<PAGE> 1
As filed with the Securities and Exchange Commission on January 27, 1995
Registration No. 33-56825
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_____________________________________
CARLISLE PLASTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2891825
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_____________________________________
POLY-TECH, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1503086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_____________________________________
1314 N. Third Street
Phoenix, Arizona 85004
(602) 407-2100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
_____________________________________
William H. Binnie
CARLISLE PLASTICS, INC.
1314 N. Third Street
Phoenix, Arizona 85004
(602) 407-2100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_____________________________________
Copies to:
Martin R. Rosenbaum, Esq.
Michael T. Berg, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
Minneapolis, Minnesota 55402
(612) 371-3211
Approximate date of commencement of proposed sale to 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: [ ]
_____________________________________
THE REGISTRANT AND THE CO-REGISTRANT HEREBY AMEND THIS REGISTRATION STATEMENT
ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT AND THE CO-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 OR
UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION, DATED JANUARY 27, 1995
PROSPECTUS
OFFER TO EXCHANGE
SERIES A 10 1/4% SENIOR NOTES DUE 1997
FOR ANY AND ALL OF THE OUTSTANDING 10 1/4% SENIOR NOTES DUE 1997 ISSUED IN 1994
OF
CARLISLE PLASTICS, INC.
UNCONDITIONALLY GUARANTEED BY
POLY-TECH, INC.
____________________________________________
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 17, 1995, UNLESS EXTENDED.
____________________________________________
Carlisle Plastics, Inc., a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange its Series A 10 1/4% Senior Notes
due 1997 (the "New Notes") for an equal principal amount of its outstanding 10
1/4% Senior Notes due 1997 issued in November 1994 (the "Old Notes"), of which
$15,000,000 principal amount is outstanding. The terms of the New Notes are
substantially the same as the terms of the Old Notes, except that the New Notes
have been registered under the Securities Act of 1933, as amended. The New
Notes will evidence the same debt as the Old Notes and will be entitled to the
benefits of the Indenture governing the Old Notes (the "Indenture"). The Old
Notes and the New Notes are sometimes referred to herein collectively as the
"Notes." See "The Exchange Offer" and "Description of New Notes."
The New Notes will bear interest at the rate of 10 1/4% per annum and
interest will be payable semiannually on June 15 and December 15, commencing on
June 15, 1995. Holders of the Old Notes whose Old Notes are accepted for
exchange will receive, in cash, accrued interest thereon to, but not including,
the date of issuance of the New Notes, such interest to be payable with the
first interest payment on the New Notes, and will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
from and after the date of issuance of the New Notes. Like the Old Notes, the
New Notes will be fully and unconditionally guaranteed by Poly-Tech, Inc., a
wholly-owned subsidiary of the Company ("Poly-Tech").
The issuer will not receive any proceeds from the Exchange Offer. In
the event the Company terminates the Exchange Offer and does not accept for
exchange any Old Notes, the Company will promptly return the Old Notes to the
holders thereof. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
that the New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and that
such holder does not intend to participate and has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, such broker-dealer
will not be deemed to be admitting that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as amended or supplemented
from time to time, may be used by such broker-dealer in connection with resales
of New Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. See "Plan of Distribution."
Prior to this Exchange Offer, there has been no public market for the
Old Notes or the New Notes. If a market for the New Notes should develop, the
New Notes could trade at a discount from their principal amount. The Company
does not currently intend to list the New Notes on any securities exchange.
There can be no assurance that an active public market for the New Notes will
develop. SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is _________________, 1995.
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.
<PAGE> 3
AVAILABLE INFORMATION
The Company and Poly-Tech have filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement", which term shall include all amendments, exhibits and schedules
thereto) on Form S-4 under the Securities Act of 1933 (the "Securities Act")
with respect to the Notes. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete; with respect to each such
contract, agreement or other document filed as an exhibit or schedule to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Company and Poly-Tech are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports and other information with the
Commission. The Registration Statement, including exhibits thereto, as well as
such reports and other information filed with the Commission may be inspected
without charge at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the following regional offices of the Commission: Northwestern Atrium
Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661; and World Trade
Center, New York, New York 10048. Copies of all or part of such materials can
be obtained from those offices upon payment of certain fees prescribed by the
Commission. In addition, such reports, proxy statements and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company and Poly-Tech with the
Commission are incorporated by reference in this Prospectus: (i) Annual
Report on Form 10-K for the year ended December 31, 1993 (which incorporates by
reference certain portions of the Company's definitive Proxy Statement relating
to the 1994 Annual Meeting of Shareholders); and (ii) Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30, and September 30, 1994.
All documents filed by the Company and Poly-Tech pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
In addition to this Prospectus, the Company is delivering without
charge to each recipient of this Prospectus a copy of its Annual Report to
Shareholders and its Annual Report on Form 10-K for the year ended December 31,
1993 and its Quarterly Report on Form 10-Q for the quarter ended September 30,
1994.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Information by Reference . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Description of the New Notes . . . . . . . . . . . . . . . . . . . . . . . . . 22
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . 41
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information included elsewhere in
this Prospectus and the financial statements and documents incorporated by
reference herein.
THE COMPANY
The Company develops, manufactures, sells and distributes national
brand and private label plastic products in three categories: film products,
hangers and containers. The Company's film products include private label
consumer bags, nationally branded trash bags (sold primarily under the
Ruffies(R) brand name), and plastic sheeting used in home improvement,
construction and agriculture. The Company's molded products group produces
plastic clothes hangers, which are sold to retailers and apparel manufacturers,
plastic bottles and containers. In 1993, the Company's film and molded
products groups accounted for 65% and 35% of the Company's consolidated net
sales, respectively.
The Company is a dominant producer of plastic hangers in North America
with an estimated leading one-third share of the United States hanger market in
1993. The Company's film products group is the leading supplier of trash bags
to mass merchandisers, the second largest manufacturer of both private label
and institutional trash bags, and the leading supplier of plastic sheeting sold
through home centers and hardware stores for the do-it-yourself and
construction markets. The Company is also a large regional producer of plastic
bottles supplying the dairy and bottled water markets.
The plastics products industry is highly fragmented with a large
number of small regional competitors. Management believes that the economics
of the industry and the growing importance of national customers create
significant advantages for large, low- cost, diversified plastics
manufacturers. The Company has focused its strategy on meeting the demands of
value-oriented customers and consumers through the manufacture and distribution
of low cost, high quality products. The Company is able to offer customers
excellent value due to its large scale operations, low-cost manufacturing and
national distribution capabilities. This value strategy is augmented by a
continuing emphasis on product innovations such as the Company's rapidly
growing line of high-density trash bags which utilizes 30%-35% less plastic
while offering superior strength at very competitive prices.
The success of the Company's value strategy is demonstrated by the
quality and breadth of its customers. The Company is a leading supplier to
many of the nation's fastest growing retailers. In the mass merchandise
segment, the Company is a leading manufacturer of both hangers and trash bags
for Wal-Mart, K-Mart and Target. The Company has other significant hanger
customers, including Dillards, Neiman Marcus, May Company, Osh Kosh, Health-Tex
and Vanity Fair. The Company's sheeting business supplies nine of the top ten
hardware and home center chains, including Home Depot, Payless Cashways, Home
Base, Cotter & Company and True Value. The Company's effectiveness in
delivering value is further evidenced by its grocery customer base. The
Company sells private label and branded trash bags to the nation's ten largest
grocery chains, including A&P, Kroger, Safeway and Winn Dixie. The Company
also supplies private label trash bag and sheeting products to a number of
non-food retailers including Ace Hardware, Sears and Hardware Wholesalers, Inc.
The Company's executive offices are located at 1314 N. Third Street,
Phoenix, Arizona 85004.
3
<PAGE> 5
THE EXCHANGE OFFER
The Exchange Offer . . . . . . . . The Company is offering to exchange up to
$15,000,000 aggregate principal amount of
the New Notes for a like principal amount
of its Old Notes. The Company will issue
the New Notes to holders on or promptly
after the Expiration Date (as defined
below).
Based on an interpretation by the staff
of the Commission set forth in no-action
letters issued to third parties, the
Company believes that New Notes issued
pursuant to the Exchange Offer in
exchange for Old Notes may be offered for
resale, resold and otherwise transferred
by any holder thereof (other than any
such holder which is an "affiliate" of
the Company within the meaning of Rule
405 under the Securities Act and certain
broker-dealers and their affiliates)
without compliance with the registration
and prospectus delivery provisions of the
Securities Act, provided that such New
Notes are acquired in the ordinary course
of such holder's business and that such
holder does not intend to participate and
has no arrangement or understanding with
any person to participate in the
distribution of such New Notes. See
"Plan of Distribution."
The Exchange Offer applies to $15,000,000
aggregate principal amount of the Old
Notes. The terms of the New Notes are
substantially the same as the terms of
the Old Notes except that the New Notes
have been registered under the Securities
Act. The New Notes will evidence the
same debt as the Old Notes and will be
entitled to the benefits of the
Indenture. See "Description of New
Notes."
Expiration Date . . . . . . . . . . The Exchange Offer will expire at 5:00
p.m., New York City time, on March 17,
1995, unless the Exchange Offer is
extended, in which case the term
"Expiration Date" means the latest date
and time to which the Exchange Offer is
extended.
Accrued Interest on the
New Notes and Old Notes . . . . . Each New Note will bear interest from its
issuance date. Holders of Old Notes that
are accepted for exchange will receive,
in cash, accrued interest thereon to, but
not including, the issuance date of the
New Notes. Such interest will be paid on
June 15, 1995 with the first interest
payment on the New Notes. Interest on
the Old Notes accepted for exchange will
cease to accrue upon issuance of the New
Notes.
Conditions to the
Exchange Offer . . . . . . . . . The Exchange Offer is subject to certain
customary conditions, which may be waived
by the Company. See "The Exchange Offer
- Conditions."
4
<PAGE> 6
Procedures for Tendering
Old Notes . . . . . . . . . . . . Each holder of Old Notes wishing to
accept the Exchange Offer must complete,
sign and date the accompanying Letter of
Transmittal (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 Old
Notes and any other required
documentation to the Exchange Agent (as
defined below) at the address set forth
herein. By executing the Letter of
Transmittal, each holder will represent
to the Company that, among other things,
(i) the New Notes acquired pursuant to
the Exchange Offer are being acquired in
the ordinary course of business of the
person receiving such New Notes, (ii)
neither the holder nor any such other
person is engaging in, or intends to
engage or has an arrangement or
understanding with any person to
participate in the distribution of such
New Notes and (iii) neither the holder
nor any such other person is an
"affiliate," as defined under Rule 405 of
the Securities Act, of the Company. In
the case of a broker-dealer that receives
New Notes for its own account in exchange
for Old Notes which were acquired by it
as a result of market-making or other
trading activities, the Letter of
Transmittal will also include an
acknowledgement that the broker-dealer
will deliver a copy of this Prospectus in
connection with the resale by it of New
Notes received pursuant to the Exchange
Offer. See "The Exchange Offer - Purpose
and Effect of the Exchange Offer," "The
Exchange Offer - Procedures for
Tendering" and "Plan of Distribution."
Following the consummation of the
Exchange Offer, holders of Old Notes not
tendered or tendered and not accepted
will not have any further registration
rights and the Old Notes will continue to
be subject to certain restrictions on
transfer. Accordingly, the liquidity of
the market for the Old Notes could be
adversely affected.
Special Procedures for
Beneficial Owners . . . . . . . . Any beneficial owner whose Old Notes are
registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and who wishes to tender
should contact 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 owner's own
behalf, such owner must, prior to
completing and executing the Letter of
Transmittal and delivering his or her Old
Notes, either make appropriate
arrangements to register ownership of the
Old Notes in such owner's name or obtain
a properly completed bond power from the
registered holder. The transfer of
registered ownership may take
considerable time and may not be able to
be completed prior to the Expiration
Date.
Guaranteed Delivery
Procedures . . . . . . . . . . . Holders of Old Notes who wish to tender
their Old Notes and whose Old Notes are
not immediately available or who cannot
deliver their Old Notes, the Letter of
Transmittal or any other documents
required by the Letter of Transmittal to
the Exchange Agent prior to the
Expiration Date must tender their Old
Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer - Guaranteed Delivery
Procedures."
5
<PAGE> 7
Withdrawal Rights . . . . . . . . . Tenders may be withdrawn at any time
prior to 5:00 p.m., New York City time,
on the Expiration Date by furnishing a
written or facsimile transmission notice
of withdrawal to the Exchange Agent
containing the information set forth in
"The Exchange Offer - Withdrawal
Tenders."
Certain Federal Income
Tax Considerations . . . . . . . For a discussion of certain Federal
income tax considerations relating to the
exchange of the Old Notes for the New
Notes, see "Certain Federal Income Tax
Consequences."
Acceptance of Old
Notes and Delivery of
New Notes . . . . . . . . . . . . The Company will accept for exchange any
and all Old Notes which are properly
tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the
Expiration Date. The New Notes issued
pursuant to the Exchange Offer will be
delivered promptly following the
Expiration Date. See "The Exchange
Offer-Terms of the Exchange Offer."
Exchange Agent . . . . . . . . . . United States Trust Company of New York
(the "Exchange Agent") is serving as
Exchange Agent in connection with the
Exchange Offer.
THE NEW NOTES
Securities Offered . . . . . . . . $15,000,000 aggregate principal amount of
Series A 10 1/4% Senior Notes Due 1997
(the "New Notes").
Interest Payment Dates . . . . . . June 15 and December 15 of each year,
commencing June 15, 1995.
Optional Redemption . . . . . . . . The Notes are redeemable at the option of
the Company, in whole or in part, on or
after June 15, 1995, at a redemption
price of 102.56% during the 12-month
period commencing June 15, 1995 and at
par commencing June 15, 1996, plus in
each case accrued and unpaid interest to
the date of redemption.
Mandatory Redemption . . . . . . . None.
Guarantees . . . . . . . . . . . . Poly-Tech has unconditionally guaranteed
the due and punctual payment of the
principal of and interest on and all
other amounts due and payable on the
Notes (the "Guarantees").
Ranking . . . . . . . . . . . . . . The Notes will be unsecured,
unsubordinated obligations of the Company
ranking pari passu in right of payment
with all other existing and future
unsecured, unsubordinated indebtedness of
the Company. The Guarantees will be
unsecured, unsubordinated obligations of
Poly-Tech ranking pari passu in right of
payment with all other existing and
future unsecured, unsubordinated
indebtedness of Poly-Tech. The Notes
will be effectively subordinated to
creditors and preferred stockholders (if
any) of the Company's subsidiaries. The
Guarantees will be effectively
subordinated to creditors and preferred
stockholders (if any) of Poly-Tech's
subsidiaries. As of September 30, 1994,
after giving effect to the sale of the
Notes and the application of the net
proceeds therefrom, (the "Note
Offering"): (i) the aggregate outstanding
amount of unsubordinated indebtedness of
the Company would have been approximately
6
<PAGE> 8
$195.4 million (of which approximately
$71.5 million would have been secured
indebtedness); (ii) the aggregate
outstanding amount of total liabilities
(excluding intercompany debt) of the
Company's subsidiaries, including
Poly-Tech's subsidiaries (but excluding
Poly-Tech), would have been approximately
$43.5 million (of which approximately
$24.1 million would have been long-term
indebtedness (including the current
portion thereof)); (iii) there would have
been no outstanding preferred stock of the
Company's subsidiaries, including
Poly-Tech's subsidiaries (other than the
outstanding preferred stock of Poly-Tech
held by the Company); and (iv) there would
have been no indebtedness of the Company
outstanding which would have been junior
to the New Notes.
Restrictive Covenants . . . . . . . The Indenture limits the incurrence of
additional debt by the Company, the
incurrence of additional secured debt by
the Company and its subsidiaries, sale
and leaseback transactions, the
incurrence of additional debt and
preferred stock by the Company's
subsidiaries, payment of dividends on and
redemptions of capital stock by the
Company and its subsidiaries, redemptions
of certain subordinated obligations of
the Company, sales of assets and
subsidiary stock, transactions with
affiliates and mergers. The Indenture
also prohibits certain restrictions on
distributions from subsidiaries.
However, all of these limitations and
this prohibition are subject to a number
of important qualifications.
Change of Control or
Fundamental Change . . . . . . . Upon the occurrence of a Change of
Control or a Fundamental Change, each
holder of the Notes will have the right
to require the Company to repurchase its
Notes at 101% of the principal amount
thereof plus accrued and unpaid interest
to the date of repurchase. The
definition of Change of Control includes
certain transactions involving or
representing a transfer of a controlling
equity interest in the Company. Other
transactions involving or representing
transfers of a controlling equity
interest in the Company not specified in
the definition of Change of Control (such
as, for example, certain recapitalization
transactions or transactions in which the
transferee is William H. Binnie) would
not constitute Changes of Control as
defined and therefore would not trigger
the repurchase obligation. The
definition of Fundamental Change includes
certain acquisitions of businesses
unrelated to the design, development,
manufacture or sale of plastic products.
