As filed with the Securities and Exchange Commission on July 9, 1996
Registration No. 33-87562
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SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 2 TO
FORM S-1 ON FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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BPI PACKAGING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 04-2997486
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
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DENNIS N. CAULFIELD, President
455 Somerset Avenue
Dighton, Massachusetts 02764
(508) 824-8636
Facsimile (508) 822-6872
(Address, Including Zip Code and Telephone Number
of Registrant's Principal Executive Offices and Name,
Address and Telephone Number of Agent for Service)
Copies to:
NEIL H. ARONSON, ESQUIRE
MARGUERITE J. HILL, ESQUIRE
O'CONNOR, BROUDE & ARONSON
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
(617) 890-6600
Facsimile (617) 890-9261
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of
this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus contained herein also relates to registration statement numbers
33-48766 and 33-39463, including but not limited to the following: (i) 1,587,040
shares of Common Stock issuable upon exercise of the Class B Redeemable Common
Stock Purchase Warrants (the "Class B Warrants") issued in the Company's third
public offering (the "Public Offering") and registered on a Form S-1
Registration Statement, No. 33-48766, declared effective on October 7, 1992; and
(ii) 100,000 shares of Common Stock issuable upon conversion of the Series A
Preferred Stock underlying the underwriters (the "Underwriters") warrant issued
to the Underwriter of the Company's second public offering in June 1991 and
registered on a Form S-1 Registration Statement, No. 33-39463, declared
effective on June 13, 1991.
Pursuant to Rule 416 there are also registered hereby such additional
indeterminate number of shares of such Common Stock as may become issuable by
reason of antidilution adjustments, stock splits, stock dividends, and similar
adjustments.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE 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 SECTION 8(a), MAY
DETERMINE.
CROSS REFERENCE SHEET
PURSUANT TO RULE 501(B)
<TABLE>
<CAPTION>
CAPTION AND SUBCAPTION
ITEM NUMBER AND CAPTION IN PROSPECTUS
----------------------- ----------------------
<S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page;
of Prospectus.................................................... Back Cover Page
3. Summary Information; Risk Factors and Ratio of Prospectus Summary; Risk
Earnings to Fixed Charges........................................ Factors; Not Applicable
4. Use of Proceeds.................................................. Use of Proceeds
5. Determination of Offering Price.................................. Not Applicable
6. Dilution......................................................... Not Applicable
7. Selling Stockholders............................................. Selling Securityholders
8. Plan of Distribution............................................. Outside Front Cover Page;
Plan of Distribution
9. Description of the Securities to be Registered................... Outside Front Cover Page;
Description of Securities
10. Interest of Named Experts and Counsel............................ Experts
11. Material Changes................................................. Recent Developments
12. Incorporation of Certain Information by Reference................ Available Information;
Incorporation by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities................... Indemnification
</TABLE>
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PROSPECTUS
BPI PACKAGING TECHNOLOGIES, INC.
1,889,510 SHARES OF COMMON STOCK
This Prospectus relates to 1,889,510 shares of Common Stock, $.01 par
value per share (the "Common Stock") of BPI Packaging Technologies, Inc. (the
"Company"), and other securities as follows: (i) 212,470 shares of Common Stock
issued by the Company to an investor (the "Investor") in a private placement of
the Company's Common Stock in August 1994 (the "Private Placement"); (ii)
1,587,040 shares of Common Stock issuable upon exercise of the Class B
Redeemable Common Stock Purchase Warrants (the "Class B Warrants") issued in the
Company's third public offering (the "Public Offering") in October 1992, subject
to anti-dilution adjustments; and (iii) 100,000 shares of Common Stock issuable
upon conversion of the Series A Preferred Stock underlying the underwriters (the
"Underwriters") warrant issued to the Underwriter of the Company's second public
offering in June 1991. See "SELLING SECURITYHOLDERS." The Investor and the
Underwriters are sometimes hereinafter referred to collectively as the "Selling
Securityholders," and the Class B Warrants are sometimes hereinafter referred to
as the "Class B Warrants" or the "Warrants." The Common Stock and Warrants are
sometimes hereinafter referred to collectively as the "Securities."
This offering (the "Offering") is not being underwritten. The shares of
Common Stock being offered hereunder may be sold by the Investor and/or his
registered representatives from time to time at prices to be determined at the
time of such sales. The shares of Common Stock issuable upon conversion of the
Preferred Stock being offered hereunder may be resold by the Underwriters and/or
their registered representatives from time to time at prices to be determined at
the time of such sales. There is no minimum required purchase and there is no
arrangement to have funds received by such Selling Securityholders and/or their
registered representative placed in an escrow, trust or similar account or
arrangement, unless the proceeds come from a purchaser residing in a state in
which the sale of those Securities has not yet been qualified. See "PLAN OF
DISTRIBUTION."
The sale of the Securities being offered hereby when made, will be made
through customary brokerage channels either through broker-dealers acting as
agents or brokers for the Selling Securityholders or through broker-dealers
acting as principals who may then resell the Securities on the National
Association of Securities Dealers Automated Quotation/National Market System
("NASDAQ/NMS") or otherwise, or by private sales on the NASDAQ/NMS or otherwise,
at negotiated prices or prevailing market prices at the time of the sales, or by
a combination of such methods of offering. Thus, the period of distribution of
such Securities may occur over an extended period of time. The Selling
Securityholders may effect these transactions by selling Securities to or
through broker-dealers or by pledges of the Securities to broker-dealers who
may, from time to time, themselves effect distributions of the Securities or
interests therein in their capacity as broker-dealers. See "PLAN OF
DISTRIBUTION." No assurance can be given that the Selling Securityholders will
be able to sell any of their Securities registered herein.
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The Selling Securityholders and any broker-dealer who acts in
connection with the sale of Securities hereunder may be deemed to be
"underwriters" as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and any commission received by them and profit on any
resale of the Securities as principal might be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Securityholders
will pay or assume brokerage commissions or underwriting discounts incurred in
connection with the sale of their Securities, which commissions or discounts
will not be paid or assumed by the Company. See "PLAN OF DISTRIBUTION."
The Company's Common Stock and Class B Warrants are quoted on the
NASDAQ/NMS under the symbols "BPIE" and "BPIEZ," respectively. The Company's
Preferred Stock is quoted on NASDAQ under the symbol "BPIEP." On June 21, 1996,
the closing bid price for one share of the Company's Common Stock, one Class B
Warrant and one share of Preferred Stock as reported by NASDAQ/NMS and NASDAQ
was $2.75, $0.1875, and $2.75, respectively.
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THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD
BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS,"
BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July __, 1996
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WHICH STATEMENTS CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL,"
"WOULD," "CAN," "COULD," "INTEND," "PLAN," "EXPECT," "ANTICIPATE," "ESTIMATE" OR
"CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY. THE FOLLOWING MATTERS CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING STATEMENTS, INCLUDING
CERTAIN RISKS AND UNCERTAINTIES, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS. IN ANALYZING THIS
OFFERING, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS IN ADDITION TO OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS:
PREVIOUS LOSSES; ACCUMULATED DEFICIT; NO ASSURANCE OF FUTURE PROFITS
At May 24, 1996, the Company had an accumulated stockholders' deficit
of $17,619,959. Since its inception in 1988, the Company has not operated
profitably in any fiscal year (exclusive of net income of $311,022 for its
fiscal year ending March 1, 1991, which included extraordinary income of
$337,179) and incurred a loss of $4,510,145 for the fiscal year ended February
23, 1996. No assurance can be given that the Company will be profitable or
attain improved operating results in future fiscal years.
INTENSE COMPETITION
The manufacture of plastic bags is a highly competitive industry. In
particular, the Company competes with major companies such as Tenneco, Inc.
("Tenneco") and Sonoco Products Corporation ("Sonoco"). The Company's in-store
advertising and promotion products compete in the same markets that are
dominated by Heritage Media Corporation and Catalina Marketing Corporation, both
of which offer in-store advertising and promotion products which are not related
to the floor or the FRESH-SAC(R) produce bag dispensing systems. These companies
have substantially greater research and development, marketing, financial and
human resources than the Company. In addition, competitors may succeed in
developing new or enhanced products that are more effective than any that may be
sold or developed by the Company, and such companies may also prove to be more
successful than the Company in marketing and selling such products. No assurance
can be given that the Company will be able to compete successfully with any of
these companies or achieve a greater market share than it currently possesses.
POSSIBLE PATENT CLAIMS BY MOBIL OIL CORPORATION AND SONOCO PRODUCTS COMPANY;
POSSIBLE PAYMENT OF LICENSE FEES AND LITIGATION COSTS
Mobil Oil Corporation ("Mobil") owns a reissue patent that relates to
avoiding stress concentration and preventing the tearing of plastic bags. This
reissue patent originally was to expire
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in 1996. Due to a change in U.S. patent law, the reissue patent is now extended
until 1998. On December 4, 1995, Mobil filed suit against the Company in the
U.S. District Court for the District of Delaware, Civil Action No. 95-737. Mobil
also named Inteplast Corporation and Integrated Bagging Systems Corporation as
defendants in this matter. Mobil has alleged that the Company has infringed on
Mobil's rights under U.S. Patent No. Re. 34,019 (the "Patent"), regarding the
manufacture of plastic carrying bags known as "T-shirt bags." Mobil is seeking
injunctive relief prohibiting the Company from selling products which allegedly
infringe on the Patent, money damages to compensate Mobil for the Company's
alleged infringement, interest, attorney's fees and costs. The Company intends
to vigorously defend this law suit. However, if Mobil was to succeed in this or
any infringement claim against the Company, Mobil might be able to prevent the
future use, sale and manufacture of the Company's grocery T-shirt sacks and
similar products which might be found to infringe the patent, or alternatively,
might require the Company to pay Mobil a license fee for the prior and future
use of this technology. Either outcome could have a material adverse effect on
the Company's business. The Company has been advised by patent counsel that the
Patent applies to the traditional grocery T-shirt sack and does not apply to the
Company's proprietary HANDI-SAC(TM) and FRESH-SAC(R) bag products.
In 1990, Sonoco Products Company ("Sonoco") indicated its intent to
seek licenses under a broadened reissue patent from all manufacturers of plastic
bags which utilize a particular method for holding plastic bags in a metal rack.
