of Old Notes will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. The Holdings Issuers, any affiliates
-12-
<PAGE>
or assigns of the Holdings Issuers, the Exchange Agent, or any other person
shall not be under any duty to give notification of any irregularities in
tenders or incur any liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FROM W-9. Under U.S. Federal
income tax law, a holder whose tendered Old Notes are accepted for exchange is
required to provide the Exchange Agent with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with respect to Old Notes exchanged
pursuant to the Exchange Offer may be subject to 31% backup withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 2 is
checked, the holder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the box in Part 2 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Exchange Agent will withhold 31% of all payments made prior to the time a
properly certified TIN is provided to the Exchange Agent. The Exchange Agent
will retain such amounts withheld during the 60 day period following the date
of the Substitute Form W-9. If the holder furnishes the Exchange Agent with
its TIN within 60 days after the date of the Substitute Form W-9, the amounts
retained during the 60 day period will be remitted to the holder and no
further amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent with
its TIN within such 60 day period, amounts withheld will be remitted to the
IRS as backup withholding. In addition, 31% of all payments made thereafter
will be withheld and remitted to the IRS until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the
registered owner of the Old Notes or of the last transferee appearing on the
transfers attached to, or endorsed on, the Old Notes. If the Old Notes are
registered in more than one name or are not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report.
Certain holders (including, among others, corporations,
financial institutions and certain foreign persons) may not be subject to
these backup withholding and reporting requirements. Such holders should
nevertheless complete the attached Substitute Form W-9 below, and write
"exempt" on the face thereof, to avoid possible erroneous backup withholding.
A foreign person may qualify as an exempt recipient by submitting a properly
completed IRS Form W-8, signed under penalties of perjury, attesting to that
holder's exempt status. Please consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which holders are exempt from backup withholding.
Backup withholding is not an
additional U.S. Federal income tax. Rather, the U.S. Federal income tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained.
10. WAIVER OF CONDITIONS. The Holdings Issuers reserve the
absolute right to waive satisfaction of any or all conditions enumerated in
the Prospectus.
-13-
<PAGE>
11. NO CONDITIONAL TENDERS. No alternative, conditional,
irregular or contingent tenders will be accepted. All tendering holders of Old
Notes, by execution of this Letter of Transmittal, shall waive any right to
receive notice of the acceptance of their Old Notes for exchanges.
Neither the Holdings Issuers, the Exchange Agent nor any
other person is obligated to give notice of any defect or irregularity with
respect to any tender of Old Notes nor shall any of them incur any liability
for failure to give any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any
Certificate(s) representing Old Notes have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificates) have been followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Old
Notes for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, Exchange Notes are to be delivered to, or
are to be issued in the name of, any person other than the registered holder
of the Old Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Old Notes in connection with the Exchange Offer,
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF)
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
TO BE COMPLETED BY ALL TENDERING NOTEHOLDERS
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART I-PLEASE PROVIDE YOUR TIN TIN: _______________________
ON THE LINE AT RIGHT AND Social Security Number or
CERTIFY BY SIGNING AND DATING Employer Identification Number
BELOW
----------------------------------------------------------------------------------------------------
PART 2--TIN Applied For |_|
----------------------------------------------------------------------------------------------------
SUBSTITUTE CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY
THAT:
Form W-9 (1) the number shown on this form is my correct taxpayer identification
Department Of The number (or I am waiting for a number to be issued to me).
Treasury Internal
Revenue Service (2) I am not subject to backup withholding either because (i) I am exempt
from backup withholding, (ii) I have not bee notified by the Internal
Payor's Request For Revenue Service ("IRS") that I am subject to backup withholding as a
Taxpayer result of a failure to report all interests or dividends, or (iii) the IRS has
Identification Number notified me that I am no longer subject to backup withholding, and
("TIN")
and Certification (3) any other information provided on this form is true and correct.
Signature Date ,1997
------------------------- -------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
- ------------------------------------------------------------------------------
You must cross out item (iii) in Part (2) above if you have been notified by
the IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
- ------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO T
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-15-
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W9
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CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1)1 have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration Office or (2)1 intend
to mail or deliver an application in the near future. I understand that if I
do not provide a taxpayer identification number by the time of payment, 31% of
all payments made to me on account of the Exchange Notes shall be retained
until I provide a taxpayer identification number to the Exchange Agent and
that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter
will be withheld and remitted to the Internal Revenue Service until I provide
a taxpayer identification number.