RISK FACTORS
Offerees should consider carefully the specific information set forth
under "Risk Factors" and the other information set forth in this Prospectus
before determining whether to accept the Exchange Offer.
7
<PAGE> 9
<TABLE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
The following table summarizes selected consolidated financial data of
the Company and is qualified in its entirety by the Company's consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1993 (the "Form 10-K") and in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994 (the "September 1994 10-Q") incorporated herein by reference. See also
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Form 10-K and the September 1994 10-Q.
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
------------------------------ ------------------------------------
1994 1994
---- ----
1991(1) 1992 1993 1993 Actual Pro Forma(2)
---- ---- ---- ---- ------ ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales . . . . . . . . . . . . . $343,637 $359,856 $360,895 $273,388 $285,352 $285,352
Cost of goods sold . . . . . . . . . 239,675 263,474 261,987 197,862 215,639 215,639
-------- -------- -------- -------- -------- --------
Gross profit . . . . . . . . . . . . 103,962 96,382 98,908 75,526 69,713 69,713
Operating expenses . . . . . . . . . 69,074 82,311 67,437 51,327 52,944 52,944
-------- -------- -------- -------- -------- --------
Income from operations(3) . . . . . . 34,888 14,071 31,471 24,199 16,769 16,769
Interest expense . . . . . . . . . . 22,648 21,957 22,549 17,156 14,689 15,118
Interest and other income . . . . . . (1,498) (451) (369) (290) (149) (149)
Other . . . . . . . . . . . . . . . . 21 (533) -- -- -- --
-------- -------- -------- -------- -------- --------
Income (loss) before provision for income
taxes, extraordinary item and
cumulative effect of change in
accounting principle(3) . . . . . 13,717 (6,902) 9,291 7,333 2,229 1,800
Provision (benefit) for income taxes(4) 8,324 (688) 3,459 2,933 937 759
-------- -------- -------- -------- -------- --------
Income (loss) before extraordinary item
and cumulative effect of change
in accounting principle . . . . . 5,393 (6,214) 5,832 4,400 1,292 1,041
Extraordinary item - early retirement
of debt (net of taxes) . . . . . . (3,576) (89) (234) (234) (2,462) (2,462)
Cumulative effect of change in accounting
principle relating to income taxes -- -- 1,586 1,586 -- --
-------- -------- -------- -------- -------- --------
Net income (loss) . . . . . . . . . . $ 1,817 $ (6,303) $ 7,184 $ 5,752 $ (1,170) $ (1,421)
======= ======== ======= ======= ======== =======
Depreciation and amortization . . . . $ 13,767 $ 15,562 $ 19,402 $ 14,260 $ 16,055 $ 16,185
Capital expenditures . . . . . . . . $ 26,661 $ 28,256 $ 15,483 $ 11,373 $ 16,610 $ 16,610
Earnings before interest, taxes,
depreciation and amortization
(EBITDA)(5) . . . . . . . . . . . $ 49,073 $ 29,473 $ 50,252 $ 38,008 $ 32,464 $ 32,464
Ratio of earnings to fixed charges(6) 1.6x -- 1.4x 1.4x 1.1x 1.1x
</TABLE>
<TABLE>
<CAPTION>
December 31, September 30, 1994
--------------------------------- ------------------------------
1991(1) 1992 1993 Actual Pro Forma(2)
---- ---- ---- ------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital . . . . . . . . . $ 38,596 61,852 54,257 $ 54,444 $ 54,444
Total assets . . . . . . . . . . 304,596 325,170 325,848 334,604 334,891
Total debt . . . . . . . . . . . 168,645 200,084 194,310 194,930 195,362
Stockholders' equity . . . . . . 68,448 62,179 69,266 68,057 67,806
</TABLE>
8
<PAGE> 10
- ----------------------
(1) In May 1991, the Company acquired the remaining 21% of Poly-Tech not
previously owned by the Company. In July 1991, the Company acquired
66.6% of the stock of Rhino-X Industries, Inc. and acquired the
remaining 33.4% on January 1, 1994. Results are included from the
date of each respective purchase.
(2) Assuming $15 million of Notes had been issued at 10.25% as of January
1, 1994 and proceeds of the Notes (net of estimated Note offering
costs of $365) had been used on such date to retire outstanding debt
portion of the 13.75% Senior Notes due 1997 assumed retired for months
of January and February 1994 and portion of Revolving Credit Agreement
and Accounts Receivable Securitization Agreement retired for months of
March 1994 through September 1994).
(3) In 1992, pretax income was reduced by $7.7 million for a new product
introduction and $4.3 million for a restructuring charge. In 1991,
pretax income was reduced by $3.4 million for a restructuring charge.
(4) In 1991, the provision for income taxes includes a $3.0 million
non-recurring deferred tax charge to recognize tax effects of timing
differences on conversion of the Company from a "S" corporation to a
"C" corporation.
(5) EBITDA = Income (loss) before provision for income taxes,
extraordinary item and cumulative effect of change in accounting
principle plus interest expense, plus depreciation and amortization
(excluding amortization of deferred financing expenses, which are a
component of interest expense). This calculation is part of a ratio
required by the Company's debt covenants. It does not represent a
measurement under generally accepted accounting principles ("GAAP")
and is not intended to supplant the GAAP basis statement of cash
flows.
(6) For purposes of these computations, earnings consist of income before
taxes plus fixed charges. Fixed charges consist of interest expense,
amortization of deferred financing fees, and approximately one third
of operating lease expense (representing Management's estimate of the
interest factor of operating lease expense). For the year ended
December 31, 1992, the Company had a net loss, and the deficiency of
earnings compared to fixed charges was $7.4 million.
9
<PAGE> 11
RISK FACTORS
Offerees should consider carefully the following specific information,
as well as other information set forth in this Prospectus, before determining
whether to accept the Exchange Offer.
SUBSTANTIAL LEVERAGE
The Company incurred substantial indebtedness in connection with its
acquisition of operating businesses. As of September 30, 1994, after giving
effect to the issuance of the Notes, the Company's long-term indebtedness would
be approximately $195.4 million (74.2% of total capitalization), including the
current portion of long-term debt. See "Capitalization". Approximately $135.5
million of such indebtedness matures in 1997. In the future, the Company
intends to use a portion of cash generated by operations to reduce its
indebtedness. However, the Company may, from time to time, find it more
advantageous to employ cash generated by operations for capital investments and
acquisitions. In addition, the Company may incur additional indebtedness from
time to time to finance expansion, either through additional acquisitions or
capital expenditures.
The degree to which the Company is leveraged could have important
consequences to holders of its debt securities, including the following: (i)
the Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes or
other purposes may be impaired; (ii) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of the principal of
and interest on its existing indebtedness; (iii) the Company is more highly
leveraged than a significant portion of its competitors, which may place the
Company at a competitive disadvantage; (iv) a significant portion of the
Company's borrowings are at variable rates of interest, which causes the
Company to be vulnerable to increases in interest rates; and (v) the Company's
substantial degree of leverage may make it more vulnerable to a downturn in the
plastic products industry, a portion of which historically has been sensitive
to changes in general economic conditions, including conditions in the
construction and retail clothing industries.
RAW MATERIALS
The primary materials used by the Company in the manufacture of its
products are various plastic resins, primarily polyethylene. The Company's
financial performance is thus dependent to a substantial extent on the
polyethylene resin market. The primary plastic resins used by the Company are
produced from petrochemical intermediates derived from products of the natural
gas and crude oil refining processes, respectively. Natural gas and crude oil
markets experience substantial cyclical price fluctuations as well as other
market disturbances including shortages of supply, changes in OPEC policy and
crises in oil producing regions of the world. The capacity, supply and demand
for plastic resins and the petrochemical intermediates from which they are
produced are also subject to cyclical and other market factors. Consequently,
plastic resin prices may fluctuate as a result of changes in natural gas and
crude oil prices and the capacity, supply and demand for resin and
petrochemical intermediates from which they are produced. The Company may not
always be able to pass through increases in the cost of its raw materials to
its customers in the form of price increases. To the extent that increases in
the cost of plastic resin cannot be passed on to its customers, such increases
may have a material detrimental impact on the profitability of the Company due
to decreases in its profit margins.
COMPETITION
Competition in the markets for many of the products manufactured by
the Company is largely based upon price, with brand name recognition and
advertising being important for that portion of the Company's business that
consists of nationally branded products. Some of the Company's competitors
have greater
10
<PAGE> 12
financial resources than those available to the Company. In addition, certain
of the Company's competitors manufacture and market nationally branded products
with greater name recognition than the Company's products, including, in
particular, Glad(R) and Hefty(R) bags, and spend substantially greater amounts
for advertising and promotion. Minimal product differentiation among
competitors results in a pricing structure in certain of the Company's markets,
particularly the market for construction film products, resembling "commodity"
pricing (i.e., a pricing structure in which competition is based solely on
price). Additionally, cost of entry into the Company's markets is relatively
low, and competition is intense. The combination of these factors creates the
possibility that sales and profit margins may decline. The pass-through of
cost increases to customers may be impracticable, and it is possible that the
Company may only be able to sell products to customers at prices near or below
the cost of production.
CYCLICAL NATURE OF PORTIONS OF BUSINESS
A portion of the business of the Company's plastic film products group
is dependent upon the levels of new construction in the United States. In
addition, the plastic hanger business of the Company's molded products group is
dependent upon the retail garment market in the United States. A sustained or
severe downturn in construction activity or retail garment sales could have a
material adverse effect on the Company.
IMPEDIMENTS TO FUTURE ACQUISITIONS OF PLASTIC PRODUCTS MANUFACTURING BUSINESSES
Historically, the Company's growth has depended, in part, on its
ability to acquire and thereafter to operate additional plastic products
manufacturing businesses. The Company intends to continue to expand through
capital expenditures as well as additional acquisitions. Some of the Company's
competitors for acquisition opportunities may be larger companies with
significantly greater resources than the Company. Increased competition for
the acquisition of plastics manufacturing businesses may result in acquisitions
on terms that prove to be less advantageous to the Company than attainable in
the past or that may increase acquisition prices to levels beyond the Company's
financial capability which, in turn, may be a function of its ability to access
the debt and equity capital markets. In addition, there can be no assurance
that the Company will find attractive acquisition candidates in the future or
succeed in reducing the costs and increasing the profitability of any business
acquired in the future.
REGULATION; ENVIRONMENTAL CONSIDERATIONS
Actions by Federal, state and local governments concerning
environmental matters could result in laws or regulations that could increase
the cost of producing the products manufactured by the Company or otherwise
adversely affect the demand for its products. At present, environmental laws
and regulations do not have a material adverse effect upon the demand for the
Company's products. The Company is aware, however, that certain local
governments have adopted ordinances prohibiting or restricting the use or
disposal of certain plastic products that are among the types of products
produced by the Company. If such prohibitions or restrictions were widely
adopted, such regulatory and environmental measures could have a material
adverse effect upon the Company. In addition, a decline in consumer preference
for plastic products due to environmental considerations could have a material
adverse effect upon the Company.
In addition, certain of the Company's operations are subject to
Federal, state and local environmental laws and regulations that impose
limitations on the discharge of pollutants into the air and water and establish
standards for the treatment, storage and disposal of solid and hazardous
wastes. While historically the Company has not had to make significant capital
expenditures for environmental compliance, the Company cannot predict with any
certainty its future capital expenditure requirements for environmental
compliance because of continually changing compliance standards and technology.
The Company does not currently have any insurance coverage for environmental
liabilities and does not anticipate obtaining such coverage in the future.
11
<PAGE> 13
ABILITY TO SERVICE DEBT
The Company has substantial interest and principal payment obligations
with respect to the New Notes and other outstanding indebtedness. No assurance
can be given that the Company will be able to generate sufficient cash flow
from operations to meet its debt service obligations. If for any reason the
Company is unable to meet its debt service obligations, it would be in default
under the terms of its indebtedness. In the event of such a default, the
holders of such indebtedness could elect to declare all such indebtedness
immediately due and payable, including accrued and unpaid interest, and to
terminate their commitments (if any) with respect to funding obligations under
such indebtedness. In addition, such holders could proceed against their
collateral (if any). Any such default could have a significant adverse effect
on the market value and marketability of the New Notes.
RANKING OF THE NEW NOTES AND THE GUARANTEES
The New Notes, like the Old Notes, will be unsubordinated obligations
of the Company ranking pari passu in right of payment with all other existing
and future unsubordinated indebtedness of the Company. The New Notes are also
unsecured and thus, in effect, would rank junior to any secured indebtedness of
the Company. Consequently, in the event of the dissolution, liquidation, or
reorganization of, or similar proceeding relating to the Company, the Company's
secured lenders would be entitled to receive payment to the extent of the value
of their collateral or in full, whichever is less, even though the holders of
the New Notes may not receive payment in full. In addition, the New Notes will
be effectively subordinated to creditors and preferred stockholders (if any) of
the Company's subsidiaries, including Poly-Tech's subsidiaries.
The Guarantees, like Poly-Tech's guarantees with respect to the Old
Notes, will be unsubordinated obligations of Poly-Tech ranking pari passu in
right of payment with all other existing and future unsubordinated indebtedness
of Poly-Tech. The Guarantees are also unsecured and thus, in effect, would
rank junior to any secured indebtedness of Poly-Tech. Consequently, in the
event of the dissolution, liquidation, or reorganization of, or similar
proceeding relating to Poly-Tech, Poly-Tech's secured lenders would be entitled
to receive payment to the extent of the value of their collateral or in full,
whichever is less, even though the holders of the Guarantees may not receive
payment in full. In addition, the Guarantees will be effectively subordinated
to creditors and preferred stockholders (if any) of Poly-Tech's subsidiaries,
including American Western.
As of September 30, 1994, after giving effect to the issuance of the
Notes, (i) the aggregate outstanding amount of unsubordinated indebtedness of
the Company would have been approximately $195.4 million (of which
approximately $71.5 million would have been secured indebtedness); (ii) the
aggregate outstanding amount of total liabilities (excluding intercompany debt)
of the Company's subsidiaries, including Poly-Tech's subsidiaries (but
excluding Poly-Tech), would have been approximately $43.5 million (of which
approximately $24.1 million would have been long-term indebtedness (including
the current portion thereof)); (iii) there would have been no outstanding
preferred stock of the Company's subsidiaries, including Poly-Tech's
subsidiaries (other than the outstanding preferred stock of Poly-Tech held by
the Company); and (iv) there would have been no indebtedness of the Company
outstanding which would have been junior to the New Notes. Pursuant to the
Indenture, the Company and its subsidiaries, including Poly-Tech, may issue
additional unsubordinated indebtedness, subject to limitations on incurrence of
additional debt of the Company, additional secured debt of the Company and its
subsidiaries and additional debt of the Company's subsidiaries. See
"Description of the New Notes--Certain Covenants".
PARTIAL HOLDING COMPANY STRUCTURE
The Company and Poly-Tech must rely to a significant degree on
manufacturing services provided by their respective subsidiaries to generate
the funds necessary to meet their respective debt service obligations,
including payment of principal and interest on the New Notes by the Company and
any payments with respect
12
<PAGE> 14
to the Guarantees by Poly-Tech. At September 30, 1994, approximately 53% of
the Company's total assets were held or contributed by the Company's
subsidiaries, including subsidiaries of Poly-Tech (but excluding Poly-Tech).
The ability of the Company's subsidiaries to pay dividends and make other
distributions to the Company and Poly-Tech may be subject to legal and
contractual limitations. The Indenture prohibits the Company and its
subsidiaries from creating or otherwise permitting to exist any consensual
encumbrance or restriction on the ability of any subsidiary to make certain
distributions to the Company or Poly-Tech subject to certain limited
exceptions. See "Description of the New Notes--Certain Covenants--Limitation
on Restrictions on Distributions from Subsidiaries". Pursuant to applicable
corporate law, the payment of dividends of such subsidiaries to the Company and
Poly-Tech is permitted only (i) out of such subsidiaries' surplus, defined
generally under Delaware law as the excess of the net assets of a corporation
less its stated capital or (ii) if no surplus exists, out of their net profits
for the fiscal year in which the dividend is declared and/or the preceding
fiscal year.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The terms and conditions of the indebtedness of the Company provided
for in various indentures and other loan documents impose restrictions that
affect, among other things, the ability of the Company and its subsidiaries to
(i) incur additional indebtedness (including indebtedness incurred by means of
guarantees); (ii) create liens on assets; (iii) sell or otherwise transfer
assets; (iv) engage in mergers or consolidations; (v) pay dividends and (vi)
engage in certain transactions with affiliates and subsidiaries. The Company
is also required to comply with certain specified financial ratios and tests.