Sonoco has commenced litigation against several plastic bag manufacturers other
than the Company. The United States District Court for the Central District of
California entered summary judgment in February 1994 for the defendants in a
suit relating to alleged patent infringement by the defendants. The court
declared Sonoco's three reissue claims to be invalid. The court is also allowing
the defendants' counterclaim against Sonoco for unfair competition to continue.
It is expected that Sonoco will appeal this judgment. Subsequent to this
decision, the Company filed suit against Sonoco alleging infringement of the
Company's patent by Sonoco. In the first quarter of Fiscal 1997, the patent
infringement suit against Sonoco and Sonoco counterclaims against the Company
were dismissed by mutual agreement of the parties.
If Sonoco was to appeal the February 1994 judgment which declared
Sonoco's three reissue claims invalid, and have that judgment reversed, Sonoco
could institute a patent infringement suit against the Company. If Sonoco was to
succeed in any infringement claim against the Company, it might be able to
prevent the future use, sale and manufacture of certain of the Company's
products which use racking systems. Alternatively, the Company could be required
to pay a license fee for the prior and future use of this technology which might
place the Company at a competitive disadvantage in the sale of certain of its
products. Either outcome could have a material adverse effect on the Company's
business. Infringement of any patent may also render the Company liable to
purchasers and end-users of the infringing product. The Company has been advised
by patent counsel that the Sonoco patent applies to the traditional grocery
T-shirt sack and does not apply to the Company's proprietary HANDI-SAC(TM) and
FRESH-SAC(R) bag products.
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No assurance can be given that the Company's products will not infringe
patents or rights of others. The Company could incur substantial costs if
required to defend itself in any patent litigation.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY
In 1993, the Company was issued a United States patent for the
dispensing system used in conjunction with its FRESH-SAC(R) product and other
T-shirt sack products and has filed patent applications for this dispensing
system in approximately 20 foreign countries. The Company has filed patent
applications in the United States and approximately 14 foreign countries for the
FRESH-SAC(R) HMWPE material, and was notified that this patent has been issued
in a foreign country. Notwithstanding the issuance of the patent in a foreign
country, the Company has elected not to further prosecute this patent in other
countries because of technological changes that the Company plans to make in its
manufacturing process which make it uneconomical to continue to invest in the
original patent applications. The Company owns patents issued in the United
States and Canada relating to the method for making a pack of T-shirt sacks
which permit the individual sacks to be mounted on a handle supported rack
dispensing system and to be easily separated and dispensed from the pack
utilizing a central "pull tab." The Company has also filed a United States
patent application for its Fresh Focus Cartridge Talker(TM). No assurance can be
given that any of these patents will be granted or that the patents currently
owned by the Company and any patents that may be granted in the future will be
enforceable or provide the Company with meaningful protection from competitors.
Even if a competitor's products were to infringe patents owned by the Company,
it could be costly for the Company to enforce its rights in an infringement
action and would divert funds and resources otherwise used in the Company's
operations. Furthermore, no assurance can be given that the Company would be
successful in enforcing such rights. No assurance can be given that any of the
Company's patent applications will be allowed or, if allowed, will provide the
Company with any advantage against competitors selling similar products.
Similarly, no assurance can be given that the Company's products will not
infringe patents or rights of others.
The Company also relies on unpatented proprietary know-how, which may
be duplicated, and employs various methods including confidentiality agreements
with employees to protect its proprietary know-how. However, such methods may
not afford complete protection and no assurance can be given that others will
not independently develop such know-how or obtain access thereto.
UNCERTAINTY OF MARKET ACCEPTANCE FOR THE COMPANY'S IN-STORE ADVERTISING AND
PROMOTION PRODUCTS
As is typical in the case of newly introduced products, demand and
market acceptance for such products is subject to a high level of uncertainty.
Achieving and maintaining market acceptance for the Company's in-store
advertising and promotion products will require substantial marketing efforts
and expenditure of significant funds. No assurance can be given that the
Company's in-store advertising and promotion products will achieve and maintain
market acceptance, or that increased marketing efforts will result in successful
commercialization of the in-store advertising and promotion products, or that
such products will generate sufficient revenues to permit profitable operations.
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DEPENDENCE ON LICENSE FOR FLOOR FOCUS AD-TILE(TM)
The Company's success in implementing its strategy for its in-store
advertising and promotion products depends in part on its exclusive, worldwide
license to use the patented Floor Focus Ad-Tile(TM) system. The termination of
this license may limit the Company's ability to market its in-store advertising
and promotion products. Pursuant to this license agreement, the Company is
required to purchase a minimum number of Floor Focus Ad-Tiles(TM) at the price
set forth in the license agreement. In the event the Company does not purchase
the minimum requirements, it must pay a minimum royalty fee based on the
deficiency. Such license is also subject to infringement claims from third
parties. No assurance can be given that this license will not be terminated, or
that a third party will not be successful in an infringement action. The
termination of this license could have a material adverse effect on the
Company's in-store advertising and promotion products.
NEED FOR ADDITIONAL FINANCING
A significant portion of the Company's capital requirements to date has
been funded through equity and subordinated debt investments by Beresford Box
Company Ltd. (formerly Beresford Packaging, Inc.) (subsequently converted into
the Company's Series B and Series C Preferred Stock), owned 100% by C. Jill
Beresford, a principal stockholder, the Company's Vice President of Marketing
and a director, the proceeds from the Company's three prior public offerings,
the exercise of warrants sold in these public offerings and private placements.
The Company has also utilized bank loan and line of credit facilities, trade
credit facilities and equipment leases. Although management believes that fixed
asset or lease financing is now available at competitive rates from banks and
leasing companies to finance a substantial part of the planned $1.8 million
increase in capacity at the Dighton facility during Fiscal 1997, and that its
current bank line of credit together with anticipated cash from operations will
be sufficient to fund the Company's current operations, the Company may raise
additional financing through the sale of equity or debt in order to fund all or
part of the planned increased capacity at the Dighton facility over the next six
months as well as to increase its in-store advertising and promotion business
and general working capital. The Company has no commitments for such financing,
and no assurance can be given that the Company will be successful in obtaining
such additional financing, that such financings will be successfully completed
or that such financing will be available on terms favorable to the Company, if
at all.
DEPENDENCE UPON KEY PERSONNEL
The Company's ability to continue to develop and to market its products
depends, in large part, on its ability to attract and retain qualified
personnel. Competition for such personnel is intense and no assurance can be
given that the Company will be able to retain and attract such personnel.
The Company is dependent in particular upon the services of Dennis N.
Caulfield, its President and Chief Executive Officer, C. Jill Beresford, its
Vice President of Marketing, and Gregory M. Davall, its Vice President of
Manufacturing, and has employment agreements with these
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officers. The loss of the services of any of these individuals could have a
material adverse effect on the Company. The Company maintains and is the
beneficiary of key-person life insurance on each of Dennis N. Caulfield and C.
Jill Beresford in the amount of at least $1,000,000 per individual.
SUBSTANTIAL SHARES OF PREFERRED STOCK OUTSTANDING; POSSIBLE ISSUANCE OF
ADDITIONAL PREFERRED STOCK
The Company is authorized to issue up to 2,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock"). As of June 21, 1996,
there were issued and outstanding 372,146 shares of Series A Convertible
Preferred Stock, 146,695 shares of Series B Convertible Preferred Stock and
18,337 shares of Series C Redeemable Preferred Stock.
The Company has no present intention to issue any additional shares of
Preferred Stock. However, the issuance of any such Preferred Stock could affect
the rights of the holders of the Common Stock and reduce its value. In
particular, specific rights granted to future holders of Preferred Stock could
be used to restrict the Company's ability to merge with or sell its assets to a
third party, thereby preserving control of the Company by its present owners.
SUBSTANTIAL SHARES OF COMMON STOCK RESERVED FOR THE EXERCISE OR GRANT OF OPTIONS
AND WARRANTS; POTENTIAL DILUTIVE EFFECT THEREOF; REGISTRATION RIGHTS OF WARRANT
HOLDERS
The Company has reserved 933,750 shares of Common Stock for issuance
upon exercise of options granted or available for grant to employees, officers,
directors and consultants pursuant to the Company's 1990 and 1993 Stock Option
Plans, as well as an aggregate of 2,433,931 shares of Common Stock for issuance
upon (i) exercise of the Class B Warrants, subject to anti-dilution adjustments;
(ii) conversion of the Series A and Series B Convertible Preferred Stock; (iii)
exercise of the warrants issued to an individual and principals of the placement
agent in the Company's private placements to overseas investors; (iv) the
exercise of warrants issued to consultants of the Company; and (v) the
attainment of certain performance goals by RC America, Inc. The existence of the
aforementioned options, warrants, and Preferred Stock may prove to be a
hindrance to future financing by the Company. Although the book value of the
Company's Common Stock is currently significantly lower than the exercise prices
of the outstanding options and warrants, the exercise of any such options or
warrants in the future could dilute the book value of the Company's Common
Stock. Further, the holders of such options and warrants may exercise them at a
time when the Company would otherwise be able to obtain additional equity
capital on terms more favorable to the Company.
REDEMPTION OF CLASS B WARRANTS; POSSIBLE PROHIBITION ON MARKET MAKING ACTIVITIES
BY THE UNDERWRITER
The Company issued 1,526,000 Class B Redeemable Common Stock Purchase
Warrants (the "Class B Warrants") in its public offering in October 1992. The
Class B Warrants are subject to redemption at $.05 per warrant on thirty days'
written notice provided the last sale price of the
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Common Stock as reported on the NASDAQ National Market System for ten (10)
consecutive trading days ending within twenty-five (25) days of the notice of
redemption averages in excess of $14.00 per share. In the event the Company
exercises the right to redeem the Class B Warrants, such Class B Warrants will
be exercisable until the close of business on the date fixed for redemption in
such notice. In addition, the right of the Company to redeem the Class B
Warrants may reduce the market value of such Warrants. If any Class B Warrant
called for redemption is not exercised by such time it will cease to be
exercisable and the holder will be entitled only to the redemption price. During
the solicitation of the Class B Warrants, H.J. Meyers & Co., Inc. may be
prohibited from engaging in any market making activities prior to and during the
solicitation period.