Signature Date , 1998
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<PAGE>
EXHIBIT 99.6
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
10 3/4% Senior Discount Notes
Due 2009, Series A
in Exchange for New
10 3/4% Senior Discount Notes Due 2009, Series B
of
GRAHAM PACKAGING HOLDINGS COMPANY
and
GPC CAPITAL CORP. II
This Notice of Guaranteed Delivery, or one substantially
equivalent to this form, must be used to accept the Exchange Offer (as defined
below) if (i) certificates for the Holdings Issuers' (as defined below) 10
3/4% Senior Discount Notes Due 2009, Series A (the "Old Notes") are not
immediately available, (ii) Old Notes, the Letter of Transmittal and all other
required documents cannot be delivered to The Bank of New York (the "Exchange
Agent") on or prior to 5:00 P.M. New York City time, on the Expiration Date
(as defined in the Prospectus referred to below) or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See
"The Exchange Offer--Procedures for Tendering Senior Discount Old Notes" in
the Prospectus. In addition, in order to utilize the guaranteed delivery
procedure to tender Old Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal relating to The Old Notes (or facsimile
thereof) must also be received by the Exchange Agent prior to 5:00 P.M. New
York City time, on the Expiration Date. Capitalized terms not defined herein
have the meanings assigned to them in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
The Bank Of New York
<TABLE>
<S> <C> <C>
By Registered or Certified Mail Facsimile Transmissions: By Hand Or Overnight Delivery
(Eligible Institutions Only)
The Bank of New York The Bank of New York
101 Barclay Street, 7E (212) 815-6339 101 Barclay Street
New York, New York 10286 Attn: Enrique Lopez, Corporate Trust Services Window
Attn: Enrique Lopez, Reorganization Section Ground Level
Reorganization Section New York, New York 10286
Confirm By Telephone: Attn: Enrique Lopez,
(212) 816-2742 Reorganization Section
For Information Call:
(212) 815-6333
</TABLE>
<PAGE>
2
Delivery of this Notice Of Guaranteed Delivery to an address
other than as set forth above or transmission of this Notice of Guaranteed
Delivery via facsimile to a number other than as set forth above will not
constitute a valid delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO,
SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Old
Notes indicated below, upon the terms and subject to the conditions contained
in the Prospectus dated __________, 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus") of Graham Packaging Holdings
Company and GPC Capital Corp. II (the Holdings Issuers"), and the other
issuers named therein, and the related Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which is hereby acknowledged, the
aggregate principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Senior Discount Exchange Offer--Procedures for Tendering Senior Discount
Old Notes."
Aggregate Principal Amount Name(s) of Registered Holder(s): _______
Amount Tendered: $________________ ________________________________________
Certificate No(s)
(if available):
- ----------------------
:--------------------------------
(Total Principal Amount Represented by
Old Notes Certificate(s)
$____________________________________
If Old Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number: ____________________
Date: ___________________________________
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<PAGE>
3
All authority herein conferred or agreed to be conferred
shall survive the death or incapacity of the undersigned and every obligation
of the undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X______________________________ ____________________
X______________________________ ____________________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: ____________________
Must be signed by the holder(s) of the Old Notes as their
name(s) appear(s) on certificates for Old Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below.
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------
------------------------------------------------------------------
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Capacity:
------------------------------------------------------------------
Address(es):
------------------------------------------------------------------
------------------------------------------------------------------
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<PAGE>
4
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker, municipal securities
dealer, government securities broker, government securities dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or learning agency; or (v) a savings association that is a
participant in a Securities Transfer Association recognized program (each of
the foregoing being referred to as an "Eligible Institution"), hereby
guarantees to deliver to the Exchange Agent, at one of its addresses set forth
above, either the Old Notes tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within
five business days after the date of execution of this Notice of Guaranteed
Delivery.
The undersigned acknowledges that it must deliver the
Letter(s) of Transmittal and the Old Notes tendered hereby to the Exchange
Agent within the time period set forth above and that failure to do so could
result in a financial loss to the undersigned.
- ------------------------------------- ------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- ------------------------------------
Address Title
- ------------------------------------- ------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No.__________ Dated:______________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM.
CERTIFICATES FOR OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
SCHEDULE II
GRAHAM PACKAGING GROUP
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Period Expenses Deductions(1) Period
----------- --------- -------- ---------- ------
(in $000's)
<S> <C> <C> <C> <C>
Valuation Accounts Deducted in
the Combined Balance Sheet
from the Assets to which They
Apply:
Year Ended December 31, 1997
Allowance for doubtful accounts 1,202 512 79 1,635
Allowance for obsolete inventory 901 75 410 566
Year Ended December 31, 1996:
Allowance for doubtful accounts 619 815 233 1,202
Allowance for obsolete inventory 1,217 298 614 901
Year Ended December 31, 1995:
Allowance for doubtful accounts 377 298 56 619
Allowance for obsolete inventory 742 669 194 1,217
</TABLE>
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(1) Deductions from the allowance for doubtfull accounts represent the
write-off of uncollectible accounts receivable and the deductions from
the allowance for obsolete inventory represent the write-off of
obsolete inventory.