The Company's ability to comply with such provisions may be affected by events
beyond its control. The Company's failure to comply with any of these
covenants and restrictions could result in a default under certain
indebtedness, which in turn could cause such indebtedness to be declared
immediately due and payable.
CONTROL BY PRINCIPAL SHAREHOLDER
The Company is controlled by William H. Binnie, Chairman of the Board
of Directors of the Company. Mr. Binnie beneficially owns shares representing
59.8% of the combined voting power of the Company's outstanding voting stock.
Therefore, Mr. Binnie controls the vote on all matters submitted to
stockholders, except in the few instances where a class vote is required. The
Company is a party to a management agreement (the "Management Agreement") dated
as of September 12, 1994 with Carlisle Plastics Management Corporation
("CPMC"), which is indirectly wholly owned by Mr. Binnie, pursuant to which
CPMC receives a management fee of $750,000 for the one-year period commencing
September 1, 1994. Because Mr. Binnie controls the Company and CPMC, he has
the power to amend, extend or terminate the Management Agreement, including the
power to increase the management fees payable thereunder (subject only to the
terms of the indebtedness agreements).
PUBLIC DEBT MARKET CONDITIONS
As with the Old Notes, there can be no assurance as to the liquidity
of any markets that exist or may develop for the New Notes, the ability of
holders of the New Notes to sell their New Notes or the price at which holders
would be able to sell their New Notes. Any trading in the New Notes might be
limited and sporadic, and the New Notes could trade at prices that may be
higher or lower than the initial offering price thereof depending on many
factors, including prevailing interest rates, the Company's operating results
and the markets for similar securities. Prudential Securities has advised the
Company that they currently intend to make a market in the New Notes; however,
they are not obligated to do so and any market making may be discontinued at
any time in their sole discretion without notice. The Company does not intend
to apply for listing of the New Notes on any securities exchange.
13
<PAGE> 15
Historically, and particularly in recent periods, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the New Notes.
There can be no assurance that the market for the New Notes will not be subject
to similar disruptions.
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the New
Notes offered hereby. In consideration for the New Notes, as contemplated in
this Prospectus, the Company will receive in exchange a like principal amount
of Old Notes, which were privately placed by the Company on November 10, 1994,
the terms of which are identical in all material respects to the New Notes.
The Old Notes surrendered in exchange for the New Notes will be retired.
Accordingly, the issuance of the New Notes will not result in any substantive
change in the indebtedness of the Issuer. Net proceeds from the sale of the
Old Notes were used to repay certain balances under the Company's revolving
credit agreement and reduce the outstanding balance under its accounts
receivable securitization agreement.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on November 10, 1994 to
Prudential Securities Incorporated ("Prudential Securities") with further
distribution permitted only to a limited number of institutional investors. In
connection therewith, the Company and Poly-Tech entered into the Exchange and
Registration Rights Agreement with Prudential Securities (the "Registration
Rights Agreement") on November 10, 1994 (the "Closing Date") for the benefit of
Prudential Securities and its transferees, which requires, among other things,
that (i) the Company file with the Commission within 60 days of the Closing
Date a registration statement under the Securities Act with respect to an issue
of new notes of the Company identical in all material aspects to the Old Notes,
(ii) the Company use its best efforts to cause such registration statement to
become effective under the Securities Act within 90 days of the Closing Date
and, (iii) upon the effectiveness of that registration statement, the Company
offer to the holders of the Old Notes the opportunity to exchange their Old
Notes for a like principal amount of New Notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
restrictions or limitations under the Securities Act. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. 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 or any other person who has obtained a properly
completed bond power from a registered Holder. No securities other than the
New Notes are included in the Exchange Offer Registration Statements.
Based on no-action letters issued by the staff of the Commission to
third parties, the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any Holder of such New Notes (other than any such
Holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act and certain broker-dealers and their affiliates)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, based on the representations of each person receiving
New Notes to the effect that such New Notes are acquired in the ordinary
course of such Holder's or any other such person's business and such
Holder or any other such person does not intend to engage or
participate and has no arrangement or understanding with any person to
engage or participate in the distribution of such New Notes. Any Holder
who tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the New Notes must comply with
the registration and prospectus delivery requirements of
14
<PAGE> 16
the Securities Act in connection with a secondary resale transaction. In
addition, any Holder which is a broker-dealer and which, having made certain
representations in accepting the Exchange Offer, receives New Notes for its own
account in exchange for Old Notes which were acquired by such broker-dealer as
a result of market-making activities or other trading activities may be deemed
to be an "underwriter" with respect to the New Notes and in connection with any
resale of New Notes must acknowledge that it will comply with the prospectus
delivery requirements of the Securities Act (for which purposes this Prospectus
may be used as the required prospectus).
As a result of the filing and effectiveness of the Registration
Statement (within the period specified in the Registration Rights Agreement) of
which this Prospectus is a part, the Company will not be required to pay
certain liquidated damages. Following the consummation of the Exchange Offer,
Holders of Old Notes not tendered will not have any further registration rights
(except as described under "Description of New Notes - Registration Rights;
Liquidated Damages") and Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal (together, the "Exchange Offer"),
the Holders may tender some or all of their Old Notes pursuant to the Exchange
Offer. However, Old Notes may be tendered only in integral multiples of
$1,000.
The terms of the New Notes are substantially the same as the terms of
the Old Notes except that the New Notes have been registered under the
Securities Act. The New Notes will evidence the same debt as the Old Notes and
will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $15,000,000 aggregate principal
amount of the Old Notes is outstanding and there is one registered Holder.
This Prospectus, together with the Letter of Transmittal, is being sent to all
such registered Holders as of January 16, 1995.
Holders of Old Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder.
The Exchange Offer is not conditioned upon there being tendered any
minimum aggregate principal amount of Old Notes. The Company shall be deemed
to have accepted validly tendered Old Notes when, as and if the Company has
given oral or written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering Holders for the purposes of receiving the
New Notes from the Company.
If any tendered Old Note are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering Holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer 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
Old Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer.
15
<PAGE> 17
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
March 17, 1995, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. The Expiration Date will
be at least 20 business days after the commencement of the Exchange Offer. The
Company expressly reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, and thereby
delay acceptance for exchange of any Old Notes by giving oral notice (confirmed
in writing) or written notice to the Exchange Agent and by giving written notice
of such extension to the Holders thereof or by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release through the Dow Jones News Service, in each case, no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration date. During any such extension, all Old Notes previously
tendered will remain subject to the Exchange Offer.
The Company expressly reserves the right, in its sole discretion, (i)
to delay accepting any Old Notes, to extend the Exchange Offer or to terminate
the Exchange Offer if any of the conditions set forth below under "Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered Holders. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered Holders, and the Company
will extend the Exchange Offer for a period of five to 10 business days,
depending upon the significance of the amendment and the manner of disclosure
to the registered Holders, if the Exchange Offer would otherwise expire during
such five to 10 business day period.
Without limiting the manner in which the Company may choose to make
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Holders
of Old Notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the New Notes.
Such interest will be paid on June 15, 1995 with the first interest payment on
the New Notes. Interest on the New Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
The New Notes bear interest at a rate equal to 10 1/4% per annum.
Interest on the New Notes is payable semi-annually on each June 15 and December
15, commencing on the first such date following their date of issuance.
PROCEDURES FOR TENDERING
Only a Holder of Old Notes may tender such Old Notes in the Exchange
Offer. To tender in the Exchange Offer, a Holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Note and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. To be tendered effectively,
the Old Notes, Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.
16
<PAGE> 18
The tender by a Holder will constitute an agreement between such
Holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
THE LETTER OF TRANSMITTAL WILL INCLUDE REPRESENTATIONS TO THE COMPANY
THAT, AMONG OTHER THINGS, (I) THE NEW NOTES RECEIVED PURSUANT TO THE EXCHANGE
OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF BUSINESS OF THE PERSON
RECEIVING SUCH NEW NOTES (WHETHER OR NOT SUCH PERSON IS THE HOLDER), (II)
NEITHER THE HOLDER NOR ANY SUCH OTHER PERSON HAS AN ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN THE DISTRIBUTION OF SUCH NEW
NOTES, (III) NEITHER THE HOLDER NOR ANY SUCH OTHER PERSON IS AN "AFFILIATE," AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT, OF THE COMPANY, (IV) THE HOLDER
IS NOT ENGAGED IN AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF THE NEW
NOTES, AND (V) IF THE TENDERING HOLDER IS A BROKER OR DEALER (AS DEFINED IN THE
EXCHANGE ACT) (X) IT ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND (Y) IT HAS NOT ENTERED
INTO ANY ARRANGEMENT OR UNDERSTANDING WITH THE COMPANY OR ANY "AFFILIATE" OF
THE COMPANY (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT) TO
DISTRIBUTE THE NEW NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IN THE CASE OF
A BROKER-DEALER THAT RECEIVED NEW NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OLD
NOTES WHICH WERE ACQUIRED BY IT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES, THE LETTER OF TRANSMITTAL WILL ALSO INCLUDE AN ACKNOWLEDGEMENT THAT
THE BROKER-DEALER WILL DELIVER A COPY OF THIS PROSPECTUS IN CONNECTION WITH THE
RESALE BY IT OF NEW NOTES RECEIVED PURSUANT TO THE EXCHANGE OFFER. SEE "PLAN
OF DISTRIBUTION."
The method of delivery of Old Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the Holder. Instead of delivery by mail, it is recommended that Holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Letter of Transmittal or Old Notes should be sent to the Company. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such Holders.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to registered ownership
of the Old Notes in such owner's name or obtain a properly completed bond power
from the registered Holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by any Eligible Institution (as defined
below) unless the Old Notes tendered pursuant thereto 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 (as defined below). In the
event that signatures on a Letter of Transmittal or notice of withdrawal, as
the case may be are required to be guaranteed, such guarantee must be by a
financial institution which is a commercial bank or trust company located or
having an office or correspondence in the United States, or any member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc., which firm or financial institution must also be a
member of or participant in the Securities Transfer Agents Medallion Program,
the Stock Exchanges Medallion Program of the New York Stock Exchange Medallion
Signatures Program (any such firm or financial institution, an "Eligible
Institution.")
17
<PAGE> 19
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered Holder as such registered Holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes 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, unless waived by
the Company, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
The Exchange Agent has established accounts with respect to the Old
Notes at the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), for the purpose of facilitating the Exchange
Offer. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Old Notes by causing
the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an appropriate
Letter of Transmittal properly completed and duly executed with any required
signature guarantee and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
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 in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instruction in the 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 shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, 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 Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth below under "Conditions," to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
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, the
Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
18
<PAGE> 20
(b) prior to the Expiration Date, the Exchange Agent
receives 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 certificate 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 five New York Stock Exchange
trading days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the
Old Notes (or a confirmation of book-entry transfer of such Old Notes
into the Exchange Agent's account at the Book-Entry Transfer
Facility), 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 the certificate(s)
representing all tendered Old Notes (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), in proper form for transfer, and all
other documents required by the Letter of Transmittal are received by
the Exchange Agent within five 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.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. 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
certificate number or numbers 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 the Book-Entry Transfer Facility to be credited), (iii) be
signed by the Holder in the same manner as the original signature on the Letter
of Transmittal by which such Old Notes were tendered (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,
whose determination shall be final and binding upon all parties. Any Old Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no New 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 the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described above under "Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company
shall not be required to accept for exchange, or exchange New Notes for, any
Old Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
19
<PAGE> 21
(a) Any action or proceeding is instituted or threatened
in any court or by or before any governmental agency with respect to
the Exchange Offer which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company, or any material adverse development has
occurred in any existing action or proceeding with respect to the
Company or any of its subsidiaries;
(b) any change, or any development involving a
prospective change, in the business or financial affairs of the
Company, or any of its subsidiaries has occurred which, in the sole
judgment of the Company, might materially impair the ability of the
Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company;
(c) any law, statute, rule or regulation is proposed,
adopted or enacted which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company; or
(d) any governmental approval has not been obtained,
which approval the Company shall in its sole discretion, deem
necessary for the consummation of the Exchange Offer as contemplated
hereby.
If the Company determines in its sole discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of Holders to withdraw such
Old Notes (see "Withdrawal of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Company will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
Holders, and the Company will extend the Exchange Offer or a period of five to
10 business days, depending upon the significance of the waiver and the manner
of disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to 10 business day period.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Overnight Courier:
<S> <C>
United States Trust Company of New York United States Trust Company of New York
P. O. Box 844 Cooper Station 770 Broadway
New York, New York 10276 New York, New York 10003
Attn: Corporate Trust Operations
By Facsimile: By Hand:
United States Trust Company of New York United States Trust Company of New York
(212) 420-6152 65 Beaver Street
Attn: Customer Service New York, New York 10005
Attn: Ground Level
Corporate Trust Operations
</TABLE>
20
<PAGE> 22
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company and are estimated in the aggregate to be $40,000.
Such expenses include fees and expenses of the Exchange Agent and Trustee,
accounting and legal fees, and printing costs.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however,
certificates representing New Notes or Old Notes for principal amounts are not
tendered or accepted for exchange or 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 tendered 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 Old Notes
pursuant to the 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 Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the New Notes.
OTHER
Participation in the Exchange Offer is voluntary. Holders of the Old
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of this Exchange Offer, the
Company will have fulfilled a covenant contained in the terms of the
Registration Rights Agreement. Holders of the Old Notes who do not tender
their certificates in the Exchange Offer will continue to hold such
certificates and will be entitled to all the rights, and limitations applicable
thereto, under the Indenture, except for any such rights under the Registration
Rights Agreement which by their terms terminate or cease to have further effect
as a result of the making of this Exchange Offer. See "Description of New
Notes." All untendered Old Notes will continue to be subject to the
restrictions on transfer set forth in the Indenture. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered Old Notes could be adversely affected.
The Company may in the future seek to acquire untendered Old Notes in
open market or through privately negotiated transactions, subject to provisions
of its debt agreements, through subsequent offers or
21
<PAGE> 23
otherwise. The Company has no present plan to acquire any Old Notes which are
not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Old Notes which are not tendered pursuant to the Exchange
Offer.
DESCRIPTION OF THE NEW NOTES
The New Notes will be issued by the Company under an indenture (the
"Indenture") among the Company, Poly-Tech and United States Trust Company of
New York, as trustee (the "Trustee"), a copy of the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
The following summary of certain provisions of the Indenture and the New Notes
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Indenture and the New Notes, including the
definitions therein of terms not defined in this Prospectus.
TERMS
The New Notes will mature on June 15, 1997, and will bear interest at
the rate per annum stated on the cover page hereof, payable semi-annually in
arrears on June 15 and December 15 of each year, commencing June 15, 1995, to
the persons who are registered holders thereof at the close of business on the
June 1 or December 1 preceding such interest payment date. The Trustee will
authenticate and deliver the New Notes for original issue in an aggregate
principal amount of $15,000,000.
Interest on the New Notes will be computed on the basis of a 360-day
year of twelve 30-day months. Principal and interest will be payable at the
office of the Trustee, but, at the option of the Company, interest may be paid
by check mailed to the registered holders at their registered addresses. The
New Notes will be transferable and exchangeable at the office of the Trustee
and will be issued in fully registered form, without coupons, in denominations
of $1,000 and any integral multiple thereof.
OPTIONAL REDEMPTION
The New Notes may not be redeemed prior to June 15, 1995. On or after
such date, the New Notes may be redeemed at the option of the Company, at any
time as a whole, or from time to time in part, on not less than 30 nor more
than 60 days' notice, at a redemption price of 102.56% of principal amount
during the 12-month period commencing June 15, 1995 and at par commencing June
15, 1996, plus accrued and unpaid interest (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).
SINKING FUND
There will be no mandatory sinking fund for the New Notes.
CHANGE OF CONTROL OR FUNDAMENTAL CHANGE
Upon (i) the consummation of (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Voting Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
(I) the holders of the Company's Voting Stock immediately prior to the merger
have the same proportionate share of voting power with respect to the Voting
Stock of the surviving corporation immediately after the merger or (II) William
H. Binnie owns more than 50% of the voting power of the Voting Stock of the
surviving corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, other than
22
<PAGE> 24
a sale or other transfer in which (I) the holders of the Company's Voting Stock
immediately prior to such sale or transfer have the same proportionate share of
voting power with respect to the Voting Stock of the transferee corporation
immediately after such sale or other transfer or (II) William H. Binnie owns
more than 50% of the voting power of the Voting Stock of the transferee
corporation immediately after such sale or other transfer; (ii) the approval by
shareholders of any plan or proposal for the liquidation or dissolution of the
Company other than a liquidation or dissolution in which (I) the holders of the
Company's Voting Stock immediately prior to such liquidation or dissolution have
the same proportionate share of voting power with respect to the Voting Stock of
the corporation which will hold all or substantially all of the assets of the
Company immediately after such liquidation or dissolution or (II) William H.