EFFECT OF FUTURE SALES OF RESTRICTED SECURITIES
Of the 13,418,359 shares of the Company's Common Stock outstanding on
June 21, 1996, 2,312,269 shares are held by Dennis N. Caulfield (through a
corporation controlled by Mr. Caulfield), Beresford Box Company Ltd. (a
corporation controlled by Ms. Beresford) (excluding 146,695 shares of Series B
Convertible Preferred Stock), C. Jill Beresford and Alex F. Vaicunas, and an
aggregate of 1,148,970 shares were issued in five Regulation D offerings to
accredited investors. Of the 1,148,970 shares, an aggregate of 515,000 shares of
Common Stock issued in the first three Regulation D offerings were registered by
the Company on Form S-1 Registration Statements that were declared effective on
September 13, 1993 and April 7, 1994, respectively. The 212,470 shares of Common
Stock sold in the fourth Regulation D offering were registered in a Registration
Statement declared effective on January 5, 1995 and are also included in this
Prospectus. The remaining 421,500 shares of Common Stock sold in the last
Regulation D offering have not yet been registered, but such investors do have
registration rights and the Company intends to register these shares on or about
July 1996. None of the 2,312,269 shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are "restricted
securities" under Rule 144 of the Securities Act, exclusive of 3,200 shares,
which are registered but also subject to the resale limitations (except the
holding period) of Rule 144 since they are held by an affiliate of the Company.
Ordinarily, under Rule 144, a period holding restricted securities for a period
of two years may, every three months, sell in ordinary brokerage transactions or
in transactions directly with a market maker an amount equal to the greater of
one percent of the Company's then outstanding Common Stock or the average weekly
trading volume during the four calendar weeks prior to such sale. Rule 144 also
permits sales by a person who is not an affiliate of the Company and who has
satisfied a three-year holding period to sell with out any quantity limitation.
Future sales under Rule 144 may have a depressive effect on the market price of
the Common Stock. All of the shares of Common Stock held by Messrs. Caulfield
and Vaicunas, and Beresford Box Company Ltd.
are currently eligible for sale pursuant to Rule 144.
From December 1992 through June 1994 and in April and May 1996, the
Company issued an aggregate of 2,477,000 shares of its Common Stock in
Regulation S offerings. These shares are subject to the restrictions of
Regulation S and may not be sold unless such shares are registered under the Act
and any applicable state securities law in the United States or such offer or
sale is made pursuant to exemptions from those registration requirements.
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In addition, in April 1993, the Company registered 200,000 shares of
its Common Stock underlying the 1990 Stock Option Plan on a Form S-8
registration statement, which shares when exercised will become freely
tradeable. To date, 16,250 shares have been exercised under the 1990 Stock
Option Plan and are freely tradeable. Options to purchase up to an additional
134,250 shares have also been granted under the 1990 Stock Option Plan, and
options to purchase 676,880 shares have been granted under the 1993 Stock Option
Plan.
ANTI-TAKEOVER MEASURES; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER
PROVISIONS
The Company, as a Delaware corporation, is subject to the General
Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law restricts the ability of
a public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result,
potential acquirors of the Company may be discouraged from attempting to effect
an acquisition transaction with the Company, thereby possibly depriving holders
of the Company's securities of certain opportunities to sell or otherwise
dispose of such securities at above-market prices pursuant to such transactions.
As a result of the application of Section 203 and certain provisions in the
Company's Certificate of Incorporation and Bylaws, as amended, including the
adoption of a classified Board of Directors and the requirement for increased
shareholder vote to take certain actions involving the directors and the
Certificate of Incorporation and Bylaws, potential acquirors of the Company may
find it more difficult or be discouraged from attempting to effect and
acquisition transaction with the Company, thereby possibly depriving holders of
the Company's securities of certain opportunities to sell or otherwise dispose
of such securities at above-market prices pursuant to such transactions.
LIMITATION ON DIRECTOR LIABILITY UNDER DELAWARE LAW
Pursuant to the Company's Certificate of Incorporation, as amended, and
under Delaware law, directors of the Company are not liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty, except for
liability in connection with a breach of the duty of loyalty, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, for dividend payments or stock repurchases illegal under
Delaware law or for any transaction in which a director has derived an improper
personal benefit. However, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable.
NO ACTIVE PUBLIC MARKET; ARBITRARY DETERMINATION OF EXERCISE PRICES; POSSIBLE
VOLATILITY OF TRADING PRICES FOR COMMON STOCK
Although the Common Stock and Class B Warrants are quoted on
NASDAQ/NMS, and the Preferred Stock is quoted on NASDAQ, no assurance can be
given that an active public market in
-9-
such securities will be sustained. The exercise price of the Class B Warrants
and the Underwriter's Warrants was arbitrarily determined by negotiation between
the Company and the Underwriters. Such exercise prices do not necessarily bear
any relationship to the Company's assets, book value, total revenue or other
established criteria of value, and should not be considered indicative of the
actual value of the Common Stock. The trading prices of the Common Stock could
be subject to wide fluctuations in response to the Company's operating results,
announcements by the Company or others of developments affecting the Company or
its competitors or customers and other events or factors. In addition, the stock
market has experienced extreme price and volume fluctuations in recent years.
These fluctuations have had a substantial effect on the market prices for many
companies and similar events in the future may adversely affect the market
prices of the Common Stock.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS
Purchasers of the Class B Warrants may reside in or move to
jurisdictions in which the securities underlying the Class B Warrants are not
registered or qualified for sale during the period that the Class B Warrants are
exercisable. In this event, the Company would be unable to issue securities to
those persons desiring to exercise their Class B Warrants unless and until the
underlying securities could be qualified for sale in the jurisdictions in which
such purchasers reside, or unless an exemption to such qualification exists in
such jurisdictions. No assurance can be given that the Company will be able to
effect any such required registration or qualification.
Additionally, purchasers of the Class B Warrants will be able to
exercise the Class B Warrants only if a current prospectus relating to the
securities underlying the Class B Warrants is then in effect under the
Securities Act and such securities are qualified for sale or exempt from
qualification under the applicable securities or "blue sky" laws of the states
in which the various holders of the Class B Warrants then reside. Although the
Company has undertaken to use reasonable efforts to maintain the effectiveness
of a current prospectus covering the securities underlying the Class B Warrants,
no assurance can be given that the Company will be able to do so. The value of
the Class B Warrants may be greatly reduced if a current prospectus covering the
securities issuable upon the exercise of the Class B Warrants is not kept
effective or if such securities are not qualified or exempt from qualification
in the states in which the holders of the Class B Warrants then reside.
NO DIVIDENDS
The Company has not paid dividends to its stockholders since its
inception and does not plan to pay dividends in the foreseeable future. The
Company intends to reinvest earnings, if any, in the development and expansion
of its business.
-10-
AVAILABLE INFORMATION
A Registration Statement on Form S-3 under the Securities Act relating
to the securities offered hereby has been filed by the Company with the
Securities and Exchange Commission (the "Commission"), 450 Fifth Street, N.W.,
Washington, D.C. 20549. This Prospectus does not contain all of the information
set forth in such Registration Statement. For further information with respect
to the Company and to the securities offered hereby, reference is made to such
Registration Statement, including the exhibits thereto. Statements contained in
this Prospectus as to the contents of any contract or other document summarize
only the material provisions thereof and are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. Copies of such materials can be
obtained at prescribed rates by writing to the Commission's Public Reference
Section, Room 1024 at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, the Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and in accordance therewith
files, reports, proxy statements and other information with the Commission. The
Company's Commission File No. is 1-10648. Such reports, proxy statements and
other information can be inspected and copies thereof may be obtained, at
prescribed rates, at the Public Reference Section of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at: 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Reprints and other information concerning the Company can
also be inspected at the NASDAQ offices located at 1735 K Street, N.W.,
Washington, D.C. 20006.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING SECURITYHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER BY THE SELLING SECURITYHOLDERS TO SELL ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE
SELLING SECURITYHOLDERS TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THE COMPANY FURNISHES ITS STOCKHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS AND SUCH INTERIM REPORTS AS IT DEEMS APPROPRIATE.
----------
-11-
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been previously filed by the
Company with the Commission under the Act, and the Exchange Act are incorporated
by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
February 23, 1996;
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended May 24, 1996, filed with the Commission on July 8, 1996;
3. The description of the Company's Common Stock in the Company's Form
8-A Registration Statement and amendment thereto, declared effective
on June 13, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering described herein shall be deemed to be
incorporated by reference into this Prospectus from the respective dates those
documents are filed.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any 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 the
Registration Statement or this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents which have been incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Dennis N. Caulfield, President, BPI Packaging Technologies, Inc.,
455 Somerset Avenue, Dighton, Massachusetts 01764, telephone: (508) 824-8636.
-12-
THE COMPANY
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. IN ANALYZING THIS OFFERING AND THE DISCUSSION IN THE
REMAINDER OF THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE RISKS DESCRIBED PREVIOUSLY IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS
BEGINNING ON PAGE 4.
BPI Packaging Technologies, Inc. (the "Company") is a specialty
packaging and in-store advertising and promotion company that develops,
manufactures, markets and sells plastic bags and advertising and promotion
products to grocery, convenience, retail and drug store chains. The Company
manufactures traditional plastic grocery carryout bags of "T-shirt sack" design
commonly used at the checkout counter and plastic T-shirt carryout bags in
proprietary, value added dispensing systems for use in the produce section of
the supermarket and the checkout counters in convenience, retail, and drug store
chains. The Company's T-shirt carryout bags are manufactured in a new,
state-of-the-art plant which utilizes some of the world's most advanced and
highest quality printing, extrusion and bag making equipment. The Company's
investment in state-of-the-art manufacturing equipment and computer controlled
process technology, allows it to be a lower cost and high quality producer in
the T-shirt bag market.
The Company's strategy is to (i) integrate its proprietary bag products
and proprietary in-store advertising and promotion products in grocery,
convenience, retail and drug store chains, and (ii) replace the lower margin
traditional plastic grocery carryout bag with higher margin proprietary bag and
in-store advertising and promotion products. Total sales for the year ended
February 23, 1996 ("Fiscal 1996") were $28.8 million, of which $7.1 million was
attributed to sales of proprietary bag products, an increase of 29% over a year
earlier. Management believes, based on existing trends, that proprietary bag
products will show a substantially stronger performance in Fiscal 1997.
Proprietary bag products were 22.4% of sales in the first quarter of Fiscal 1997
compared to 24.0% of sales in the same period last year.