Binnie owns more than 50% of the voting power of the Voting Stock of the
corporation that will hold all or substantially all of the assets of the Company
immediately after such liquidation or dissolution; (iii) the failure of
individuals who on the date of the Indenture constitute the board of directors
to constitute at least a majority thereof, unless the election or the nomination
for election by the Company's shareholders of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors on the date of the Indenture; (iv) the acquisition by a person (other
than William H. Binnie) or entity or group of persons or entities acting in
concert as a partnership, limited partnership, syndicate or other group, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, of beneficial ownership of Voting Stock of
the Company representing 50% or more of the combined voting power of the
outstanding Voting Stock of the Company (each of the events described in (i),
(ii), (iii) or (iv) above hereby referred to as a "Change of Control"); (v) the
direct or indirect acquisition by the Company or any of its Subsidiaries of a
corporation, partnership, joint venture interest, association, joint-stock
company, trust or unincorporated organization (including any subdivision or
ongoing business of any such entity or substantially all the assets of any such
entity, subdivision or business) engaged primarily in a business not directly
related to the design, development, manufacture or sale of plastic products
(each an "Unrelated Entity") if the consolidated total assets attributable to
all Unrelated Entities acquired (and still held) by the Company and its
Subsidiaries exceeds 25% of the consolidated total assets of the Company after
such acquisition (determined in accordance with generally accepted accounting
principles); or (vi) any Asset Disposition occurring after an acquisition of an
Unrelated Entity if the consolidated total assets attributable to all Unrelated
Entities acquired (and still held) by the Company and its Subsidiaries exceeds
25% of the consolidated total assets of the Company after such Asset Disposition
(determined in accordance with generally accepted accounting principles) (each
of the events described in (v) or (vi) above hereby referred to as a
"Fundamental Change"), each holder of New Notes will have the right to require
the Company to repurchase all or any part of such holder's Notes at a repurchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase.
Clause (i)(y) of the definition of Change of Control set forth in the
preceding paragraph includes a sale, lease exchange or other transfer of all or
"substantially all" of the Company's assets. Clauses (ii)(I) and (ii)(II) of
such definition exclude certain events involving a corporation that will hold
all or "substantially all" of the assets of the Company immediately after a
liquidation or dissolution. Although there is a developing body of case law
interpreting the phrase "substantially all", there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of New Notes to require the Company to repurchase such New Notes as a
result of one of the events described in this paragraph may be uncertain.
Within 30 days following any Change of Control or Fundamental Change,
the Company will mail a notice to each holder of New Notes and the Trustee
stating (i) that a Change of Control or Fundamental Change, as the case may be,
has occurred and that such holder has the right to require the Company to
repurchase such holder's New Notes at a repurchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the date of repurchase; (ii) the circumstances and relevant facts regarding
such Change of Control or Fundamental Change (including, but not limited to,
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change in Control or Fundamental
Change); (iii) the repurchase date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (iv) the
instructions determined by the Company,
23
<PAGE> 25
consistent with the Indenture, that a holder must follow in order to have its
New Notes repurchased. Prior to mailing notice of such Change of Control or
Fundamental Change to the holders of the New Notes, the Company will (x) obtain
the requisite consents under the Credit Agreement (and any other applicable
instrument governing Debt of the Company that would restrict the repurchase of
the New Notes) to permit the repurchase of the New Notes or (y) repay all Debt
under the Credit Agreement (and any other applicable instrument governing Debt
of the Company that would restrict the repurchase of the New Notes) in full.
The Company will comply with all applicable tender offer rules, including Rules
13e-4 and 14e-1, if the Change of Control or Fundamental Change repurchase
option is triggered.
A Change of Control as defined above includes certain transactions
involving or representing a transfer of a controlling equity interest in the
Company. Other transactions involving or representing transfers of a
controlling equity interest in the Company not specified above (such as, for
example, certain recapitalization transactions or transactions in which the
transferee is William H. Binnie) would not constitute Changes of Control as
defined and therefore would not trigger the repurchase obligation. The fact
that a transaction would constitute a Change of Control as defined does not
mean that the transaction would be permitted under the Indenture unless the
transaction would be otherwise permissible under the Indenture.
The Company's other senior indebtedness contains prohibitions of
certain events which would constitute a Change of Control. In addition, the
exercise by holders of New Notes of their right to require the Company to
repurchase New Notes could cause a default under such other senior
indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the holders of Notes upon a repurchase may be limited by
the Company's then existing financial resources.
CERTAIN COVENANTS
Limitation on Secured Debt. The Company may not, and may not permit
any Subsidiary to, issue (as defined), directly or indirectly, any Secured Debt
unless contemporaneously therewith effective provision is made to secure the
Notes equally and ratably with such Secured Debt for so long as such Secured
Debt is secured by a Lien. However, the Company will not be required to
equally and ratably secure the Notes upon the issuance of the following Secured
Debt: (i) Debt of the Company permitted under clause (i) in the second sentence
of "Limitation on Debt" and Debt of a Subsidiary permitted under clause (i) of
"Limitation on Subsidiary Debt and Preferred Stock", so long as such Debt is
not secured by any property or assets of the Company or any Subsidiary other
than inventories or receivables; (ii) Debt of the Company permitted under the
first sentence or clause (v) of the second sentence of "Limitation on Debt"
that is incurred to finance the acquisition of property or assets acquired by
the Company and its Subsidiaries after the date of the Indenture (including any
improvements, alterations or repairs to existing property), so long as (1) such
Debt is incurred and the Lien securing such Debt is created not later than one
year following such acquisition and (2) such Debt is not secured by any
property or assets of the Company or any Subsidiary other than the property and
assets so acquired other than, in the case of construction or improvement, any
theretofore unimproved real property or portion thereof on which the property
so constructed, or the improvement, is located; (iii) Debt of the Company
permitted under the first sentence of "Limitation on Debt" that is secured by
property or assets of a person if such Debt (1) was existing at the time the
obligor thereon was merged or consolidated with the Company or at the time of
sale, lease or other disposition of the properties of such obligor as an
entirety (or substantially as an entirety) to the Company or (2) was issued in
exchange for or the proceeds of which were used to refund or refinance Debt
referred to in clause (1) above or this clause (2), so long as (A) the
principal amount of such Debt so issued does not exceed the Scheduled Principal
Amount of the Debt so exchanged, refunded or refinanced and (B) such Debt so
issued (I) matures after the Stated Maturity of the Debt so exchanged, refunded
or refinanced and (II) has an Average Life greater than the remaining Average
Life of the Debt so exchanged, refunded or refinanced, and so long as such Debt
is not secured by any property or assets of the Company or any Subsidiary other
than (x) in the case of Debt referred to in clause (1), the
24
<PAGE> 26
property subject thereto at the time such obligor or properties were acquired
and (y) in the case of Debt referred to in clause (2), the property subject to
the Debt being exchanged, refunded or refinanced; (iv)(A) Debt of a Subsidiary
permitted under clause (iii)(A) of "Limitation on Subsidiary Debt and Preferred
Stock", so long as (1) the Debt refunded or refinanced thereby was Secured Debt
and (2) the Debt so permitted shall not be secured by any property or assets of
the Company or any Subsidiary other than the property subject to such Secured
Debt being refunded or refinanced and (B) Debt of a Subsidiary permitted under
clause (iii)(B) of "Limitation on Subsidiary Debt and Preferred Stock", so long
as the Debt so permitted is not secured by any property or assets of the
Company or any Subsidiary other than the property that was, or would have been,
subject to any Debt incurred, or that could have been incurred, pursuant to the
commitments available to such Subsidiary under revolving credit facilities on
the date such Subsidiary was acquired by the Company; (v) Non-Recourse Debt of
a Non-Recourse Subsidiary permitted under clause (iv) of "Limitation on
Subsidiary Debt and Preferred Stock" which is secured solely by assets of the
issuer thereof or the assets of other Non-Recourse Subsidiaries; and (vi) Debt
(other than Debt described in clauses (i) through (v) of this covenant) in an
aggregate amount at any one time outstanding not to exceed 5% of Consolidated
Tangible Assets of the Company as of the end of the most recent fiscal quarter
of the Company ending not less than 45 days from the date of determination.
Limitation on Sale and Leaseback Transactions. The Company may not,
and may not permit any Subsidiary to, enter into any arrangement with any
person providing for the leasing by the Company or any Subsidiary of any real
or tangible personal property (except for leases for a term of not more than
three years or between the Company and a Subsidiary or between Subsidiaries),
which property has been or is to be sold or transferred by the Company or such
Subsidiary to such person in contemplation of such leasing, unless (i) the
Company or such Subsidiary would be entitled to create a Lien on such property
securing Debt in an amount equal to the Attributable Debt with respect to such
arrangement without equally and ratably securing the Notes pursuant to
"Limitation on Secured Debt" or (ii) the net proceeds from such sale or
transfer are at least equal to the fair value (as determined by the board of
directors) of such property and the Company or such Subsidiary applies or
causes to be applied an amount in cash equal to the net proceeds from such sale
or transfer to purchase, redeem or otherwise acquire or retire the 10 1/4%
Senior Notes Due 1997 issued on June 1, 1992 (the "Senior Notes Due 1997"), the
Variable Notes Due 1997 or the Notes within 60 days of the effective date of
any such sale or transfer.
Limitation on Debt. The Company may not issue, directly or
indirectly, any Debt unless the Consolidated EBITDA Coverage Ratio for the four
consecutive fiscal quarters immediately preceding the issuance of such Debt (as
shown by a pro forma income statement of the Company for the four most recent
fiscal quarters ending at least 30 days prior to the issuance of such Debt
after giving effect to (i) the issuance of such Debt and (if applicable) the
application of the net proceeds thereof to refinance other Debt as if such Debt
was issued and the application of such proceeds occurred at the beginning of
the period, (ii) the issuance and retirement of any other Debt since the last
day of the most recent fiscal quarter covered by such income statement as if
such Debt was issued or retired at the beginning of the period and (iii) the
acquisition of any company or business acquired by the Company since the first
day of the period, including any acquisition which will be consummated
contemporaneously with the issuance of such Debt, as if such acquisition
occurred at the beginning of the period) exceeds 2.0.
Notwithstanding the foregoing, the Company may issue, directly or
indirectly, the following Debt: (i) Debt issued pursuant to the Credit
Agreement up to the greater of (a) $50.0 million less the aggregate principal
amount of Debt then outstanding incurred by a Subsidiary pursuant to clause (i)
of "Limitation on Subsidiary Debt and Preferred Stock" and (b) the sum of 80%
of Eligible Receivables and 50% of Eligible Inventory as of the month-end prior
to the date of such issuance; (ii) Debt evidenced by the Notes and Debt issued
in exchange for or the proceeds of which are used to refund or refinance Debt
permitted by this clause (ii), so long as (1) the principal amount of such Debt
so issued does not exceed the principal amount of the Debt so exchanged,
refunded or refinanced and (2) such Debt so issued (A) does not mature prior to
the
25
<PAGE> 27
Stated Maturity of the Debt so exchanged, refunded or refinanced, and (B) has
an Average Life equal to or greater than the remaining Life of the Debt so
exchanged, refunded or refinanced; (iii) Debt (other than Debt described in
clauses (i) and (ii)) outstanding on the date of the Indenture and Debt issued
in exchange for or to refund or refinance Debt permitted by this clause (iii),
so long as (1) the principal amount of such Debt so issued does not exceed the
principal amount of the Debt so exchanged, refunded or refinanced and (2) such
Debt so issued (A) does not mature prior to the Stated Maturity of the Debt so
exchanged, refunded or refinanced and (B) has an Average Life equal to or
greater than the remaining Average Life of the Debt so exchanged, refunded or
refinanced; (iv) Debt owed to and held by a Wholly Owned Subsidiary or a
Guarantor, except that (1) any subsequent issuance or transfer of any Capital
Stock that results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or (2) any transfer of such Debt, in each case, will be deemed
to constitute the issuance of such Debt by the Company; (v) (1) Debt issued to
finance up to 80% of the purchase price of any assets acquired by the Company
and its Subsidiaries (other than from an Affiliate) after the date of the
Indenture if all the purchase price for such assets is or should be included in
"addition to property, plant or equipment" in accordance with generally
accepted accounting principles and the acquisition of such assets is not part
of any acquisition of a business unit, so long as (A) to the extent that the
aggregate principal amount of all Debt previously incurred under this clause
(v)(1) exceeds $15.0 million, such Debt is issued within one year of such
acquisition of such assets and (B) at the time of the issuance of such Debt,
the aggregate amount of such Debt and all Debt previously incurred under this
clause (v)(1) would not exceed the greater of (x) $35.0 million and (y) 15% of
Consolidated Tangible Assets of the Company as of the end of the most recent
fiscal quarter of the Company ending not less than 45 days from the date of
determination and (2) Debt which is exchanged for, or the proceeds of which are
used to refinance or pay at maturity (including any mandatory sinking fund
payment), any Debt issued pursuant to this clause (v), in an aggregate
principal amount not to exceed the principal amount of the Debt so exchanged,
refinanced or paid, so long as such Debt (A) does not mature prior to the
Stated Maturity of the Debt so exchanged, refinanced or paid and (B) has an
Average Life equal to or greater than the Average Life of the Debt so
exchanged, refinanced or paid; (vi) Debt issued in exchange for, or the
proceeds of which are used to refund or refinance, any Debt incurred pursuant
to the first sentence of this covenant and any Debt permitted by this clause
(vi), so long as (A) the principal amount of the Debt so issued does not exceed
the principal amount of the Debt so exchanged, refunded or refinanced and (B)
the Debt so issued (x) does not mature prior to the Stated Maturity of the Debt
so exchanged, refunded or refinanced, (y) has an Average Life equal to or
greater than the remaining Average Life of the Debt so exchanged, refunded or
refinanced and (z) is not issued prior to one year prior to the Stated Maturity
of the Debt so exchanged or refinanced unless the Debt so issued has an
effective interest cost to the Company that is less than the effective interest
cost of the Debt so exchanged, refunded or refinanced; and (vii) Debt (other
than Debt described in clauses (i) through (vi) of this covenant) in an
aggregate amount at any one time outstanding not to exceed 10% of the
Consolidated Tangible Assets of the Company as of the end of the most recent
fiscal quarter of the Company ending not less than 45 days from the date of
determination.
The Indenture provides that, notwithstanding the foregoing provisions,
the Company will not issue any Debt if the proceeds thereof are used, directly
or indirectly, to repay, prepay, redeem, defease, retire or refinance any
Subordinated Obligations unless such Debt (A) is subordinated to the Notes on
terms at least as favorable to the holders of Notes as the Subordinated
Obligations repaid, prepaid, redeemed, defeased, retired or refinanced, (B) has
a Stated Maturity later than the Stated Maturity of the Subordinated
Obligations repaid, prepaid, redeemed, defeased, retired or refinanced and (C)
has an Average Life greater than the remaining Average Life of the Subordinated
Obligations repaid, prepaid, redeemed, defeased, retired or refinanced.
Limitation on Restricted Payments. The Company may not, and may not
permit any Subsidiary to, directly or indirectly, (i) declare or pay any
dividend or make any distribution on its Capital Stock or to the direct or
indirect holders of its Capital Stock (except dividends or distributions
payable solely in Non-Convertible Capital Stock or in options, warrants or
other rights to purchase Non-Convertible Capital
26
<PAGE> 28
Stock and except dividends or distributions payable to the Company or a
Subsidiary (and, if a Subsidiary has minority stockholders, pro rata to such
stockholders)), (ii) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company or any direct or indirect parent of the
Company, (iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than the acquisition
of Subordinated Obligations purchased in anticipation of satisfying a sinking
fund obligation, principal installment or final maturity, in each case due
within one year of the date of acquisition) or (iv) make any loan or advance
(other than a Permitted Investment), acquire any Capital Stock, equity interest,
obligation or other security of, or make any capital contribution to, or
otherwise invest in, any person (other than the Company or a Subsidiary or a
person which will become a Subsidiary as a result of any such acquisition of
Capital Stock or other interests) (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement, loan,
advance, contribution or other investment being hereinafter referred to as a
"Restricted Payment") if at the time the Company or such Subsidiary makes such
Restricted Payment: (1) a Default has occurred and is continuing (or would
result therefrom); (2) the aggregate amount of such Restricted Payment and all
other Restricted Payments made since the date of the Indenture, would exceed the
sum of (A) an amount equal to (I) 50% of the Consolidated Net Income accrued
during the period (treated as one accounting period) from March 31, 1992, to the
earlier of the end of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment or March 31, 1993 (or minus 100% of
any cumulative deficit in Consolidated Net Income), and minus 100% of the amount
of any write-downs, write-offs, other negative revaluations and other negative
extraordinary charges not otherwise reflected in Consolidated Net Income during
such period; plus (II) 75% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from April 1, 1993, to the end of the
most recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or minus 100% of any cumulative deficit in Consolidated Net
Income), and minus 100% of the amount of any write-downs, write-offs, other
negative revaluations and other negative extraordinary charges not otherwise
reflected in Consolidated Net Income for such period, (B) the aggregate Net Cash
Proceeds received by the Company from the issuance or sale of its Capital Stock
(other than to a Subsidiary or to an employee stock ownership plan) subsequent
to the date of the Indenture, (C) the aggregate Net Cash Proceeds received by
the Company from the issue or sale of its Capital Stock to an employee stock
ownership plan of the Company subsequent to the date of the Indenture, but only
to the extent that any such proceeds are equal to any decrease in the Company's
unearned employee stock ownership plan compensation equity contra-account
resulting from principal repayments made by such employee stock ownership plan
with respect to indebtedness incurred by it to finance the purchase of such
Capital Stock, as and when such principal payments are made and (D) the amount
by which indebtedness of the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary) subsequent to the
date of the Indenture, of any Debt of the Company convertible or exchangeable
for Capital Stock of the Company (less the amount of any cash, or other
property, distributed by the Company upon such conversion or exchange); or (3)
if such Restricted Payment is a Restricted Payment of the type referred to in
clause (i) above, the Consolidated Adjusted EBITDA Coverage Ratio for the four
consecutive fiscal quarters immediately preceding the making of such Restricted
Payment (as shown by a pro forma income statement of the Company for the four
most recent fiscal quarters ending at least 30 days prior to the making of such
Restricted Payment after giving effect to (i) the issuance and retirement of any
Debt since the last day of the most recent fiscal quarter covered by such income
statement as if such Debt was issued or retired at the beginning of the period
and (ii) the acquisition of any company or business acquired by the Company
since the first day of the period as if such acquisition occurred at the
beginning of the period) is less than 2.00.
The foregoing provisions will not prohibit (i) the payment of
dividends within 60 days of declaration if, at the date of declaration, such
dividend would have complied with this provision, so long as, at the time of
the payment of such dividend, no Default has occurred and is continuing (or
would result therefrom) (and any such dividends will be included in the
calculation of the amount of Restricted Payments); (ii) any purchase or
redemption of Capital Stock of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital stock of the Company
and any purchase or redemption of Capital Stock of a Subsidiary made by
exchange for, or out of the substantially concurrent sale of, Capital Stock of
27
<PAGE> 29
the Company or a Subsidiary (and (A) any such purchase or redemption will be
excluded from the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale will be excluded from clauses (2)(B) and (2)(C)
of the preceding sentence); (iii) any purchase or redemption of Subordinated
Obligations made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Debt of the Company, so long as such Debt (A) does not
mature prior to the Stated Maturity of the Subordinated Obligations so
exchanged, purchased or redeemed, (B) has an Average Life equal to or greater
than the Average Life of the Subordinated Obligations so exchanged, purchased or
redeemed and (C) is subordinated to the Notes to at least the same extent as the
Subordinated Obligations so exchanged, purchased or redeemed (and any such
purchase or redemption will be excluded from the calculation of the amount of
Restricted Payments); (iv) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted by "Limitation on
Sales of Assets and Subsidiary Stock" (and any such purchase or redemption shall
be excluded from the calculation of the amount of Restricted Payments); (v) the
repurchase of Capital Stock from officers and employees (or their estates) of
the Company or the Subsidiaries upon death, disability or termination of
employment of such officers and employees, so long as the aggregate amount of
all such repurchases in any fiscal year does not exceed $4.0 million (and any
such repurchases will be included in the calculation of the amount of Restricted
Payments); (vi) the payment of a management fee to Carlisle Capital or any
Affiliate in an amount not to exceed 1.0% of sales per year (and any such
payment will be excluded from the calculation of the amount of Restricted
Payments) or (vii) dividends in an aggregate amount of $10.0 million (and any
such dividend will be excluded from the calculation of the amount of Restricted
Payments).
Limitation on Subsidiary Debt and Preferred Stock. The Company may
not permit any Subsidiary to issue, directly or indirectly, any Debt or
Preferred Stock, except the following Debt and Preferred Stock: (i) Debt
issued pursuant to the Credit Agreement up to the greater of (a) $50.0 million
less the aggregate amount of Debt then outstanding incurred by the Company
pursuant to clause (i) of the second sentence of "Limitation on Debt" and (b)
the sum of 80% of Eligible Receivables and 50% of Eligible Inventory as of the
month-end prior to the date of such issuance; (ii) Debt or Preferred Stock
issued to and held by the Company or a Wholly Owned Subsidiary or a Guarantor,
except that (1) any subsequent issuance or transfer of any Capital Stock that
results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or (2) any transfer of such Debt or Preferred Stock other than to
the Company or a Wholly Owned Subsidiary or a Guarantor will be deemed to
constitute the issuance of such Debt or Preferred Stock by the issuer thereof;
(iii) (A) Debt issued in exchange for or the proceeds of which are used to
refund or refinance Debt (other than Debt issued pursuant to a revolving credit
facility) or Preferred Stock of a Subsidiary (1) issued and outstanding prior
to the date on which such Subsidiary was acquired by the Company (other than
Debt or Preferred Stock issued as consideration in, or to provide all or any
portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a Subsidiary or
was acquired by the Company), (2) outstanding on the date of the Indenture or
(3) permitted by this clause (iii), so long as (I) the principal amount of such
Debt so issued does not exceed the principal amount of the Debt or Preferred
Stock so exchanged, refunded or refinanced and (II) the Debt so issued shall
have a Stated Maturity later than the Stated Maturity of the Debt or final
redemption date (if any) of the Preferred Stock so exchanged, refunded or
refinanced, and (B) Debt of a Subsidiary issued pursuant to a revolving credit
facility, so long as the aggregate principal amount of all Debt of such
Subsidiary permitted by, or permitted to be exchanged, refunded or refinanced
by, this clause (iii) that is outstanding at any one time under revolving
credit facilities may not exceed the aggregate available commitments (whether
drawn or undrawn) available to such Subsidiary (individually or jointly) under
revolving credit facilities (but without duplication of such commitments to the
extent such commitments were also available to another Subsidiary) on the date
such Subsidiary was acquired by the Company; (iv) Non-Recourse Debt of a
Non-Recourse Subsidiary issued after the date of the Indenture, except that if
any such Debt thereafter ceases to be Non-Recourse Debt of a Non-Recourse
Subsidiary, then such event shall be deemed for the purpose of this covenant to
constitute the issuance of such Debt by the issuer thereof; (v) Debt issued
with respect to obligations that are tax-exempt pursuant to Section 103 of the
Code and that are issued in connection with
28
<PAGE> 30
pollution control or other facilities of such Subsidiary; (vi) guarantees of
Debt of the Company (other than Secured Debt) permitted under the first
sentence or clause (ii), (iii), (v), (vi) or (vii) of the second sentence under
"Limitation on Debt", so long as such guarantees rank pari passu in all
respects with, or be subordinated in right of payment to, the guarantees that
are required under "Guarantees" below to be issued prior to the issuance of
such guarantees; and (vii) Debt in an aggregate principal amount or Preferred
Stock having an aggregate liquidation value which, together with all other Debt
and Preferred Stock of Subsidiaries then outstanding other than Debt or
Preferred Stock permitted under clauses (i) through (vi) above, does not exceed
5% of the Consolidated Net Tangible Assets of the Company as of the end of the
most recent fiscal quarter of the Company ending not less than 45 days from the
date of determination.
Limitation on Restrictions on Distributions from Subsidiaries. The
Company may not, and may not permit any Subsidiary to, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make any
other distributions on its Capital Stock or pay any Debt or other obligation
owed to the Company, (ii) make any loans or advances to the Company or (iii)
transfer any of its property or assets to the Company, except: (1) any
encumbrance or restriction pursuant to an agreement in effect at or entered
into on the date of the Indenture; (2) any encumbrance or restriction with
respect to a Subsidiary pursuant to an agreement relating to any Debt issued by
such Subsidiary on or prior to the date on which such Subsidiary was acquired
by the Company (other than Debt issued as consideration in, or to provide all
or any portion of the funds utilized to consummate, the transaction or series
of related transactions pursuant to which such Subsidiary became a Subsidiary
or was acquired by the Company, but not including Debt to the extent issued to
provide funds to pay transaction fees, expenses, and other similar
miscellaneous costs resulting from, or incurred in connection with, the
acquisition of such Subsidiary); (3) any encumbrance or restriction pursuant to
an agreement effecting a refinancing of Debt issued pursuant to an agreement
referred to in clause (1) or (2) above, so long as the encumbrances and
restrictions under or pursuant to any such refinancing agreement are, in the
good faith judgment of the board of directors, no less favorable to the holders
of the Notes than the encumbrances and restrictions under or pursuant to the
agreement refinanced; (4) any encumbrance or restriction relating to a
Non-Recourse Subsidiary; (5) any encumbrance or restriction consisting of
customary non-assignment provisions in leases governing leasehold interests to
the extent such provisions restrict the transfer of the lease; and (6) in the
case of clause (iii) above, restrictions contained in security agreements
securing Debt permitted by "Limitation on Secured Debt" to the extent such
restrictions restrict the transfer of the property subject to such security
agreements.
Limitation on Sales of Assets and Subsidiary Stock. The Company may
not, and may not permit any Subsidiary to, make any Asset Disposition unless
(i) fair market value (as determined in good faith by the board of directors if
the Asset Disposition involves shares or assets having a fair market value of
more than $5.0 million) is received, (ii) if the fair market value (determined
as aforesaid) of the shares or assets subject to such Asset Disposition exceeds
$10,000,000, an amount in cash or Cash Equivalents is received from such Asset
Disposition equivalent to at least 75% of such fair market value and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied (A) first, to the extent the Company elects, to prepay, repay or
purchase Debt incurred under any then existing senior bank term loan agreement
of the Company or Debt of a Wholly Owned Subsidiary (in each case other than
Debt owed to the Company or a Subsidiary) within 90 days from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash and to
permanently reduce (and not to subsequently recreate, whether with the same
bank or otherwise) the related loan commitment (if any) in an amount equal to
the principal amount so prepaid, repaid or purchased; (B) second, to the extent
of the balance of such Net Available Cash after application as described above,
to the extent the Company elects, to (I) make open market purchases of the
Senior Notes Due 1997 or (II) the acquisition by the Company or any Subsidiary
of Tangible Property or a majority interest in another corporation (so long as,
after giving effect thereto, the Consolidated EBITDA Coverage Ratio for the
four consecutive fiscal quarters immediately preceding such acquisition (as
shown by a pro forma income statement of the Company for the four most recent
fiscal quarters ending at least 30 days prior to such
29
<PAGE> 31
acquisition after giving effect to (i) such acquisition as if such acquisition
occurred at the beginning of the period, (ii) the issuance and retirement of any
Debt since the last day of the most recent fiscal quarter covered by such income
statement as if such Debt was issued or retired at the beginning of the period,
including the issuance of Debt in connection with such acquisition and (if
applicable) the application of the net proceeds thereof to refinance other Debt
and (iii) the acquisition of any other company or business acquired by the
Company since the first day of the period as if such acquisition occurred at the
beginning of the period) exceeds 2.0, in each case within 6 months from the
receipt of such Net Available Cash); (C) third, to the extent of the balance of
such Net Available Cash after application as described above, to make a tender
offer to purchase the Senior Notes Due 1997 at a purchase price of 100% of their
principal amount plus accrued interest to the purchase date, unless the
available Net Available Cash (after application of Net Available Cash as
described above) is less than $10.0 million for any particular Asset Disposition
(and if less than $10.0 million, such Net Available Cash is not carried forward
for purposes of determining whether a tender offer is required with respect to
the Net Available Cash of subsequent Asset Dispositions); (D) fourth, to the
extent of the balance of such Net Available Cash after application as described
above, to the extent the Company elects, to make open market purchases of the
Variable Notes Due 1997; (E) fifth, to the extent of the balance of such Net
Available Cash after application as described above, to make a tender offer to
purchase Variable Notes Due 1997 at a purchase price of 100% of their principal
amount plus accrued interest to the purchase date, unless the available Net
Available Cash (after application of Net Available Cash as described above) is
less than $10.0 million for any particular Asset Disposition (and if less than
$10.0 million, such Net Available Cash is not carried forward for purposes of
determining whether a tender offer is required with respect to the Net Available
Cash of subsequent Asset Dispositions); (F) sixth, to the extent of the balance
of such Net Available Cash after application as described above, to the extent
the Company elects, to make open market purchases of the Notes; (G) seventh, to
the extent of the balance of such Net Available Cash after application as
described above, to make a tender offer to purchase Notes at a purchase price of
100% of their principal amount plus accrued interest to the purchase date,
unless the available Net Available Cash is less than $10.0 million for any
particular Asset Disposition (and if less than $10.0 million, such Net Available
Cash is not carried forward for purposes of determining whether a tender offer
is required with respect to the Net Available Cash of subsequent Asset
Dispositions); and (H) eighth, to the extent of the balance of such Net
Available Cash after application as described above, to (x) the acquisition by
the Company or any Wholly Owned Subsidiary of Tangible Property or (y) the
prepayment, repayment or purchase of Debt of the Company (including the Notes)
or any Subsidiary, in each case within one year from the later of the receipt of
such Net Available Cash and the date such tender offer is consummated.
Limitation on Transactions with Affiliates. The Company may not, and
may not permit any Subsidiary to, conduct any business or enter into any
transaction or series of related transactions in an aggregate amount greater
than $100,000 per transaction or related transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any legal or beneficial owner of 5% or more of any class of Capital Stock of
the Company or with any Affiliate of any such owner or the Company (other than
(i) a Wholly Owned Subsidiary or a Guarantor, (ii) a Subsidiary at least 51% of
the Capital Stock of which is owned by the Company or one or more Wholly Owned
Subsidiaries so long as no portion of the minority interest in such Subsidiary
is owned by any Affiliate (other than the Company or another Wholly Owned
Subsidiary) of either the Company or any Wholly Owned Subsidiary or any legal
or beneficial owner of 5% or more of any class of Capital Stock of the Company
or any Affiliate of such owner or (iii) an employee stock ownership plan for
the benefit of the Company's or any Subsidiary's employees) unless (x) the
terms of such business, transaction or series of transactions are (A) set forth
in writing and (B) as favorable to the Company or such Subsidiary as terms that
would be obtainable at the time for a comparable transaction or series of
related transactions in arm's-length dealings with an unrelated third person
and (y) the board of directors has, by resolution, determined that such
business or transaction or series of transactions meets the criterion set forth
in (x)(B) above. This covenant, however, will not prohibit (i) a management
fee payable by the Company to Carlisle Capital or any Affiliate in an amount
not to exceed 2.0% of sales per year, so long as the Company and Carlisle
Capital or such Affiliate execute and deliver to the Trustee a management fee
subordination
30
<PAGE> 32
agreement (in the form attached to the Indenture as an exhibit) or (ii)
transactions between the Company or any Subsidiary and certain underwriters.
Guarantees. The Company will cause each Subsidiary that guarantees
Debt of the Company (other than Secured Debt) permitted under the first
sentence or clause (ii), (iii), (v), (vi) or (vii) of the second sentence under
"Limitation on Debt" to execute and deliver to the Trustee, prior to or
concurrently with the issuance of such guarantee, a supplemental indenture, in
form satisfactory to the Trustee, pursuant to which such Subsidiary
unconditionally guarantees the Notes, and such guarantee of Debt of the Company
must rank pari passu in all respects with, or be subordinated in right of
payment to, such guarantee of the Notes, and also such Subsidiary is not
required to issue such guarantee of the Notes if such Subsidiary has previously
guaranteed the Notes and such previous guarantee (i) satisfies the requirements
of this covenant with respect to such guarantee of Debt of the Company and (ii)
is in full force and effect.
SEC Reports. The Company will file with the Trustee and provide
holders of Notes within 15 days after it files them with the Commission copies
of its annual reports and of the information, documents and reports which the
Company or any Subsidiary is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may
not be required to remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company will continue to file with the SEC
and provide the Trustee and Securityholders with such annual reports and such
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which are
specified in Sections 13 and 15(d) of the Exchange Act. The Company will also
comply with the other provisions of TIA Section 314(a).
LIMITATION ON MERGER
The Company may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, another person unless
(i) the resulting, surviving or transferee person is a person organized and
existing under the laws of the United States, any State thereof or the District
of Columbia, and such entity expressly assumes by a supplemental indenture all
the obligations of the Company under the Notes and the Indenture, (ii)
immediately prior to and after giving effect to such transaction, no Default
has occurred and is continuing, (iii) the resulting, surviving or transferee
person has Consolidated Net Worth after giving effect to such transaction which
is not less than the Consolidated Net Worth of the Company prior to such
transaction, (iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee person would be able to issue an additional
$1.00 of Debt pursuant to the first sentence of "Limitation on Debt" and (v)
the Company delivers to the Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with the Indenture.