During the period June 1991 to May 1996, the Company acquired and
brought online approximately $36 million of new, state-of-the-art extrusion,
printing and bag making equipment in its Dighton, Massachusetts facility and
developed and acquired patented and proprietary bag and in-store advertising and
promotion products. The Company's proprietary bag and in-store advertising and
promotion products are uniquely positioned in the market which has limited
direct competition. The Company's present manufacturing capacity will support
estimated sales of $40 to $50 million annually. The Company currently has
outstanding commitments of $1.8 million that have been entered into to complete
the planned increase in capacity in Fiscal 1997 to support estimated sales of
$50 to $60 million annually. All capacity estimates are based upon certain
assumptions regarding pricing, manufacturing efficiencies and product mix.
Management's goal is to have the capacity fully utilized by the end of Fiscal
1998 with higher margin proprietary bag products.
-13-
Potential sales for the Company's in-store advertising and promotion
products, Floor Focus Ad-Tile(TM) and Produce Profit Builder(TM) are directly
related to market penetration and are not constrained by manufacturing capacity.
Developing the capability to penetrate the in-store advertising and promotion
market requires an investment in sales and marketing infrastructure, but
management expects that this capital investment will be significantly less than
the investment required to support equivalent sales of bag products.
Management's goal of integrating proprietary bag products and proprietary
in-store advertising and promotion products is expected to create in the future,
new market opportunities and reduce the capital requirements necessary to
support growth.
The Company competes in the $731 million annual market (based on 1994
industry information) for traditional plastic grocery carryout T-shirt bags.
This market is highly competitive and margins have remained low for several
years. Management's goal is to substantially reduce sales from this market by
the end of Fiscal 1998 and concentrate on the markets for its higher margin
proprietary T-shirt bag products (estimated at $384 million annually in 1994)
and its in-store advertising and promotion products for the supermarket and
convenience store markets (which are currently estimated by management at
approximately $600 million annually).
The Company has recently entered the in-store advertising and promotion
market with two new products: (1) Product Profit Builder(TM), which incorporates
the Company's established proprietary FRESH-SAC(R) T-shirt produce bag, which is
used by approximately 3,000 supermarkets, into a new in-store advertising and
promotion vehicle for supermarkets, and (2) the new patented Floor Focus
Ad-Tile(TM) system, which is a semi-permanent floor tile which contains full
color advertising messages manufactured into it and is installed in the floor in
strategic locations throughout the store. Market Media, Inc., a wholly owned
subsidiary, has entered into a contract with Winn-Dixie Stores, Inc., of
Florida, the fifth largest grocery chain in the U.S., to install its patented
Floor Focus Ad-Tile(TM) advertising product in all of the 1,178 Winn-Dixie
supermarkets. The objective of the Produce Profit Builder program and Floor
Focus Ad-Tile(TM) is to increase sales in-store at the point of purchase. In the
first quarter of Fiscal 1997, the Floor Focus Ad-Tile(TM) rollout began for the
first Winn-Dixie Division (109 stores of which 10 stores will be control stores)
with national brand advertisers which include Nestle, Campbell Soup, Hebrew
National, and H.J. Heinz.
PRODUCTS AND MARKETS
FRESH-SAC(R) T-shirt produce bag is a thin, high clarity, high
molecular weight, high density ("HMWPE") produce bag manufactured from a patent
pending plastic developed by the Company and sold in a patented dispensing
mechanism. The product is presently sold to approximately 3,000 supermarkets
directly and through distributors. In 1994, it was estimated that there were
32,500 supermarkets in the United States, which represents an annual market
potential for this product of an estimated $264 million. The Company has no
direct competition in this market, but has indirect competition from the
traditional produce bag on a roll. In this section, direct competition refers to
competition from identical products, and indirect competition refers to products
which are not identical, but which could be substituted for the Company's
product.
-14-
HANDI-SAC(TM) is a T-shirt bag sold in a patented dispensing mechanism.
The system allows the retailer to effectively store and dispense T-shirt bags in
a limited space, which is important to drug, convenience and hardware stores.
The marketing program for this product began in Fiscal 1995 and at the end of
the first quarter of Fiscal 1997, the product is being sold to approximately
7,000 convenience, drug and hardware stores. The annual market potential for
HANDI-SAC(TM) in the 93,000 convenience store industry is estimated at
approximately $120 million. The sales and marketing program is accelerating for
this product. The Company has no direct competition in this market, but has
indirect competition from paper bags and the T-shirt bag on a roll manufactured
by Sonoco Products Company ("Sonoco"). The principal competition in this market
is paper bags, which have the largest share of the market and cost approximately
two to three times the price of HANDI-SAC(TM).
TRADITIONAL GROCERY T-SHIRT BAG is classified as a non-proprietary
product although the Company owns an issued patent on this product. The bags are
manufactured using HMWPE plastic resin and are sold to grocery, convenience,
drug and retail chains.
The $731 million annual market in 1994 for T-shirt bags has developed
over the past ten years primarily because the T-shirt bag has been approximately
one-half to one-quarter the price of kraft paper bags over the period and the
T-shirt bag has been a less expensive alternative to paper and plastic
merchandise bags. Plastic T-shirt bags have an estimated 75% marketshare of the
supermarket industry. This market is highly competitive. The Company's
competitors include divisions of large multinational companies (e.g., Tenneco,
Inc. ("Tenneco") and Sonoco) and, to a lesser extent, other specialty bag
manufacturers. The Company believes that Sonoco and Tenneco are, respectively,
the leading manufacturers of HMWPE and linear low density polyethylene ("LLDPE")
T-shirt grocery bags. (Mobil Oil Corporation ("Mobil") recently exited the
grocery T-shirt sack market and sold this business to Tenneco.) There are
significant barriers to entry into the market due to the significant capital
requirements (management estimates that it presently requires a capital
investment of approximately $10 million for each one billion bags of
manufacturing capacity, exclusive of real estate costs, start-up costs and
working capital requirements).
IN-STORE ADVERTISING AND PROMOTION PRODUCTS are the Floor Focus
Ad-Tile(TM), an in-floor advertising system, and the Produce Profit Builder(TM),
which consists of the (i) Floor Focus Ad-Tile(TM), (ii) the FRESH-SAC(R) T-shirt
sack produce bag in a patented dispensing system, and (iii) the patent pending
Fresh Focus Cartridge Talker(TM), an attachment to the patented dispensing
system, which is utilized as an advertising and promotion vehicle and coupon
dispensing mechanism. The patented Floor Focus Ad-Tile(TM) system has full-color
advertising messages manufactured into a tile which is then installed in the
floor in strategic locations throughout the store with the objective of
increasing brand sales at the point of purchase. Floor Focus Ad-Tile(TM) is a
semi-permanent installation that withstands heavy traffic, yet is easily
replaced when the message changes.
-15-
Market Media, Inc. ("Market Media"), a wholly-owned subsidiary, was
organized in the first quarter of Fiscal 1996 to develop in-store advertising
and promotion products, which are to be marketed with the FRESH-SAC(R) produce
bag. Subsequently, the Floor Focus Ad-Tile(TM) product was acquired.
In the second quarter of Fiscal 1996, Market Media entered into a
contract with Winn-Dixie Stores, Inc. of Florida to install its Floor Focus
Ad-Tile(TM) advertising product in all of the 1,178 Winn-Dixie supermarkets. In
the first quarter of Fiscal 1997, the rollout began for the first Winn-Dixie
Division (109 stores of which ten stores will be control stores) with national
brand advertisers which include Nestle, Campbell Soup, Hebrew National, and H.J.
Heinz. In the second quarter of Fiscal 1997, the Floor Focus Ad-Tile(TM) rollout
will be expanded to 486 Winn-Dixie Supermarkets with S.C. Johnson & Son, Inc.
Armstrong Floor Cleaner Floor Focus Ad-Tiles(TM) being installed in all 486
supermarkets. Initial advertising contracts total approximately $200,000 with
individual contracts from one to three advertising cycles (4 to 12 weeks).
Under the contract, Market Media is responsible for the sale of Floor
Focus Ad-Tile(TM) advertising to consumer package goods advertisers in the 1,178
Winn-Dixie supermarkets. Management estimates that the sale of Floor Focus
Ad-Tile(TM) at Winn-Dixie Stores, Inc. could result in annual sales of up to
$12.3 million when the rollout is complete in mid 1997, assuming all Floor Focus
Ad-Tile(TM) locations are fully utilized at current advertising rates.
Market Media's new Floor Focus Ad-Tile(TM), for the supermarket,
convenience store and non-food retail store industries, has the potential of
creating new in-store advertising and promotion markets, which management
estimates at approximately $600 million annually.
Market Media's Floor Focus Ad-Tile(TM), under the Winn-Dixie contract,
is located in the dry goods sections of the supermarket, and it is anticipated
that any competitive products will be directed at this market. While Market
Media is marketing the Floor Focus Ad-Tile(TM) to the dry goods section of the
supermarket, the Company plans to market Floor Focus Ad-Tile(TM) to the produce
department as an element of its Produce Profit Builder program.
The Company's Produce Profit Builder has three elements: FRESH-SAC(R)
T-shirt produce bag, Fresh Focus Cartridge Talker(TM), and Floor Focus
Ad-Tile(TM). All three products create a marketing program for the produce
department of the supermarket and have the objective of increasing produce
sales.
The Produce Profit Builder program provides a platform for the Company
to potentially reach its goal of capturing a 60% marketshare of the 1994 $264
million annual potential market for the FRESH-SAC(R) T-shirt produce bag by
replacing the produce bag on a roll with FRESH-SAC(R). FRESH-SAC(R) is now sold
to approximately 3,000 supermarkets. In the context of the Produce Profit
Builder program, FRESH-SAC(R) becomes an important component of a marketing
program that can increase store profits. This marketing program has been well
received, and in-store market tests have been successful in Canada and are
planned to begin at several leading U.S. grocery chains in the second quarter of
Fiscal 1997.
-16-
Floor Focus Ad-Tile(TM) marked the Company's entry into the in-store
advertising and promotion market. The Produce Profit Builder program is also the
platform to launch a second proprietary product, Fresh Focus Cartridge
Talker(TM), into this market.
3M has entered the floor tile advertising market with a "decal" that is
attached to the existing floor tile surface and is regarded as an indirect
competitor of Floor Focus Ad-Tile(TM). 3M is classified as an indirect
competitor because its decal advertising message is attached to the surface of
the floor tile rather than having the advertising message manufactured into the
floor tile similar to the Floor Focus Ad-Tile(TM).
Traditional in-store advertising and promotion markets are estimated at
approximately $500 million in 1995 and the major companies are Heritage Media
Corporation and Catalina Marketing Corporation, both of which offer in-store
advertising and promotional products which are not related to the floor tile or
the FRESH-SAC(R) produce bag dispensing systems.
COMPETITION
The plastic bag and the in-store advertising and promotion industries
are highly competitive. In the plastic bag industry, the Company's competitors
include divisions of large multinational companies (e.g. Tenneco and Sonoco) and
to a lesser extent, other specialty bag manufacturers. The Company believes that
Sonoco and Tenneco are, respectively, the leading manufacturers of HMWPE and
LLDPE T-shirt grocery bags. (Mobil recently exited the grocery T-shirt sack
market and sold this business to Tenneco.) There are significant barriers to
entry into the plastic bag market due to the significant capital requirements
(management estimates that it presently requires a capital investment of
approximately $10 million for each one billion bags of manufacturing capacity,
exclusive of real estate costs, start-up costs and working capital
requirements).
The Company's in-store advertising and promotion products compete in
the same markets that are dominated by Heritage Media Corporation and Catalina
Marketing Corporation, both of which offer in-store advertising and promotion
products which are not related to the floor tile or the FRESH-SAC(R) produce bag
dispensing systems. Consequently, the Company anticipates much of its
competition will come from larger, well-capitalized businesses which have
significantly greater financial and other resources than the Company.
Accordingly, no assurance can be given that the Company will be able to compete
successfully with any of these companies or achieve a greater market share than
it currently possesses. The Company competes in the plastic bag and in-store
advertising and promotion industries by (i) developing and marketing what it
believes are innovative plastic bags and in-store advertising and promotion
products, (ii) filing for patent protection in the United States and numerous
foreign countries for its proprietary products, (iii) using state-of-the-art
manufacturing equipment in an effort to increase productivity and lower costs,
and (iv) integrating its proprietary bag and in-store advertising and promotion
products to create barriers to market entry for manufacturers of plastic bags,
which do not have in-store advertising and promotion products, and to create
barriers to market entry for in-store advertising and promotion companies that
do not manufacture plastic bags.
-17-
PROPRIETARY PROCESSES, PATENTS AND OTHER RIGHTS
PATENT STRATEGY
The Company's strategy is to, first, be a low cost producer in each of
its markets, and second, to develop patentable, proprietary products in order to
differentiate its products in the marketplace.
The Company has developed a patent position in the T-shirt bag and
in-store advertising markets. The Company owns a patent issued in 1989 for its
T-shirt carryout bag and patents for its HANDI-SAC(TM) and FRESH-SAC(R)
dispensing systems and has patents pending on several other T-shirt bag and
in-store advertising products. The Company also has an exclusive worldwide
license for the patented Floor Focus Ad-Tile(TM) system.
In 1993, the Company was issued a United States patent for the
dispensing system used in conjunction with its FRESH-SAC(R) product and other
T-shirt sack products and has filed patent applications for the dispensing
system in 20 foreign countries. The Company has filed patent applications for
the FRESH-SAC(R) HMWPE material, and was notified that this patent has been
issued in a foreign country. Notwithstanding the issuance of the patent in a
foreign country, the Company has elected not to further prosecute this patent
application in other countries because of technological changes that the Company
plans to make in its manufacturing process which make it uneconomical to
continue to invest in the original patent applications. The Company has also
filed patent applications in the United States for its RAPID-SACTM product and
for its RACK 'N SACKTM product, a new dispensing system for T-shirt sacks for
non-food retail markets. The Company has filed a United States patent
application for its Fresh Focus Cartridge Talker(TM). For Fiscal 1996, the
Company spent approximately $61,000 for patent activities, including
applications, legal fees and related costs. No assurance can be given that any
of these patents will be granted or that the patents currently owned by the
Company and any patents that may be granted in the future will be enforceable or
provide the Company with meaningful protection from competitors. Even if a
competitor's products were to infringe patents owned by the Company, it could be
costly for the Company to enforce its rights in an infringement action and would
divert funds and resources otherwise used in the Company's operations.
Furthermore, no assurance can be given that the Company would be successful in
enforcing such rights. No assurance can be given that any of the Company's
patent applications will be allowed, or if allowed, will provide the Company
with any advantage against competitors selling similar products. Similarly, no
assurance can be given that the Company's products will not infringe patents or
rights of others. The Company has a registered trademark in the United States
for FRESH-SAC(R).
The Company has developed a number of proprietary manufacturing methods
and processes utilized in the manufacture of its products, including processes
that utilize greater percentages of recycled plastic materials in plastic bags,
and produce strong, thin, high clarity and traditional HMWPE bags using less
plastic. The Company relies on and employs various methods to protect the
concepts, ideas, and documentation for these manufacturing methods such as
patents and confidentiality agreements with its employees. However, such methods
may not afford sufficient
-18-
protection and no assurance can be given that others will not independently
develop such know-how or obtain access to the Company's know-how, concepts,
ideas and documentation.
The Company owns patents in the United States and Canada relating to
the methods for making a pack of plastic T-shirt sacks which permits the
individual sacks to be mounted on a handle-supported dispensing rack system and
to be easily separated and dispensed from the pack utilizing a central "pull
tab." Sonoco also owns a patent relating to the methods for holding plastic bags
in a metal rack. In 1990, Sonoco indicated its intent to seek licenses under a
broadened reissue patent from all manufacturers of plastic bags which utilize a
particular method for holding plastic bags in a metal rack. Sonoco has commenced
litigation against several plastic bag manufacturers other than the Company. The
United States District Court for the Central District of California entered
summary judgment in February 1994 for the defendants in a suit relating to
alleged patent infringement by the defendants. The court declared Sonoco's three
reissue claims to be invalid. It is expected that Sonoco will appeal this
judgment. Subsequent to this decision, the Company filed suit against Sonoco
alleging infringement of the Company's patent by Sonoco. In the first quarter of
Fiscal 1997, the patent infringement suit against Sonoco and Sonoco
counterclaims against the Company were dismissed by mutual agreement of the
parties.
If Sonoco was to appeal the February 1994 judgment which declared
Sonoco's three reissue claims invalid, and have that judgment reversed, Sonoco
could institute a patent infringement suit against the Company. If Sonoco was to
institute and succeed in any infringement claim against the Company, Sonoco
might be able to prevent the future use, sale and manufacture of certain of the
Company's products using certain racking systems, or alternatively, might
require the Company to pay Sonoco a license fee for the use of this technology.
Either outcome could have a material adverse effect on the Company's business.
Infringement of any patent may also render the Company liable to purchasers and
end-users of the infringing product. The Company has been advised by patent
counsel that the Sonoco patent applies to the traditional grocery T-shirt sack
and does not apply to the Company's proprietary HANDI-SAC(TM) and FRESH-SAC(R)
bag products.
Mobil owns a reissue patent that relates to avoiding stress
concentration and preventing the tearing of plastic bags. This reissue patent
originally was to expire in 1996. Due to a change in U.S. patent law, the
reissue patent is now extended until 1998. On December 4, 1995, Mobil instituted
an infringement claim against the Company. The Company intends to vigorously
defend this suit. However, if Mobil was to succeed in this or any infringement
claim against the Company, Mobil might be able to prevent the future use, sale
and manufacture of the Company's grocery T-shirt sacks and similar products
which might be found to infringe the patent, or alternatively, might require the
Company to pay Mobil a license fee for the prior and future use of this
technology. Either outcome could have a material adverse effect on the Company's
business. The Company has been advised by patent counsel that the Mobil patent
applies to the traditional grocery T-shirt sack and does not apply to the
Company's proprietary HANDI-SAC(TM) and FRESH-SAC(R) bag products.
No assurance can be given that the Company's products will not infringe
patents or rights of others. The Company could incur substantial costs in
defending itself in any patent litigation.
-19-
MANUFACTURING
All of the Company's plastics products are manufactured in its Dighton,
Massachusetts facility. The HMWPE resin is delivered to the Company by rail car,
where it is brought into the facility to be heated and blown into a thin film on
blown film extrusion lines. The film is cooled and wound on large rolls and
printed with the customer's information using non-toxic inks. The film is then
cut into bags, reviewed by quality control inspectors, boxed, and shipped to
customers. The Company retains customer design ink plates for future use and has
an art department which assists in graphic design for the bags.
The Company's manufacturing equipment consists of blown film extrusion
lines, printing presses and bag making machines. The Company anticipates further
increases in manufacturing capacity in the Dighton facility during Fiscal 1997
from its present manufacturing capacity of approximately 2.5 to 3.3 billion bags
to manufacturing capacity of approximately 4.0 to 4.8 billion bags. All capacity
estimates are based upon certain assumptions regarding pricing, manufacturing
efficiencies and product mix.
RAW MATERIALS
HMWPE resin comprises the principal raw material in the Company's
products, the principal component of which is ethylene, a derivative of natural
gas. HMWPE resin is currently available from several sources, but is being
produced at over 90% of industry capacity utilization. During the past fiscal
year, as in some prior fiscal years, resin prices fluctuated significantly,
which trend the Company expects will continue. Although the Company currently
purchases the additives used in the production of its FRESH-SAC(R) products from
a single source, it believes that alternate sources would be available, if the
current manufacturer were to cease production. In such event, however, the
Company may experience delays in obtaining the additives, which could result in
temporary delays in FRESH-SAC(R) production. To date, the Company has not
experienced any shortages of raw materials.
GENERAL
The Company's predecessor, Beresford Packaging, Inc.
("Beresford-U.S."), was organized as a wholly owned subsidiary of Beresford
Packaging, Inc. a Canadian corporation that was subsequently amalgamated into
Beresford Box Company Limited ("Beresford -Canada") in February 1988 to acquire
certain assets and assume certain liabilities of Surrey Industries, Inc., an
unaffiliated entity, which manufactured traditional HMWPE plastic bags. The
Company was organized as a Delaware corporation in May 1990 and in August 1990
Beresford-U.S. merged into the Company. In February 1993, the stockholders and
directors of the Company approved the name change of the Company from BPI
Environmental, Inc. to BPI Packaging Technologies, Inc. The Company operates
four wholly owned subsidiaries: RC America, Inc., which purchases surplus
inventory from manufacturers of consumer products and markets and sells the
products to mass merchandise
-20-
retailers and other retail chains; BPI Packaging (UK) Limited, which markets and
sells the Company's products in Europe; Market Media, Inc., which sells and
markets in-store advertising promotion programs; and BPI Packaging, Inc., which
was established to purchase, sell and market plastic bag products manufactured
by another bag manufacturer. Unless otherwise indicated, the term "Company"
includes BPI Packaging Technologies, Inc., its predecessor Beresford-U.S., and
its four subsidiaries.