GUARANTEE
Poly-Tech and each other Guarantor which may become a Guarantor
pursuant to the covenant described under "Guarantees" above jointly and
severally, unconditionally and irrevocably guarantees to each holder of New
Notes and to the Trustee and its successors (a) the due and punctual payment of
principal of and premium and interest on the New Notes when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under the Indenture and the New Notes and (b) the
due and punctual performance within applicable grace periods of all other
obligations of the Company under the Indenture and the New Notes (all the
foregoing being collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from such Guarantor, and that such Guarantor
will remain bound notwithstanding any extension or renewal of any Obligation.
Each Guarantor waives presentation to, demand of, payment from and protest to
the Company of any of the Obligations, and also waives notice of protest for
nonpayment. Each Guarantor waives notice of any default under the New Notes or
the Obligations.
31
<PAGE> 33
Concurrently with any sale or other disposition (other than to the
Company or any Affiliate of the Company) by way of merger, consolidation or
otherwise of all or substantially all the assets of a Guarantor or all the
Capital Stock of a Guarantor permitted by and in accordance with the terms of
the Indenture, such Guarantor (in the event of such a sale or other disposition
of all the Capital Stock of such Guarantor) or the corporation acquiring the
property (in the event of such a sale or other disposition, by way of a merger,
consolidation or otherwise, of all or substantially all the assets of such
Guarantor) will be released and relieved of its Obligations. Except as
provided in the preceding sentence, this guarantee will be binding upon each
Guarantor and its successors and assigns and will inure to the benefit of the
successors and assigns of the Trustee and the holders of the Notes and, in the
event of any transfer or assignment of rights by any holder or the Trustee, the
rights and privileges conferred upon that party in the Indenture and in the
Notes will automatically extend to and be vested in such transferee or
assignees, all subject to the terms and conditions of the Indenture.
DEFAULTS
An Event of Default is defined in the Indenture as (i) default in the
payment of principal or premium, if any, of any Note when due at its Stated
Maturity, upon redemption, upon declaration or otherwise, including any failure
by the Company to repurchase any of the Notes when required pursuant to "Change
in Control or Fundamental Change", (ii) default in the payment of interest on
any Note when due, continued for 30 days, (iii) failure by the Company to
comply with "Limitation on Merger", (iv) failure by the Company for 30 days
after notice to comply with its obligations under the covenants described above
under "Limitation on Secured Debt", "Limitation on Sale and Leaseback
Transactions", "Limitation on Debt", "Limitation on Restricted Payments",
"Limitation on Subsidiary Debt and Preferred Stock", "Limitation on
Restrictions on Distributions from Subsidiaries", "Limitation on Sales of
Assets and Subsidiary Stock", "Limitation on Transactions with Affiliates",
"Guarantees" and "Change of Control or Fundamental Change" (other than a
failure to repurchase Notes when required pursuant to the covenant described
under "Change of Control or Fundamental Change"), (v) failure by the Company
for 60 days after notice to comply with its other agreements contained in the
Indenture, (vi) acceleration of Debt of the Company or any Significant
Subsidiary by the holders thereof because of a default on such Debt having an
outstanding principal amount of $2.0 million or more in the aggregate and not
annulled within 10 days after notice, or failure to make any payment on Debt of
the Company or a Significant Subsidiary when due (without regard to any
applicable grace period) and the total amount of such Debt exceeds $2.0 million
and such default is not cured in 10 days after notice (the "cross-acceleration
provision"), (vii) certain events of bankruptcy, insolvency or reorganization
of the Company or any Significant Subsidiary or (viii) one or more judgments or
decrees for the payment of money of $2.0 million or more is rendered against
the Company or a Significant Subsidiary and is not fully bonded and/or covered
by insurance and there is a period of 60 consecutive days during which a stay
of enforcement of such judgment or decree by reason of a pending appeal or
otherwise is not in effect or during which such judgment or decree is not
vacated or discharged and such default is not cured within 10 days after notice
(the "judgment default provisions").
A Default under clause (iv), (v), (vi) or (viii) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the New Notes notify the Company of the Default and the Company does not cure
the Default within the specified time.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the outstanding New Notes may
declare the principal of and accrued but unpaid interest on all New Notes to be
due and payable. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the New Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holders of the New Notes. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
New Notes may rescind any such acceleration with respect to such New Notes and
its consequences.
32
<PAGE> 34
The Company is required to deliver to the Trustee within 120 days
after the end of each fiscal year of the Company an officers' certificate
stating whether such officers have knowledge of any Default that occurred
during such period and, if they do know of such Default, the certificate will
describe the Default and what action the Company is taking or proposes to take
with respect thereto. Promptly after an officer of the Company learns of a
Default, the Company will deliver to the Trustee an officers' certificate
specifying such Default and what action the Company is taking or proposes to
take with respect thereto.
Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default thereunder should occur and be
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any of the
holders of the New Notes unless such holders have offered to the Trustee
reasonable indemnity or security against any loss, liability or expense.
Subject to such provisions for security or indemnification and certain
limitations contained in the Indenture, the holders of a majority in principal
amount of the New Notes at the time outstanding have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee.
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indenture may be amended or
supplemented without notice to any holder of New Notes but with the consent of
the holders of at least a majority in principal amount of the New Notes then
outstanding, and any past default or compliance with any provision may be
waived with the consent of the holders of at least a majority in principal
amount of the New Notes then outstanding. However, without the consent of each
holder of an outstanding New Note affected thereby, no amendment may, among
other things, (i) reduce the amount of New Notes whose holders must consent to
any amendment; (ii) reduce the rate of or extend the time for payment of
interest on any New Note; (iii) reduce the principal of or extend the fixed
maturity of any Note, (iv) reduce the premium payable upon redemption of any
Note or change the time at which any Note may or shall be redeemed; (v) change
the currency for payment of principal of, or premium or interest on, any Note;
(vi) make any change to the covenant entitled "Change of Control or Fundamental
Change"; (vii) impair the right to institute suit for the enforcement of any
payment on or with respect to any New Note; (viii) waive certain payment
defaults with respect to the New Notes; or (ix) make any change in the
amendment provisions which require each holder's consent or in the waiver
provisions. Without the consent of any holder of the New Notes, the Company
and the Trustee may amend or supplement the Indenture to cure any ambiguity,
omission, defect or inconsistency, to provide for the assumption by a successor
corporation of the obligations of the Company under the Indenture, to provide
for uncertificated New Notes in addition to or in place of certificated New
Notes so long as such uncertificated New Notes are in registered form for
purposes of the Internal Revenue Code of 1986, as amended, to add guarantees
with respect to the New Notes, to add to the covenants of the Company for the
benefit of holders of the New Notes, to surrender any right conferred upon the
Company, to make any change that does not adversely affect the rights of any
holder of the New Notes or to comply with any requirement of the Commission in
connection with the qualification of the Indenture under the Trust Indenture
Act.
After an amendment described in the preceding sentence becomes
effective, the Company must mail to holders of the New Notes notice briefly
describing such amendment. However, the failure to give such notice to all
holders of the New Notes, or any defect therein, will not impair or affect the
validity of the amendment.
The consent of the holders of the New Notes is not necessary to
approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
33
<PAGE> 35
TRANSFER
The New Notes will be issued in registered form and will be
transferable only upon the surrender of the New Notes being transferred for
registration of transfer. The Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge payable in
connection with certain transfers and exchanges.
PAYMENT FOR CONSENT
Neither the Company, any Affiliate of the Company nor any Subsidiary
may, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any holder of a New Note for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all holders which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
DEFEASANCE
The Company at any time may terminate all its obligations under the
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under the
covenants described under "Certain Covenants" (other than "SEC Reports") and
"Change of Control or Fundamental Change" and the operation of the
cross-acceleration provision and the judgment default provision described under
"Defaults" ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If the Company exercises
its legal defeasance option, payment of the Notes may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in clause (iv), (vi) or (viii) under
"Defaults".
In order to exercise either defeasance option, the Company must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be, and must comply with
certain other conditions including delivering to the Trustee an Opinion of
Counsel to the effect that holders of the Notes will not recognize income, gain
or loss for Federal income tax purposes as a result of such deposit and
defeasance and will be subject to Federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
United States Trust Company of New York is to be the Trustee under the
Indenture and has been appointed by the Company as Registrar and Paying Agent
with regard to the New Notes.
34
<PAGE> 36
GOVERNING LAW
The Indenture provides that it will be governed by the laws of the
State of New York 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.
CERTAIN DEFINITIONS
The following definitions apply to the covenants described above:
"Affiliate" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person, (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above or (iii) any
corporation or other organization of which persons described in (i) or (ii)
above collectively own more than 10% of the equity. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries (other
than (i) a disposition by a Subsidiary to the Company or by the Company or a
Subsidiary to a Wholly Owned Subsidiary or a Guarantor, (ii) a disposition of
property or assets that is at fair market value and in the ordinary course of
business and (iii) a disposition of obsolete assets in the ordinary course of
business), including any disposition by means of a merger, consolidation or
similar transaction.
"Attributable Debt" in respect of a sale and leaseback arrangement
means, as at the time of determination, the greater of (i) the fair value of
the property subject to such arrangement (as determined by the board of
directors) and (ii) the present value (discounted at the interest rate borne by
the Notes, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
arrangement (including any period for which such lease has been extended).
"Attributed Income Tax Liabilities" means liabilities (including
estimated liabilities to the extent amounts are required to be paid on an
estimated basis) for Federal income taxes and for all state and local income
taxes that are imposed on shareholders of the Company with respect to the
earnings of the Company under the provisions of Subchapter S or analogous state
and local income tax laws.
"Average Life" means, as of the date of determination, with respect to
any Debt, the quotient obtained by dividing (i) the sum of the products of the
numbers of years from the date of determination to the dates of each successive
scheduled principal payment of such Debt multiplied by the amount of such
principal payment by (ii) the sum of all such principal payments.
"Capital Lease Obligations" of a person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
35
<PAGE> 37
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock, including any Preferred
Stock.
"Consolidated Adjusted EBITDA Coverage Ratio" with respect to any
period means the ratio of (i)(a) the aggregate amount of Consolidated Net
Income before Consolidated Interest Expense, income taxes, depreciation expense
and amortization expense (but without giving effect to any extraordinary gain
or loss) less (b) Consolidated Capital Expenditures to (ii) the aggregate
amount of Consolidated Interest Expense for such period.
"Consolidated EBITDA Coverage Ratio" with respect to any period means
the ratio of (i) the aggregate amount of Consolidated Net Income before
Consolidated Interest Expense, income taxes, depreciation expense and
amortization expense (i.e., all noncash charges subtracted in determining
operating income) (but without giving any effect to any extraordinary gain or
loss) and the management fees payable to Carlisle Capital and Affiliates
thereof to (ii) the aggregate amount of Consolidated Interest Expense for such
period.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated subsidiaries, including
(i) interest expense attributable to capital leases, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest, (iv) noncash
interest payments, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Interest Rate Protection Agreements (including amortization of
discount) and (vii) Preferred Stock dividends in respect of all Preferred Stock
of Subsidiaries held by persons other than the Company or a Wholly Owned
Subsidiary.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles. However,
Consolidated Net Income will not include:
(i) any net income of any person if such person is not a
Subsidiary, except that (A) the Company's equity in the net income of
any such person for such period will be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by
such person during such period to the Company or a Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to a Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any
such person for such period will be included in determining such
Consolidated Net Income,
(ii) any net income of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition,
(iii) any net income of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary, directly
or indirectly, to the Company, except that (A) the Company's equity in
the net income of any such Subsidiary for such period will be included
in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Subsidiary during such period to the
Company or another Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to another
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Subsidiary for such period
will be included in determining such Consolidated Net Income, and
(iv) any gain (but not loss) realized upon the sale or other
disposition of any property, plant or equipment of the Company or its
consolidated subsidiaries which is not sold or otherwise disposed
36
<PAGE> 38
of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any capital stock of
any person.
"Consolidated Net Tangible Assets" means the total assets shown on the
balance sheet of the Company and its consolidated subsidiaries, determined on a
consolidated basis in accordance with generally accepted accounting principles,
as of any date selected by the Company not more than 90 days prior to the
taking of any action for the purpose of which the determination is being made
less (i) all current liabilities and amounts applicable to minority interests
of the Company and (ii) goodwill and other intangibles.
"Consolidated Net Worth" means, with respect to any person, the total
of the amounts shown on the balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of any date selected by the Company not more
than 90 days prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of such person plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit, (B) any amounts attributable to
Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.
"Consolidated Tangible Assets" means (i) the total assets shown on the
balance sheet of the Company and its consolidated subsidiaries, determined on a
consolidated basis in accordance with generally accepted accounting principles,
as of any date selected by the Company not more than 90 days prior to the
taking of any action for the purpose of which the determination is being made
less (ii) goodwill and other intangibles.
"Credit Agreement" means one or more revolving credit agreements,
entered into after the date of the Indenture pursuant to which the Company or
any Subsidiary finances working capital borrowings, as any such agreement or
agreements may be amended, refinanced or replaced from time to time.
"Debt" of any person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar interests for
the payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person issued or contracted for
as payment in consideration of the purchase by such person of the
stock or substantially all of the assets of other persons or a merger
or consolidation to which such person was a party;
(v) all obligations of such person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i),
(ii), (iii) and (iv) above) entered into in the ordinary course of
business of such person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by
such person of a demand for reimbursement following payment on the
letter of credit);
37
<PAGE> 39
(vi) all obligations of the type referred to in clauses (i)
through (v) of other persons and all dividends of other persons for
the payment of which, in either case, such person is responsible or
liable as obligor, guarantor or otherwise; and
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons secured by any Lien on any property or
asset of such person (whether or not such obligation is assumed by
such person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the
obligation so secured.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Eligible Inventory" will mean inventory which qualifies as "Eligible
Inventory" as such term may be defined in an applicable Credit Agreement and
which serves as the borrowing base for working capital loans.
"Eligible Receivables" will mean receivables which qualify as
"Eligible Receivables" as such term will be defined in the Credit Agreement and
which serves as the borrowing base for working capital loans.
"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of the Company
which is neither Exchangeable Stock or Redeemable Stock).
"Guarantor" means Poly-Tech and each other Subsidiary (if any) that
delivers to the Trustee a supplemental indenture, in form satisfactory to the
Trustee, pursuant to which such person expressly agrees to unconditionally
guarantee the Notes on the terms and conditions set forth in the Indenture.
"Interest Rate Protection Agreement" means any interest swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Issue" means issue, assume, guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Secured Debt, Debt or Preferred Stock
issued as consideration in, or to provide all or any portion of the funds
utilized to consummate, the transaction or series of related transactions
pursuant to which the issuer thereof becomes a Subsidiary shall be deemed for
the purposes of the covenant described under "Limitation on Secured Debt" (in
the case of Secured Debt) and the covenant described under "Limitation on
Subsidiary Debt and Preferred Stock" (in the case of Debt or Preferred Stock)
to be issued by such Subsidiary at the time it becomes a Subsidiary, except
that this PROVISO shall not apply to Secured Debt, Debt or Preferred Stock to
the extent issued to provide funds to pay transaction fees, expenses, and other
similar miscellaneous costs resulting from, or incurred in connection with, the
acquisition of such issuer.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes
38
<PAGE> 40
required to be accrued as a liability under generally accepted accounting
principles, as a consequence of such Asset Disposition, and in each case net of
all payments made on any Debt which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any lien upon or other
security agreement of any kind with respect to such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset Disposition
or by applicable law be repaid out of the proceeds from such Asset Disposition,
and net of all distributions and other payments made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition.
"Net Cash Proceeds" means, with respect to any issuance or sale of
Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, brokerage, consultant and other fees actually incurred
in connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
Capital Stock of such corporation. However, Non-Convertible Capital Stock will
not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (a) as to which
neither the Company nor its Subsidiaries (other than a Non-Recourse Subsidiary)
(i) provide credit support (including any undertaking, agreement or instrument
that would cause such Debt or portion of Debt to be considered Debt of the
Company or a Subsidiary (other than a Non-Recourse Subsidiary)) or (ii) is
directly or indirectly liable and (b) no default with respect to which
(including any rights which the holders thereof may have to take enforcement
action against a Non-Recourse Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Debt issued after the date of this
Indenture of the Company or any Subsidiary (other than a Non-Recourse
Subsidiary) to declare a default on such other Debt or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means a Subsidiary that (i) has not acquired
any assets (other than cash acquired while such Subsidiary is a Non-Recourse
Subsidiary and materials, supplies and equipment purchased in the ordinary
course of business) from the Company or any Subsidiary and (ii) has no Debt
other than Non-Recourse Debt.