USE OF PROCEEDS
The Company would receive approximately $12,300,000 in net proceeds if
all of the Class B Warrants were exercised. The net proceeds from such exercises
will be used by the Company for working capital and general corporate purposes.
The Company will not receive any proceeds from the sale of the 212,470 shares of
Common Stock by such Investor. See "PLAN OF DISTRIBUTION."
SELLING SECURITYHOLDERS
The shares of Common Stock and the shares of Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Class B Warrants are
being registered to permit the resale and issuance of the Common Stock. Such
Securities are being registered at the expense of the Company, pursuant to the
terms of the Private Placement and the warrant and underwriting agreements,
exclusive of fees and expenses of the Selling Securityholders' attorneys or
other representatives and selling or brokerage commissions, if any, as the
result of the sale of such Securities.
The Selling Securityholders are not restricted as to the price or
prices at which they may resell their Securities and sales of such Securities at
less than the market price may depress the market price of the Company's Common
Stock or Class B Warrants. It is anticipated that the resale of the Securities
being offered hereby when made, will be made through customary channels either
through broker-dealers acting as agents or brokers for the seller, or through
broker-dealers acting as principals, who may then resell the shares in the
over-the-counter market, or at private sales in the over-the-counter market or
otherwise, at negotiated prices related to prevailing market prices at the time
of the sales, or by a combination of such methods. Thus, the period for sale of
such Securities by the Company, or resale of such Securities by the Selling
Securityholders, may occur over an extended period of time.
-21-
The following table sets forth, as of June 21, 1996, the number of
shares beneficially owned prior to the Offering, the number of shares of Common
Stock or Preferred Stock offered hereby, and the number of shares beneficially
owned after the Offering (assuming sale of all shares of Common Stock or
Preferred Stock being offered hereby) by the Selling Securityholders.
<TABLE>
<CAPTION>
Common
and/or Common
Preferred Stock Stock
Material Beneficially Common Beneficially
Relationship Owned Stock Owned After Percentage of
Selling with the Prior to Being Completion of Class After
Securityholder(1) Company Offering Offering Offered Offering
- -------- -------- -------- ----- ------- -------------
<S> <C> <C> <C> <C> <C>
Mitch Leigh (2) 511,470(3) 212,470 299,000 *
H.J. Meyers & Co., Inc.
(formerly known as (4) 442,680 100,000 342,680 *
Thomas James
Associates, Inc.)
</TABLE>
- ----------
* Less than one percent
(1) The Selling Securityholders also comprise those persons who own the
Company's outstanding Class B Warrants.
(2) Mr. Leigh purchased shares of the Company's Common Stock in the Private
Placement.
(3) Includes 273,000 shares of Common Stock owned by Mr. Leigh in an IRA
account.
(4) H.J. Meyers & Co., Inc. (formerly known as Thomas James Associates,
Inc.) served as the underwriter in connection with the Company's second
public offering. See "PLAN OF DISTRIBUTION." Assumes conversion of the
100,000 shares of Series A Preferred Stock held by H.J. Meyers & Co.,
Inc. Excludes 176,000 shares of Common Stock issuable upon exercise of
a warrant issued by the Company to H.J. Meyers & Co., Inc. in
connection with a consulting agreement.
-22-
PLAN OF DISTRIBUTION
The shares of Common Stock and Warrants covered hereby may be offered
and sold from time to time and, in the case of the Warrants after exercise of
such Warrants, by their respective holders.
To exercise a Class B Warrant, the holder must pay the exercise price
of $8.65 and transfer one Class B Warrant to the Company in exchange for 1.04
shares of Common Stock. The exercise price and shares purchasable upon the
exercise of the Class B Warrants have been adjusted (the "Class B Warrant
Adjustment") in connection with certain private placements by the Company. The
Class B Warrants expire on October 7, 1996. Prior to the Class B Warrant
Adjustment, each Class B Warrant entitled the holder thereof to purchase one
share of Common Stock at a price of $9.00 per share.
The shares of Common Stock and Warrants covered by this Prospectus may
be offered and resold from time to time by the Selling Securityholders, or by
pledgees, donees, transferees or other successors in interest, in one or more
transactions on NASDAQ/NMS, or otherwise at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The Selling Securityholders will act independently of the Company
in making decisions with respect to such offers and resales. The Securities may
be resold by one or more of the following: (a) a block trade in which the broker
or dealer so engaged will attempt to sell the Securities as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus; and (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
Thus, the period of distribution of such Securities may occur over an extended
period of time. The Company is paying all of the other expenses of registering
the securities offered hereby under the Securities Act estimated to be $15,000
for filing, legal, accounting and miscellaneous fees and expenses, and has
agreed to indemnify the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act. In effecting sales,
broker-dealers engaged by the Selling Securityholders may arrange for other
broker-dealers to participate. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Securityholders in
connection with such sales. The Company will not receive any proceeds from any
sales of the Common Stock by the Investor, but will receive the proceeds
generated upon exercise of any of the Warrants.
The Company would receive approximately $12.3 million in net proceeds
if all of the Class B Warrants described above were exercised. Any proceeds from
such exercise would be used for general corporate purposes.
See "USE OF PROCEEDS."
In offering the Securities, the Selling Securityholders and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Securityholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Securityholders and the compensation of such
broker-dealer may be
-23-
deemed to be underwriting discounts and commissions. In addition, any shares
covered by this Prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
The Company has advised the Selling Securityholders that during such
time as they may be engaged in a distribution of Securities included herein they
are required to comply with Rules 10b-6 and 10b-7 under the Exchange Act (as
those Rules are described in more detail below) and, in connection therewith,
that they may not engage in any stabilization activity, except as permitted
under the Exchange Act, are required to furnish each broker-dealer through which
Securities included herein may be offered copies of this Prospectus, and may not
bid for or purchase any securities of the Company or attempt to induce any
person to purchase any securities except at permitted under the Exchange Act.
Rule 10b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
DESCRIPTION OF SECURITIES
The following is a brief summary of the Securities, which does purport
to be complete and is qualified in all respects by reference to the actual text
of the applicable exhibit incorporated by reference herein.
COMMON STOCK
The following summary description of the Common Stock is qualified in
its entirety by reference to the Company's Certificate of Incorporation, as
amended. The Company is authorized to issue up to 30,000,000 shares of Common
Stock, $.01 par value. After issuance, shares of Common Stock are not subject to
further assessment or call.
The holders of Common Stock are entitled to one vote for each share
held of record on each matter submitted to a vote of stockholders. There is no
cumulative voting for election of directors. Subject to the prior rights of any
series of Preferred Stock which may from time to time be outstanding, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor, and, upon the
liquidation, dissolution or winding up of the Company, are entitled to share
ratably in all assets remaining after payment of liabilities and payment of
accrued dividends and liquidation preference on the Preferred Stock, if any.
Holders of Common Stock have no preemptive rights and have no rights to convert
their Common Stock into any other securities. The outstanding Common Stock is
validly issued, fully paid, and nonassessable.
-24-
CLASS B WARRANTS
The following is a brief summary of certain provisions of the Class B
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the Warrant Agreement between
the Company and American Stock Transfer & Trust Company (the "Transfer and
Warrant Agent").
EXERCISE PRICE AND TERMS. Each Class B Warrant entitles the holder
thereof to purchase 1.04 shares of Common Stock for $8.65 per share at any time
up to and including October 7, 1996. The exercise price and shares purchasable
upon the exercise of the Class B Warrants have been adjusted (the "Warrant
Adjustment") in connection with certain private placements by the Company to
overseas investors and accredited investors. Prior to the Warrant Adjustment,
each Class B Warrant entitled the holder thereof to purchase one share of Common
Stock at $9.00 per share. The exercise prices for the Class B Warrants are
subject to further adjustment in accordance with the provisions of the Warrant
Agreement. The holder of any Class B Warrant may exercise such Class B Warrant
by surrendering the certificate representing the Class B Warrant to the
Company's Transfer and Warrant Agent, with the subscription form on the reverse
side of such certificate properly completed and executed, together with payment
of the exercise price. No fractional shares will be issued upon the exercise of
the Class B Warrants.
The exercise price of the Class B Warrants should in no event be
regarded as an indication of any future market price of the securities offered
hereby.
REDEMPTION. The Class B Warrants are subject to redemption at $.05 per
Class B Warrant on 30 days' written notice by the Company, provided the last
sale price of the Company's Common Stock as represented by the NASDAQ National
Market System for 10 consecutive trading days ending within 25 days of the date
of notice of redemption averages at least $14. If any Class B Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the holder will be entitled only to the redemption price.
ADJUSTMENTS. The exercise price of the Class B Warrants will be subject
to adjustment in certain events, which are set forth in the Warrant Agreement.
TRANSFER, EXCHANGE AND EXERCISE. The Class B Warrants are fully
registered and may be presented to the warrant agent for transfer, exchange or
exercise (subject to the requirements set forth below) at any time prior to the
close of business on October 7, 1996, at which time any Class B Warrants will
become wholly void and of no value. As a market for the Class B Warrants has
developed, the holder may sell the Class B Warrants instead of exercising them.
No assurance can be given, however, that the market for the Class B Warrants
will continue.
In order for a holder to exercise his Class B Warrants, and as required
in the Warrant Agreement, there must be a current registration statement on file
with the Securities and Exchange Commission, and such shares must be the subject
of an effective registration statement under the
-25-
state securities law where the person exercising the Class B Warrants resides or
such exercise must be exempt from registration in such state. The Company will
be required to file post-effective amendments to the registration statement when
events require such amendments. No assurance can be given, however, that the
registration statement can be kept current. If it is not kept current for any
reason, the Class B Warrants will not be exercisable and will have no value. The
Company has agreed to use its best efforts to maintain a current registration
statement to permit the issuance of the Common Stock upon exercise of the Class
B Warrants. In addition, if the Company is unable to qualify for sale in
particular states its Common Stock underlying the Class B Warrants, holders of
the Class B Warrants residing in such states and desiring to exercise the Class
B Warrants will have no choice but to either sell the Class B Warrants or let
them expire.