"Permitted Investments" means (a) investments in direct obligations of
the United States of America maturing within 90 days of the date of acquisition
thereof, (b) investments in certificates of deposit maturing within 90 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500.0 million,
and (c) investments in commercial paper given the highest rating by two
nationally recognized statistical rating organizations (as defined in Rule 436
under the Securities Act) and maturing not more than 90 days from the date of
acquisition thereof.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
maturity of the Notes or is redeemable at the option of the holder thereof at
any time prior to the first anniversary of the maturity of the Notes.
"Scheduled Principal Amount", when used with respect to any Debt or
Preferred Stock, means the sum of (i) the principal amount of such Debt or
liquidation value of such Preferred Stock plus (ii) amounts paid as voluntary
repayments of such Debt or voluntary redemptions of such Preferred Stock.
However, (A) any
39
<PAGE> 41
mandatory repayment or redemption made pursuant to any provision of such Debt
or Preferred Stock requiring mandatory repayments or redemptions based upon the
Company's or a Subsidiary's excess cash flow or favorable financial performance
(except to the extent that excess cash flow or favorable financial performance
is attributable to the net proceeds of Asset Dispositions) will be deemed to be
voluntary repayments, (B) any payment made pursuant to a provision of a
revolving credit agreement requiring a reduction in the amount outstanding
thereunder for a specified period of time in each year that is not related to a
reduction in the commitment of the lenders thereunder will be deemed to be a
voluntary repayment and (C) to the extent any voluntary repayment or
redemption discharges or satisfies a succeeding mandatory repayment or
redemption, such voluntary repayment or redemption will be deemed to be a
mandatory repayment or redemption only at the time and to the extent such
succeeding mandatory repayment or redemption would otherwise have been
required to have been made.
"Secured Debt" means any Debt of the Company or a Subsidiary secured
by a Lien on any property or assets of the Company or any Subsidiary.
"Significant Subsidiary" means (i) any domestic Subsidiary of the
Company (other than a Non-Recourse Subsidiary) which at the time of
determination either (A) had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, constituted at least 3% of the
Company's total assets on a consolidated basis as of such date, or (B) had
revenues for the 12-month period ending on the date of the Company's most
recent quarterly consolidated statement of income which constituted at least 3%
of the Company's total revenues on a consolidated basis for such period, or
(ii) any foreign Subsidiary of the Company (other than a Non-Recourse
Subsidiary) which at the date of determination either (A) had assets which, as
of the date of the Company's most recent quarterly consolidated balance sheet,
constituted at least 5% of the Company's total assets on a consolidated basis
as of such date, in each case determined in accordance with generally accepted
accounting principles, or (B) had revenues for the 12-month period ending on
the date of the Company's most recent quarterly consolidated statement of
income which constituted at least 5% of the Company's total revenues on a
consolidated basis for such period. If two or more Subsidiaries (other than
Non-Recourse Subsidiaries) which are not at the respective times of
determination relevant to each thereof Significant Subsidiaries within the
meaning of clause (i) or (ii) above (a) take or suffer action of the type
described in clause (vii) of "Defaults" or, in the aggregate, take or suffer
action of the type described in clauses (vi) or (viii) of "Defaults" and (b)
have at such time of determination total assets or revenues as described above
which represent percentages which when added together equal either 10% or more
of the Company's total assets on a consolidated basis or of the Company's total
revenues for the 12-month period ending on the date of the Company's most
recent quarterly consolidated statement of income as described above, the
Subsidiary which last takes or suffers the type of action described in clauses
(vii) of "Defaults" shall be deemed a Significant Subsidiary and the Subsidiary
taking or suffering action of the type described in clauses (vi) or (viii) of
"Defaults" to the greatest extent shall be deemed a Significant Subsidiary.
"Stated Maturity", when used with respect to any security or any
installment of interest thereon, means the date specified in such security as
the fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the date hereof or hereafter incurred) which is subordinate or
junior in right of payment to the Notes.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) the Company, (ii) the Company and one or more
Subsidiaries or (iii) one or more Subsidiaries.
40
<PAGE> 42
"Tangible Property" means all land, buildings, machinery and equipment
and leasehold interest and improvements which would be reflected on a balance
sheet of the Company prepared in accordance with generally accepted accounting
principles, excluding (i) all such tangible property located outside the United
States of America, (ii) all rights, contracts and other intangible assets of
any nature whatsoever and (iii) all inventories and other current assets.
"Voting Stock" means, with respect to a corporation, all classes of
capital stock then outstanding of such corporation normally (and apart from
rights accruing under special circumstances) entitled to vote in elections of
directors.
"Wholly Owned Subsidiary" means a Subsidiary (other than a
Non-Recourse Subsidiary) all the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly Owned Subsidiary.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences of the exchange of Old Notes for New Notes. The discussion set
forth below is based upon the Internal Revenue Code of 1986, as amended,
regulations and announcements promulgated thereunder and published rulings and
court decisions, all as in effect on the date hereof and without giving effect
to changes to the federal tax laws, if any, enacted after the date hereof.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements or conclusions set forth
below. This summary does not discuss all the federal income tax consequences
that may be relevant to a particular holder or to certain holders subject to
special treatment under the federal income tax laws.
The exchange of Old Notes for New Notes should not be treated as a
sale or exchange of Old Notes for federal income tax purposes. Consequently,
noteholders who exchange Old Notes for New Notes will not recognize gain or
loss upon receipt of the New Notes. For purposes of computing original issue
discount on the New Notes, the original issue discount, if any, of the Old
Notes will carry over to the New Notes as if the New Notes were issued on the
same issue date and for the same issue price as the Old Notes. A noteholder's
tax basis in and market discount, if any, on the New Notes will be the same as
such noteholder's tax basis in and market discount, if any, on the Old Notes
exchanged therefor. Noteholders will be considered to have held the New Notes
from the time of their original acquisition of the Old Notes.
There will be no federal income tax consequences of the Exchange Offer
to nonexchanging noteholders.
THE FOREGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
INCLUDED HEREIN FOR GENERAL INFORMATION PURPOSES ONLY. HOLDERS OF OLD NOTES
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC FEDERAL
INCOME TAX CONSEQUENCES OF ACCEPTING THE EXCHANGE OFFER, AS WELL AS THE EFFECT
OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
In case of a broker-dealer which acquired Old Notes for
its own account as a result of marketmaking activities or other trading
activities, such broker-dealer may be deemed an "underwriter" for purposes
of the Securities Act and, if it is able to make the representations set forth
in the third paragraph under "The Exchange Offer -- Procedures for Tendering,"
may obtain New Notes in the Exchange Offer and may resell
41
<PAGE> 43
such New Notes without registration under the Securities Act, provided that
such broker-dealer delivers to the purchaser of such New Notes a copy of a
prospectus relating thereto, which may be this Prospectus as supplemented or
amended from time to time.
New Notes received by broker-dealers for their own account pursuant to
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. The Letter of Transmittal requires such
broker-dealer to acknowledge that the broker-dealer will deliver such
prospectus, but states that by so acknowledging and by delivering a prospectus,
such broker-dealer will not be deemed to be admitting that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed that, for a period of one year after the
Expiration Date of the Exchange Offer, it will make this Prospectus, as amended
or supplemented from time to time, available to any broker-dealer for use in
connection with any such resale. The Company has agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions of
any brokers or dealers and expenses of counsel for the holders of the New Notes
and will indemnify the Holders of the New Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers or any other persons. Any broker- dealer that resells or
participates in a distribution of New Notes may be deemed to be an "underwriter"
as defined in Section 2(11) of the Securities Act and subject to restrictions
thereunder as such.
LEGAL MATTERS
Certain legal matters regarding the validity of the New Notes will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1993 have been audited by Deloitte
& Touche, independent auditors, as stated in their report which is incorporated
herein by reference (which report expresses an unqualified opinion and includes
an explanatory paragraph referring to a change in the accounting for income
taxes to conform with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes") and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
With respect to the unaudited interim financial information for the
periods ended March 31,1994 and 1993, June 30, 1994 and 1993 and September 30,
1994 and 1993, which is incorporated herein by reference, Deloitte & Touche and
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their reports included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1994, June 30, 1994 and September 30, 1994 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such
42
<PAGE> 44
information should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche and Deloitte & Touche LLP are not
subject to the liability provisions of Section 11 of the Securities Act of 1933
for their reports on the unaudited interim financial information because those
reports are not "reports" or a "part" of the registration statement prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
43
<PAGE> 45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-Laws require indemnification of directors and
officers of the Company to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law generally provides that any
person who was or is a director or officer may be indemnified against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with the defense or settlement
of any threatened, pending or completed legal proceedings in which he is
involved by reason of the fact that he is or was a director or officer if he
acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe that
his conduct was unlawful. However, if the legal proceeding is by or in the
right of the corporation, the director or officer may not be indemnified in
respect of any claim, issue or matter as to which he shall have been adjudged
to be liable to the corporation unless the court in which such action was
brought deems it proper.
<TABLE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
4.1 -- Indenture dated November 10, 1994 relating to the Company's Series A 10 1/4% Senior Notes Due 1997 (the "New
Notes") among the Company, Poly-Tech, as guarantor, and United States Trust Company of New York, as trustee (a
specimen of the New Notes is contained as Exhibit A thereto). *
5.1 -- Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to the Company. *
10.1(a) -- Securities Purchase Agreement dated as of March 23, 1990 between the Company and Kawajitsu Leasing (H.K.) Ltd.
(incorporated by reference to Exhibit 10.1(a) to the Registration Statement on Form S-1, Registration No. 33-
35966, as filed with the Securities and Exchange Commission on October 30, 1990 (hereinafter, the "1990 S-1")).
10.1(b) -- Securities Purchase Agreement dated as of March 23, 1990 between the Company and Show Leasing America, Inc.
(incorporated by reference to Exhibit 10.1(b) to the 1990 S-1).
10.2 -- Securities Purchase Agreement dated as of March 23, 1990 between the Company and each purchaser of the 1997 Notes
(incorporated by reference to Exhibit 10.2 to the 1990 S-1).
10.3 -- Carlisle Acquisition Corp.'s Senior Subordinated Note in the principal amount of $35,000,000, dated April 7, 1989
(incorporated herein by reference to Exhibit A to Exhibit 4.1 of the 1989 S-1).
10.4 -- Poly-Tech's Senior Subordinated Promissory Note in the principal amount of $55,000,000, dated March 23, 1990
(incorporated by reference to Exhibit 10.21 to the 1990 S-1).
</TABLE>
II-1
<PAGE> 46
<TABLE>
<S> <C> <C>
10.5 -- Indenture dated March 23, 1990, as supplemented by First Supplemental Indenture dated as of October 9, 1990,
relating to the Company's Senior Variable Notes Due 1997 among the Company, Poly-Tech, Inc., as guarantor, and the
Bank of Montreal Trust Company, as trustee (incorporated by reference to Exhibits 4.2 and 4.3 to the 1990 S-1,
respectively).
10.6 -- Management Agreement dated as of September 12, 1994 between the Company and Carlisle Plastics Management
Corporation (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (the "September 1994 10-Q")).
10.7 -- Restated 1991 Employee Incentive Plan (incorporated by reference to Exhibit 4(a) to the Registration Statement on
Form S-8, Registration No. 33-64890, as filed with the Securities and Exchange Commission on June 24, 1993).
10.8 -- Lease between the Company and One Union Realty Trust dated September 1, 1991, as amended by Addendum Number 1 to
the Lease dated June 29, 1993 (incorporated by reference to Exhibits 10.35 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991 (the "1991 10-K") and 10.10 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1993).
10.9 -- Stockholders' Agreement dated as of July 16, 1991 by and among High-D Acquisition Corp., Carlisle Plastics, Inc.
and certain individuals and institutions relating to Rhino-X Industries, Inc. (incorporated by reference to
Exhibit 10.45 to the 1991 10-K).
10.10 -- Employment Agreement dated September 1, 1992 between the Company and David E. Wilbur, Jr. (incorporated by
reference to Exhibit I to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992) as
amended by the Amendment dated September 20, 1994. *
10.11 -- Indenture relating to the Company's 10 1/4% Senior Notes Due 1997 among the Company, Poly-Tech, as Guarantor, and
United States Trust Company of New York, as Trustee (a form of the Notes is contained as Exhibit A thereto)
(incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1, as amended, Registration No.
33-47627, as filed with the Securities and Exchange Commission on May 1, 1992).
10.12 -- Credit Agreement dated as of March 9, 1994 by and among the Company, as borrower, Poly-Tech, A&E Products (Far
East) Ltd. ("Far East"), Plasticos Bajacal S.A. de C.V. ("Plasticos"), Rhino-X Industries, Inc. ("Rhino-X"), A&E
Korea, Ltd. ("Korea"), American Western Corporation ("American Western") and AWC Transportation Corporation
("AWCT"), as co-obligors, and General Electric Capital Corporation ("GECC"), as agent and lender, as amended by
the First, Second and Third Amendments to Credit Agreement and Security Agreement dated as of April 14, April 15,
and October 25, 1994 by and among the same parties (incorporated by reference to Exhibits 10.14 to the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994 (the "March 1994 10-Q") and June 30, 1994
and the September 1994 10-Q).
10.13 -- Revolving Credit Note dated March 9, 1994 in the amount of $55,000,000 issued by the borrowers under the Credit
Agreement referenced in Exhibit 10.12 to GECC (incorporated by reference to Exhibit 10.15 to the March 1994 10-Q).
10.14 -- Security Agreement dated as of March 9, 1994 by and among the borrowers under the Credit Agreement referenced in
Exhibit 10.12 and GECC, as administrative agent, as amended by
</TABLE>
II-2
<PAGE> 47
<TABLE>
<S> <C> <C>
the First Amendment to Credit Agreement and Security Agreement dated as of April 14, 1994 by and among the same
parties (included in Exhibit 10.12).
10.15 -- Asset Purchase Agreements dated March 9, 1994 by and between the Company and American Western, Poly-Tech and
Rhino-X (incorporated by reference to Exhibit 10.17 to the March 1994 10-Q).
10.16 -- Contract Manufacturing Agreements dated March 9, 1994 by and between the Company and American Western, Poly-Tech
and Rhino-X (incorporated by reference to Exhibit 10.18 to the March 1994 10-Q).
10.17 -- Subordination Agreement dated as of March 9, 1994 by and among GECC, the Company, Poly-Tech, Far East, Plasticos,
Rhino-X, Korea, American Western and AWCT (incorporated by reference to Exhibit 10.19 to the March 1994 10-Q).
10.18 -- Equipment Lease Agreement dated as of April 4, 1994, as amended by the First Amendment and Amendment No. 2 dated
as of August 17 and October 25, respectively, by and between the Company and GECC (incorporated by reference to
Exhibits 10.20 to the March 10-Q and September 1994 10-Q).
10.19 -- Equipment Sublease Agreements dated as of April 4, 1994, as amended by Amendments dated as of August 17 and
October 25, 1994, by and between the Company and American Western, Poly-Tech and Rhino-X (incorporated by
reference to Exhibits 10.21 to the March 10-Q and September 1994 10-Q).
10.20 -- Bills of Sale dated April 4, 1994 by the Company, Poly-Tech, American Western and Rhino-X (incorporated by
reference to Exhibit 10.22 to the March 1994 10-Q).
10.21 -- Subordination Agreement dated as of April 4, 1994 by and among GECC, the Company, Poly-Tech, Far East, Plasticos,
Rhino-X, Korea, American Western and AWCT (incorporated by reference to Exhibit 10.23 to the March 1994 10-Q).
10.22 -- Subsidiary Guarantees dated as of April 4, 1994 by Poly-Tech, American Western and Rhino-X in favor of GECC
(incorporated by reference to Exhibit 10.24 to the March 1994 10-Q).
10.23 -- Receivables Funding and Servicing Agreement dated as of April 14, 1994, as amended by Amendment No. 1 dated as of
October 25, 1994, by and among Carlisle Plastics Funding Corporation ("CPFC"), as Borrower, Redwood Receivables
Corporation ("Redwood"), as Lender, the Company, as Servicer, and GECC, as Operating Agent and Collateral Agent
(incorporated by reference to Exhibits 10.25 to the March 1994 10-Q and September 1994 10-Q).
10.24 -- Note dated October 25, 1994 in the amount of $45,000,000 issued by CPFC to Redwood pursuant to the Receivables
Funding and Servicing Agreement referenced in Exhibit 10.23 (incorporated by reference to Exhibit 10.26 to the
September 1994 10-Q).
10.25 -- Receivables Sale Agreement dated as of April 14, 1994, as amended by Amendment No. 1 dated as of October 25, 1994,
by and between the Company and CPFC (incorporated by reference to Exhibits 10.27 to the March 1994 10-Q and
September 1994 10-Q).