WARRANT SOLICITATION FEE. The Company has agreed with H.J. Meyers &
Co., Inc. (the "Solicitation Agent") not to solicit Class B Warrant exercises
other than through the Solicitation Agent. Upon the exercise of any Class B
Warrants, the Company will pay the Solicitation Agent a fee of seven percent
(7%) of the aggregate exercise price, if (i) the market price of the Company's
Common Stock on the date of the Class B Warrant is exercised is greater than the
then exercise price of the Class B Warrants; (ii) the exercise of the Class B
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc.; (iii) the Class B Warrant is not held in a discretionary account;
(iv) disclosure of compensation arrangements was made both at the time of the
offering and at the time of exercise of the Class B Warrant; and (v) the
solicitation of exercise of the Class B Warrant was not in violation of Rule
10b-6 promulgated under the Securities Act of 1934. The Class B Warrant
solicitation fee is payable to the Solicitation Agent only for the exercise of
the Class B Warrants solicited and procured by the Solicitation Agent. No fee
will be paid to the Solicitation Agent on Class B Warrants voluntarily exercised
at any time without solicitation by the Solicitation Agent. In order for any
other member of the National Association of Securities Dealers, Inc. ("NASD") to
qualify to receive the solicitation fee, such NASD member soliciting the
exercise of the Class B Warrant must be designated in writing by the
Warrantholder as having solicited the exercise.
WARRANTHOLDER NOT A SHAREHOLDER.
The Class B Warrants do not confer upon holders any voting or any other
rights as stockholders of the Company.
PREFERRED STOCK
The following summary description of the Company's Preferred Stock is
qualified in its entirety by reference to the Company's Certificate of
Incorporation, as amended and the certificates of Designation for each series of
outstanding Preferred Stock. The Company is authorized to issue up to 2,000,000
shares of Preferred Stock, $.01 par value. The Preferred Stock may be issued in
one or more series, the terms of which may be determined at the time of issuance
by the Board of Directors, without further action by stockholders, and may
include voting rights (including the right to vote as a series on particular
matters), preferences as to dividends and liquidation, conversion, redemption
rights and sinking fund provisions.
-26-
SERIES A CONVERTIBLE PREFERRED STOCK
In connection with the Company's second public offering in June 1991,
the Company authorized 1,400,000 shares of Series A Convertible Preferred Stock,
of which 1,061,800 shares were issued in the offering. A total of 689,654 shares
of Series A Convertible Preferred Stock have been converted to Common Stock as
of June 21, 1996, leaving a balance of 372,146 shares of Series A Convertible
Preferred Stock outstanding. In addition, the Company has reserved for issuance
an additional 100,000 shares of Series A Convertible Preferred Stock for
issuance upon exercise of the Underwriter's Warrant I issued in connection with
the second public offering. The rights and preferences of the Series A
Convertible Preferred Stock are summarized as follows:
DIVIDEND RIGHTS. Holders of Series A Convertible Preferred Stock are
entitled to receive, in each fiscal year in which the Company attains net
earnings after taxes, as defined below, from funds legally available therefor,
non-cumulative cash dividends at the annual rate of $.34 per share, payable
annually on the last day of June, beginning June 30, 1992. For each fiscal year
through the year ending February 29, 1996, dividends will be payable in cash if
net earnings after taxes exceed 150% of the amount necessary to pay the
dividends on the Series A Convertible Preferred Stock in full, and in cash,
Common Stock, or any combination thereof if such net earnings are less than such
amount. Commencing with any dividend payment for the fiscal year commencing
March 1, 1996, dividends may be paid in cash, Common Stock, or any combination
thereof at the discretion of the Company's Board of Directors. As used herein,
"net earnings after taxes" means net earnings (inclusive of extraordinary gains
and losses) after payment of federal and state corporate income taxes as
determined by the Company's independent accountants in accordance with generally
accepted accounting principles applied on a consistent basis. Dividends will be
non-cumulative and will be payable to holders of record on such record dates as
shall be fixed by the Board of Directors of the Company. Dividends payable for
any period less than a full year will be computed on the basis of a 360-day year
with equal months of 30 days.
In the event that full dividends on the Series A Convertible Preferred
Stock have not been declared and set apart for payment in cash the Company may
not declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
retirement of, the Common Stock or any other stock of the Company ranking as to
dividends or distribution of assets on liquidation, dissolution or winding-up of
the Company junior to the Series A Convertible Preferred Stock (other than, in
the case of dividends or distributions, dividends or distributions paid in
shares of Common Stock or such other junior ranking stock). The Series A
Convertible Preferred Stock shall be non-participating with respect to any
dividends, whether payable in cash, property or stock, paid on any other class
of the Company's securities.
CONVERSION RIGHTS. Each share of Series A Convertible Preferred Stock
is convertible at the option of the holder into one share of Common Stock of the
Company at any time prior to redemption. Each share of Common Stock issued upon
conversion of the shares of the Series A Convertible Preferred Stock will be
fully paid and nonassessable. The conversion rate is subject to
-27-
adjustment in certain events, including (i) dividends and other distributions
payable in Common Stock on any class of capital stock of the Company, (ii) the
issuance to all holders of Common Stock of rights or warrants entitling them to
subscribe for or purchase Common Stock at less than the then current conversion
price of the Series A Convertible Preferred Stock (as defined in the certificate
of designation), (iii) subdivisions, combinations and reclassifications of
Common Stock and (iv) distributions to all holders of Common Stock of evidence
of indebtedness of the Company (including securities, but excluding those
rights, warrants, dividends and distributions referred to above and dividends
and distributions paid in cash out of earned surplus). No adjustment for
issuances of Common Stock at below the then current conversion price will be
made until the number of shares of Common Stock issued by the Company exceeds
400,000 and no adjustments will be made until the cumulative adjustments in the
conversion price amount to $.01 or more. Fractional shares of Common Stock will
not be issued upon conversion, but, in lieu thereof, the Company will pay a cash
adjustment based upon the market price of the Common Stock. Shares of Series A
Convertible Preferred Stock which are converted into Common Stock will be
restored to the status of authorized but unissued shares of preferred stock,
without designation as to series, and may thereafter be issued, but not as
shares of Series A Convertible Preferred Stock. The right to convert any shares
of the Series A Convertible Preferred Stock called for redemption will terminate
at the close of business on the day preceding the redemption date and will be
lost if not exercised prior to that time.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
for Common Stock) and pursuant to the antidilution provisions relating to the
Preferred Stock the conversion price thereof is reduced for federal income tax
purposes, such reduction may be deemed to be the payment of a taxable dividend
to holders of the Series A Convertible Preferred Stock.
LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the holders of Series A
Convertible Preferred Stock, after payment of any sums due to the holders of the
Series B Convertible Preferred Stock and the Series C Redeemable Preferred
Stock, shall have preference and priority over the Common Stock and any other
class or series of stock ranking junior to the Series A Convertible Preferred
Stock upon liquidation, dissolution or winding-up for payment out of the assets
of the Company or proceeds thereof available for distribution to stockholders of
$4.00 per share plus all dividends payable and unpaid thereon to the date of
such distribution, and after such payment the holders of the Series A
Convertible Preferred Stock shall be entitled to no other payments. If, in the
case of any such liquidation, dissolution or winding-up of the Company, the
assets of the Company or proceeds thereof shall be insufficient to make the full
liquidation payment of $4.00 per share plus all payable and unpaid dividends on
the Series A Convertible Preferred Stock and full liquidation payments on any
other series of preferred stock ranking as to liquidation on a parity with the
Series A Convertible Preferred Stock, then such assets and proceeds shall be
distributed among the holders of the Series A Convertible Preferred Stock and
any such other preferred stock ratably in accordance with the respective amounts
which would be payable upon liquidation, dissolution or winding-up on such
-28-
shares of Series A Convertible Preferred Stock and any such other series of
preferred stock if all amounts payable thereof were paid in full. A
consolidation or merger of the Company with or into one or more corporations, or
a sale of all or substantially all of the assets of the Company in consideration
for the issuance of equity securities of another corporation, at the option of
holders of at least 50% of the outstanding shares of Series A Convertible
Preferred Stock, shall be deemed to be a liquidation, dissolution or winding-up
of the Company.
REDEMPTION. The Company may, at its option, redeem shares of Series A
Convertible Preferred Stock for cash, in whole or in part, upon written notice
mailed to each holder of record of shares to be redeemed. Such notice shall be
given not more than 60 days and not less than 30 days prior to the redemption
date. However, the shares of Series A Convertible Preferred Stock may not be
redeemed unless the last sale price (as reported by the NASDAQ National Market
System) of the Common Stock shall have averaged in excess of $9.00 per share
(subject to equitable adjustment for stock splits, reverse stock splits and
similar recapitalizations) for at least 30 consecutive trading days ending
within five days prior to the date notice of redemption is given. Any redemption
by the Company shall be at $4.00 per share.
If less than all of the outstanding shares of Series A Convertible
Preferred Stock not previously called for redemption are to be redeemed, shares
to be redeemed shall be selected by the Company from outstanding shares not
previously called for redemption by lot or pro rata as determined by the Board
of Directors of the Company. The Company may not redeem outstanding shares of
Series A Convertible Preferred Stock unless full dividends shall have been
declared and paid or set apart for payment upon all outstanding shares of Series
A Convertible Preferred Stock through the most recent fiscal quarter. Shares of
Series A Convertible Preferred Stock redeemed for cash by the Company will be
restored to the status of authorized but unissued shares of preferred stock,
without designation as to series, and may thereafter be issued, but not as
shares of Series A Convertible Preferred Stock.
VOTING RIGHTS. The Series A Convertible Preferred Stock votes with the
Common Stock as a single class on all matters except that the holders of the
Series A Convertible Preferred Stock are entitled to vote as a class upon any
proposed amendment to the Company's Certificate of Incorporation that would
increase or decrease the aggregate number of authorized shares of the Series A
Convertible Preferred Stock, increase or decrease the par value of the Series A
Convertible Preferred Stock, or alter or change the powers, preferences or
special rights of the shares of the Series A Convertible Preferred Stock so as
to affect them adversely. In addition, the Company may not issue equity
securities with a dividend or liquidation preference ranking senior to, or in
parity with, the Series A Convertible Preferred Stock without the consent of the
holders of a majority of the outstanding shares of Series A Convertible
Preferred Stock.
-29-
RECENT DEVELOPMENTS
No material changes in the Company's affairs have occurred since the
end of Fiscal 1995, which have not been described in an Annual Report on Form
10-K, a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by
the Company under the Exchange Act.
LEGAL OPINIONS
O'Connor, Broude & Aronson, Bay Colony Corporate Center, 950 Winter
Street, Suite 2300, Waltham, Massachusetts 02154 have passed upon the legality
of the securities offered hereby for the Company, Dennis M. O'Connor, a partner
of the firm and Secretary of the Company, is the brother-in-law of Dennis N.
Caulfield, the Company's Chairman of the Board and Chief Executive Officer.
EXPERTS
The financial statements as of February 23, 1996, February 24, 1995 and
February 25, 1994 and for the years then ended incorporated by reference in this
Prospectus have been incorporated by reference in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
INDEMNIFICATION
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violations of a director's fiduciary duty
of care. However, the elimination of limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
obtaining an improper personal benefit.
"A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any
breach of the directors' duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal
benefit."
Delaware General Corporation Law, Section 145, permits a corporation
organized under Delaware law to indemnify directors and officers with respect to
any matter in which the director or officer acted in good faith and in a manner
he reasonably believed to be not opposed to the best interests of the Company,
and, with respect to any criminal action, he had reasonable cause to believe his
conduct was not unlawful. The Company's Bylaws include the following provision:
-30-
"Reference is made to Section 145 and any other relevant
provisions of the General Corporation Law of the State of Delaware.
Particular reference is made to the class of persons, hereinafter
called "Indemnitees," who may be indemnified by a Delaware corporation
pursuant to the provisions of such Section 145, namely, any person or
the heirs, executors, or administrators of such person, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such
corporation or is or was serving at the request of such corporation as
a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise. The Corporation
shall, and is hereby obligated to, indemnify the Indemnitees, and each
of them, in each and every situation where the Corporation is obligated
to make such indemnification pursuant to the aforesaid statutory
provisions. The Corporation shall indemnify the Indemnitees, and each
of them, in each and every situation, where, under the aforesaid
statutory provisions, the Corporation is not obligated, but is
nevertheless permitted or empowered, to make such indemnification, it
being understood that, before making such indemnification with respect
to any situation covered under this sentence, (i) the Corporation shall
promptly make or cause to be made, by any of the methods referred to in
Subsection (d) of such Section 145, a determination as to whether each
Indemnitee acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation,
and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful, and (ii)
that no such indemnification shall be made unless it is determined that
such Indemnitee acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
Corporation, and, in the case of any criminal action or proceeding, had
no reasonable cause to believe that his conduct was unlawful."
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offering herein contained, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or Solicitation Agent. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such an offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in the affairs of the Company since
any of the dates as of which information is furnished herein or since the date
hereof.
------------
TABLE OF CONTENTS
Page
----
Risk Factors................................... 3
Available Information.......................... 11
Incorporation of Certain Information
by Reference................................ 12
The Company.................................... 13
Use of Proceeds................................ 21
Selling Securityholders........................ 21
Plan of Distribution........................... 23
Description of Securities...................... 24
Recent Developments............................ 30
Legal Opinions................................. 30
Experts........................................ 30
Indemnification................................ 30
================================================================================
================================================================================
BPI PACKAGING TECHNOLOGIES, INC.
1,889,510 Shares of Common Stock
-------------
PROSPECTUS
-------------
July __, 1996
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with this Registration Statement (items marked with an asterisk (*) represent
estimated expenses):
Printing Costs*................................. $ 1,000.00
Legal Fees*..................................... $ 7,000.00
Accounting Fees*................................ $ 5,000.00
Miscellaneous*.................................. $ 2,000.00
-----------
Total*................................. $15,000.00
==========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
See "Indemnification" contained in Part I hereof, which is incorporated
by reference.
ITEM 16. EXHIBITS
(a) The following exhibits are filed herewith:
Exhibit
No. Title
--- -----
5 Opinion letter of O'Connor, Broude & Aronson as to legality of shares
being registered.
23a Consent of Price Waterhouse LLP.
23b Consent of O'Connor, Broude & Aronson (contained in opinion filed as
Exhibit 5).
(b) The following exhibits were filed as part of the Company's
quarterly report on Form 10-Q for the quarter ended November 24, 1995, as
amended, as initially filed with the Securities and Exchange Commission on
January 11, 1996 and is incorporated herein by reference:
II-1
Exhibit
No. Title
--- -----
3a Certificate of Incorporation, as amended.
3b Bylaws, as amended.
(c) The following exhibits were filed as part of the Company's Form S-1
Registration Statement (33-48766) declared effective by the Commission on
October 7, 1992 and are incorporated herein by reference:
Exhibit
No. Title
--- -----
4b Specimen Class B Warrant Certificate (Form attached as Exhibit B to
Warrant Agreement - Exhibit 4c filed herewith).
4c Revised Form of Warrant Agreement between the Company and the Warrant
Agent.
(d) The following exhibits were filed as part of the Company's Form S-1
Registration Statement (No. 33-39463) declared effective by the Commission on
June 13, 1991 and are incorporated herein by reference:
Exhibit
No. Title
--- -----
3b Form of Certificate of Designation of Series A Convertible Preferred
Stock, as amended.
3c Form of Amended Certificate of Designation for Series B Convertible
Preferred Stock and Series C Redeemable Preferred Stock.
4a Specimen Series A Convertible Preferred Stock Certificate.
(e) The following Financial Statement schedules were filed as part of
the Company's Form 10-K for the fiscal years ended February 23, 1996, February
24, 1995 and February 25, 1994 as filed with the Securities and Exchange
Commission on June 7, 1996, May 26, 1995 and June 10, 1994, respectively and are
incorporate herein by reference:
Schedule II: Valuation of Qualifying Accounts (formerly Schedule VIII)
II-2
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the registration statement; and
(iii) To include any additional or material information on the
plan of distribution.
(2) For the purpose of determining any liability under the Securities
Act, to treat each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at that time as the
initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the Offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Dighton, Commonwealth of Massachusetts on July
8, 1996.
BPI PACKAGING TECHNOLOGIES, INC.
By:/s/ Dennis N. Caulfield
------------------------
Dennis N. Caulfield, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Dennis N. Caulfield President, Chief Executive July 8, 1996
- ----------------------- Officer and Chairman of
Dennis N. Caulfield the Board of Directors
(Principal Executive
Officer)
/s/ James F. Koehlinger Chief Financial Officer July 8, 1996
- ----------------------- (Principal Financial and
James F. Koehlinger Principal Accounting
Officer)
/s/ C. Jill Beresford Vice President of July 8, 1996
- -----------------------------------
C. Jill Beresford Marketing, Treasurer
and Director
/s/ Gregory M. Davall Vice President of July 8, 1996
- ------------------------------
Gregory M. Davall Manufacturing and Director
/s/ Ronald V. Caulfield Director July 8, 1996
- ------------------------------
Ronald V. Caulfield
/s/ Ivan J. Hughes Director July 8, 1996
- ----------------------------------
Ivan J. Hughes
/s/ David N. Laux Director July 8, 1996
- ---------------------------------
David N. Laux
</TABLE>
II-4
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Title Page Number
- ------ ----- -----------
5 Opinion Letter of O'Connor, Broude and Aronson as to
legality of shares being registered.
23a Consent of Price Waterhouse LLP.
23b Consent of O'Connor, Broude & Aronson (contained in opinion
filed as Exhibit 5).
O'CONNOR, BROUDE & ARONSON
ATTORNEYS AT LAW
THE BAY COLONY CORPORATE CENTER
ROUTE 128 AND WINTER STREET
950 WINTER STREET, SUITE 2300
WALTHAM, MASSACHUSETTS 02154
------------
617-890-6600
July 9, 1996
Board of Directors
BPI Packaging Technologies, Inc.
455 Somerset Avenue
Dighton, Massachusetts 02764
Re: BPI Packaging Technologies, Inc.
--------------------------------
Ladies and Gentlemen:
This firm has represented BPI Packaging Technologies, Inc., a Delaware
corporation (hereinafter called the "Corporation"), in connection with the
public offerings described below.
In our capacity as corporate counsel to the Corporation, we are familiar
with the Certificate of Incorporation, as amended, and the Bylaws of the
Corporation, as amended. We are also familiar with the corporate proceedings
taken by the Corporation in connection with the preparation and filing of a
Post-Effective Amendment No. 2 to Form S-1 Registration Statement on Form S-3
relating to registration statement numbers 33-48766 and 33-39463, including but
not limited to the following: (i) 1,587,040 shares of Common Stock issuable upon
exercise of the Class B Redeemable Common Stock Purchase Warrants (the "Class B
Warrants") issued in the Company's third public offering (the "Public Offering")
and registered on a Form S-1 Registration Statement, No. 33-48766, declared
effective on October 7, 1992; and (ii) 100,000 shares of Common Stock issuable
upon conversion of the Series A Preferred Stock underlying the underwriter's
(the "Underwriter") warrant issued to the Underwriter of the Company's second
public offering in June 1991 and registered on a Form S-1 Registration
Statement, No. 33-39463, declared effective on June 13, 1991.
Based upon the foregoing, we are of the opinion that:
1. The Corporation is duly organized and validly existing under the laws
of State of Delaware.
O'CONNOR, BROUDE & ARONSON
Board of Directors
Re: BPI Packaging Technologies, Inc.
--------------------------------
July 9, 1996
Page 2
2. The 1,587,040 shares of Common Stock underlying the Class B Warrants
will be when issued and paid for in accordance with the terms of the
Class B Warrants legally issued, fully paid and non-assessable.
3. The 100,000 shares of Common Stock issuable upon conversion of the
100,000 shares of Series A Preferred Stock underlying the
Underwriter's warrant issued in the Corporation's second public
offering in July 1991 will be when converted in accordance with the
terms of the Series A Preferred Stock legally issued, fully paid and
non-assessable.
This opinion is provided solely for the benefit of the addressee hereof and
is not to be relied upon any other person or party. Neverless, we hereby consent
to the use of this opinion and to all references to our firm in or made part of
the Registration Statement and any amendments thereto.
Very truly yours,
O'CONNOR, BROUDE & ARONSON
By: /s/ Neil H. Aronson
-------------------
Neil H. Aronson
NHA:MJH:anr
c: Dennis N. Caulfield, President
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post Effective Amendment No. 2 to Form S-1 to the
Registration Statement on Form S-3 of our report dated June 7, 1996 appearing on
Page F-1 of BPI Packaging Technologies, Inc.'s Annual Report on Form 10-K for
the year ended February 23, 1996. We also consent to the reference made to us
under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Boston, Massachusetts
July 8, 1996