</TABLE>
II-3
<PAGE> 48
<TABLE>
<S> <C> <C>
10.26 -- Note dated October 25, 1994 in the amount of $45,000,000 issued by the Company to CPFC pursuant to the Receivables
Sale Agreement referenced in Exhibit 10.25 (incorporated by reference to Exhibit 10.28 to the September 1994 10-
Q).
10.27 -- Employment Agreement dated September 12, 1994 by and between the Company and Clifford A. Deupree. *
12.1 -- Statement of ratio of earnings to fixed charges of the Company. *
13.1 -- Quarterly Report on Form 10-Q for the quarter ended September 30, 1994 (incorporated by reference to the September
1994 10-Q as filed with the Commission on November 10, 1994).
15.1 -- Letter of Deloitte & Touche LLP regarding unaudited interim financial information. *
23.1 -- Consent of Lindquist & Vennum P.L.L.P. (See exhibit 5.1 above).
23.2 -- Consent of Deloitte & Touche LLP.
24.1 -- A Power of Attorney is set forth on the signature pages of this Registration Statement.
25.1 -- Statement of Eligibility and Qualification on Form T-1, dated November 29, 1994, by the Company and United States
Trust Company of New York, as trustee, relating to the New Notes. *
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery. *
<FN>
</TABLE>
______________________
* Previously filed.
(b) Financial Statement Schedules
Not applicable.
ITEM 22. UNDERTAKINGS.
The Company and Poly-Tech hereby undertake:
1. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company and Poly-Tech pursuant to the foregoing provisions, or
otherwise, the Company and Poly-Tech have been advised that in the opinion of
the 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 Company
or Poly-Tech of expenses incurred or paid by a director, officer or controlling
person of the Company or Poly-Tech 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 Company or Poly-Tech,
as the case may be, 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.
II-4
<PAGE> 49
2. (a) To file, during any period in which offers or sales are
being made, a post-effective amendment to the 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 thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement; and
(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.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a form
of prospectus 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.
(c) 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.
3. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement 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.
II-5
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Phoenix, State of Arizona, on January 26 1995.
CARLISLE PLASTICS, INC.
By: /s/ William H. Binnie
------------------------------------
William H. Binnie
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed on
January 26, 1995, by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ William H. Binnie Chairman of the Board of Directors
- ----------------------------- (principal executive officer)
William H. Binnie
/s/ Patrick J. O'Leary Chief Financial Officer, Secretary (principal
- ----------------------------- financial and accounting officer) and Director
Patrick J. O'Leary
* Director
- -----------------------------
Clifford A. Deupree
* Director
- -----------------------------
Yehochai Schneider
* Director
- -----------------------------
Clarence M. Schwerin III
* Director
- -----------------------------
Samuel H. Smith, Jr.
* Director
- -----------------------------
David E. Wilbur, Jr.
* Director
- -----------------------------
Grant M. Wilson
- ----------------------
* By: /s/ William H. Binnie
----------------------
William H. Binnie
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Phoenix, State of Arizona, on January 26, 1995.
POLY-TECH, INC.
By: /s/ William H. Binnie
----------------------------------------
William H. Binnie
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed on
January 26, 1995, by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ William H. Binnie Chairman of the Board of Directors
- ---------------------------------- (principal executive officer)
William H. Binnie
/s/ Patrick J. O'Leary Vice President, Secretary, and Chief Financial Officer (principal
- ---------------------------------- financial and accounting officer)
Patrick J. O'Leary
</TABLE>
II-7
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
4.1 Indenture dated November 10, 1994 relating to the Company's Series A 10 1/4% Senior Notes Due 1997 (the "New
Notes") among the Company, Poly-Tech, as guarantor, and United States Trust Company of New York, as trustee (a
specimen of the New Notes is contained as Exhibit A thereto). *
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to the Company. *
10.10 Amendment dated September 20, 1994 to the Employment Agreement dated September 1, 1992 by and between the Company
and David E. Wilbur, Jr. *
10.27 Employment Agreement dated September 12, 1994 by and between the Company and Clifford A. Deupree. *
12.1 Statement of ratio of earnings to fixed charges of the Company. *
15.1 Letter of Deloitte & Touche LLP regarding unaudited interim financial information. *
23.1 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above).
23.2 Consent of Deloitte & Touche LLP.
25.1 Statement of Eligibility and Qualification on Form T-1, dated November 29, 1994, by the Company and United States
Trust Company of New York, as trustee, relating to the New Notes. *
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery. *
<FN>
______________________
* Previously filed.
</TABLE>
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendement No. 1 to the
Registration Statement No. 33-56825 of Carlisle Plastics, Inc. and subsidiaries
on Form S-4 of the report of Deloitte & Touche dated February 9, 1994 (which
expresses an unqualified opinion and includes an explanatory paragraph relating
to the change in accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109) appearing in the Annual Report on Form
10-K of Carlisle Plastics, Inc. and subsidiaries for the year ended December
31, 1993, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
January 27, 1995
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
----------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ___________, 1995, UNLESS EXTENDED (THE "EXPIRATION DATE").
----------------------------------------------------------------
CARLISLE PLASTICS, INC.
LETTER OF TRANSMITTAL
SERIES A 10 1/4% SENIOR NOTES DUE 1997
To: United States Trust Company of New York, The Exchange Agent
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Overnight Courier:
<S> <C>
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 Cooper Station 770 Broadway
New York, New York 10276 New York, New York 10003
Attention: Corporate Trust Operations
By Hand: By Facsimile:
United States Trust Company of New York (212) 420-6152
65 Beaver Street Attention: Customer Service
New York, New York 10005
Attention: Ground Level Confirm by telephone:
Corporate Trust Operations (800) 548-6565
</TABLE>
Delivery of this instrument to an address other than as set forth
above or transmission of instructions via a facsimile number other than the one
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 that he or she has received the
Prospectus dated ________________, 1995 (the "Prospectus") of Carlisle
Plastics, Inc. (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its Series A 10 1/4% Senior
Notes due 1997 (the "New Notes") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for each $1,000
principal amount of its outstanding 10 1/4% Senior Notes due 1997 which were
issued in 1994 (the "Old Notes"), of which $15,000,000 principal amount is
outstanding. Other capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
The Letter of Transmittal is to be used by Holders of Old Notes (i) if
certificates representing the Old Notes are to be physically delivered
herewith, or (ii) if the guaranteed delivery procedures described in the
Prospectus are to be utilized.
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 or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered 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.
<PAGE> 2
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING
<TABLE>
- --------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 10 1/4% SENIOR NOTES DUE 1997 ("OLD NOTES")
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount
Name(s) and Address(es) of Aggregate Principal Tendered (must be in
Registered Holder(s) Certificate Amount Represented integral multiple of
(Please fill in, if blank) Number(s) by Certificate(s) $1,000)*
- --------------------------------------------------------------------------------------------------------------
<S> <C>
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------
<FN>
* Unless indicated in the column labeled "Principal Amount Tendered," any tendering Holder of Old Notes
will be deemed to have tendered the entire aggregate principal amount represented by the columns labeled
"Aggregate Principal Amount Represented by Certificate(s)."
If the space provided above is inadequate, list the certificate numbers and principal amounts on a
separate signed schedule and affix the list to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of Old Notes. All other tenders must be in
integral multiples of $1,000.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ----------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6) (See Instructions 4, 5 and 6)
<S> <C>
To be completed ONLY if certificates for Old Notes To be completed ONLY if certificates for Old Notes
in a principal amount not tendered or not in a principal amount not tendered or not
purchased, or New Notes issued in exchange for Old purchased, or New Notes issued in exchange for Old
Notes accepted for exchange, are to be issued in Notes accepted for exchange, are to be sent to
the name of someone other than the undersigned. someone other than the undersigned, or to the
undersigned at an address other than that shown
above.
Issue certificate(s) to: Mail to:
Name Name
---------------------------------------------- -----------------------------------------------
(Please Print) (Please Print)
Address Address
------------------------------------------- --------------------------------------------
-------------------------------------------------- ---------------------------------------------------
(Include Zip Code) (Include Zip Code)
-------------------------------------------------- ---------------------------------------------------
(Tax Identification or Social Security No.) (Tax Identification or Social Security No.)
- --------------------------------------------------- ----------------------------------------------------
</TABLE>
2
<PAGE> 3
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Old Notes with full power of substitution to (i) deliver certificates
for such Old Notes to the Company and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company and (ii)
present such Old Notes for transfer on the books of the Company and receive all
benefits and otherwise exercise all rights of beneficial ownership of such Old
Notes all in accordance with the terms of the Exchange Offer. The power of
attorney granted in this paragraph shall be deemed irrevocable and coupled with
an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby further represents that (i) the New Notes received pursuant
to the Exchange Offer are being acquired in the ordinary course of business of
the person receiving such New Notes (whether or not such person is the Holder),
(ii) neither the Holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) neither the Holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, (iv) the Holder
is not engaged in and does not intend to engage in, a distribution of the New
Notes, and (v) if the tendering Holder is a broker or dealer (as defined in the
Exchange Act) (a) it acquired the Old Notes for its own account as a result of
market making activities or other trading activities, (b) it has not entered
into any arrangement or understanding with the Company or any "affiliate" of
the Company (within the meaning of Rule 405 under the Securities Act) to
distribute the New Notes to be received in the Exchange Offer, and (c) it will
deliver the Company's Prospectus dated January ____, 1995, as supplemented or
amended, in connection with any resale of such New Notes. By making the
representations in (v)(c) above and by delivering such Prospectus, such
broker-dealer will not be deemed to be admitting that it is an "underwriter"
within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment, transfer and purchase of the Old Notes
tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to
have accepted validly tendered Old Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
If any tendered Old Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Old
Notes will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Payment Instructions" as promptly as practicable after the Expiration Date.
3
<PAGE> 4
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions,"
please issue the certificates representing the New Notes issued in exchange for
the Old Notes accepted for exchange and return any Old Notes not tendered or
not exchanged, in the name(s) of the undersigned. Similarly, unless otherwise
indicated under "Special Delivery Instructions," please send the certificates
representing the New Notes issued in exchange for the Old Notes accepted for
exchange and any certificates for Old Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below the undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any Old Notes not tendered or not
exchanged in the name(s) of, and send said certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Payment Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
Holders of Old Notes 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 or any other documents required hereby to the
Exchange Agent prior to the Expiration Date, may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the Caption "The Exchange Offer - Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X__________________________________________ __________________________
Date
X__________________________________________ __________________________
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number: ___________________________
The above lines must be signed by the registered holder(s) of Old
Notes as their name(s) appear(s) on the Old Notes or by person(s) authorized to
become registered holder(s) by a properly
4
<PAGE> 5
completed bond power from the registered holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Old Notes to which this Letter
of Transmittal relates are held of record by two or more joint holders, then
all such holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must (i) set forth his or her full title below and (ii) unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 4 regarding the completion of
this Letter of Transmittal printed below.
Name(s): _______________________________________________________________
_______________________________________________________________
(Please Print)
Capacity: _______________________________________________________________
Address: _______________________________________________________________
_______________________________________________________________
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
____________________________________________________________
(Authorized Signature)
____________________________________________________________
(Title)
____________________________________________________________
(Name of Firm)
Dated:________________________________________________,1995.
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The
tendered Old Notes, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile hereof and any other documents required
by this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 P.M., New York City time, on the
Expiration Date. The method of delivery of the tendered Old Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent 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.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or Old Notes should be sent
to the Company.
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available, or (ii) who cannot delivery their Old Notes, this
Letter of Transmittal or any other documents required hereby to the Exchange
Agent prior to 5:00 P.M., New York City time, on the Expiration Date must
tender their Old Notes according to the guaranteed delivery procedures set
forth in the Prospectus. Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution within the meaning of Rule 17 Ad-15
under the Securities Exchange Act of 1934, as amended; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed
delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder of the Old Notes, the certificate number or
numbers of such Old Notes and the principal amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, this
Letter of Transmittal (or facsimile hereof) together with the certificate(s)
representing the Old Notes and any other required documents will be deposited
by the Eligible Institution with the Exchange Agent; and (iii) such properly
completed and executed Letter of Transmittal (or facsimile hereof), as well as
all other documents required by this Letter of Transmittal and the
certificate(s) representing all tendered Old Notes in proper form for transfer,
must be received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date, all as provided in the Prospectus under
the caption "Guaranteed Delivery Procedures." Any Holder of Old Notes who
wishes to tender his or her Old Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery prior to 5:00 P.M., New York City time, on the
Expiration Date for the Old Notes. Upon request of 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.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) shall be final and
binding on all parties. Unless waived, any
6
<PAGE> 7
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them 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 Holders of Old Notes, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
2. TENDER BY HOLDER. Only a Holder of Old Notes may tender such
Old Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not
the registered holder and who wishes to tender should arrange with the
registered holder to execute and deliver this Letter of Transmittal on his or
her behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his or her Old Notes, either make appropriate
arrangements to register ownership of the Old Notes in such holder's name or
obtain a properly completed bond power from the registered holder.
3. PARTIAL TENDERS. Tenders of Old Notes will be accepted only
in integral multiples of $1,000. If less than the entire principal amount of
any Old Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 10
1/4% Senior Notes due 1997" above. The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, then Old Notes for the principal amount of Old Notes not tendered and
a certificate or certificates representing New Note issued in exchange for any
Old Notes accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEES OF SIGNATURES. If this Letter of Transmittal (or
facsimile hereof) is signed by the record Holder(s) of the Old Notes tendered
hereby, the signature must correspond with the name(s) as written on the face
of the Old Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes tendered and the certificate or
certificates for New Notes issued in exchange therefor are to be issued (or any
untendered principal amount of Old Notes is to be reissued) to the registered
holder, the said holder need not and should not endorse any tendered Old Notes,
nor provide a separate bond power. In any other case, such holder must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered Holder or Holders of any Old Notes listed,
such Old Notes must be endorsed or accompanied by appropriate bond powers
signed as the name of the registered Holder or Holders appears on the Old
Notes.
7
<PAGE> 8
If this Letter of Transmittal (or facsimile hereof) or any Old Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact or officers of corporations or others acing in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by
this Instruction 4 must be guaranteed by an Eligible Institution.
Except as otherwise provided below, all signatures on this Letter of
Transmittal (or facsimile hereof) must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed if (i) this
Letter of Transmittal is signed by the registered Holder(s) of the Old Notes
tendered herewith and such Holder(s) have not completed the box set forth
herein entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" or (ii) such Old Notes are tendered for the account of
an Eligible Institution.
5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box or boxes, the name and address to which
New Notes or substitute Old Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires
that a Holder whose offered Old Notes are accepted for exchange must provide
the Company (as payor) with his or her correct Taxpayer Identification Number
("TIN"), which, in the case of an exchanging Holder who is an individual, is
his or her social security number. If the Company is not provided with the
correct TIN or an adequate basis for exemption, such Holder may be subject to a
$50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
delivery to such Holder of New Notes may be subject to backup withholding in an
amount equal to 31% of the gross proceeds resulting from the Exchange Offer.
If withholding results in an overpayment of taxes, a refund may be obtained.
Exempt Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed form W-9 for additional instructions.
To prevent backup withholding, each exchanging Holder must provide his
or her correct TIN by completing the form W-9 enclosed herewith, certifying
that the TIN provided is correct (or that such Note Holder is awaiting a TIN)
and that (i) the Holder is exempt from backup withholding, (ii) the Holder has
not been notified by the IRS that he or she is subject to backup withholding as
a result of a failure to report all interest or dividends or (iii) the IRS has
notified the Holder that he or she is no longer subject to backup withholding.
In order to satisfy the Exchange Agent that a foreign individual qualifies as
an exempt recipient, such Holder must submit a statement signed under penalty
of perjury attesting to such exempt status. Such statements may be obtained
from the Exchange Agent. If the Old Note are in more than one name or are not
in the name of the actual owner, consult the Form W-9 for information on which
TIN to report. If you do not provide your
8
<PAGE> 9
TIN to the Company within 60 days, backup withholding will begin and continue
until you furnish your TIN to the Company.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if
any, applicable to the exchange of Old Notes pursuant to the Exchange Offer.
If, however, certificates representing New Notes or Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
Holder of the Old Notes tendered hereby, or if tendered Old Notes are
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or on any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with this Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering Holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
8. WAIVER OF CONDITIONS. The Company reserves the absolute right
to amend, waive or modify specified conditions in the Exchange Offer in the
case or any Old Notes tendered.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering
Holder whose Old Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated herein for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance and requests for additional copies of the Prospectus or
this Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
<TABLE>
(DO NOT WRITE IN SPACE BELOW)
<CAPTION>
=================================================================================================
CERTIFICATE OLD NOTES OLD NOTES
SURRENDERED TENDERED ACCEPTED
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
=================================================================================================
Delivery Prepared by Checked By Date , 1995.
---------------- ---------------------- --------------
</TABLE>
9
